-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UDp/AIZpdr/Qt/6BZVTy6GnNDARoG/CsBAt/WOtQae2LYtY6pM484inZqJqGP17w ZUUc9vEWN2fI9m/SNTtmAw== 0000950123-96-003445.txt : 19960705 0000950123-96-003445.hdr.sgml : 19960705 ACCESSION NUMBER: 0000950123-96-003445 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 95 CONFORMED PERIOD OF REPORT: 19960612 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960703 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHWEST AIRLINES CORP CENTRAL INDEX KEY: 0000917678 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 954205287 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23642 FILM NUMBER: 96591138 BUSINESS ADDRESS: STREET 1: 2700 LONE OAK PKWY CITY: EAGAN STATE: MN ZIP: 55121 BUSINESS PHONE: 6127262111 MAIL ADDRESS: STREET 1: 5101 NORTHWEST DR CITY: ST PAUL STATE: MN ZIP: 55111-3034 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of earliest event reported June 12, 1996 NORTHWEST AIRLINES CORPORATION (Exact name of registrant as specified in its charter) Delaware (State of Incorporation) 95-4205287 (I.R.S. Employer Identification No.) 0-23642 (Commission File Number) 2700 Lone Oak Parkway, Eagan, Minnesota 55121 (Address of principal executive offices) (612) 726-2111 (Registrant's telephone number) 2 2 Item 7 Exhibits. The documents listed below are filed as Exhibits with reference to the Registration Statement on Form S-3 (Registration No. 333-2516) and the Registration Statement on Form S-3 (Registration No. 33-74772) (collectively, the "Registration Statements") of Northwest Airlines Corporation and Northwest Airlines, Inc. The Registration Statements and the Prospectus Supplement, dated June 3, 1996, to the Prospectus, dated May 3, 1996, relate to the offering of Northwest Airlines, Inc.'s Pass Through Certificates, Series 1996-1. 4(a)(1) Trust Agreement [NW 1989 B] between the Owner Participant and The First National Bank of Boston, Owner Trustee 4(a)(2) First Amendment to Trust Agreement [NW 1989 B] between the Owner Participant, and First Security Bank of Utah, National Association, Owner Trustee 4(a)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1989 B] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(a)(4) Amended and Restated Lease Agreement [NW 1989 B] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(a)(5) Guarantee [NW 1989 B] from Northwest Airlines Corporation 4(a)(6) Participation Agreement [NW 1989 B] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, The First National Bank of Boston, Owner Trustee, and Meridian Trust Company, Equipment Trust Trustee 4(a)(7) First Amendment to Participation Agreement [NW 1989 B] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant and State Street Bank and Trust Company, National Association, Indenture Trustee 4(a)(8) Refunding Agreement [NW 1989 B] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent and State Street Bank and Trust Company, Indenture Trustee 3 3 4(b)(1) Trust Agreement [NW 1990 A] between the Owner Participant and The First National Bank of Boston, Owner Trustee 4(b)(2) First Amendment to Trust Agreement [NW 1990 A] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(b)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1990 A] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(b)(4) Lease Agreement [NW 1990 A] between The First National Bank of Boston, Lessor, and Northwest Airlines, Inc., Lessee 4(b)(5) First Amendment to Lease Agreement [NW 1990 A] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(b)(6) Guarantee [NW 1990 A] from Northwest Airlines Corporation 4(b)(7) Participation Agreement [NW 1990 A] among Northwest Airlines, Inc., Lessee, the Owner Participants Named Therein the Loan Participant, The First National Bank of Boston, Owner Trustee, and The Connecticut Bank and Trust Company, National Association, Indenture Trustee 4(b)(8) First Amendment to Participation Agreement [NW 1990 A] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(b)(9) Refunding Agreement [NW 1990 A] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National 4 4 Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(c)(1) Trust Agreement [NW 1995 A] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(c)(2) Amended and Restated Trust Indenture and Security Agreement [NW 1995 A] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(c)(3) Lease Agreement [NW 1995 A] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(c)(4) First Amendment to Lease Agreement [NW 1995 A] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(c)(5) Guarantee [NW 1995 A] from Northwest Airlines Corporation 4(c)(6) Participation Agreement [NW 1995 A] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(c)(7) First Amendment to Participation Agreement [NW 1995 A] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(c)(8) Refunding Agreement [NW 1995 A] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National 5 5 Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(d)(1) Trust Agreement [NW 1995 B] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(d)(2) Amended and Restated Trust Indenture and Security Agreement [NW 1995 B] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(d)(3) Lease Agreement [NW 1995 B] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(d)(4) First Amendment to Lease Agreement [NW 1995 B] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(d)(5) Guarantee [NW 1995 B] from Northwest Airlines Corporation 4(d)(6) Participation Agreement [NW 1995 B] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(d)(7) First Amendment to Participation Agreement [NW 1995 B] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(d)(8) Refunding Agreement [NW 1995 B] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National 6 6 Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(e)(1) Trust Agreement [NW 1996 A] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(e)(2) Amended and Restated Trust Indenture and Security Agreement [NW 1996 A] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(e)(3) Lease Agreement [NW 1996 A] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(e)(4) First Amendment to Lease Agreement [NW 1996 A] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(e)(5) Guarantee [NW 1996 A] from Northwest Airlines Corporation 4(e)(6) Participation Agreement [NW 1996 A] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(e)(7) First Amendment to Participation Agreement [NW 1996 A] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(e)(8) Refunding Agreement [NW 1996 A] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National 7 7 Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(f)(1) Trust Agreement [NW 1996 B] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(f)(2) Amended and Restated Trust Indenture and Security Agreement [NW 1996 B] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(f)(3) Lease Agreement [NW 1996 B] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(f)(4) First Amendment to Lease Agreement [NW 1996 B] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(f)(5) Guarantee [NW 1996 B] from Northwest Airlines Corporation 4(f)(6) Participation Agreement [NW 1996 B] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(f)(7) First Amendment to Participation Agreement [NW 1996 B] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(f)(8) Refunding Agreement [NW 1996 B] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National 8 8 Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(g)(1) Trust Agreement [NW 1996 C] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(g)(2) First Amendment to Trust Agreement [NW 1996 C] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(g)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1996 C] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(g)(4) Lease Agreement [NW 1996 C] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(g)(5) First Amendment to Lease Agreement [NW 1996 C] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(g)(6) Guarantee [NW 1996 C] from Northwest Airlines Corporation 4(g)(7) Participation Agreement [NW 1996 C] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(g)(8) First Amendment to Participation Agreement [NW 1996 C] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(g)(9) Refunding Agreement [NW 1996 C] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through 9 9 Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(h)(1) Trust Agreement [NW 1996 D] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(h)(2) First Amendment to Trust Agreement [NW 1996 D] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(h)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1996 D] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(h)(4) Lease Agreement [NW 1996 D] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(h)(5) First Amendment to Lease Agreement [NW 1996 D] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(h)(6) Guarantee [NW 1996 D] from Northwest Airlines Corporation 4(h)(7) Participation Agreement [NW 1996 D] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(h)(8) First Amendment to Participation Agreement [NW 1996 D] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(h)(9) Refunding Agreement [NW 1996 D] among Northwest Airlines, Inc., Lessee, Northwest Airlines 10 10 Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(i)(1) Trust Agreement [NW 1996 E] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(i)(2) First Amendment to Trust Agreement [NW 1996 E] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(i)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1996 E] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(i)(4) Lease Agreement [NW 1996 E] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(i)(5) First Amendment to Lease Agreement [NW 1996 E] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(i)(6) Guarantee [NW 1996 E] from Northwest Airlines Corporation 4(i)(7) Participation Agreement [NW 1996 E] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(i)(8) First Amendment to Participation Agreement [NW 1996 E] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 11 11 4(i)(9) Refunding Agreement [NW 1996 E] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(j)(1) Trust Agreement [NW 1996 F] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(j)(2) First Amendment to Trust Agreement [NW 1996 F] between the Owner Participant, and First Security Bank of Utah, National Association, Owner Trustee 4(j)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1996 F] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(j)(4) Lease Agreement [NW 1996 F] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(j)(5) First Amendment to Lease Agreement [NW 1996 F] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(j)(6) Guarantee [NW 1996 F] from Northwest Airlines Corporation 4(j)(7) Participation Agreement [NW 1996 F] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(j)(8) First Amendment to Participation Agreement [NW 1996 F] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, 12 12 Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(j)(9) Refunding Agreement [NW 1996 F] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(k)(1) Trust Agreement [NW 1996 G] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(k)(2) First Amendment to Trust Agreement [NW 1996 G] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(k)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1996 G] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(k)(4) Lease Agreement [NW 1996 G] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(k)(5) First Amendment to Lease Agreement [NW 1996 G] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(k)(6) Guarantee [NW 1996 G] from Northwest Airlines Corporation 4(k)(7) Participation Agreement [NW 1996 G] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(k)(8) First Amendment to Participation Agreement [NW 1996 G] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the 13 13 Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(k)(9) Refunding Agreement [NW 1996 G] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 14 14 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NORTHWEST AIRLINES CORPORATION Dated: July 3, 1996 By: /s/ THOMAS SCHREIER, JR. ------------------------------ Thomas Schreier, Jr. Vice President, Finance and Assistant Treasurer 15 15 Exhibit Exhibit Index - ------- ------------- 4(a)(1) Trust Agreement [NW 1989 B] between the Owner Participant and The First National Bank of Boston, Owner Trustee 4(a)(2) First Amendment to Trust Agreement [NW 1989 B] between the Owner Participant, and First Security Bank of Utah, National Association, Owner Trustee 4(a)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1989 B] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(a)(4) Amended and Restated Lease Agreement [NW 1989 B] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(a)(5) Guarantee [NW 1989 B] from Northwest Airlines Corporation 4(a)(6) Participation Agreement [NW 1989 B] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participant, The First National Bank of Boston, Owner Trustee, and Meridian Trust Company, Equipment Trust Trustee 4(a)(7) First Amendment to Participation Agreement [NW 1989 B] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant and State Street Bank and Trust Company, National Association, Indenture Trustee 4(a)(8) Refunding Agreement [NW 1989 B] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent and State Street Bank and Trust Company, Indenture Trustee 16 16 4(b)(1) Trust Agreement [NW 1990 A] between the Owner Participant and The First National Bank of Boston, Owner Trustee 4(b)(2) First Amendment to Trust Agreement [NW 1990 A] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(b)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1990 A] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(b)(4) Lease Agreement [NW 1990 A] between The First National Bank of Boston, Lessor, and Northwest Airlines, Inc., Lessee 4(b)(5) First Amendment to Lease Agreement [NW 1990 A] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(b)(6) Guarantee [NW 1990 A] from Northwest Airlines Corporation 4(b)(7) Participation Agreement [NW 1990 A] among Northwest Airlines, Inc., Lessee, the Owner Participants Named Therein, the Loan Participant, The First National Bank of Boston, Owner Trustee, and The Connecticut Bank and Trust Company, National Association, Indenture Trustee 4(b)(8) First Amendment to Participation Agreement [NW 1990 A] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(b)(9) Refunding Agreement [NW 1990 A] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National 17 17 Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(c)(1) Trust Agreement [NW 1995 A] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(c)(2) Amended and Restated Trust Indenture and Security Agreement [NW 1995 A] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(c)(3) Lease Agreement [NW 1995 A] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(c)(4) First Amendment to Lease Agreement [NW 1995 A] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(c)(5) Guarantee [NW 1995 A] from Northwest Airlines Corporation 4(c)(6) Participation Agreement [NW 1995 A] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(c)(7) First Amendment to Participation Agreement [NW 1995 A] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(c)(8) Refunding Agreement [NW 1995 A] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National 18 18 Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(d)(1) Trust Agreement [NW 1995 B] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(d)(2) Amended and Restated Trust Indenture and Security Agreement [NW 1995 B] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(d)(3) Lease Agreement [NW 1995 B] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(d)(4) First Amendment to Lease Agreement [NW 1995 B] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(d)(5) Guarantee [NW 1995 B] from Northwest Airlines Corporation 4(d)(6) Participation Agreement [NW 1995 B] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(d)(7) First Amendment to Participation Agreement [NW 1995 B] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(d)(8) Refunding Agreement [NW 1995 B] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National 19 19 Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(e)(1) Trust Agreement [NW 1996 A] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(e)(2) Amended and Restated Trust Indenture and Security Agreement [NW 1996 A] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(e)(3) Lease Agreement [NW 1996 A] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(e)(4) First Amendment to Lease Agreement [NW 1996 A] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(e)(5) Guarantee [NW 1996 A] from Northwest Airlines Corporation 4(e)(6) Participation Agreement [NW 1996 A] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(e)(7) First Amendment to Participation Agreement [NW 1996 A] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(e)(8) Refunding Agreement [NW 1996 A] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National 20 20 Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(f)(1) Trust Agreement [NW 1996 B] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(f)(2) Amended and Restated Trust Indenture and Security Agreement [NW 1996 B] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(f)(3) Lease Agreement [NW 1996 B] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(f)(4) First Amendment to Lease Agreement [NW 1996 B] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(f)(5) Guarantee [NW 1996 B] from Northwest Airlines Corporation 4(f)(6) Participation Agreement [NW 1996 B] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(f)(7) First Amendment to Participation Agreement [NW 1996 B] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(f)(8) Refunding Agreement [NW 1996 B] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National 21 21 Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(g)(1) Trust Agreement [NW 1996 C] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(g)(2) First Amendment to Trust Agreement [NW 1996 C] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(g)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1996 C] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(g)(4) Lease Agreement [NW 1996 C] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(g)(5) First Amendment to Lease Agreement [NW 1996 C] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(g)(6) Guarantee [NW 1996 C] from Northwest Airlines Corporation 4(g)(7) Participation Agreement [NW 1996 C] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(g)(8) First Amendment to Participation Agreement [NW 1996 C] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(g)(9) Refunding Agreement [NW 1996 C] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through 22 22 Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(h)(1) Trust Agreement [NW 1996 D] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(h)(2) First Amendment to Trust Agreement [NW 1996 D] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(h)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1996 D] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(h)(4) Lease Agreement [NW 1996 D] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(h)(5) First Amendment to Lease Agreement [NW 1996 D] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(h)(6) Guarantee [NW 1996 D] from Northwest Airlines Corporation 4(h)(7) Participation Agreement [NW 1996 D] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(h)(8) First Amendment to Participation Agreement [NW 1996 D] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(h)(9) Refunding Agreement [NW 1996 D] among Northwest Airlines, Inc., Lessee, Northwest Airlines 23 23 Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(i)(1) Trust Agreement [NW 1996 E] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(i)(2) First Amendment to Trust Agreement [NW 1996 E] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(i)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1996 E] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(i)(4) Lease Agreement [NW 1996 E] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(i)(5) First Amendment to Lease Agreement [NW 1996 E] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(i)(6) Guarantee [NW 1996 E] from Northwest Airlines Corporation 4(i)(7) Participation Agreement [NW 1996 E] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(i)(8) First Amendment to Participation Agreement [NW 1996 E] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 24 24 4(i)(9) Refunding Agreement [NW 1996 E] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(j)(1) Trust Agreement [NW 1996 F] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(j)(2) First Amendment to Trust Agreement [NW 1996 F] between the Owner Participant, and First Security Bank of Utah, National Association, Owner Trustee 4(j)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1996 F] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(j)(4) Lease Agreement [NW 1996 F] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(j)(5) First Amendment to Lease Agreement [NW 1996 F] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(j)(6) Guarantee [NW 1996 F] from Northwest Airlines Corporation 4(j)(7) Participation Agreement [NW 1996 F] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(j)(8) First Amendment to Participation Agreement [NW 1996 F] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, 25 25 Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(j)(9) Refunding Agreement [NW 1996 F] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(k)(1) Trust Agreement [NW 1996 G] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(k)(2) First Amendment to Trust Agreement [NW 1996 G] between the Owner Participant and First Security Bank of Utah, National Association, Owner Trustee 4(k)(3) Amended and Restated Trust Indenture and Security Agreement [NW 1996 G] between First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(k)(4) Lease Agreement [NW 1996 G] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(k)(5) First Amendment to Lease Agreement [NW 1996 G] between First Security Bank of Utah, National Association, Lessor, and Northwest Airlines, Inc., Lessee 4(k)(6) Guarantee [NW 1996 G] from Northwest Airlines Corporation 4(k)(7) Participation Agreement [NW 1996 G] among Northwest Airlines, Inc., Lessee, the Owner Participant, the Loan Participants Named Therein, Loan Participants, First Security Bank of Utah, National Association, Owner Trustee, and State Street Bank and Trust Company, Indenture Trustee 4(k)(8) First Amendment to Participation Agreement [NW 1996 G] among Northwest Airlines, Inc., Lessee, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the 26 26 Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee 4(k)(9) Refunding Agreement [NW 1996 G] among Northwest Airlines, Inc., Lessee, Northwest Airlines Corporation, Guarantor, First Security Bank of Utah, National Association, Owner Trustee, State Street Bank and Trust Company, Pass Through Trustee under each of the Pass Through Trust Agreements, the Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, Subordination Agent, and State Street Bank and Trust Company, Indenture Trustee EX-4.A1 2 TRUST AGREEMENT-1989 B 1 TRUST AGREEMENT [NW 1989 B] This TRUST AGREEMENT [NW 1989 B] dated as of March 15, 1989 between [__________________], a [_____________] corporation (the "Original owner Participant"), and The First National Bank of Boston, a national banking association (in its individual capacity, "The First National Bank of Boston") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "Owner Trustee"); W I T N E S S E T H: ARTICLE I DEFINITIONS AND TERMS SECTION 1.1. Certain Definitions. Unless the context shall otherwise require, the capitalized terms used herein shall have the respective meanings assigned in Annex A to this Trust Agreement. ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS; DECLARATION OF TRUST SECTION 2.1. Authority to Execute Documents. The Original Owner Participant hereby authorizes and directs the Owner Trustee to execute and deliver the Operative Documents and any other agreements, instruments or documents to which the Owner Trustee is a party in the respective forms thereof in which delivered from time to time by the Owner Participant to the Owner Trustee for execution and delivery and, subject to the terms hereof, to exercise its rights and perform its duties under said Operative Documents in accordance with the terms thereof. SECTION 2.2. Declaration of Trust. The Owner Trustee hereby declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the Owner Participants, subject, however, to the provisions of and the Lien created by the Equipment Trust Agreement and to the provisions of the Lease and the Participation Agreement. ARTICLE III PURCHASE OF AIRCRAFT; ISSUANCE OF CERTIFICATES SECTION 3.1. Purchase of Aircraft. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner 2 Participants that it will, on the Delivery Date, subject to due compliance with the terms of Section 3.2 hereof: (a) purchase the Aircraft pursuant to the Participation Agreement and the Bill of Sale; (b) accept from Lessee the delivery of the Bill of Sale and the FAA Bill of Sale; (c) execute and deliver a Lease Supplement covering the Aircraft; (d) execute and deliver a Trust Supplement covering the Aircraft; (e) execute and deliver the Guaranties of the Certificates as provided in Section 2.11 of the Equipment Trust Agreement; and (f) execute and deliver the financing statements referred to in Section 4(a)(vi) of the Participation Agreement; and (g) effect the registration of the Aircraft in the name of the Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of Sale; (ii) an application for registration of the Aircraft in the name of the Owner Trustee (including without limitation, an affidavit from the Owner Trustee in compliance with the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement. SECTION 3.2. Conditions Precedent. The right and obligation of the Owner Trustee to take the action required by Section 3.1 hereof with respect to the Aircraft shall be subject to the following conditions precedent: (a) the Original Owner Participant shall have made the full amount of the Owner Participant's Commitment set forth in Schedule I of the Participation Agreement available to the Owner Trustee, in immediately available funds, in accordance with Section 1(a)(ii) of the Participation Agreement; and (b) the terms and conditions of Section 4(a) of the Participation Agreement, insofar as they relate to the Aircraft, shall have been complied with in a manner satisfactory to the original Owner Participant and the Owner Trustee. SECTION 3.3. Authorization in Respect of Assumption of the Guaranties. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, take the actions specified to be taken by the Owner Trustee in Section -2- 3 8(x) of the Participation Agreement upon Lessee's assuming the Guaranties in accordance with the provisions of such Section 8(x). SECTION 3.4. Performance by Owner Participant. The Owner Participant shall furnish or shall cause to be furnished to the Owner Trustee all such affidavits and certificates respecting the citizenship or status of the Owner Participant as the Owner Trustee may require in order to discharge its duties under the Operative Documents, including without limitation, the FAA reporting requirements described in Section 8(h) of the Participation Agreement. ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE SECTION 4.1. Distribution of Payments. (a) Payments to Equipment Trust Trustee. Until the Equipment Trust Agreement shall have been discharged pursuant to Section 10.1 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Equipment Trust Trustee (and if any of the same are received by the Owner Trustee shall upon receipt be paid over to the Equipment Trust Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with the provisions of Article 3 of the Equipment Trust Agreement. (b) Payments to Owner Trustee; Other Parties. After the Equipment Trust Agreement shall have been discharged pursuant to Section 1.1 thereof, any payment of the type referred to in Section 4.1(a) hereof (other than Excluded Payments) received by the Owner Trustee, any payments received from the Equipment Trust Trustee other than as specified in Section 4.1(d) hereof and any other amount received as part of the Trust Estate and for the application or distribution of which no provision is made herein, shall be distributed forthwith upon receipt by the Owner Trustee in the following order of priority: first, so much of such payment as shall be required to reimburse the Owner Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof shall be retained by the Owner Trustee; second, so much of the remainder for which provision as to the application thereof is contained in the Lease or any of the other Operative Documents shall be applied and distributed in accordance with the terms of the Lease or such other Operative Document; and third, the balance, if any, shall be paid ratably to each Owner Participant in proportion to such Owner Participant's Ownership Interest. -3- 4 (c) Certain Distributions to Owner Participant. All amounts from time to time distributable by the Equipment Trust Trustee to the Owner Participants pursuant to the Equipment Trust Agreement shall, if paid to the Owner Trustee, be distributed by the Owner Trustee to each Owner Participant in proportion to such Owner Participant's Ownership Interest and in accordance with the provisions of Article 3 of the Equipment Trust Agreement. (d) Excluded Payments. Any Excluded Payments received by the Owner Trustee shall be paid by the Owner Trustee to the person to whom such Excluded Payments are payable under the provisions of the Participation Agreement, the Tax Indemnity Agreement or the Lease. SECTION 4.2. Method of Payments. The Owner Trustee shall make distributions or cause distributions to be made to each Owner Participant pursuant to this Article IV by transferring by wire transfer the amount to be distributed to such account or accounts of such Owner Participant as such Owner Participant may designate from time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner Trustee will, if so requested by such Owner Participant in writing, pay any or all amounts payable to such Owner Participant pursuant to this Article IV either (i) by crediting such amount or amounts to an account or accounts maintained by such Owner Participant with the Owner Trustee in its individual capacity in immediately available funds, (ii) by payment at the Trust Office of the Owner Trustee, in immediately available funds, or (iii) by mailing an official bank check or checks in such amount or amounts payable to such Owner Participant at. such address as such Owner Participant shall have designated in writing to the Owner Trustee. ARTICLE V DUTIES OF THE OWNER TRUSTEE SECTION 5.1. Notice of Event of Default. If the Owner Trustee shall have knowledge of an Event of Default or Event of Acceleration (or an event which with the passage of time or the giving of notice or both would constitute an Event of Default or an Event of Acceleration) the Owner Trustee shall give to each Owner Participant prompt telephonic or telex notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Event of Acceleration referred to in paragraph (c) of Section 8.1 of the Equipment Trust Agreement, such notice shall in no event be furnished later than ten days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Event of Acceleration referred to in paragraph (d) of Section 8.1 of the Equipment Trust Agreement, such notice shall in no event be furnished later than ten days -4- 5 after the Owner Trustee shall first have knowledge of such event. Subject to the terms of Section 5.3 hereof, the Owner Trustee shall take such action or shall refrain from taking such action, not inconsistent with the provisions of the Equipment Trust Agreement, with respect to such Event of Default, Event of Acceleration or other event as the Owner Trustee shall be directed in writing by a Majority in Interest of Owner Participants. If the Owner Trustee shall not have received instructions as above provided within 20 days after the mailing of such notice to the Owner Participants, the Owner Trustee until instructed otherwise in accordance with the preceding sentence may, but shall be under no duty to, take or refrain from taking such action with respect to such Event of Default, Event of Acceleration or other event, not inconsistent with the provisions of the Equipment Trust Agreement, as it shall deem advisable in the best interests of the Owner Participants. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by a responsible officer or responsible employee of the Corporate Trust Division of the Owner Trustee in his or her capacity as such, the Owner Trustee shall not be deemed to have knowledge of an Event of Default, Event of Acceleration or other event referred to in this Section 5.1 unless notified in writing by the Equipment Trust Trustee, one or more of the Owner Participants or Lessee. SECTION 5.2. Action Upon Instructions. Subject to the terms of Sections 5.1 and 5.3 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Owner Participants, the Owner Trustee will take such of the following actions, not inconsistent with the provisions of the Equipment Trust Agreement, as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder or under any of the Operative Documents to which the Owner Trustee is a party or in respect of all or any part of the Trust Estate, or take such other action, as shall be specified in such instructions (including entering into agreements referred to in clause (i) of the definition of "Subsequent Owner Participant"); (ii) take such action to preserve or protect the Trust Estate (including the discharge of Liens) as may be specified in such instructions; (iii) approve as satisfactory to it all matters required by the terms of the Lease or the other Operative Documents to be satisfactory to the Owner Trustee, it being understood that without written instructions of a Majority in Interest of Owner Participants, the Owner Trustee shall not approve any such matter as satisfactory to it; and (iv) subject to the rights of Lessee under the Operative Documents, after the expiration or earlier termination of the Lease, convey all of the Owner Trustee's right, title and interest in and to the Aircraft for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or retain, lease or otherwise dispose of, or from time to time take such other action with respect to, the Aircraft on such terms as shall be designated in such instructions. -5- 6 SECTION 5.3. Indemnification. The Owner Trustee shall not be required to take any action under Section 5.1 or 5.2 hereof unless the Owner Trustee shall have been indemnified by the Owner Participants, in manner and form satisfactory to the Owner Trustee, against any liability, cost or expense (including reasonable counsel fees and disbursements) which may be incurred in connection therewith; and, if a Majority in Interest of Owner Participants shall have directed the Owner Trustee to take any such action or refrain from taking any action, each Owner Participant agrees to furnish such indemnity as shall be required (severally and ratably according to their respective Ownership Interests) and, in addition, to the extent not otherwise paid pursuant to the provisions of the Lease or of the Participation Agreement, to pay (severally and ratably according to their respective Ownership Interests) the reasonable compensation of the Owner Trustee for the services performed or to be performed by it pursuant to such direction and any fees and disbursements of counsel or agents employed by the Owner Trustee in connection therewith. The Owner Trustee shall not be required to take any action under Section 5.1 or 5.2 hereof if the Owner Trustee shall reasonably determine, or shall have been advised by counsel, that such action is contrary to the terms of any of the Operative Documents to which the Owner Trustee is a party, or is otherwise contrary to law. SECTION 5.4. No Duties Except as Specified in Trust Agreement or Instructions. The Owner Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with any of the Operative Documents to which the Owner Trustee is a party, except as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, or (to the extent not inconsistent with the provisions of the Equipment Trust Agreement) as expressly provided by the terms hereof or in written instructions from a Majority in Interest of Owner Participants received pursuant to the terms of Section 5.1 or 5.2, and no implied duties or obligations shall be read into this Trust Agreement against the Owner Trustee. The First National Bank of Boston agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under Section 7.1 hereof) promptly take such action as may be necessary to duly discharge and satisfy in full all Lessor Liens which it is required to discharge pursuant to Section 8(h) of the Participation Agreement and otherwise comply with the terms of said Section binding on it. SECTION 5.5. Satisfaction of Conditions Precedent. Anything herein to the contrary notwithstanding, the Owner Trustee shall comply with the provisions of Section 3.1 hereof upon the satisfaction, to the satisfaction of special counsel for the Owner Trustee, of all the applicable conditions precedent -6- 7 specified in Section 3.2 hereof and in Section 4(a) of the Participation Agreement. SECTION 5.6. No Action Except Under Specified Documents or Instructions. The Owner Trustee agrees that it will not manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate except (i) as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, (ii) as expressly provided by the terms hereof, or (iii) as expressly provided in written instructions from a Majority in Interest of Owner Participants pursuant to Section 5.1 or 5.2 hereof. ARTICLE VI THE OWNER TRUSTEE SECTION 6.1. Acceptance of Trusts and Duties. The First National Bank of Boston accepts the trusts hereby created and agrees to perform the same but only upon the terms hereof applicable to it. The Owner Trustee also agrees to receive and disburse all monies received by it constituting part of the Trust Estate upon the terms hereof. The First National Bank of Boston shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence, (b) for performance of the terms of the last sentence of Section 5.4 hereof, (c) for its or the Owner Trustee's failure to use ordinary care to disburse funds, (d) for liabilities that may result from the inaccuracy of any representation or warranty of it (or from the failure by it to perform any covenant) in Section 6.3 hereof, in Section 2.10 of the Equipment Trust Agreement, in Section 4 of the Lease or in Section 8(c) and 8(d) of the Participation Agreement and (e) for Taxes on, based on or measured by fees, commissions or compensation received by the Owner Trustee for acting as trustee in connection with any of the transactions contemplated by the Operative Documents. SECTION 6.2. Absence of Certain Duties. Except in accordance with written instructions furnished pursuant to Section 5.2 hereof and except as provided in, and without limiting the generality of, Section 5.4 hereof and the last sentence of Section 9.1(b) hereof, neither the Owner Trustee nor The First National Bank of Boston shall have any duty (i) to see to any recording or filing of any Operative Document or of any supplement to any thereof or to see to the Maintenance of any such recording or filing or any other filing of reports with the Federal Aviation Administration or other governmental agencies, except that the Owner Trustee shall, to the extent that information for that purpose is supplied by Lessee pursuant to any of the Operative Documents, complete and timely submit (and furnish each Owner Participant with a copy of) any and all reports relating to the Aircraft which may from time to time be required by the Federal Aviation Administration or any government -7- 8 or governmental authority having jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, other than to forward to the Owner Participant copies of all reports and other written information which the Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against any part of the Estate or the Trust Estate, except as provided in Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and records with respect to the Aircraft at any time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the Equipment Trust Trustee and each of the Owner Participants, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease or any other Operative Document. SECTION 6.3. No Representations or Warranties as to Certain Matters. NEITHER THE OWNER TRUSTEE NOR THE FIRST NATIONAL BANK OF BOSTON MAKES OR SHALL BE DEEMED TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF TEE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that The First National Bank of Boston in its individual capacity represents and warrants that on the Delivery Date the Owner Trustee shall have received whatever title was conveyed to it by Lessee and that the Aircraft shall during the Lease Term be free of Lessor Liens attributable to it, or (b) any representation or warranty as to the validity, legality or enforceability of this Trust Agreement or any Operative Document to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof except to the extent that any such statement is expressly made herein or therein as a representation by The First National Bank of Boston in its individual capacity or by the Owner Trustee and except that The First National Bank of Boston in its individual capacity hereby represents and warrants that this Trust Agreement has been, and (assuming due authorization, execution and delivery by the Original Owner Participant of this Trust Agreement) the Operative Documents to which it or the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by it or the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of itself or the Owner Trustee, as the case may be. SECTION 6.4. No Segregation of Monies Required; No Interest. Except as otherwise provided herein or in any of the -8- 9 Operative Documents, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law, and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. SECTION 6.5. Reliance Upon Certificates, Counsel and Agents. The Owner Trustee shall incur no liability to anyone in acting in reliance upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Unless other evidence in respect thereof is specifically prescribed herein, any request, direction, order or demand of the Owner Participants or Lessee mentioned herein or in any of the Operative Documents to which the Owner Trustee is a party shall be sufficiently evidenced by written instruments signed by a person purporting to be the Chairman of the Board, the President or any Vice President or a managing director and in the name of any such Owner Participant or Lessee, as the case may be. The Owner Trustee may accept a copy of a resolution of the Board of Directors or Executive Committee of Lessee, certified by the Secretary of Lessee as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or Committee and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Owner Trustee may for all purposes hereof rely on a certificate signed by a person purporting to be the Chairman of the Board, the President or any Vice President or a managing director of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. In the administration of trusts hereunder, the Owner Trustee may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may, at the expense of the Trust Estate, consult with counsel, accountants and other skilled persons to be selected and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such agent, attorney, counsel, accountant or other skilled person appointed by it with due care hereunder. SECTION 6.6. Not Acting in Individual Capacity. In acting hereunder, the Owner Trustee acts solely as trustee and not in its individual capacity except as otherwise expressly provided herein; and, subject to the terms of the Participation Agreement and the Equipment Trust Agreement, all persons, other than the Owner Participant, as provided herein, having any claim against the Owner Trustee by reason of the transactions -9- 10 contemplated hereby shall look only to the Trust Estate for payment or satisfaction thereof. SECTION 6.7. Fees; Compensation. Except as provided in Section 5.3 or 7.1 hereof, the Owner Trustee agrees that it shall have no right against the Owner Participants or (subject to the provisions of the Equipment Trust Agreement) the Trust Estate for any fee as compensation for its services hereunder; provided, however, that the Owner Trustee shall have a lien upon the Trust Estate (subject, however, to the Lien of the Equipment Trust Agreement) for any such fee not paid by Lessee as contemplated by the last paragraph of Section 7(c) of the Participation Agreement. SECTION 6.8. Tax Returns. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all moneys under this Trust Agreement or any agreement contemplated hereby. The Owner Participants shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Owner Participants. The Owner Trustee shall be responsible for causing to be prepared, at the request of the Owner Participant, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. Each Owner Participant, upon request, will furnish the Owner Trustee with all such information as may be reasonably required from any such Owner Participant in connection with the preparation of such income tax returns. ARTICLE VII INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANTS SECTION 7.1. Owner Participants to Indemnify Owner Trustee. The Owner Participants hereby severally agree, each in proportion to its Ownership Interest, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and hereby indemnify, protect, save and keep harmless The First National Bank of Boston in its individual capacity and its successors, assigns, legal representatives, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by The First National Bank of Boston in its individual capacity on or measured by any compensation received by The First National Bank of Boston in its individual capacity for its services hereunder), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and including without limitation any liability of an Owner, any strict liability and any liability without fault) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against The First National Bank of Boston in its individual capacity (whether or not also indemnified against by -10- 11 Lessee under the Lease or under the Participation Agreement or also indemnified against by any other person) in any way relating to or arising out of this Trust Agreement or any of the Operative Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, Ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of the Owner Trustee or The First National Bank of Boston in its individual capacity hereunder, except (a) in the case of willful misconduct or gross negligence on the part of the Owner Trustee or The First National Bank of Boston in its individual capacity in the performance or non-performance of its duties hereunder or (b) those resulting from the inaccuracy of any representation or warranty of the Owner Trustee or The First National Bank of Boston in its individual capacity (or from the failure of the Owner Trustee or The First National Bank of Boston in its individual capacity to perform any covenant) in Section 6.3 hereof, in Section 2.10 of the Equipment Trust Agreement or, with respect to representations or warranties of The First National Bank of Boston in its individual capacity only, in Section 4 of the Lease, in Section 8(c) or Section 8(d) of the Participation Agreement or in any of the other Operative Documents or (c) as may result from a breach by the Owner Trustee or The First National Bank of Boston in its individual capacity of their respective covenants in the last sentence of Section 5.4 hereof or (d) in the case of failure to use ordinary care on the part of the Owner Trustee or The First National Bank of Boston in its individual capacity in the disbursement of funds. The indemnities contained in this Section 7.1 extend to The First National Bank of Boston only in its individual capacity and shall not be construed as indemnities of the Estate or the Trust Estate (except to the extent, if any, that The First National Bank of Boston in its individual capacity has been reimbursed by the Estate or the Trust Estate for amounts covered by the indemnities contained in this Section 7.1). The indemnities contained in this Section 7.1 shall survive the termination of this Trust Agreement. In addition, if necessary, The First National Bank of Boston in its individual capacity shall be entitled to indemnification from the Trust Estate, subject to the Lien of the Equipment Trust Agreement, for any liability, obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.1 to the extent not reimbursed by Lessee, the Owner Participants or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same The First National Bank of Boston in its individual capacity shall have a Lien on the Trust Estate, subject to the Lien of the Equipment Trust Agreement, which shall be prior to any interest therein of the Owner Participants. The payor of any indemnity under this -11- 12 Article VII shall be subrogated to any right of the person indemnified in respect of the matter as to which such indemnity was paid. ARTICLE VIII TRANSFER OF AN OWNER PARTICIPANT'S INTEREST SECTION 8.1. Transfer of Interests. All provisions of Section 8(n) of the Participation Agreement shall (with the same force and effect as if set forth in full, mutatis mutandis, in this Section 8.1) be applicable to any assignment, conveyance or other transfer by any Owner Participant of any of its right, title or interest in and to this Trust Agreement or any of the operative Documents to which the Owner Trustee is a party. ARTICLE IX SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES SECTION 9.1. Resignation of Owner Trustee; Appointment of Successor. (a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the Participation Agreement and (ii) may resign at any time without cause by giving at least 60 days' prior written notice to each Owner Participant, the Equipment Trust Trustee and Lessee, such resignation to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.1(b) hereof. In addition, a Majority in Interest of Owner Participants may at any time remove the Owner Trustee without cause by a notice in writing delivered to the Owner Trustee, all other Owner Participants, the Equipment Trust Trustee and Lessee, such removal to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.1(b) hereof. In the case of the resignation or removal of the Owner Trustee, a Majority in Interest of Owner Participants may appoint a successor Owner Trustee by an instrument signed by such Owner Participants. If a successor Owner Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Owner Trustee, any Owner Participant, Lessee or the Equipment Trust Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor shall have been appointed as above provided. Any successor Owner Trustee so appointed by such court shall immediately and without further act be superseded by any successor Owner Trustee appointed as above provided. (b) Execution and Delivery of Documents, etc. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee an instrument accepting such appointment, and thereupon such successor Owner Trustee, -12- 13 without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts hereunder with like effect as if originally named the Owner Trustee herein; but nevertheless, upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to such successor Owner Trustee all monies or other property then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will execute such documents as are provided to it by such successor Owner Trustee and will take such further actions as are requested of it by such successor Owner Trustee as are reasonably required to cause registration of the Aircraft included in the Trust Estate to be transferred upon the records of the Federal Aviation Administration, or other governmental authority having jurisdiction, into the name of the successor Owner Trustee. (c) Qualification. Any successor Owner Trustee, however appointed, shall be a "citizen of the United States" within the meaning of Section 101(16) of the Federal Aviation Act and shall also be a bank or trust company organized under the laws of the United States or any state thereof having a combined capital and surplus of at least $50,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. (d) Merger, etc. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee may be transferred, shall, subject to the terms of Section 9.1(c) hereof, be the Owner Trustee hereunder without further act. SECTION 9.2. Co-Trustees and Separate Trustees. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of the Owner Participants or the Owner Trustee, or the Owner Trustee shall have been directed to do so by a Majority in Interest of Owner Participants, the Owner Trustee and each Owner Participant shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a "citizen of the United States" as defined in Section 101(16) of the Federal Aviation -13- 14 Act) approved by the Owner Trustee and a Majority in Interest of Owner Participants, either to act as co-trustee, jointly with the Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as an "additional trustee"), and to vest in such persons, in such capacity, such title to the Trust Estate or any part thereof, and such rights or duties as may be necessary or desirable, all for such period and under such terms and conditions as are satisfactory to the Owner Trustee and the Owner Participant. In case any co-trustee or separate trustee shall die, become incapable of acting, resign or be removed, the title to the Trust Estate and all rights and duties of such co-trustee or separate trustee shall, so far as permitted by law, vest in and be exercised by the Owner Trustee, without the appointment of a successor to such co-trustee or separate trustee. In the event the Owner Participants shall not have joined in the execution of such agreements supplemental hereto within ten days after the receipt of a written request from the Owner Trustee so to do, or in case a Lease Event of Default or Event of Acceleration shall occur and be continuing, the Owner Trustee may act under the foregoing provisions of this Section 9.2 without the concurrence of the Owner Participants; and the Owner Participants hereby appoint the Owner Trustee their agent and attorney-in-fact to act for them under the foregoing provisions of this Section 9.2 in either of such contingencies. Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except -14- 15 jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; (E) a Majority in Interest of Owner Participants, at any time, by an instrument in writing may remove any such additional trustee. In the event that the Owner Participants shall not have joined in the execution of any such instrument within ten days after the receipt of a written request from the Owner Trustee so to do, the Owner Trustee shall have the power to remove any such additional trustee without the concurrence of the Owner Participants; and the Owner Participants hereby appoint the Owner Trustee their agent and attorney-in-fact for them in such connection in such contingency; and (F) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, the Equipment Trust Agreement or affect the interests of the Equipment Trust Trustee or the Holders of the Certificates in the Estate. ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS SECTION 10.1. Supplements and Amendments. (a) Supplements and Amendments. This Trust Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Owner Trustee and a Majority in Interest of Owner Participants. Subject to Section 10.2 hereof and Section 10 of the Participation Agreement, the Owner Trustee will execute any amendment, supplement or other modification of this Trust Agreement or of any other Operative Document to which the Owner Trustee is a party which it is requested to execute by a Majority in Interest of Owner Participants, except that the Owner Trustee shall not execute any such amendment, supplement or other modification which, by the express provisions of any of the above documents, requires the consent of any other party unless such consent shall have been obtained; and provided that, without the prior written consent of each Owner Participant: (i) no such supplement, amendment or modification shall (A) modify any of the provisions of this Section 10.1, the definition of "Majority in Interest of Owner Participants" or Article IV hereof, (B) reduce, modify or amend any indemnities in favor of any Owner Participant as set forth in Section 7 of the Participation Agreement or in the Tax Indemnity Agreement, (C) reduce the amount or extend the time of payment of -15- 16 Basic Rent, Supplemental Rent, Termination Value or Stipulated Loss Value for the Aircraft as set forth in the Lease and (ii) no such supplement, amendment or modification shall require any Owner Participant to invest or advance funds or shall entail any additional personal liability or the surrender of any indemnification, claim or individual right on the part of any Owner Participant with respect to any agreement or obligation. (b) Delivery of Amendments and Supplements to Certain Parties. A signed copy of each amendment or supplement referred to in Section 10.1(a) hereof shall be delivered by the Owner Trustee to the Equipment Trust Trustee. (c) Limitation on Amendments. The provisions of Section 10.1 notwithstanding, the Owner Trustee shall not be required to execute any amendment which might result in the trusts created hereunder being terminated prior to the release of the Lien of the Equipment Trust Agreement on the Estate or prior to the payment in full of the principal of, premium (if any) and interest on the Certificates. SECTION 10.2. Discretion as to Execution of Documents. Prior to executing any document required to be executed by it pursuant to the terms of Section 10.1 hereof, the Owner Trustee shall be entitled to receive an opinion of its counsel to the effect that the execution of such document is authorized hereunder. If in the opinion of the Owner Trustee any such document adversely affects any right, duty, immunity or indemnity in favor of the Owner Trustee hereunder or under any other Operative Document to which the Owner Trustee is a party, the Owner Trustee may in its discretion decline to execute such document. SECTION 10.3. Absence of Requirements as to Form. It shall not be necessary for any written request furnished pursuant to Section 10.1 hereof to specify the particular form of the proposed documents to be executed pursuant to such Section, but it shall be sufficient if such request shall indicate the substance thereof. SECTION 10.4. Distribution of Documents. Promptly after the execution by the Owner Trustee of any document entered into pursuant to Section 10.1 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof to each Owner Participant, but the failure of the Owner Trustee to mail such conformed copy shall not impair or affect the validity of such document. SECTION 10.5. No Request Needed as to Lease Supplement and Trust Supplement. No written request pursuant to Section 10.1 hereof shall be required to enable the Owner Trustee to enter into the Lease Supplement covering the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.1 hereof and the -16- 17 Trust Supplement pursuant to the terms of the Equipment Trust Agreement and Section 3.1 hereof. ARTICLE XI MISCELLANEOUS SECTION 11.1. Termination of Trust Agreement. This Trust Agreement and the trusts created hereby shall be of no further force or effect upon the earlier of (a) both the final discharge of the Equipment Trust Agreement pursuant to Section 10.1 thereof and the sale or other final disposition by the Owner Trustee of all property constituting part of the Trust Estate and the final distribution by the Owner Trustee of all monies or other property or proceeds constituting part of the Trust Estate in accordance with Article IV hereof, provided that at such time Lessee shall have fully complied with all of the terms of the Lease and the Participation Agreement or (b) twenty-one years less one day after the death of the last survivor of all of the descendants of the grandparents of David Rockefeller living on the date of the earliest execution of this Trust Agreement by any party hereto (or, without limiting the generality of the foregoing, if legislation shall become effective providing for the ability or permitting the effective grant of such rights, privileges and options for a period in gross exceeding the period for which such rights, privileges and options are hereinabove stated to extend and be valid, then such rights, privileges or options shall not terminate as aforesaid but shall extend to and continue in effect, but only if such nontermination and extension shall then be valid under Applicable Law, until such time as the same shall, under Applicable Law, cease to be valid); otherwise this Trust Agreement and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 11.2. Owner Participants Have No Legal Title in Trust Estate. The Owner Participants shall not have legal title to any part of the Trust Estate. No transfer, by operation of law or otherwise, of any right, title and interest of the Owner Participant in and to the Trust Estate hereunder shall operate to terminate this Trust Agreement or the trusts hereunder or entitle any successors or transferees of the Owner Participants to an accounting or to the transfer of legal title to any part of the Trust Estate. SECTION 11.3. Assignment, Sale, etc. of Aircraft. Any assignment, sale, transfer or other conveyance of the Aircraft or an Engine or any Part thereof by the Owner Trustee made pursuant to the terms hereof or of the Lease or the Participation Agreement shall bind the Owner Participants and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Owner Participants in and to the Aircraft or any Engine or any Part thereof. No purchaser or other grantee shall be required to inquire as to the -17- 18 authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee SECTION 11.4. Trust Agreement for Benefit of Certain Parties Only. Except for the terms of Section 8(n) of the Participation Agreement incorporated in Article VIII hereof and except as otherwise provided in Article IX and Section 10.1 hereof, nothing herein, whether expressed or implied, shall be construed to give any person other than the Owner Trustee and the Owner Participants any legal or equitable right, remedy or claim under or in respect of this Trust Agreement; but this Trust Agreement shall be held to be for the sole and exclusive benefit of the Owner Trustee and the Owner Participants. SECTION 11.5. Notices; Consent to Jurisdiction. (a) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by prepaid Telex, TWX or telegram (with messenger delivery specified in the case of a telegram) , or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 11.5(a). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.5(a), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective Telex, TWX or telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Equipment Trust Trustee or the Owner Participant, to the respective addresses set forth below the signatures of such parties at the foot of the Participation 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 Holder, addressed to such Holder at its address set forth in the certificate register maintained pursuant to Section 2.4 of the Equipment Trust Agreement. (b) Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Trust Agreement, the Participation Agreement, 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 -18- 19 assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that the Participation Agreement, 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. SECTION 11.6. Severability. Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.7. Waivers, etc. No term or provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing entered into in compliance with the terms of Article X hereof; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. SECTION 11.8. Counterparts. This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.9. Binding Effect, etc. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participants, their successors and, to the extent permitted by Article VIII hereof, their assigns. Any request, notice, direction, consent, waiver or other instrument or action by an Owner Participant shall bind its successors and assigns. Any Owner Participant which shall cease to have any Ownership Interest shall thereupon cease to be a party hereto or an Owner Participant for any reason and shall have no further obligations hereunder. SECTION 11.10. Headings; References. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11. Governing Law. This Trust 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 Trust Agreement has been delivered in the State of New York. -19- 20 TRUST AGREEMENT NW 1989 B SIGNATURE PAGE IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [_______________________] By:_______________________ Title: THE FIRST NATIONAL BANK OF BOSTON By:_______________________________ Title: By:_______________________________ Title: -20- 21 ANNEX A ------- NORTHWEST AIRLINES, INC. LEASE OF ONE BOEING 747-451 AIRCRAFT DEFINITIONS RELATING TO THE PARTICIPATION AGREEMENT, LEASE AGREEMENT, TRUST AGREEMENT, PURCHASE AGREEMENT ASSIGNMENT, EQUIPMENT TRUST AGREEMENT AND TAX INDEMNITY AGREEMENT, DATED AS OF MARCH 15, 1989 RELATING TO [NW 1989 B] The definitions stated herein shall apply equally to both the singular and plural forms of the terms defined. Reference herein to any Operative Document shall be deemed to refer to the document referring on the first or cover page thereof to [NW 1989 B]. "Actual Knowledge" shall mean, (i) as it applies to the Owner Trustee or Equipment Trust 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 Equipment Trust Trustee, as the case may be, and (ii) as it applies to the Owner Participant, actual knowledge of a Senior vice president or other higher officer of the Owner Participant; provided that each of the Owner Trustee, the Equipment Trust Trustee and the Owner Participant shall be deemed to have "Actual Knowledge" of any matter as to which it has been given notice by any of Lessee, the Owner Participant, any Holder, the Owner Trustee or the Equipment Trust Trustee, such notice having been given in accordance with Section 13(b) of the Participation Agreement. "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" when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the Ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means any Paying Agent or Registrar. "Agreement," "this Agreement," "herein," "hereby," or other like terms shall mean the Operative Document in which such term is used. "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 22 Lease) together with the four Engines initially leased under the Lease (or any engine substituted for any of such Engines pursuant to the terms of the Lease), whether or not any of such initial or substituted Engines may from time to time be installed on such initial or substituted Airframe or may be installed on any other airframe or on any other aircraft. "Airframe" means: (i) the Boeing 747-451 aircraft (except Engines or engines from time to time installed thereon) specified in the initial Lease Supplement, manufactured by the Manufacturer and transferred by Lessee to Lessor pursuant to the Bill of Sale, 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 Agreement; 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 Agreement 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. "Applicable Law" means all applicable laws, treaties, judgments, decrees, injunctions, writs and orders of any court, governmental agency or authority and rules, regulations, orders, directives, licenses and permits of any governmental body, instrumentality, agency or authority. "Applicable Rate" means, as of any date, the weighted average of the interest rates borne by the Certificates then Outstanding. "Appraiser" means a Person appointed by the Company engaged in the business of making appraisals and familiar with aviation equipment or a Person employed by the Company and sufficiently familiar with aviation equipment to make determinations as to the value thereof. "Assumed Interest Rate" has the meaning set forth in Section 3(c) of the Lease Agreement. "Base Rate" means the rate of interest announced from time to time by Chase Manhattan Bank N.A. at its principal office in New York, New York as its "base rate" or its equivalent successor rate if the base rate is no longer used. A-2 23 "Basic Rent" means, for the Basic Term, the rent payable for the Aircraft pursuant to Section 3(c) of the Lease Agreement as adjusted as provided in Section 3(d) of the Lease Agreement and, for. any Renewal Term, Basic Rent determined pursuant to Section 19 of the Lease Agreement. "Basic Term" means the term for which the Aircraft is leased under the Lease pursuant to Section 3(a) of the Lease Agreement commencing on the Commencement Date and ending on September 15, 2014. "Bill of Sale" means a full warranty bill 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 Bill of Sale and warranty shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good and marketable title to the Airframe and each Engine described in such Bill of Sale, free and clear of all liens, encumbrances and rights of others except Permitted Liens. "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; Minneapolis, Minnesota; or the city in which the Corporate Trust Office of the Equipment Trust Trustee (as long as the Equipment Trust Agreement has not been discharged) is located. "Certificate" means any certificate of any Series issued by the Equipment Trust Trustee under the Equipment Trust Agreement, substantially in the form annexed as an exhibit thereto, as such form may be varied pursuant to the terms thereof, and includes any certificates issued thereunder in exchange for or replacement of any thereof or upon any redemption of a series of certificates as provided in the Equipment Trust Agreement. "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government pursuant to Executive Order No. 11490, as amended, or any substantially similar program. "Code" means the Internal Revenue Code of 1986, as amended through the Delivery Date. "Commencement Date" means September 15, 1989. "Company" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns, and when used in the Equipment Trust Agreement, shall also include any other "obligor", within the meaning of the Trust Indenture Act. A-3 24 "Company Request" means a request by the Company setting forth the subject matter of the request accompanied by an Officer's Certificate and an opinion of Counsel if required by Section 14.04 of the Equipment Trust Agreement. "Consent and Agreement" means the Consent and Agreement [NW 1989 B], dated as of March 15, 1989, executed by the Manufacturer, as the same may be amended, modified or supplemented from time to time in accordance with the applicable provisions thereof. "Co-Registrar" has the meaning given in Section 2.4 of the Equipment Trust Agreement. "Corporate Trust Office" shall mean the principal office of the Equipment Trust Trustee located at 35 North Sixth Street, Reading, Pennsylvania 19601, Attention: Corporate Trust Department, or such other office at which the Equipment Trust Trustee's corporate trust business shall be administered which the Equipment Trust Trustee shall have specified by notice in writing to Lessee, the Owner Trustee and each Holder. "Debt Rate" has the meaning given in Exhibit A to the Equipment Trust Agreement. "Defaulted Interest" has the meaning given in Section 2.9 of the Equipment Trust Agreement. "Delivery Date" means the date of the Lease Supplement for the Aircraft, which date shall be the date the Aircraft is leased by Lessor to Lessee and accepted by Lessee. "Deposited Cash" means the aggregate of (i) cash deposited with the Equipment Trust Trustee as provided by Section 3.1 of the Equipment Trust Agreement, (ii) all sums restored to the account containing the Deposited Cash pursuant to Section 7.1 of the Equipment Trust Agreement and on deposit with the Equipment Trust Trustee and (iii) when required or indicated by the context, any Permitted Investment purchased by the use of such cash pursuant to Section 9.4(b) of the Equipment Trust Agreement. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of four Pratt & Whitney Model PW4056 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 any 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 A-4 25 thereto shall remain vested in Lessor in accordance with the terms of Section 8 of the Lease Agreement 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 under the Lease. The term "Engines" means, as of any date of determination, all Engines then leased under the Lease. "Equipment Trust Agreement" means the Equipment Trust Agreement [NW 1989 B], dated as of March 15, 1989 among the Owner Trustee, Lessee and the Equipment Trust Trustee, as the same may be modified or supplemented from time to time. The term "Equipment Trust Agreement" shall also include each Trust Supplement entered into pursuant to the terms of the Equipment Trust Agreement. "Equipment Trust Trustee" means the Equipment Trust Trustee under the Equipment Trust Agreement, and any entity which may from time to time be acting as Equipment Trust Trustee under the Equipment Trust Agreement. "Estate" has the meaning specified in Section 4.3 of the Equipment Trust Agreement, but excludes the Excluded Payments. "ETA Default" means any event which is or after notice or passage of time, or both, would be an Event of Acceleration. "ETA Lease Term" has the meaning specified in Section 5.2 of the Equipment Trust Agreement. "ETA Rent" has the meaning specified in Section 5.3 of the Equipment Trust Agreement. "Event of Acceleration" has the meaning specified in Section 8.1 of the Equipment Trust Agreement. "Event of Default" has the meaning specified in Section 14 of the Lease. "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 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 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 by any governmental or purported governmental authority (other than a requisition for A-5 26 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) shall have resulted in the loss of possession of such property by Lessee for a period in excess of 180 consecutive days or on the last day of the Term, whichever first occurs; (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, 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, if such prohibition is continuing, on the last day 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 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 an Engine treated as an Event of Loss pursuant to Section 7(b) of the Lease. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe. "Excess Amount" for the Commencement Date means an amount equal to the amount determined by multiplying Lessor's Cost by the percentage set forth in column 3 of Exhibit B of the Lease Agreement opposite the Commencement Date; provided, however, to the extent that the aggregate amount of interest due and payable on the Commencement Date on the Certificates for the period from the date of issuance of such Certificates to but excluding the Commencement Date is less than the aggregate amount of interest on the Certificates that would have been due and payable on the Commencement Date if such Certificates had borne interest at the Assumed Interest Rate for such period, such percentage shall be decreased to compensate for such differential. "Excluded Payments" shall mean (i) indemnity payments paid or payable by Lessee to or in respect of the Owner Participant, the Owner Trustee in its individual capacity or the Equipment Trust Trustee in its individual capacity, their respective Affiliates, successors and permitted assigns and their directors, officers, employees, servants and agents pursuant to Sections 7(b) and 7(c) 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 Equipment Trust Trustee in their respective individual capacities or by the Owner Participant, A-6 27 (iii) proceeds of insurance maintained with respect to the Aircraft by the Owner Participant (whether directly or through the Owner Trustee) or by any Affiliate of the Owner Participant and not required under Section 11 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 Equipment Trust Trustee pursuant to Section 7(c) of the Participation Agreement, (vi) provided that the Guaranties shall have been duly assumed by Lessee pursuant to Section 11.1(6) of the Equipment Trust Agreement, the amounts payable to the Owner Trustee pursuant to clauses 2(B)(Y) and 2(B)(Z) of Section 9(b) of the Lease or 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 Lessor and the Owner Participant in connection with such assumption, as applicable, and (vii) any right to enforce the payment of any amount described in clauses (i) through (vi) above. "Expenses" has the meaning given in section 7(c) of the Participation Agreement. "FAA Bill of Sale" means a bill 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 the Federal Aviation Act of 1958, as amended. "Federal Aviation Administration" and "FAA" mean the United States Federal Aviation Administration and any successor agency or agencies thereto. "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 1'Aviation Civile of the French Republic or the Luftfahrt Bundesamt of the Federal Republic of Germany. "Funding Loss Amount" means, for each Series BB Certificate, an amount equal to the net loss or additional expense which the Holder reasonably expects to sustain or incur as a direct result of the redemption of the Series BB Certificates on a date other than the last day of an Interest Period (as reasonably determined by the Holder and set forth in a certificate of the Holder which includes in reasonable detail the basis for the calculations of the amount being claimed). Such A-7 28 amount shall constitute a premium and shall be deemed such for all places in the Operative Documents which refer to a "premium" payable with respect to any Certificate. "Guaranties" means the guaranty of the Owner Trustee endorsed on each Certificate, contained in the form of the applicable exhibit to the Equipment Trust Agreement for each series of Certificates. "Holder," "Holder of a Certificate" or "Holders of Certificates" means a person in whose name a Certificate is registered on the Registrar's books as of any date of determination. "Holder's Commitment" has the meaning given in Section 1(a)(i) of the Participation Agreement. "Indemnified Person" has the meaning given in Section 7(c) of the Participation Agreement. "Indemnitee" has the meaning given in Section 7(b) of the Participation Agreement. "Independent" when used with respect to an engineer, Appraiser or other expert, means an engineer, Appraiser or other expert who (i) is in fact independent, (ii) does not have any direct financial interest, or any material, indirect financial interest in the Company or any Affiliate of the Company, and (iii) is not connected with the Company or any Affiliate of the Company as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions. "Independent Investment Banker" means an Independent investment banking institution of national standing appointed by the Company on behalf of the Owner Trustee; provided, that if the Equipment Trust Trustee shall not have received written notice of such an appointment at least 10 days prior to the Redemption Date or if an Event of Default shall have occurred and be continuing, "Independent Investment Banker" means such an institution appointed by the Equipment Trust Trustee. "Interest Payment Date" means each March 15 and September 15, commencing September 15, 1989, so long as any Certificate remains Outstanding. "Interest Period" has the meaning given in Exhibit A to the Equipment Trust Agreement. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions of the Lease. A-8 29 "Lease" or "Lease Agreement" means that certain Lease Agreement [NW 1989 B], dated as of March 15, 1989 and entered into by the Owner Trustee and Lessee as said Lease Agreement may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of the Trust Agreement. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Period" means each of the consecutive semiannual periods throughout the Basic Term and any Renewal Term and ending on a Lease Period Date, the first such period commencing on and including the Commencement Date. "Lease Period Date" means March 15, 1990 and each succeeding September 15 and March 15, to and including the last such date in the Term. "Lease Supplement" means a Lease Supplement, substantially in the form of Exhibit A of the Lease Agreement, 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 of the Lease Agreement. "Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns. "Lessor" means the Owner Trustee and its successors and permitted assigns. "Lessor Liens" means any Lien or disposition of title arising as a result of (i) claims against Lessor, The First National Bank of Boston, 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 The First National Bank of Boston, 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 The First National Bank of Boston, in its individual capacity, with respect to Taxes or Expenses against which Lessee is not required to indemnify the Owner Participant, Lessor or The First National Bank of Boston, 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 the Lease Agreement, the transfer pursuant to the Equipment Trust Agreement or a transfer of the Aircraft pursuant to Sections 9, 10 or 19 of the Lease Agreement or pursuant to the exercise of the remedies set forth in Section A-9 30 15 of the Lease Agreement; provided, however, that any Lien which is attributable solely to The First National Bank of Boston or the Owner Participant, as applicable, and would otherwise constitute a Lessor Lien under the Lease shall not constitute a Lessor Lien under the Lease so long as (1) the existence of such Lien poses no material risk of seizure of the Aircraft, (2) the existence of such Lien does not interfere in any way with the use or operation 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 Equipment Trust Agreement, (4) The First National Bank of Boston or the Owner Participant, as the case may be, is diligently contesting such Lien and (5) the existence of such Lien does not result in threatened or actual interruption in the payment of Rent assigned to the Equipment Trust Trustee for the benefit of the Holders of the Certificates. "Lessor's Cost" for the Aircraft means $125,000,000. "Lien" means any mortgage, pledge, lien, charge, claim, encumbrance, lease, sublease, sub-sublease or security interest. "Majority in Interest of Owner Participants" at any time means the Owner Participant or Owner Participants which then hold more than 50% of the Ownership Interests of all Owner Participants, except that if there shall then be two Owner Participants, "Majority in Interest of Owner Participants" shall mean both such Owner Participants. "Manufacturer" means The Boeing Company, a Delaware corporation. "Manufacturer's Bill of Sale" means the bills of sale for the Aircraft on AC Form 8050-2 or such other form as may be then approved by the Federal Aviation Administration for the Aircraft, one executed by the Manufacturer in favor of Boeing Sales Corporation, a subsidiary of the Manufacturer, and one executed by Boeing Sales Corporation in favor of Lessee. "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, Stipulated Loss Values and Termination Values as of the Delivery Date. "Net Present Value of Rents" means the net present value, as of the Commencement Date, of Basic Rent set forth in Exhibit B of the Lease Agreement, discounted at a rate per Lease Period equal to (a) 10.50% divided by (b) the number of Lease Periods per year. A-10 31 "Officer's Certificate" means a certificate signed by the Chairman of the Board, the President or any Vice President and by the Treasurer, Assistant Treasurer, the Secretary or an Assistant Secretary of the Person on whose behalf such certificate is delivered. "Operative Documents" and "Operative Document" means each of the Participation Agreement, the Lease, the Equipment Trust Agreement, the Trust Agreement, the Tax Indemnity Agreement, the Lease Supplement covering the Aircraft, the Trust Supplement covering the Aircraft, the Series BB Certificates, the Bill of Sale, the FAA Bill of Sale, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Owner Trustee's Bills of Sale, the Acceptance Certificate and the Parent Letter. "Opinion of Counsel" means a written opinion of legal counsel, who in the case of legal counsel for the Company may be (i) any attorney employed by the Company, (ii) Cadwalader, Wickersham & Taft or a successor firm, or (iii) other counsel designated by the Company and reasonably satisfactory to the Equipment Trust Trustee or, in the case of legal counsel for the Owner Trustee, may be (x) Csaplar & Bok or (y) other counsel designated by the Owner Trustee and reasonably satisfactory to the Equipment Trust Trustee. "Original Holder" means each institution listed and identified in Schedule I to the Participation Agreement as an Original Holder, and its successors and registered assigns of the Series BB Certificates. "Original Holder Liens" means Liens which arise from acts of or claims against any Original Holder not related to the transactions contemplated by the Operative Documents. "Original Owner Participant" means [_______________________], a [_______________] corporation. "Outstanding" when used with respect to Certificates means, as of the date of determination, all Certificates theretofore executed and delivered under this Agreement, with the exception of the following: (i) Certificates theretofore cancelled by the Equipment Trust Trustee or delivered to the Equipment Trust Trustee for cancellation pursuant to Section 2.8 of the Equipment Trust Agreement or otherwise; (ii) Certificates for whose payment or redemption money in the necessary amount has been theretofore deposited with the Equipment Trust Trustee in trust for the Holders; provided, that if such Certificates are to be redeemed, notice of such redemption has been duly given pursuant to the Equipment Trust Agreement or provision therefor A-11 32 satisfactory to the Equipment Trust Trustee has been made; and (iii) Certificates in exchange for or in lieu of which other Certificates have been executed and delivered pursuant to the Equipment Trust Agreement; provided, however, that in determining whether the Certificate Holders of the requisite principal amount of Certificates outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Certificates owned by or pledged to the Company or any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Equipment Trust Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Certificates which the Equipment Trust Trustee knows to be so owned or so pledged shall be disregarded. Certificates owned by the Company which have been pledged in good faith may be regarded as Outstanding if the Company establishes to the satisfaction of the Equipment Trust Trustee the pledgee's right to act with respect to the Certificates and that the pledgee is not the Company or a Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. "Overdue Rate" or "Past Due Rate" means (i) with respect to any amount which is or will be distributable to Holders pursuant to the terms of the Equipment Trust Agreement, the rate of interest per annum borne by the Certificates held by such Holders, and (ii) with respect to any other amount, a rate per annum equal to 1% over the Base Rate. "Owner Participant" means the corporation executing the Participation Agreement as the Owner Participant (as therein defined) and 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 8.1 of the Trust Agreement and Section 8 of the Participation Agreement. Owner Participant's Commitment" has the meaning given in Section i(a)(ii) of the Participation Agreement. "Owner Trustee" means the entity executing the Participation Agreement as Owner Trustee and any entity appointed as successor Owner Trustee pursuant to Section 9.1 of the Trust Agreement. "Owner Trustee's Bill of Sale" means a bill of sale for the Aircraft from the Owner Trustee to the Equipment Trust Trustee. A-12 33 "Owner Trustee's FAA Bill of Sale" means a bill 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 the Owner Trustee in favor of the Equipment Trust Trustee and dated the Delivery Date. "Owner Trustee's Bills of Sale" means, collectively, the Owner Trustee's Bill of Sale and the Owner Trustee's FAA Bill of Sale for the Aircraft. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by the Trust Agreement, which percentage shall be: (i) in the case of the Original Owner Participant (A) so long as it shall be the sole Owner Participant, 100% and (B) if it shall no longer be the sole Owner Participant, the percentage of such undivided interest in the Trust Estate which it shall not have transferred to any Subsequent Owner Participant; and (ii) in the case of any Subsequent Owner Participant, the percentage of such undivided interest in the Trust Estate specified in the agreement pursuant to which such Subsequent Owner Participant becomes an Owner Participant as provided in the definition of "subsequent Owner Participant". "Parent" means Imperial Corporation of America, a Delaware corporation. "Parent Letter" means that certain letter agreement [NW 1989 B], dated as of March 15, 1989, from the Parent to the parties specified in Schedule A attached thereto. "Participation Agreement" means that certain Participation Agreement [NW 1989 B], dated as of March 15, 1989, among Lessee, the Equipment Trust Trustee, the Owner Participant, the Original Holder and Lessor, as such Participation Agreement may be amended or supplemented from time to time pursuant to the applicable provisions thereof. "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) title to which is not required to be vested in Lessor pursuant to Section 8 of the Lease 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 Agreement after removal therefrom. "Paying Agent" has the meaning given in Section 2.4 of the Equipment Trust Agreement. A-13 34 "Payment Date" shall mean each March 15 and September 15, commencing on September 15, 1989 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Certificates have been paid in full. "Permitted Investment" means (i) direct obligations of the United States of America and agencies guaranteed by the United States government having a final maturity of one year or less from date of purchase thereof; (ii) certificates of deposit issued by, or bankers' acceptances of, or time deposits with any bank, trust company or national banking association incorporated or doing business 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 $100,000,000 and having a short term debt rating of B or better by Keefe, Bruyette & Woods, Inc. or 3 or better by McCarthy, Crisanti & Maffie, Inc. (including the Owner Trustee or the Equipment Trust Trustee if such conditions are met) and having a final maturity of one year or less from date of purchase thereof; (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 (including the Owner Participant if it satisfies the conditions hereof) incorporated or doing business under the laws of the United States of America or any state thereof having a rating assigned to such commercial paper of Al by Standard & Poor's Corporation or P1 by Moody's Investors Service, Inc. (or, if neither such organization shall rate such commercial paper at any time, a rating equal to the highest ratings assigned by any nationally recognized rating organization in the United States of America) and having a final maturity of 270 days or less from the date of purchase thereof; (iv) U.S. dollar-denominated certificates of deposit issued by the European subsidiaries of any bank, trust company or national banking association described in (ii) and having a final maturity of 90 days or less from the date of purchase thereof; (v) U.S.-issued Yankee certificates of deposit issued by or bankers' acceptances of any bank having total deposits as of its last report of condition exceeding an amount equivalent to U.S. $10,000,000,000, a Peer Group and Dollar Risk ratings by Keefe, Bruyette & Woods, Inc. of II or better and headquartered in Canada, Japan, the United Kingdom, West Germany, Switzerland or the Netherlands and having a final maturity of one year or less from the date of purchase thereof; or (vi) repurchase agreements with any financial institution having combined capital and surplus and retained earnings as of its last report of condition of at least $100,000,000 (including the Owner Trustee and the Equipment Trust Trustee if such conditions are met) when subject to an executed Master Repurchase Agreement and which are fully collateralized by obligations described in clause (i) above where delivery must be taken, and having a final maturity of 90 days or less from the date of purchase thereof; provided that except for investments described in clauses (i) and (vi) above, no more than the greater of $10,000,000 or 50% of the principal amount may be invested as A-14 35 "Permitted Investments" issued by any one corporation, bank holding company, bank, trust company or national banking association at any given time. If any of the above investments are unavailable, the entire amount to be invested may be used to purchase Federal Funds overnight from an entity described in (ii) above. "Permitted Lien" means any Lien referred to in clauses (i) through (vii) of Section 6 of the Lease Agreement. "Permitted Sublessee" means any entity listed in Exhibit E of the Lease Agreement and such other entities to which Lessor shall consent, such consent not to be unreasonably withheld. "Person" means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature. "Potential Default" means any event which is or after notice or passage of time, or both, would be an Event of Default pursuant to Section 14(a), (b), (e), (f) or (g) of the Lease. "Purchase Agreement" means the Purchase Agreement No. 1267, dated December 13, 1985, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1989 B], dated as of March 15, 1989, 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. "Record Date" for the interest payable on any Interest Payment Date, means (i) in the case of an Interest Payment Date which is March 15, the preceding March 1, and (ii) in the case of an Interest Payment Date which is September 15, the preceding September 1. "Redemption Amount" shall mean with respect to each Outstanding Certificate to be redeemed pursuant to Section 6.1 of the Equipment Trust Agreement an amount which an Independent Investment Banker determines to be equal to the greater of (i) the unpaid principal amount of such Certificate or (ii) (x) the present value on the Redemption Date (computed in accordance with generally accepted financial practices on a semiannual basis at a discount rate equal to the Treasury Yield) of (A) the payments of scheduled interest due on such Certificate after the Redemption Date including accrued interest to but excluding the Redemption A-15 36 Date as required by the terms thereof and of the Equipment Trust Agreement and (B) the principal payable on such Certificate at the maturity thereof less (y) the amount of accrued interest on such Certificate to but excluding the Redemption Date (the excess, if any, of the amount referred to in clause (ii) of this definition over the amount referred to in clause (i) constituting a premium). "Redemption Date" shall mean (i) in the case of a redemption of the Certificates pursuant to clause (A) of Section 6.1 of the Equipment Trust Agreement, a Business Day not later than the Business Day next succeeding the 120th day following the occurrence of the Event of Loss specified by the Company on behalf of the Owner Trustee by written notice to the Equipment Trust Trustee, or if no such Business Day is so specified, then the Business Day next succeeding the 120th day following the occurrence of the Event of Loss (or if such day is not a Business Day, the next Business Day) as determined by the Equipment Trust Trustee; (ii) in the case of a redemption of the Certificates pursuant to clause (B) or (D) of said Section 6.1, the 30th day after the Equipment Trust Trustee shall have received from or on behalf of the Owner Trustee the applicable Redemption Price (or if such day is not a Business Day, the next Business Day); (iii) in the case of a redemption of the Certificates pursuant to clause (C) of said Section 6.1, a Business Day specified by the Company on behalf of the Owner Trustee; and (iv) in the case of a redemption of the Certificates pursuant to clause (E) of said Section 6.1, the Termination Date under Section 9(b) of the Lease or the date for purchase of the Aircraft pursuant to Section 19(d) of the Lease, as applicable. "Redemption Price" means the price at which the Certificates are redeemable on the Redemption Date pursuant to Section 6.1 of the Equipment Trust Agreement, provided, that in the case of a redemption of the Series B Certificates pursuant to clause (B) or (D) of said Section 6.1, references to the "Redemption Price" on any date prior to the final determination of the Redemption Amount shall mean an amount equal to the aggregate unpaid principal amount of the Certificates plus interest thereon accrued to but excluding the Redemption Date plus the amount, if any, that the Independent Investment Banker, on the first Business Day immediately preceding the date on which notice of redemption is mailed to the Holders pursuant to Section 6.2 of the Equipment Trust Agreement estimates may be necessary to pay the portion of the Redemption Amount constituting a premium using the same procedure for estimating the Redemption Amount as would be used for calculating the Redemption Amount. "Refinancing" means any borrowing, in accordance with the terms of Section 17 of the Participation Agreement, pursuant to which borrowing, among other things, notes or other instruments of indebtedness evidencing such borrowing would be issued or guaranteed by the Owner Trustee. A-16 37 "Register" has the meaning given in Section 2.4 of the Equipment Trust Agreement. "Registrar" has the meaning given in Section 2.4 of the Equipment Trust Agreement. "Reimbursement Amount" has the meaning set forth in Section 3(g) of the Lease Agreement. "Renewal Term" shall mean any Fixed Renewal Term or Fair Market Renewal Term as those terms are defined in Section 19(a) of the Lease Agreement. "Rent" means Basic Rent and Supplemental Rent, collectively. "Rent Differential Amount" has the meaning set forth in Section 3(c) of the Lease Agreement. "Replacement Aircraft" shall mean any aircraft of which a Replacement Airframe is part. "Replacement Airframe" means a Boeing 747-400 series aircraft (except Engines or engines from time to time installed thereon) which shall have been leased pursuant to Section 10(a) of the Lease. "Replacement Engine" means a Pratt & Whitney PW4056 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) which shall have been leased pursuant to Section 10(b) of the Lease. "Responsible Officer" means with respect to the Owner Trustee, a responsible officer in the Trust Office of the Owner Trustee (including, without limitation, any Product Manager, Senior Manager, Senior Account Manager, Account Manager or authorized officer in the Trust Office of the Owner Trustee), and with respect to the Equipment Trust Trustee, a responsible officer in the Corporate Trust Office of the Equipment Trust Trustee. "SEC" means the Securities and Exchange Commission. "Series B Certificate" means any certificate issued by the Equipment Trust Trustee under the Equipment Trust Agreement, substantially in the form of Exhibit E annexed thereto. "Series BB Certificate" means any certificate issued by the Equipment Trust Trustee under the Equipment Trust Agreement, substantially in the form of Exhibit A annexed thereto. "Stipulated Loss Value" with respect to the Aircraft as of any date through and including September 15, 2014, means, but A-17 38 subject always to the provisions of Section 3(d)(v) of the Lease Agreement, (i) the amount determined by multiplying Lessor's Cost for the Aircraft by the percentage specified in Exhibit C of the Lease Agreement opposite the Stipulated Loss Value Date with respect to which the amount of Stipulated Loss Value is determined (as such Exhibit C may be adjusted from time to time as provided in Section 3(d) of the Lease Agreement and in Section 8 of the Tax Indemnity Agreement), plus (ii) the amount of the premium, if any, due pursuant to Section 6.1(B), (C) or (E) of the Equipment Trust Agreement. To the extent that the actual amount of interest paid and to be paid on the Certificates during the Interim Term or the Lease Period in which such Stipulated Loss Value Date occurs up to and including such Stipulated Loss Value Date is greater or less than the amount included in calculating the percentage set forth in Exhibit C of the Lease Agreement with respect to such Stipulated Loss Value Date on account of such interest, such percentage shall be adjusted appropriately to compensate for such differential. "Stipulated Loss Value" as of any date after September 15, 2014 shall be the amount determined as provided in Section 19(a) of the Lease Agreement. "Stipulated Loss Value Date" means the fifteenth calendar day of each calendar month during the Interim Term, Basic Term and any Renewal Term. "Sublease" means any sublease permitted by the terms of Section 7(b)(x) of the Lease Agreement. "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 Agreement. "Subsequent Owner Participant" means any corporation or partnership to which the Original Owner Participant or any transferee from the Original Owner Participant or any subsequent Owner Participant shall have transferred at any time after the Delivery Date all or any part of the undivided right, title and interest originally held by the Original Owner Participant in the Trust Estate, provided that any such transfer: (i) shall be effected by a written agreement, in form and substance reasonably satisfactory to the Owner Trustee in its individual capacity, among such transferee, its transferor and the Owner Trustee, which shall (A) specify the percentage of the Ownership Interest of such transferee so transferred to it and (B) provide that such transferee thereby becomes a party to, and beneficiary of, the Trust Agreement and an Owner Participant for all purposes of the Trust Agreement and that such transferee assumes all of the obligations of its transferor under the Trust Agreement to the extent of such transferee's Ownership Interest; and (ii) so long as the Lease shall be in effect or the Certificates remain unpaid, such transferee and its transferor shall have complied A-18 39 with all of the terms of Section 8(n) of the Participation Agreement. "Subsidiary" means a Person controlled by another Person. "Supplemental Rent" means all amounts, liabilities and obligations (other than Basic Rent) which Lessee assumes or agrees to pay to Lessor or others under the Lease (including payments of Stipulated Loss Value, Termination Value and amounts calculated by reference thereto), under the Participation Agreement, under the Tax Indemnity Agreement or under any of the other Operative Documents. The parties acknowledge that Supplemental Rent is a general category and, accordingly, agree that any provision of any Operative Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment. "Tax" means any and all fees (including, without limitation, license, documentation and registration fees), taxes (including without limitation, income, gross receipts, sales, rental, use, turnover, value added, property (tangible and intangible), excise, franchise, capital, doing business and stamp taxes) levies, impost, 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"). "Tax Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1989 B], dated as of March 15, 1989, between the Owner Participant and Lessee, as originally executed or as modified, amended or supplemented pursuant to the applicable provisions thereof. "Temporary Certificates" refers to Certificates issued to Certificate Holders pursuant to Section 2.3 of the Equipment Trust Agreement. "Term" means the Interim Term, Basic Term and, if actually entered into, any Renewal Term. "Termination Value" with respect to the Aircraft as of any date through and including September 15, 2014, means, but subject always to the provisions of Section 3(d)(v) of the Lease Agreement, (i) the amount determined by multiplying Lessor's Cost for the Aircraft by the percentage specified in Exhibit D of the Lease Agreement opposite the Termination Date with respect to which the amount of Termination Value is determined (as such Exhibit D of the Lease Agreement may be adjusted from time to time as provided in Section 3(d) of the Lease Agreement and in Section 8 of the Tax Indemnity Agreement), plus (ii) the amount of the premium, if any, due pursuant to Section 6.1(B), (C) or (E) of the Equipment Trust Agreement. To the extent that the A-19 40 actual amount of interest paid and to be paid on the Certificates during the Lease Period in which such Termination Date occurs up to and including such Termination Date is greater or less than the amount included in calculating the percentage set forth in Exhibit D of the Lease Agreement with respect to such Termination Date on account of such interest, such percentages shall be adjusted appropriately to compensate for such differential. "Termination Date" means the fifteenth calendar day of each calendar month during the Interim Term, Basic Term and any Renewal Term. "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Messrs. Whitman & Ransom, special counsel for the Equipment Trust Trustee, and Stevens & Lee, Pennsylvania counsel for the Equipment Trust Trustee, such information to be furnished by the Equipment Trust Trustee, (2) Messrs. Csaplar & Bok, counsel for Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Messrs. Shearman & Sterling, special counsel to the Original Holder, such information to be furnished by the Original Holder, and (4) Messrs. Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (iv) the initial fee and reasonable and actual disbursements of the Equipment Trust Trustee under the Equipment Trust Agreement, such information to be furnished by the Equipment Trust Trustee, (v) the fee of Avmark Inc. (or of such other appraiser as shall be acceptable to Lessee and the Owner Participant) with respect to the appraisal of the Aircraft pursuant to Section 4(a)(xx) of the Participation Agreement, such information to be furnished by the Owner Participant, and (vi) the reasonable and actual fees, expenses and disbursements of [ ], special counsel to the Owner Participant and the Parent, in connection with the preparation, execution and delivery of the Operative Documents and the closings of the transactions contemplated thereby in an aggregate amount not to exceed $190,000, such information to be furnished by the Owner Participant. "Treasury Yield" shall mean with respect to the Redemption Amount of an Outstanding Certificate to be redeemed pursuant to Section 6.1 of the Equipment Trust Agreement (i) in the case of a Certificate having a maturity within one year after the Redemption Date, the average yield to maturity on a government bond equivalent basis of the applicable United States Treasury Bill due the week of the maturity of such Certificate and (ii) in the case of a Certificate having a maturity one year or more after the Redemption Date, the average yield of the most A-20 41 actively traded United States Treasury Note (as reported by Cantor Fitzgerald Securities Corp. on page 5 of Telerate Systems, Inc., a financial news service, or if such report is not available, a source deemed comparable by the Independent Investment Banker selected to determine the Redemption Amount) corresponding in maturity to such Certificate (or if there is no corresponding maturity, an interpolation of maturities by such Independent Investment Banker), in each case determined by the Independent Investment Banker selected to determine the Redemption Amount based on the bid price as of 10:00 a.m. and 2:00 p.m., New York time, on the second Business Day preceding the Redemption Date. "Trust Agreement" means that certain Trust Agreement [NW 1989 B], dated as of March 15, 1989, between the Owner Participant and The First National Bank of Boston, 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 Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participants or the Equipment Trust Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participants, to the Equipment Trust Trustee, to the Owner Trustee, in its individual capacity or any Holder of a Certificate pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, or any subsequent legislation that amends, supplements or supersedes such Act. "Trust Office" shall mean the principal corporate trust office of the Owner Trustee at 100 Federal Street, Boston, Massachusetts 02110 Attention: Corporate Trust Division, or the principal corporate trust office of any successor Owner Trustee. "Trust Supplement" shall mean (a) the Equipment Trust Agreement and Trust Agreement Supplement No. 1, in substantially the form of Exhibit C to the Equipment Trust Agreement, which shall particularly describe the Aircraft included in the property of the Owner Trustee covered by the Trust Agreement by reference to the Lease Supplement and which, pursuant to Section 4.3 of the A-21 42 Equipment Trust Agreement, shall create a first mortgage on such Aircraft and the Engines which are part of such Aircraft and shall assign and pledge such Lease Supplement to the Equipment Trust Trustee as part of the Estate and (b) any other supplement to the Equipment Trust Agreement and the Trust Agreement from time to time executed and delivered. "Trustee's Liens" means any Liens arising as a result of (i) claims against or affecting the Equipment Trust Trustee or any Affiliate thereof not arising solely from participation in the transactions contemplated by the Operative Documents or (ii) any act or omission of the Equipment Trust Trustee or any Affiliate thereof not required or permitted by the Operative Documents. "U.S. Air Carrier" means any United States air carrier as to which there is in force a certificate issued pursuant to Section 401 of the Federal Aviation Act and as to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the regulations under such 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. "U.S. Government Obligations" means securities that are direct obligations of the United States of America for the payment of which its full faith and credit is pledged which are not callable or redeemable, and shall also include a depository receipt issued by a bank or a trust company as custodian with respect to any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt so long as such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. "Wet Lease" shall mean 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 for the performance by such employees of similar functions within the United States of America (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. A-22 EX-4.A2 3 FIRST AMENDMENT TO TRUST AGREEMENT-1989 B 1 FIRST AMENDMENT TO TRUST AGREEMENT [NW 1989 B] This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1989 B] (this "AMENDMENT") dated as of June 12, 1996 between [_____________________] (the "OWNER PARTICIPANT"), as successor to [_____________________] (the "ORIGINAL OWNER PARTICIPANT") and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity but solely as Owner Trustee (the "OWNER TRUSTEE"), as successor to The First National Bank of Boston (the "ORIGINAL OWNER TRUSTEE"). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the respective meanings attributed thereto in or pursuant to the Trust Agreement defined below. W I T N E S S E T H: WHEREAS, the Original Owner Participant and the Original Owner Trustee entered into a Trust Agreement [NW 1989 B] dated as of March 15, 1989, supplemented by an Equipment Trust Agreement and Trust Agreement Supplement No. 1 [NW 1989 B] dated March 16, 1989 covering the Aircraft (the "ORIGINAL TRUST AGREEMENT" and, as so supplemented and as amended hereby and from time to time, the "TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate for the use and benefit of the Owner Participant; WHEREAS, pursuant to the Lease Agreement [NW 1989 B] dated as of March 15, 1989 between the Original Owner Trustee and Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), as supplemented by the Lease Supplement No. 1 [NW 1989 B] dated March 16, 1989 (as so supplemented, the "ORIGINAL LEASE"), the Lessee has leased the Aircraft from the Owner Trustee; WHEREAS, pursuant to an Assignment and Assumption Agreement dated as of December 19, 1991 by and among the Original Owner Participant, the Owner Participant and [_________________________________], as parent of the Owner Participant (the "ASSIGNMENT AGREEMENT"), the Original Owner Participant transferred to the Owner Participant all of its right, title and interest in the Trust Estate, the Aircraft and the Operative Documents, including without limitation the Trust Agreement and the Lease; and the Owner Participant thereby succeeded to all of the rights, privileges and obligations of the Original Owner Participant under the Trust Agreement and the other Operative Documents; WHEREAS, pursuant to an Instrument of Transfer, Removal, Appointment, Assumption and Acceptance dated May 16, 1996 among the Owner Participant, the Original 2 Owner Trustee and the Owner Trustee (the "INSTRUMENT OF TRANSFER"), the Owner Trustee succeeded to all the estates, properties, rights, powers and trusts of the Original Owner Trustee as Owner Trustee under the Trust Agreement, including without limitation all right, title and interest of the Owner Trustee in and to the Aircraft and in, to and under the Original Lease and the other Operative Documents; WHEREAS, the Lessee, Northwest Airlines Corporation, a Delaware corporation, as guarantor, the Owner Trustee, the Owner Participant and certain other parties have entered into a Refunding Agreement [NW 1989 B] dated as of June 3, 1996 (the "REFUNDING AGREEMENT"), providing for a refinancing as contemplated by Section 17 of the Original Participation Agreement (as such term is defined in the Refunding Agreement); WHEREAS, in connection with such refinancing all of the Original Certificates (as such term is defined in the Refunding Agreement) have been redeemed and, concurrently with the execution and delivery of this Amendment, there has been executed and delivered an instrument of termination dated as of the Refinancing Date evidencing and effecting the satisfaction, discharge and termination of the Equipment Trust Agreement and transfer of title to the Aircraft; WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have entered into the Trust Indenture and Security Agreement [NW 1989 B] dated as of the Refinancing Date, under which the Owner Trustee will issue new secured certificates in four series substantially in the form set forth in Section 2.01 thereof; WHEREAS, on June 3, 1996, the Lessee and the Owner Trustee entered into the Amended and Restated Lease Agreement [NW 1989 B] (the "LEASE") amending and restating the Original Lease and containing amendments, modifications and additions thereto necessary to give effect to the transactions described in the Refunding Agreement; and WHEREAS, the Owner Participant and the Owner Trustee wish to amend the Original Trust Agreement as set forth herein so as more fully to give effect to the transactions contemplated by the Refunding Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto hereby agree as follows: SECTION 1. AMENDMENT OF SECTION 1.01 OF THE ORIGINAL TRUST AGREEMENT. Section 1.01 of the Original Trust Agreement is hereby amended (a) by adding the words "and except as contained in this Section 1.01" immediately after the word "require" and (b) by deleting the words "Annex A to this Trust Agreement" and substituting therefor the following: that certain Amended and Restated Lease Agreement [NW 1989 B] dated as of June 3, 1996 between the Owner 2 3 Trustee and Northwest Airlines, Inc. All definitions contained in this Section 1.01 shall be equally applicable to both the singular and plural forms of the terms defined. For all purposes of this Trust Agreement the following terms shall have the following meanings: "Original Owner Participant" means [_______________________________]. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by the Trust Agreement, which percentage shall be: (i) in the case of the Original Owner Participant (A) so long as it shall be the sole Owner Participant, 100% and (B) if it shall no longer be the sole Owner Participant, the percentage of such undivided interest in the Trust Estate which it shall not have transferred to any Subsequent Owner Participant; and (ii) in the case of any Subsequent Owner Participant, the percentage of such undivided interest in the Trust Estate specified in the agreement pursuant to which such Subsequent Owner Participant becomes an Owner Participant as provided in the definition of "Subsequent Owner Participant". "Subsequent Owner Participant" means any corporation or partnership to which the Original Owner Participant or any transferee from the Original Owner Participant or any subsequent Owner Participant shall have transferred at any time after the Delivery Date all or any part of the undivided right, title and interest originally held by the Original Owner Participant in the Trust Estate, provided that any such transfer: (i) shall be effected by a written agreement, in form and substance reasonably satisfactory to the Owner Trustee in its individual capacity, among such transferee, its transferor and the Owner Trustee, which shall (A) specify the percentage of the Ownership Interest of such transferee so transferred to it and (B) provide that such transferee thereby becomes a party to, and beneficiary of, the Trust Agreement and an Owner Participant for all purposes of the Trust Agreement and that such transferee assumes all of the obligations of its transferor under the Trust Agreement to the extent of such transferee's Ownership Interest; and (ii) so long as the Lease shall be in effect or the Secured Certificates remain unpaid, such transferee and its transferor shall have complied with all of the terms of Section 8(n) of the Participation Agreement. 3 4 "Trust Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participants or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participants, to the Indenture Trustee, to the Owner Trustee in its individual capacity or any Certificateholder pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. "Trust Office" means the principal corporate trust office of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111 Attention: Corporate Trust Division, or the principal corporate trust office of any successor Owner Trustee. SECTION 2. AMENDMENT OF SECTION 2.02 OF THE ORIGINAL TRUST AGREEMENT. Section 2.02 of the Original Trust Agreement is hereby amended by adding the words "or the Trust Indenture" immediately after the words "Equipment Trust Agreement". SECTION 3. AMENDMENT OF SECTION 3.03 OF THE ORIGINAL TRUST AGREEMENT. Section 3.03 of the Original Trust Agreement is hereby amended by deleting the words "assuming the Guaranties" and substituting therefor the words "assuming the obligations of the Owner Trustee under the Trust Indenture". SECTION 4. AMENDMENT OF SECTION 4.01 OF THE ORIGINAL TRUST AGREEMENT. Section 4.01 of the Original Trust Agreement is hereby amended by adding the following immediately after subsection (d) thereof: (e) Payments to Indenture Trustee. After the Equipment Trust Agreement shall have been discharged pursuant to Section 10.01 thereof and until the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee the same shall upon receipt be paid over to the 4 5 Indenture Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with the provisions of Article III of the Trust Indenture. SECTION 5. AMENDMENT OF SECTION 4.01(b) OF THE ORIGINAL TRUST AGREEMENT. Section 4.01(b) of the Original Trust Agreement is hereby amended by adding immediately before the first comma therein the words "and after the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof" and by adding the words "or the Indenture Trustee" immediately after the words "the Equipment Trust Trustee". SECTION 6. AMENDMENT OF SECTION 4.01(c) OF THE ORIGINAL TRUST AGREEMENT. Section 4.01(c) of the Original Trust Agreement is hereby amended by adding the words "or the Indenture Trustee" immediately after the words "the Equipment Trust Trustee", by adding the words and punctuation "or the Trust Indenture, as the case may be," immediately after the words "the Equipment Trust Agreement" the first time such words appear and by adding the words and punctuation "or Article III of the Trust Indenture, as the case may be" immediately before the period ending such Section. SECTION 7. AMENDMENT OF SECTION 5.01 OF THE ORIGINAL TRUST AGREEMENT. Section 5.01 of the Original Trust Agreement is hereby deleted in its entirety and replaced by the following: SECTION 5.01. Notice of Event of Default. If the Owner Trustee shall have knowledge of an Event of Default or an event of default under the Trust Indenture (an "Indenture Default") (or an event which with the passage of time or the giving of notice or both would constitute an Event of Default or an Indenture Default) the Owner Trustee shall give to each Owner Participant prompt telephonic or telex notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Indenture Default referred to in paragraph (c) or (e) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Indenture Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten days after the Owner Trustee shall first have knowledge of such misrepresentation. Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain from taking such action, not inconsistent with the provisions of the Trust Indenture, with respect to such Event of Default, Indenture Default or other event as the Owner Trustee shall be directed in writing by a Majority in Interest of Owner Participants. If the Owner Trustee shall not have received instructions as above provided within 20 days after the mailing of such notice to the Owner Participants, the Owner Trustee until instructed otherwise in accordance with the preceding sentence 5 6 may, but shall be under no duty to, take or refrain from taking such action with respect to such Event of Default, Indenture Default or other event, not inconsistent with the provisions of the Trust Indenture, as it shall deem advisable in the best interests of the Owner Participants. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by a responsible officer or responsible employee of the Corporate Trust Division of the Owner Trustee in his or her capacity as such, the Owner Trustee shall not be deemed to have knowledge of an Event of Default, Indenture Default or other event referred to in this Section 5.01 unless notified in writing by the Indenture Trustee, one or more of the Owner Participants or Lessee. SECTION 8. AMENDMENT OF SECTION 5.04 OF THE ORIGINAL TRUST AGREEMENT. Section 5.04 of the Original Trust Agreement is hereby amended by adding the words and punctuation "or the Trust Indenture, as the case may be" immediately after the words "the Equipment Trust Agreement" and by deleting the words "The First National Bank of Boston" and substituting therefor the words and punctuation "First Security Bank of Utah, National Association". SECTION 9. AMENDMENT OF SECTION 6.01 OF THE ORIGINAL TRUST AGREEMENT. Section 6.01 of the Original Trust Agreement is hereby amended by deleting the words "The First National Bank of Boston" each time such words appear and substituting therefor the words and punctuation "First Security Bank of Utah, National Association" and by deleting the words "Section 2.10 of the Equipment Trust Agreement" and substituting therefor the words "Section 2.03(a) of the Trust Indenture". SECTION 10. AMENDMENT OF SECTION 6.02 OF THE ORIGINAL TRUST AGREEMENT. Section 6.02 of the Original Trust Agreement is hereby amended by deleting the words "The First National Bank of Boston" each time such words appear and substituting therefor the words and punctuation "First Security Bank of Utah, National Association" and by deleting the words "Equipment Trust Trustee" and substituting therefor the words "Indenture Trustee". SECTION 11. AMENDMENT OF SECTION 6.03 OF THE ORIGINAL TRUST AGREEMENT. Section 6.03 of the Original Trust Agreement is hereby amended by deleting the words "THE FIRST NATIONAL BANK OF BOSTON" and substituting therefor the words and punctuation "FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION" and by deleting the words "The First National Bank of Boston" each time such words appear and substituting therefor the words and punctuation "First Security Bank of Utah, National Association". SECTION 12. AMENDMENT OF SECTION 6.06 OF THE ORIGINAL TRUST AGREEMENT. Section 6.06 of the Original Trust Agreement is hereby amended by inserting the 6 7 words and punctuation "or the Trust Indenture, as the case may be" immediately after the words "Equipment Trust Agreement" and before the comma therein. SECTION 13. AMENDMENT OF SECTION 6.07 OF THE ORIGINAL TRUST AGREEMENT. Section 6.07 of the Original Trust Agreement is hereby amended by inserting the words and punctuation "or the Trust Indenture, as the case may be" after the words "Equipment Trust Agreement" each time such words appear therein. SECTION 14. AMENDMENT OF SECTION 7.01 OF THE ORIGINAL TRUST AGREEMENT. Section 7.01 of the Original Trust Agreement is hereby amended by deleting the words "The First National Bank of Boston" each time such words appear and substituting therefor the words and punctuation "First Security Bank of Utah, National Association", by deleting the words "Section 2.10 of the Equipment Trust Agreement" and substituting therefor the words "Section 2.03(a) of the Trust Indenture", by deleting the words "Equipment Trust Agreement" each time such words appear in the penultimate sentence thereof and substituting therefor the word "Trust Indenture" and by deleting the words "the Estate" each time such words appear and substituting therefor the words "the Trust Indenture Estate (as such term is defined in the Trust Indenture)". SECTION 15. AMENDMENT OF SECTION 9.01(a) OF THE ORIGINAL TRUST AGREEMENT. Section 9.01(a) of the Original Trust Agreement is hereby amended by deleting the words "Equipment Trust Trustee" each time such words appear and substituting therefor the words "Indenture Trustee". SECTION 16. AMENDMENT OF SECTION 9.02 OF THE ORIGINAL TRUST AGREEMENT. Section 9.02 of the Original Trust Agreement is hereby amended by deleting the word and numbers "Section 101(16)" and substituting therefor the word and numbers "Section 40102(a)(15)", by deleting the words "Equipment Trust Agreement" from clause (F) thereof and substituting therefor the words "Trust Indenture", by deleting the words "Equipment Trust Trustee" from clause (F) thereof and substituting therefor the words "Indenture Trustee", by deleting the word "Holders" from clause (F) thereof and substituting therefor the word "holders", by inserting the word "Secured" immediately before the word "Certificates" in clause (F) thereof and by deleting the words "Event of Acceleration" and substituting therefor the words "Event of Default (as such term is defined in the Trust Indenture)". SECTION 17. AMENDMENT OF SECTION 10.01(b) OF THE ORIGINAL TRUST AGREEMENT. Section 10.01(b) of the Original Trust Agreement is hereby amended by deleting the words "Equipment Trust Trustee" and substituting therefor the words "Indenture Trustee". SECTION 18. AMENDMENT OF SECTION 10.05 OF THE ORIGINAL TRUST AGREEMENT. Section 10.05 of the Original Trust Agreement is hereby amended by adding the words "or the Trust Indenture" immediately after the words "Equipment Trust Agreement". 7 8 SECTION 19. AMENDMENT OF SECTION 11.01 OF THE ORIGINAL TRUST AGREEMENT. Section 11.01 of the Original Trust Agreement is hereby amended by deleting the words "Equipment Trust Agreement" and substituting therefor the word "Trust Indenture". SECTION 20. AMENDMENT OF SECTION 11.05(a) OF THE ORIGINAL TRUST AGREEMENT. Section 11.05(a) of the Original Trust Agreement is hereby amended by deleting the words and punctuation ", the Equipment Trust Trustee" from clause (A) of the last sentence thereof and by deleting clause (C) in its entirety from the last sentence thereof and substituting therefor the following: "(C) if to the Indenture Trustee to the address provided in or pursuant to Section 10.05 of the Trust Indenture or (D) if to any holder of Secured Certificates, addressed to such holder at its address set forth in the certificate register maintained pursuant to Section 2.07 of the Trust Indenture.". SECTION 21. AMENDMENT OF SECTION 11.11 OF THE ORIGINAL TRUST AGREEMENT. Section 11.11 of the Original Trust Agreement is hereby amended by deleting the first sentence thereof and substituting therefor the following: "THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE." SECTION 22. AMENDMENT OF THE ORIGINAL TRUST AGREEMENT. The Original Trust Agreement is hereby amended by deleting Annex A thereto in its entirety. SECTION 23. ACKNOWLEDGMENTS AND DIRECTION. (a) The parties hereto acknowledge and confirm that, pursuant to the Assignment Agreement, the Owner Participant succeeded to all of the Original Owner Participant's right, title and interest in, to and under the Trust Estate, the Aircraft and the Operative Documents, including without limitation the Trust Agreement and the Lease, and to all of the privileges and obligations of the Original Owner Participant under the Trust Agreement and the other Operative Documents, except for those obligations retained by the Original Owner Participant as provided in the Assignment Agreement. (b) The parties hereto acknowledge and confirm that, pursuant to the Instrument of Transfer, the Owner Trustee succeeded to all the estates, properties, rights, powers and trusts of the Original Owner Trustee as trustee under the Trust Agreement with like effect as if originally named the Owner Trustee therein, including without limitation all right, title and interest of the Owner Trustee in and to the Aircraft and in, to and under the Lease and the other Operative Documents. (c) Pursuant to and in conformity with Section 10.01 of the Trust Agreement, the Owner Participant hereby requests the Owner Trustee to execute this Amendment. The Owner Participant represents and warrants that it is a Majority in Interest of Owner Participants. 8 9 SECTION 24. RATIFICATION. Except as modified hereby, the Trust Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Trust Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Trust Agreement or any word or phrase referring to a section or provision of the Trust Agreement is deemed for all purposes to be a reference to the Trust Agreement or such section or provision as amended by this Amendment. SECTION 25. MISCELLANEOUS. This Amendment 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. The terms of this Amendment shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII of the Original Trust Agreement as amended hereby, its assigns. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. 9 10 IN WITNESS WHEREOF, the parties hereto have each caused this Amendment to be duly executed as of the day and year first written above. [Owner Participant] By: ------------------------------------ Title: --------------------------------- FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By: ------------------------------------ Title: --------------------------------- 10 EX-4.A3 4 TRUST INDENTURE-1989 B 1 TRUST INDENTURE AND SECURITY AGREEMENT [NW 1989 B] TRUST INDENTURE AND SECURITY AGREEMENT [NW 1989 B], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Owner Trustee under the Trust Agreement referred to below (together with its successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity, except as expressly stated herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE"). W I T N E S S E T H WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Trustee desires by this Trust Indenture, among other things, (i) to provide for the issuance by the Owner Trustee of the Secured Certificates and (ii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of all of the Owner Trustee's right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Certificate Holders, subject to Section 2.15 and Article III hereof; WHEREAS, all things have been done to make the Secured Certificates, when executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid, binding and enforceable obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Trust Indenture the valid, binding and legal obligation of the Owner Trustee for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened: 2 GRANTING CLAUSE NOW, THEREFORE, THIS TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Secured Certificates from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions herein and in the Participation Agreement and the Secured Certificates contained, for the benefit of the Certificate Holders and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Certificate Holders by the Owner Trustee and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Secured Certificates by the holders thereof, and for other good and valuable consideration the receipt and adequacy whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors in trust and assigns, for the security and benefit of the Certificate Holders, a first priority security interest in and mortgage lien on all right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges, other than Excluded Payments (which collectively, excluding Excluded Payments but including all property hereafter specifically subjected to the Lien of this Trust Indenture by the Trust Agreement and Indenture Supplement or any mortgage supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines and all replacements thereof and substitutions therefor in which the Owner Trustee shall from time to time acquire title as provided herein and in the Lease), all as more particularly described in the Trust Agreement and Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Trust Indenture; (2) the Lease and any Lease Supplement and all Rent thereunder (including, without limitation, all amounts of Basic Rent, Supplemental Rent, and payments of any kind thereunder, but excluding any Excluded Payments) and the Guarantee; (3) the Purchase Agreement (to the extent specified in the Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent and Agreement and the Bill of Sale; (4) all rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the lien of this Trust Indenture; (5) all insurance and requisition proceeds with respect to the Aircraft, including but not limited to the insurance required under Section 11 of the Lease, but excluding insurance proceeds described in clauses (ii) and (iii) of the definition of Excluded Payments; (6) all rights of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under the Participation Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder, but excluding amounts described in clauses (i) and (v) of the definition of Excluded Payments; (7) all monies and securities from time to time deposited (other than Excluded Payments) or required to be deposited with the Indenture Trustee pursuant to any terms of this Trust Indenture or the Lease or required hereby or by the Lease to be held by the Indenture Trustee hereunder; and (8) all proceeds of the foregoing. BUT EXCLUDING from the foregoing and from the Trust Indenture Estate all Excluded Payments, and the right to enforce and collect the same, and SUBJECT TO all of the terms and conditions of this Trust Indenture and the rights of the Owner Trustee and the Owner Participant hereunder. -2- 3 Concurrently with the delivery hereof, the Owner Trustee delivered to the Indenture Trustee the original executed counterpart of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt is attached), and executed copies of the Participation Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and its successors and assigns, in trust for the benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III hereof without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (8) inclusive above, subject to the terms and provisions set forth in this Trust Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Owner Trustee shall remain liable under each of the Indenture Agreements to which it is a party, to perform all of the obligations assumed by it thereunder, except to the extent prohibited or excluded from doing so pursuant to the terms and provisions thereof, and the Indenture Trustee and the Certificate Holders shall have no obligation or liability under the Indenture Agreements, by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to any of the Indenture Agreements to which it is a party, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, but only so long as an Event of Default is continuing, and with full power (in the name of the Owner Trustee or otherwise) to ask for, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds but in all cases excluding Excluded Payments) due and to become due under or arising out of the Indenture Agreements, and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Without limiting the generality of the foregoing, but subject to the rights of the Owner Trustee and the Owner Participant hereunder, during the continuance of any Event of Default under this Trust Indenture, the Indenture Trustee shall have the right under such power of attorney to accept any offer in connection with the exercise of remedies as set forth herein of any purchaser to purchase the Airframe and Engines and upon such purchase to execute and deliver in the name of and on behalf of the Owner Trustee an appropriate bill of sale and other instruments of transfer relating to the Airframe and Engines, when purchased by such purchaser, and to perform all other necessary or appropriate acts with respect to any such purchase, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or appropriate to protect and preserve the right, title and interest of the Indenture Trustee in and to such Rents and other sums and the security intended to be afforded hereby; provided, however, that no action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or liabilities of the Owner Trustee to any Person beyond those obligations and liabilities specifically set forth in this Trust Indenture and in the other Operative Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture shall not have been fully discharged, to make all payments of Rent (other than Excluded Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to, or as directed by, the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Trust Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Trust Indenture. -3- 4 The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem necessary or desirable to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be created hereby or to obtain for the Indenture Trustee the full benefits of the assignment hereunder and of the rights and powers herein granted. The parties hereto acknowledge that none of the Owner Trustee in its individual capacity, the Owner Participant or (except upon the written request of the Indenture Trustee pursuant to the terms of the preceding sentence or of Lessee pursuant to the terms of the Participation Agreement) the Owner Trustee in its trust capacity shall have any obligation as to any recording, filing, refiling or re-recording of any documents or instruments in regard to maintaining the perfection of the security interests created hereunder, in the Trust Indenture Estate or any security interest that may be claimed to have been created by the Lease or the ownership interest of the Owner Trustee in the Aircraft. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants and agrees that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee and its predecessor(s) in this transaction, and that it will not, except as otherwise provided in this Trust Indenture and except with respect to Excluded Payments to which it is entitled, (i) accept any payment from Lessee under any Indenture Agreement, (ii) enter into any agreement amending or supplementing any Indenture Agreement, (iii) execute any waiver or modification of, or consent under, the terms of, or exercise any rights, powers or privileges under, any Indenture Agreement, (iv) settle or compromise any claim (other than those relating to an Excluded Payment) arising under any Indenture Agreement or (v) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any Indenture Agreement to arbitration thereunder. The Owner Trustee does hereby further agree that it will not without the written consent of the Indenture Trustee: (a) collect or agree to the receipt or collection of any payment of Rent (other than Excluded Payments), including Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease prior to the date for the payment thereof provided for by the Lease or assign, transfer or hypothecate (other than to the Indenture Trustee hereunder) any payment of Rent, including Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease, then due or to accrue in the future under the Lease in respect of the Airframe and Engines; or (b) except as contemplated by the Trust Agreement in connection with the appointment of a successor owner trustee, sell, mortgage, transfer, assign or hypothecate (other than to the Indenture Trustee hereunder) its interest in the Airframe and Engines or any part thereof or in any amount to be received by it from the use or disposition of the Airframe and Engines, other than amounts distributed to it pursuant to Article III hereof. It is hereby further agreed that any and all property described or referred to in the granting clauses hereof which is hereafter acquired by the Owner Trustee shall ipso facto, and without any further conveyance, assignment or act on the part of the Owner Trustee or the Indenture Trustee, become and be subject to the Lien herein granted as fully and completely as though specifically described herein, but nothing contained in this paragraph shall be deemed to modify or change the obligations of the Owner Trustee contained in the foregoing paragraphs. The Owner Trustee does hereby ratify and confirm the Lease and does hereby agree that it will not violate any covenant or agreement made by it therein, herein or in any of the other Owner Trustee Documents. -4- 5 Notwithstanding the Granting Clause or any of the foregoing paragraphs, there is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excluded Payments. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "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. "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 hereof. "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 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. "Cash Equivalents" shall mean the investments specified in Section 22(a) of the Lease. "Certificate Holder" shall mean any holder from time to time of one or more Secured Certificates. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Continuous Stay Period" shall have the meaning specified in Section 4.04(a) hereof. "Corporate Trust Department" or "Trust Office" means the principal corporate trust office of the Owner Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, 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 Two International Place, 4th Floor, Boston, Massachusetts 02110, 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 and each Certificate Holder. -5- 6 "Debt" shall mean any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments or for the deferred purchase price of property, goods or services. "Debt 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" means any event or condition that with the giving of notice or the lapse of time or both would become an Event of Default or Lease Event of Default (excluding Lease Events of Default related to Excluded Payments). "Dollars" and "$" shall mean the lawful currency of the United States of America. "Enforcement Date" shall have meaning specified in Section 4.03 hereof. "Event of Default" shall have the meaning specified in Section 4.02 hereof. "Excess Amount" shall have the meaning specified in Section 2.03(b) hereof. "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 hereof, the amounts payable to the Owner Trustee pursuant to clauses 2(B)(Y) and 2(B)(Z) of Section 9(b) of the Lease or 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 as provided in the Operative Documents, 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. "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 Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Guarantor" shall have the meaning specified in the Lease. "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 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 -6- 7 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. "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" shall mean that certain Lease Agreement [NW 1989 B], dated as of March 15, 1989, entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of the Original Trust Indenture, as said Lease Agreement has been, or may from time to time be, supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Indenture. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Default" shall mean a "Potential Default" as defined in the Lease. "Lease Event of Default" shall mean an "Event of Default" as defined in the Lease. "Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Lessee Operative Documents" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. "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 hereof (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 (plus, in the case of Series C and D Secured Certificates, 75 basis points) 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. -7- 8 "Mortgaged Property" shall have the meaning specified in Section 3.03 hereof. "Owner Indemnitee" shall have the meaning specified in the definition of Excluded Payments herein. "Owner Participant" shall mean [ ], a [ ] corporation, so long as such party shall have any interest in the Trust Estate, and transferees thereof as permitted by Section 8 of the Participation Agreement. "PA Amendment No. 1" shall mean the First Amendment to Participation Agreement [NW 1989 B] dated as of the Closing Date, among Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent, and State Street Bank and Trust Company in its individual capacity and as Indenture Trustee. "Participation Agreement" shall mean that certain Participation Agreement [NW 1989 B], dated as of March 15, 1989, among Lessee, [ ] as original owner participant, [ ] as Original Holder, The First National Bank of Boston as original owner trustee, and Meridian Trust Company, as equipment trust trustee, as amended by PA Amendment No. 1, as the same may from time to time be supplemented or further amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Past Due Rate" shall mean, with respect to the Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in effect from time to time. "Payment Date" shall mean each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Secured Certificates have been paid in full. "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. "QIB" shall have the meaning specified in Section 2.08 hereof. "Replacement Airframe" shall mean any airframe substituted for the Airframe pursuant to Section 5.06 hereof. "Replacement Engine" shall mean any engine substituted for an Engine pursuant to Section 5.06 hereof. "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. "Section 1110 Period" shall have the meaning specified in Section 4.04(a) hereof. "Secured Certificates" shall mean and include any Secured Certificates issued hereunder, and issued in exchange therefor or replacement thereof. "Secured Obligations" shall have the meaning specified in Section 2.06 hereof. -8- 9 "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Holder" shall have the meaning specified in Section 2.15(c) hereof. "Series A" or "Series A Secured Certificates" means Secured Certificates issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A." "Series B" or "Series B Secured Certificates" means Secured Certificates issued and designated as "Series B" hereunder, 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" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series C." "Series D" or "Series D Secured Certificates" means Secured Certificates issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series D." "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. "Transactions" means the transactions contemplated by the Participation Agreement and the other Operative Documents. "Trust Agreement and Indenture Supplement" shall mean a supplement to the Trust Agreement and to this Indenture, in substantially the form of Exhibit A hereto, 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. "Trust Indenture", "this Trust Indenture", "the Trust Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this Trust Indenture and Security Agreement [NW 1989 B] as it may from time to time be supplemented or amended as herein provided, including supplementing by the Trust Agreement and Indenture Supplement pursuant hereto. "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 this Trust Indenture, excluding Excluded Payments. SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this Trust Indenture the terms used but not defined herein are used as defined in the Lease. -9- 10 ARTICLE II THE SECURED CERTIFICATES SECTION 2.01. FORM OF SECURED CERTIFICATES. The Secured Certificates shall be substantially in the form set forth below: THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [NW 1989 B] DATED AS OF MARCH 15, 1989. SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION WITH THE BOEING MODEL 747-451 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N662US. No.____ Date: [______,__] $__________________
INTEREST RATE MATURITY DATE ------------- ------------- [________] [________,_______]
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1989 B], dated as of March 15, 1989, between the Owner Participant named therein and The First National Bank of Boston (herein as such Trust Agreement may be supplemented or amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Interest Rate indicated above. The Principal Amount of this Secured Certificate shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Secured Certificate set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including _______, _____. Notwithstanding the foregoing, the final payment made on this Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Secured Certificate. Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "TRUST INDENTURE" means the Trust Indenture and Security Agreement [NW 1989 B], dated as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Secured Certificate and not defined herein shall have the respective meanings assigned in the Trust Indenture. -10- 11 This Secured Certificate shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Trust Indenture or the Participation Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Trust Indenture and each holder hereof, by its acceptance of this Secured Certificate, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the holder hereof as above provided and that none of the Owner Participant, the Owner Trustee or the Indenture Trustee is personally liable or liable in any manner extending to any assets other than the Trust Indenture Estate to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Trust Indenture or in the Participation Agreement, for any liability under the Trust Indenture or the Participation Agreement; provided, however, that nothing herein contained shall limit, restrict or impair the right of the Indenture Trustee, subject always to the terms and provisions of the Trust Indenture, to accelerate the maturity of this Secured Certificate upon occurrence of an Event of Default under the Trust Indenture in accordance with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment against the Owner Trustee on this Secured Certificate for purposes of realizing upon the Trust Indenture Estate and to exercise all rights and remedies provided under the Trust Indenture or otherwise realize upon the Trust Indenture Estate. There shall be maintained a Secured Certificate Register for the purpose of registering transfers and exchanges of Secured Certificates at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Trust Indenture. The Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Trust Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Secured Certificate, except that in the case of any final payment with respect to this Secured Certificate, the Secured Certificate shall be surrendered promptly thereafter by the Indenture Trustee to the Owner Trustee for cancellation. The holder hereof, by its acceptance of this Secured Certificate, agrees that, except as provided in the Trust Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts hereunder) to the date of such payment, second, to the payment of the Principal Amount of this Secured Certificate then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of Principal Amount of this Secured Certificate remaining unpaid in the inverse order of their normal maturity. This Secured Certificate is one of the Secured Certificates referred to in the Trust Indenture which have been or are to be issued by the Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Secured Certificates. The provisions of this Secured Certificate are subject to the Trust Indenture. Reference is hereby made to the Trust Indenture and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Secured Certificate and the rights and obligations of the holders of, and the nature and extent of the security for, any other Secured Certificates executed and delivered under the Trust Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust Indenture, to all -11- 12 of which terms and conditions in the Trust Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Secured Certificate. As provided in the Trust Indenture and subject to certain limitations therein set forth, this Secured Certificate is exchangeable for a like aggregate Principal Amount of Secured Certificates of different authorized denominations, as requested by the holder surrendering the same. Prior to due presentment for registration of transfer of this Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the person in whose name this Secured Certificate is registered as the owner hereof for all purposes whether or not this Secured Certificate be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Secured Certificate is subject to redemption as provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This Secured Certificate is also subject to assumption by Lessee as provided in Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.14 of the Trust Indenture but not otherwise. [The indebtedness evidenced by this Secured Certificate is, to the extent and in the manner provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Trust Indenture) in respect of [Series A Secured Certificates](1)[Series A and Series B Secured Certificates](2) [Series A, Series B and Series C Secured Certificates](3), and this Secured Certificate is issued subject to such provisions. The Certificate Holder of this Secured Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]** Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Secured Certificate shall not be entitled to any benefit under the Trust Indenture or be valid or obligatory for any purpose. THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. - ------------------------- (1) To be inserted in the case of a Series B Secured Certificate. (2) To be inserted in the case of a Series C Secured Certificate. (3) To be inserted in the case of a Series D Secured Certificate. ** To be inserted for each Secured Certificate other than any Series A Secured Certificate. -12- 13 IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Certificate to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By ___________________________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Secured Certificates referred to in the within-mentioned Trust Indenture. STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By ___________________________________________ Name: Title: -13- 14 SCHEDULE I SECURED CERTIFICATES AMORTIZATION
Percentage of Principal Amount Payment Date to be Paid ------------ ----------------
[SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES. The Secured Certificates shall be dated the date of issuance thereof, shall be issued in four separate series consisting of Series A, Series B, Series C and Series D and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Agreements as set forth in Schedule II hereto in connection therewith and (ii) the Secured Certificates issued under the Original Indenture shall be concurrently redeemed. The Secured Certificates shall be issued in registered form only. The Secured Certificates shall be issued in denominations of $1,000 and integral multiples thereof, except that one Secured Certificate of each Series may be in an amount that is not an integral multiple of $1,000. Each Secured Certificate shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Secured Certificate shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Secured Certificates. Notwithstanding the foregoing, the final payment made under each Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Secured Certificate. Each Secured Certificate shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Certificate Holders, (iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass Through Trustees, in each case pursuant to Section 7 of the Participation Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Advances (as -14- 15 defined in the Liquidity Facilities) under any Liquidity Facility except to the extent included in Net Interest and Related Charges, and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used in this Section, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes, plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Secured Certificate (other than any Series D Secured Certificate) a fraction, the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes issued under Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any Series D Secured Certificates or Series D Equipment Notes. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to the Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount which would be payable if such drawings bore interest at the Designated Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding Liquidity Facility) which result from any Interest Drawing, Final Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities). As used in this Section "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) except with respect to that portion of any Final Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section, a Payment Default when used in connection with a Secured Certificate or Equipment Note means a default in the payment of principal thereof or interest thereon other than a default in the payment of principal or interest on a Series D Equipment Note which has not been cured other than solely because of acceleration. The following terms are used in this Section as defined in the Intercreditor Agreement without regard to any amendment, modification or supplement thereto after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and Series D Equipment Notes. The Secured Certificates shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Secured Certificates bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Secured Certificates or did not hold such offices at the respective dates of such Secured Certificates. The Owner Trustee may from time to time execute and deliver Secured Certificates with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Secured Certificates shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Secured Certificates to be authenticated hereunder on original issue with respect to the Aircraft. No Secured Certificate shall be secured by or entitled to any benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears on such Secured Certificate a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Secured Certificates shall be conclusive evidence, and the only evidence, that such Secured Certificate has been duly authenticated and delivered hereunder. -15- 16 SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY. (a) Without impairing any of the other rights, powers, remedies, privileges, liens or security interests of the Certificate Holders under this Trust Indenture, each Certificate Holder, by its acceptance of a Secured Certificate, agrees that as between it and the Owner Trustee, except as expressly provided in this Trust Indenture, the Participation Agreement or any other Operative Document, (i) the obligation to make all payments of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Secured Certificates, and the performance by the Owner Trustee of every obligation or covenant contained in this Trust Indenture and in the Participation Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Trust Indenture and any agreement referred to herein other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Trust Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Owner Trustee is responsible for, or is making, in its individual capacity, for which there would be personal liability of the Owner Trustee), no recourse shall be had with respect to this Trust Indenture 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, and (ii) none of the Owner Trustee, in its individual capacity, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Participation Agreement or any of the other Operative Documents or under the Secured Certificates except as expressly provided herein or in the Participation Agreement; provided, however, that nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Trust Indenture or such other agreements of rights and remedies against the Trust Estate. These provisions are not intended as any release or discharge of the indebtedness represented by the Secured Certificates and the Trust Indenture, but are intended only as a covenant not to sue the Owner Participant, the Owner Trustee or the Indenture Trustee in their individual capacities, except as expressly provided herein or in the Participation Agreement, for a deficiency with respect to such indebtedness, the indebtedness represented by this Trust Indenture and the Secured Certificates to remain in full force and effect as fully as though these provisions were not contained in this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders have expressly reserved all their rights and remedies against the Trust Indenture Estate, including the right, in the event of a default in the payment of all or part of the Principal Amount of, interest on, Make-Whole Amount, if any, or any other amount due with respect to any Secured Certificate within the periods provided for in Section 4.02(b) hereof, or upon the occurrence and continuation of any other Event of Default under this Trust Indenture, to foreclose upon this Trust Indenture, and/or to receive the proceeds from the Trust Indenture Estate and otherwise to enforce any other right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner Participant from personal liability, or constitute a covenant not to sue the Owner Participant, for any breach by it of any of its covenants, representations or warranties contained in the Participation Agreement or for any of the payments it has agreed to make pursuant to the Participation Agreement or (y) release the Owner Trustee or constitute a covenant not to sue the Owner Trustee for any breach by it of any representations, warranties or covenants of the Owner Trustee contained in the Operative Documents or (z) release the Owner Trustee in its individual capacity from personal liability, or constitute a covenant not to sue the Owner Trustee in its individual capacity for any breach by it of any representations, warranties or covenants of the Owner Trustee made in its individual capacity in the Operative Documents. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, 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 any Certificate Holder or the Indenture Trustee, -16- 17 directly or indirectly (other than the recourse liability of the Owner Trustee (in its individual capacity)), to make payment on account of any amount payable as principal, Make-Whole Amount, if any, interest or other amounts on the Secured Certificates or under this Indenture, and (iii) any Certificate Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Owner Trustee (in its individual capacity) or the Owner Participant on account of clause (ii) above, then such Certificate Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Trustee (in its individual capacity) or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a Certificate Holder 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 clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Certificate Holder 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 the Participation Agreement or this Trust Indenture (and any exhibits or annexes hereto or thereto) or by separate agreement or from retaining any amount paid by Owner Participant under Section 2.14 or 4.03 hereof. SECTION 2.04. METHOD OF PAYMENT. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Secured Certificate or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Certificate Holders in the manner provided herein. The Owner Trustee shall not have any responsibility for the distribution of such payment to any Certificate Holder. Notwithstanding the foregoing or any provision in any Secured Certificate to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such holder's Secured Certificate or Secured Certificates to such holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such holder with a bank located in the continental United States the amount to be distributed to such holder, for credit to the account of such holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate such holders for loss of use of funds at the Debt Rate until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Secured Certificate, except that, in the case of the final payment in respect of any Secured Certificate, such Secured Certificate shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Secured Certificate is registered on the Secured Certificate Register as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable with respect to such Secured Certificate and for all other purposes, and none of the Owner Trustee or the Indenture Trustee shall be affected by any notice to the contrary. So long as any signatory to the Participation Agreement or nominee thereof shall be a registered Certificate Holder, all payments to it shall be made to the account of such Certificate Holder specified in Schedule I thereto and otherwise in the manner provided in or pursuant to the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. -17- 18 (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Secured Certificate (and such exclusion and withholding shall constitute payment in respect of such Secured Certificate) any and all United States withholding taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Secured Certificates, to withhold such amounts (and such withholding shall constitute payment in respect of such Secured Certificate) and timely pay the same to the appropriate authority in the name of and on behalf of the Certificate Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Certificate Holder (with a copy to the Owner Trustee and Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Certificate Holder may reasonably request from time to time. If a Certificate Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Secured Certificate(s) held by such holder is made (but prior to the making of such payment), or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by Law (after taking into account any applicable exemptions claimed by the Certificate Holder) to be withheld from payments hereunder or under the Secured Certificates held by such holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Secured Certificates held by such holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Certificate Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Secured Certificates held by such holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Certificate Holder withholding taxes at the appropriate rate under Law and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. SECTION 2.05. APPLICATION OF PAYMENTS. In the case of each Secured Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; -18- 19 Second: to the payment of the Principal Amount of such Secured Certificate (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Secured Certificate; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Secured Certificate remaining unpaid (provided that such Secured Certificate shall not be subject to redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Secured Certificate in the inverse order of their normal maturity. SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE. A Certificate Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Secured Certificates held by such Certificate Holder and all other sums then payable to such Certificate Holder hereunder and under the other Operative Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall have been paid in full. SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED CERTIFICATES. The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the registration of Secured Certificates and the registration of transfers of Secured Certificates. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Secured Certificate Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the purpose of registering Secured Certificates and transfers of Secured Certificates as herein provided. A holder of any Secured Certificate intending to exchange such Secured Certificate shall surrender such Secured Certificate to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Secured Certificate, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Secured Certificate, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Secured Certificates of a like aggregate Principal Amount and of the same series. At the option of the Certificate Holder, Secured Certificates may be exchanged for other Secured Certificates of any authorized denominations of a like aggregate Principal Amount, upon surrender of the Secured Certificates to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Secured Certificates are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Secured Certificates which the Certificate Holder making the exchange is entitled to receive. All Secured Certificates issued upon any registration of transfer or exchange of Secured Certificates (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Trust Indenture, as the Secured Certificates surrendered upon such registration of transfer or exchange. Every Secured Certificate presented or surrendered for registration of transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Certificate Holder or such holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of any applicable state. The Indenture Trustee shall make a notation on each new Secured Certificate of the amount of all payments of Principal Amount previously made on the old Secured Certificate or Secured Certificates with respect to which such new Secured Certificate is issued and the date to which interest on such old Secured Certificate or Secured Certificates has been paid. Interest shall be deemed to have been paid on such new Secured Certificate to the date on which interest shall have been paid on such old Secured Certificate, and all payments of the Principal Amount marked on such new Secured Certificate, as provided above, shall be deemed to have been -19- 20 made thereon. The Owner Trustee shall not be required to exchange any surrendered Secured Certificates as provided above during the ten-day period preceding the due date of any payment on such Secured Certificate. The Owner Trustee shall in all cases deem the Person in whose name any Secured Certificate shall have been issued and registered as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable by the Owner Trustee with respect to such Secured Certificate and for all purposes until a notice stating otherwise is received from the Indenture Trustee and such change is reflected on the Secured Certificate Register. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of a Secured Certificate. Any such transferee of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to the provisions of the Participation Agreement applicable to Certificate Holders, including Sections 6, 8(c), 8(q)(A), 8(t), 8(x), 8(gg), 8(hh), 8(ii), 8(ll), 8(nn), 12, 13(b), 13(c), 15(b), 15(c), and 15(d), and shall be deemed to have represented, warranted and covenanted, to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by the original Loan Participant in the Participation Agreement. Subject to compliance by the Certificate Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates upon transfer or exchange within 10 Business Days of the date a Secured Certificate is surrendered for transfer or exchange. SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED CERTIFICATES. If any Secured Certificate shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the holder of such Secured Certificate, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Secured Certificate, payable in the same Principal Amount dated the same date and captioned as issued in connection with the Aircraft. If the Secured Certificate being replaced has become mutilated, such Secured Certificate shall be surrendered to the Indenture Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the Secured Certificate being replaced has been destroyed, lost or stolen, the holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be required by them to save the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Secured Certificate and of the ownership thereof. If a "qualified institutional buyer" of the type referred to in paragraph (a)(1)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen Secured Certificate, then the written indemnity of such QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Secured Certificate. Subject to compliance by the Certificate Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates within 10 Business Days of the date of the written request therefor from the Certificate Holder. SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION. (a) No service charge shall be made to a Certificate Holder for any registration of transfer or exchange of Secured Certificates, but the Indenture Trustee, as Secured Certificate Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Secured Certificates; provided, however, that neither the Owner Trustee nor the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Secured Certificates surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Secured Certificates. -20- 21 SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES. (a) On the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders but without Make-Whole Amount. (b) If the Lease is terminated with respect to the Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the Lease is so terminated all the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES. Any or all of the Secured Certificates may be redeemed by the Owner Trustee in connection with a transaction described in, and subject to the terms and conditions of, Section 17 of the Participation Agreement upon at least 30 days' revocable prior written notice to the Indenture Trustee and the Certificate Holders, and the Secured Certificates shall, as provided in Section 17 of the Participation Agreement, be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION. (a) Neither any redemption of any Secured Certificate nor any purchase by the Owner Trustee of any Secured Certificate may be made except to the extent and in the manner expressly permitted by this Trust Indenture. No purchase of any Secured Certificate may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Secured Certificates shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Certificate Holder of such Secured Certificates to be redeemed or purchased, at such Certificate Holder's address appearing in the Secured Certificate Register; provided that, in the case of a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be deemed revoked in the event that the Lease does not in fact terminate on the specified termination date or if notice of such redemption shall have been given in connection with a refinancing of Secured Certificates and the Indenture Trustee receives written notice of such revocation from Lessee or the Owner Trustee not later than three days prior to the redemption date. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Secured Certificate, and that, if any such Secured Certificates are then outstanding, interest on such Secured Certificates shall cease to accrue on and after such redemption date, and (4) the place or places where such Secured Certificates are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Secured Certificates to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption date in immediately available funds the redemption price of the Secured Certificates to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid (and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee or at -21- 22 any office or agency maintained for such purposes pursuant to Section 2.07, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Secured Certificates then outstanding shall cease to bear interest. Upon surrender of any such Secured Certificate for redemption or purchase in accordance with said notice, such Secured Certificate shall be redeemed at the redemption price. If any Secured Certificate called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Secured Certificate as of such redemption date. SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE. If, in accordance with Section 8(x) of the Participation Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a full recourse basis) all of the obligations of the Owner Trustee hereunder, under the Secured Certificates and all other Operative Documents by supplemental indenture satisfactory to the Indenture Trustee (which shall contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease and (ii) other provisions necessary or advisable to effectuate such assumption), then upon delivery of such supplemental indenture, payment by Lessee of all expenses (including reasonable fees and expenses of counsel) for the Owner Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of the Secured Certificates and other amounts owing to the Certificate Holders substantially in the form of the Guarantee, and delivery of an opinion of counsel for Lessee that such assumption has been duly and validly effected, the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Secured Certificates and all other Operative Documents and the Owner Participant shall be released and discharged from any further obligations under the Participation Agreement and any other Operative Document to which it is a party, except with respect to any such obligations of the Owner Trustee in its individual capacity and of the Owner Participant that accrued prior thereto. SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.14, purchase all but not less than all of the Secured Certificates outstanding hereunder, and each Certificate Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Secured Certificates and except against Liens on such Secured Certificates arising by, through or under such holder), all of the right, title and interest of such Certificate Holder in and to the Trust Indenture Estate, this Trust Indenture and the Secured Certificates held by it, and such purchaser or its nominee shall assume all of such holder's obligations under the Participation Agreement and hereunder. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Participation Agreement to the holder thereof. Such option to purchase the Secured Certificates may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default, the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to -22- 23 occur pursuant to the terms of the preceding sentence. Such election to purchase the Secured Certificates shall become irrevocable upon the sixteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Certificate Holders will comply with all the provisions of Section 2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes, charges and expenses required pursuant to Section 2.09 in connection with the issuance of such new Secured Certificate shall be borne by the Owner Participant. SECTION 2.15. SUBORDINATION. (a) The Owner Trustee and, by acceptance of its Secured Certificates of any Series, each Certificate Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g) hereof, except as expressly provided in Article III hereof. (b) By the acceptance of its Secured Certificates of any Series (other than Series A), each Certificate Holder of such Series agrees that in the event that such Certificate Holder, in its capacity as a Certificate Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.15 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article III hereof. (c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured Obligations in respect of Series A Secured Certificates have been paid in full, (ii) after the Secured Obligations in respect of Series A Secured Certificates have been paid in full, the Certificate Holders of Series B until the Secured Obligations in respect of Series B Secured Certificates have been paid in full and (iii) after the Secured Obligations in respect of Series B Secured Certificates have been paid in full, the Certificate Holders of Series C until the Secured Obligations in respect of Series C Secured Certificates have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Basic Rent Distribution. Except as otherwise provided in Section 3.03 hereof, each installment of Basic Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly distributed in the following order of priority: FIRST, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Secured Certificates shall be distributed to the Certificate Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Secured Certificate bears to the aggregate amount of the payments then due under all Series A Secured Certificates; -23- 24 (ii) after giving effect to paragraph (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Secured Certificates shall be distributed to the Certificate Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Secured Certificate bears to the aggregate amount of the payments then due under all Series B Secured Certificates; (iii) after giving effect to paragraph (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series C Secured Certificates shall be distributed to the Certificate Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Secured Certificate bears to the aggregate amount of the payments then due under all Series C Secured Certificates; and (iv) after giving effect to paragraph (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series D Secured Certificates shall be distributed to the Certificate Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Secured Certificate bears to the aggregate amount of the payments then due under all Series D Secured Certificates; and SECOND, the balance, if any, of such installment remaining thereafter shall be distributed to the Owner Trustee; provided, however, that if an Event of Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "Second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 5.09 hereof until whichever of the following shall first occur: (i) all Events of Default shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "Second" without reference to this proviso, (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of such Section 3.03, or (iii) the 120th day after the receipt of such payment in which case such payment shall be distributed as provided in this clause "Second" without reference to this proviso. SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION; REFINANCING. Except as otherwise provided in Section 3.03 hereof, any payments received by the Indenture Trustee (i) with respect to the Aircraft as the result of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a refinancing of the Secured Certificates pursuant to Section 17 of the Participation Agreement shall be applied to redemption of the Secured Certificates and to all other amounts payable hereunder or to the Indenture Trustee or any Certificate Holder under the Participation Agreement by applying such funds in the following order of priority: -24- 25 FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for any reasonable costs or expenses incurred in connection with such redemption for which they are entitled to reimbursement, or indemnity by Lessee, under the Operative Documents and then (b) to pay any other amounts then due to the Indenture Trustee and the Certificate Holders under this Trust Indenture, the Participation Agreement or the Secured Certificates; SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, to pay the amounts specified in paragraph (ii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series B Secured Certificates; (iii) after giving effect to paragraph (ii) above, to pay the amounts specified in paragraph (iii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series C Secured Certificates; and (iv) after giving effect to paragraph (iii) above, to pay the amounts specified in paragraph (iv) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series D Secured Certificates; and THIRD, as provided in clause "Fourth" of Section 3.03 hereof; provided, however, that if a Replacement Airframe or Replacement Engine shall be substituted for the Airframe or Engine subject to such Event of Loss as provided in Section 10 of the Lease and in accordance with Section 5.06 hereof, any insurance, condemnation or similar proceeds which result from such Event of Loss and are paid over to the Indenture Trustee shall be held by the Indenture Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be invested as provided in Section 5.09 hereof) as additional security for the obligations of Lessee under the Lessee Operative Documents and, unless otherwise applied pursuant to the Lease, such proceeds (and such investment earnings) shall be released to Lessee at Lessee's written request upon the release of such damaged Airframe or Engine and the replacement thereof as provided in the Lease. SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT. Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Section 15 of the Lease or Article IV hereof) after both an Event of Default shall have occurred and be continuing and the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, as well as all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly distributed by the Indenture Trustee in the following order of priority: FIRST, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate (all such property being herein called the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) incurred by the Indenture Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Certificate Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or any Certificate Holder, liquidated or otherwise, upon such Event of Default shall be applied by the Indenture Trustee as between itself and the Certificate Holders in -25- 26 reimbursement of such expenses and any other expenses for which the Indenture Trustee or the Certificate Holders are entitled to reimbursement under any Operative Document and in the case the aggregate amount to be so distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as shall be required to reimburse the then existing or prior Certificate Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to such then existing or prior Certificate Holders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Certificate Holder pursuant to said Section 5.03 hereof; THIRD, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and -26- 27 (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Secured Certificates the date of distribution, shall be distributed to the Certificate Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series D Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and FOURTH, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee. No Make-Whole Amount shall be due and payable on the Secured Certificates as a consequence of the acceleration of the Secured Certificates. SECTION 3.04. CERTAIN PAYMENTS. (a) Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in this Trust Indenture and for which such provision is made in the Lease, the Participation Agreement or any other Operative Document shall be applied forthwith to the purpose for which such payment was made in accordance with the terms of the Lease, the Participation Agreement or such other Operative Document, as the case may be. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of the Participation Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the third paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the third paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) [Intentionally Omitted] (d) Notwithstanding anything to the contrary contained in this Article III, any amounts received by the Indenture Trustee which constitute Excluded Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. (e) Notwithstanding any provision of this Trust Indenture to the contrary, any amounts held by the Indenture Trustee that would, but for the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall, notwithstanding the provisions of said Section, be distributed to Lessee unless and until a Lease Event of Default shall have occurred and be continuing. SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any other Operative Document shall be distributed by the Indenture Trustee to the extent received or realized at any time (i) -27- 28 prior to the payment in full of all Secured Obligations due the Certificate Holders, in the order of priority specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in full of all Secured Obligations due the Certificate Holders, in the following order of priority: FIRST, to the extent payments or amounts described in clause "First" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "First" of Section 3.03 hereof, and SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof. Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04 hereof, all payments received and amounts realized by the Indenture Trustee under the Lease or otherwise with respect to the Aircraft (including, without limitation, all amounts realized upon the sale or release of the Aircraft after the termination of the Lease with respect thereto), to the extent received or realized at any time after payment in full of all Secured Obligations due the Certificate Holders, shall be distributed by the Indenture Trustee in the order of priority specified in clause (ii) of the immediately preceding sentence of this Section 3.05. SECTION 3.06. PAYMENTS TO OWNER TRUSTEE. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account (within the time limits contemplated by Section 2.04(a)) specified in Schedule I to the Participation Agreement. SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE. All payments received by the Indenture Trustee pursuant to the Guarantee shall be distributed forthwith by the Indenture Trustee in the same order of priority, and in the same manner, as it would have distributed the payment in respect of which such payment under the Guarantee was received. ARTICLE IV COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Owner Trustee. The Owner Trustee hereby covenants and agrees (the covenants and agreements only in clause (b) below being made by the Owner Trustee in its individual capacity) as follows: (a) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Secured Certificates and hereunder in accordance with the terms of the Secured Certificates and this Trust Indenture and all amounts, if any, payable by it to the Certificate Holders under the Participation Agreement; (b) the Owner Trustee in its individual capacity covenants and agrees that it shall not, directly or indirectly, cause or permit to exist a Lessor Lien attributable to it in its individual capacity -28- 29 with respect to the Aircraft or any other portion of the Trust Estate; that it will promptly, at its own expense, take such action as may be necessary to duly discharge such Lessor Lien attributable to it in its individual capacity; and that it will make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Lessor Liens attributable to it in its individual capacity; (c) in the event the Owner Trustee shall have Actual Knowledge of an Event of Default, a Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Event of Default, Default or Event of Loss to the Indenture Trustee, each Certificate Holder, Lessee and the Owner Participant; (d) the Owner Trustee will furnish to the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of any Termination Notice and a copy of each report or notice received pursuant to Section 9(a) and 11(c) of the Lease to the extent that the same shall not have been furnished to the Indenture Trustee pursuant to the Lease; (e) except pursuant to the Operative Documents or with the consent of the Indenture Trustee (acting pursuant to instructions given in accordance with Section 9.01 hereof), the Owner Trustee will not contract for, create, incur, assume or suffer to exist any Debt, and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the Debt of any other person; and (f) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. EVENT OF DEFAULT. "EVENT OF DEFAULT" means any of the following events (whatever the reason for such Event of Default and whether 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): (a) any Lease Event of Default (provided that any such Lease Event of Default caused solely by a failure of Lessee to pay to the Owner Trustee or the Owner Participant when due any amount that is included in the definition of Excluded Payments shall not constitute an Event of Default unless notice is given by the Owner Trustee to the Indenture Trustee that such failure shall constitute an Event of Default); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due and payable under any Secured Certificate or hereunder (other than any such failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof or as a result of a Lease Event of Default or a Lease Default) and such failure shall have continued unremedied for ten Business Days in the case of any payment of Principal Amount or interest or Make-Whole Amount, if any, thereon and, in the case of any other amount, for ten Business Days after the Owner Trustee and the Owner Participant receives written demand from the Indenture Trustee or any Certificate Holder; or (c) any Lien required to be discharged by the Owner Trustee, in its individual capacity pursuant to Section 4.01(b) hereof or in its individual or trust capacity pursuant to Section 8(h) of the Participation Agreement, or by the Owner Participant pursuant to Section 8(h) of the Participation Agreement shall remain undischarged for a period of 30 days after the Owner Trustee and the Owner -29- 30 Participant shall have received written notice from the Indenture Trustee or any Certificate Holder of such Lien; or (d) any representation or warranty made by the Owner Participant or the Owner Trustee herein, in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in any certificate furnished by the Owner Participant or the Owner Trustee to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents shall prove to have been false or incorrect when made in any material respect and continues to be material; and if such misrepresentation is capable of being corrected and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 60 days (or, without affecting Section 4.02(f) hereof, in the case of the representations made in Section 8(c) of the Participation Agreement as to the citizenship of the Owner Trustee in its individual capacity or of the Owner Participant, respectively, as soon as is reasonably practicable but in any event within 60 days) following notice thereof from the Indenture Trustee or any Certificate Holder to the Owner Trustee or the Owner Participant, as the case may be; or (e) other than as provided in (c) above or (f) below, any failure by the Owner Trustee or Owner Participant to observe or perform any other covenant or obligation of the Owner Trustee or Owner Participant, as the case may be, for the benefit of the Indenture Trustee or the Certificate Holders contained in the Participation Agreement, Section 4.01(a) of the Trust Agreement, the Secured Certificates or this Trust Indenture which is not remedied within a period of 60 days after notice thereof has been given to the Owner Trustee and the Owner Participant; or (f) if at any time when the Aircraft is registered under the laws of the United States, the Owner Participant shall not be a Citizen of the United States, and as the result thereof the registration of the Aircraft under the Federal Aviation Act, and regulations then applicable thereunder, shall cease to be effective; provided that no Event of Default shall be deemed to have occurred under this paragraph (f) unless such circumstances continue unremedied for more than 60 days after the Owner Participant has Actual Knowledge of the state of facts that resulted in such ineffectiveness and of such loss of citizenship; or (g) at any time either (i) the commencement of an involuntary case or other proceeding in respect of the Owner Participant, the Owner Trustee or the Trust Estate 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 seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii) the commencement by the Owner Participant, the Owner Trustee or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee or the Trust Estate to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or the making by the Owner Participant, the Owner Trustee or the Trust Estate of any assignment for the benefit of creditors or the Owner Participant or the Owner Trustee shall take any action to authorize any of the foregoing; provided, however, that an event referred to in this Section 4.02(g) with respect to the Owner Participant shall not constitute an Event of Default if within 30 days of the commencement of the case or proceeding a final non-appealable order, judgment or decree shall be entered in such case or proceeding by a court or a trustee, custodian, receiver or liquidator, to the effect that, no part of the Trust Estate (except for the Owner Participant's beneficial interest therein) and no right, title or interest under the Trust Indenture Estate shall be included in, or be subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 4.02(g). -30- 31 SECTION 4.03. CERTAIN RIGHTS. The Indenture Trustee shall give the Certificate Holders, the Owner Trustee and the Owner Participant prompt written notice of any Event of Default of which the Indenture Trustee has Actual Knowledge and, if any such Event of Default results from a Lease Event of Default, shall give the Certificate Holders, the Owner Trustee and the Owner Participant not less than ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence and consummate the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the provisions of Section 15 of the Lease. If an Event of Default shall have occurred and be continuing, the Owner Trustee shall have the following rights hereunder, any of which may be exercised directly by the Owner Participant. If as a result of the occurrence of an Event of Default in respect of the nonpayment by Lessee of Basic Rent due under the Lease, the Indenture Trustee shall have insufficient funds to make any payment of Principal Amount and interest on any Secured Certificate on the day it becomes due and payable, the Owner Trustee or the Owner Participant may, but shall not be obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the manner provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an amount equal to the portion of the Principal Amount and interest (including interest, if any, on any overdue payments of such portion of Principal Amount and interest) then due and payable on the Secured Certificates, and, unless the Owner Trustee has cured Events of Default in respect of payments of Basic Rent on each of the three immediately preceding Basic Rent payment dates, or the Owner Trustee has cured six previous Events of Default in respect of payments of Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any Event of Default which would otherwise have arisen on account of the nonpayment by Lessee of such installment of Basic Rent (but not any other Default or Event of Default which shall have occurred and be continuing). If any Event of Default (other than in respect of the nonpayment of Basic Rent by Lessee) which can be cured has occurred, the Owner Trustee or the Owner Participant may, but shall not be obligated to, cure such Event of Default prior to the Enforcement Date as is necessary to accomplish the observance or performance of the defaulted covenant, condition or agreement. Except as hereinafter in this Section 4.03 provided, the Owner Trustee shall not, as a result of exercising the right to cure any such Event of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable under the Lease for or on account of costs or expenses incurred in connection with the exercise of such right, nor shall any claim of the Owner Trustee against Lessee or any other party for the repayment of such costs or expenses impair the prior right and security interest of the Indenture Trustee in and to the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner Participant pursuant to the first or second preceding paragraphs of this Section 4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be subrogated to the rights of the Indenture Trustee and the Certificate Holders in respect of the Basic Rent which was overdue at the time of such payment and interest payable by Lessee on account of its being overdue and any Supplemental Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant to the immediately preceding paragraph (but in either case shall have no rights as a secured party hereunder), and thereafter, the Owner Trustee or the Owner Participant, as the case may be, shall be entitled to receive such overdue Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt thereof by the Indenture Trustee (and shall be entitled to bring an action against Lessee to enforce such payment); provided, however, that (i) if the Principal Amount and interest on the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to all Secured Certificates shall have been paid in full, be subordinate to the rights of the Indenture Trustee and the Certificate Holders in respect of such payment of overdue Basic Rent, Supplemental Rent and such interest and (ii) the Owner Trustee shall not be entitled to seek to recover any such payment (or any payment in lieu thereof) except pursuant to the foregoing right of subrogation by demand or suit for damages. -31- 32 SECTION 4.04. REMEDIES. (a) Subject to the provisions of Section 2.14 hereof, if an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, then and in every such case the Indenture Trustee may, subject to the second paragraph of this Section 4.04(a), on and after the Enforcement Date if such Event of Default results from a Lease Event of Default, exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article IV and shall have and may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and, in the event such Event of Default is also a Lease Event of Default, any and all of the remedies pursuant to Section 15 of the Lease and may take possession of all or any part of the properties covered or intended to be covered by the Lien created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee and Lessee and all persons claiming under any of them wholly or partly therefrom, provided, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Unless an Event of Default not resulting from or relating to a Lease Event of Default has occurred and is continuing, the Owner Trustee or the Owner Participant may bid at any public sale and become the purchaser. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Trust Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder as a result of an Event of Default which arises solely by reason of one or more events or circumstances which constitute a Lease Event of Default unless the Indenture Trustee as security assignee of the Owner Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 15 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person. In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any rights or remedy of the Indenture Trustee hereunder) to participate in such proceedings. It is expressly understood and agreed that, subject only to the immediately preceding paragraph, the inability, described in such paragraphs, of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising any or all of its rights, powers and remedies under this Trust Indenture, including, without limitation, this Article IV. (b) If an Event of Default shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery of written notice or notices to the Owner Trustee and the Owner Participant, declare all the Secured Certificates to be due and payable, whereupon the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued but unpaid interest thereon (without Make-Whole Amount) and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. -32- 33 This Section 4.04(b), however, is subject to the condition that, if at any time after the Principal Amount of the Secured Certificates shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Secured Certificates and all other amounts payable under the Secured Certificates (except the Principal Amount of the Secured Certificates which by such declaration shall have become payable) shall have been duly paid, and every other Default and Event of Default with respect to any covenant or provision of this Trust Indenture shall have been cured, then and in every such case a Majority in Interest of Certificate Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. (c) Any Certificate Holder shall be entitled, at any sale pursuant to Section 15 of the Lease or this Section 4.04, to credit against any purchase price bid at such sale by such holder all or any part of the unpaid obligations owing to such Certificate Holder and secured by the Lien of this Trust Indenture (but only to the extent that such purchase price would have been paid to such Certificate Holder pursuant to Article III hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c) were not given effect). (d) In the event of any sale of the Trust Indenture Estate, or any part thereof, pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Trust Indenture, the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued interest thereon, and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any Mortgaged Property or take any action with respect to any Mortgaged Property so acquired by it if such acquisition or action would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. RETURN OF AIRCRAFT, ETC. (a) If an Event of Default shall have occurred and be continuing, subject to Sections 4.03 and 4.04 hereof, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Mortgaged Property included in the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents to the fullest extent permitted by applicable law, and (ii) pursue all or part of such Mortgaged Property wherever it may be found and, in the event that a Lease Event of Default has occurred and is continuing, may enter any of the premises of Lessee wherever such Mortgaged Property may be or be supposed to be and search for such Mortgaged Property and take possession of and remove such Mortgaged Property. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Trust Indenture. (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Mortgaged Property, make all such expenditures for maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modifications or alterations to and of the Mortgaged Property, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the Mortgaged Property and to carry on the business and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Mortgaged -33- 34 Property, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modification or alteration of the Mortgaged Property or any part thereof as the Indenture Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Mortgaged Property and every part thereof, except Excluded Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Trust Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, improvement, modification or alteration of the Mortgaged Property and of conducting the business thereof, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Mortgaged Property or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Trust Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee with respect hereto. SECTION 4.06. REMEDIES CUMULATIVE. Each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or Lessee or to be an acquiescence therein. SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS. In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Trust Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Owner Trustee, the Indenture Trustee and Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Mortgaged Property, and all rights, remedies and powers of the Owner Trustee, the Indenture Trustee or Lessee shall continue as if no such proceedings had been instituted. SECTION 4.08. WAIVER OF PAST DEFAULTS. Upon written instruction from a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Default hereunder and its consequences and upon any such waiver such Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon; provided, that in the absence of written instructions from all the Certificate Holders, the Indenture Trustee shall not waive any Default (i) in the payment of the Principal Amount, Make-Whole Amount, if any, and interest and other amounts due under any Secured Certificate then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Certificate Holder. -34- 35 SECTION 4.09. APPOINTMENT OF RECEIVER. The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee thereof) for all or any part of the Mortgaged Property, whether such receivership be incidental to a proposed sale of the Mortgaged Property or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Mortgaged Property shall be entitled to exercise all the rights and powers of the Indenture Trustee with respect to the Mortgaged Property. SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC.. The Owner Trustee irrevocably appoints the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture, whether pursuant to foreclosure or power of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Owner Trustee hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Trust Indenture, the right of any Certificate Holder to receive payment of principal of, and premium, if any, and interest on a Secured Certificate on or after the respective due dates expressed in such Secured Certificate, or to bring suit for the enforcement of any such payment on or after such respective dates in accordance with the terms hereof, shall not be impaired or affected without the consent of such Certificate Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default arising from a failure to pay Rent, the Indenture Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms of Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default or Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture Trustee shall not have received instructions as above provided within 20 days after mailing notice of such Event of Default to the Certificate Holders, the Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default or Default as it shall determine advisable in the best interests of the Certificate Holders. If the Indenture Trustee shall at any time declare the Lease to be in default pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall forthwith notify the Owner Participant, the Certificate Holders, the Owner Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall not be deemed to have knowledge of a Default or an Event of Default (except, in the case of the Indenture Trustee, the failure of Lessee to pay any installment of Basic Rent within one Business Day after the same shall become due, if -35- 36 any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee, the Owner Participant or one or more Certificate Holders. SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, subject to the terms of this Section 5.02, take such of the following actions as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder as shall be specified in such instructions; (ii) give such notice or direction or exercise such right, remedy or power under the Lease, the Participation Agreement, the Purchase Agreement, or any other part of the Trust Indenture Estate as shall be specified in such instructions; and (iii) after the occurrence and during the continuance of an Event of Default, approve as satisfactory to the Indenture Trustee all matters required by the terms of the Lease to be satisfactory to the Owner Trustee, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall not approve any such matter as satisfactory to the Indenture Trustee; provided, that anything contained in this Trust Indenture, the Lease or the other Operative Documents to the contrary notwithstanding: (1) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excluded Payments from Lessee or the Guarantor, exercise any election or option or make any decision or determination or give or receive any notice, consent, waiver or approval in respect of any Excluded Payment and seek legal or equitable remedies to require Lessee or the Guarantor to maintain the insurance coverage referred to in Section 11 of the Lease; provided, that the rights referred to in this clause (1) shall not be deemed to include the exercise of any remedies provided for in Section 15 of the Lease other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by Lessee or the Guarantor of such amounts included in Excluded Payments or performance by Lessee or the Guarantor of such insurance covenant, or to recover damages for the breach thereof or for specific performance of any covenant of Lessee or the Guarantor; (2) unless an Event of Default and an Indenture Trustee Event shall have occurred and be continuing, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that whether or not an Event of Default shall have occurred and be continuing, no amendment, modification, waiver or consent in respect of the Lease shall affect the amount or timing of, or the right to enforce payment of, any Excluded Payment; (3) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which any thereof is permitted or required to give or furnish to the Owner Trustee or Lessor pursuant to any Operative Document (including pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 11(e) of the Lease specifically confers on Lessor or the Owner Participant, (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of Lessor under Section 21 of the Lease and (v) to give notices of default under Section 14 of the Lease; -36- 37 (4) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee shall have the right to the exclusion of the Indenture Trustee to adjust Rent, Stipulated Loss Values and Termination Values as provided in Section 3(d) of the Lease and to select counsel with respect to any opinion relating to tax matters to be delivered solely to the Owner Participant; (5) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee may, without the consent of the Indenture Trustee, (i) solicit and make bids with respect to the Aircraft under Section 9 of the Lease in respect of a termination of the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales value" and "fair market rental value" under Section 19 of the Lease for all purposes except following an Event of Default pursuant to Section 15 of the Lease, and (iii) make an election pursuant to and in accordance with the provisions of Section 9(c) of the Lease; and (6) so long as no Event of Default shall have occurred and be continuing, except as provided in clauses (2) and (3) above, all rights of the "Lessor" under the Lease shall be exercised by the Owner Trustee to the exclusion of the Indenture Trustee including, without limitation, the right to (i) exercise all rights with respect to Lessee's use and operation, modification or maintenance of the Aircraft and any Engine which the Lease specifically confers on Lessor, and (ii) consent to and approve any assignment pursuant to Section 13 of the Lease; provided that the foregoing shall not limit (A) any rights separately granted to the Indenture Trustee under the Operative Documents or (B) the right of the Indenture Trustee to receive any funds to be delivered to the "Lessor" under the Lease (except with respect to Excluded Payments) and under the Purchase Agreement. Notwithstanding anything to the contrary contained herein, the Indenture Trustee shall have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) declare the Lease to be in default under Section 15 thereof and (B) subject only to the provisions of Sections 4.03, 4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15 (other than in connection with Excluded Payments) at any time that a Lease Event of Default shall have occurred and be continuing. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as specified by Lessee pursuant to Section 8(e) of the Participation Agreement or as may be specified from time to time in written instructions of a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee will furnish to each Certificate Holder (and, during the continuation of an Indenture Trustee Event, to the Owner Trustee and Owner Participant), promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder, including, without limitation, a copy of any Termination Notice (as defined in the Lease) and a copy of each report or notice received pursuant to Sections 9(a) and 11(c) of the Lease, respectively, to the extent that the same shall not have been furnished to such Certificate Holder pursuant hereto or to the Lease. (b) If any Lease Event of Default shall have occurred and be continuing and the Owner Trustee shall not have cured fully such Lease Event of Default under and in accordance with Section 4.03 hereof, on request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall declare the Lease to be in default pursuant to Section 15 thereof and exercise those remedies specified by such Certificate Holders. The Indenture Trustee agrees to provide to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with such declaration by the Indenture Trustee, notice of such declaration by the Indenture Trustee. -37- 38 SECTION 5.03. INDEMNIFICATION. The Indenture Trustee shall not be under any obligation to take any action under this Trust Indenture and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds or otherwise incur the risk of any financial liability in the performance of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (the written indemnity of any Certificate Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Indenture Trustee shall be accepted as reasonable assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture or any other Operative Document be deemed to impose a duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or of the Lease or is otherwise contrary to Law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR INSTRUCTIONS. The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Trust Indenture or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Trust Indenture or as expressly provided in written instructions from Certificate Holders as provided in this Trust Indenture; and no implied duties or obligations shall be read into this Trust Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof), promptly take such action as may be necessary duly to discharge all liens and encumbrances on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the ownership of the Aircraft or the administration of the Trust Indenture Estate or any other transaction pursuant to this Trust Indenture or any document included in the Trust Indenture Estate. SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR INSTRUCTIONS. The Owner Trustee and the Indenture Trustee agree that they will not use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate except (i) as required by the terms of the Lease or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Trust Indenture and in accordance with the express terms hereof. SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES. At any time an Airframe or Engine is to be replaced under or pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of Default is continuing, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid, but only upon compliance by Lessee with the applicable provisions of Section 10 of the Lease and upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee, requesting such release specifically describing the Airframe and/or Engine(s) so to be released. (2) A certificate signed by a duly authorized officer of Lessee stating the following: -38- 39 A. With respect to the Replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe to be received (including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number) as consideration for the Airframe to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of such Replacement Airframe free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Airframe will on such date be in good working order and condition, and that such Replacement Airframe has been or, substantially concurrently with such withdrawal, will be duly registered in the name of the Owner Trustee under the Federal Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and that Lessee will have the full right and authority to use such Replacement Airframe; (iv) the existence of the insurance required by Section 11 of the Lease with respect to such Replacement Airframe and the payment of all premiums then due thereon; (v) that the Replacement Airframe is of the same or an improved model as the Airframe requested to be released from this Indenture; (vi) the fair market value of the Replacement Airframe as of the date of such certificate (which value in the judgment of Lessee shall be not less than the then fair market value of the Airframe requested to be released) (assuming such Airframe was in the condition and repair required to be maintained under the Lease); (vii) the fair market value of the Airframe immediately prior to the date the Airframe suffered an Event of Loss (assuming such Airframe was in the condition and repair required to be maintained under the Lease); -39- 40 (viii) that no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default, has occurred which has not been remedied or waived, and that Lessee will not be in default, by the making and granting of the request for release and the addition of a Replacement Airframe, in the performance of any of the terms and covenants of the Lease; and (ix) that the release of the Airframe so to be released will not be in contravention of any of the provisions of this Indenture; or B. with respect to the replacement of any Engine: (i) a description of the Engine which shall be identified by manufacturer's serial number; (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) as consideration for the Engine to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Engine will on such date be in good working order and condition and that such Replacement Engine is substantially the same as the Engine to be released (or as improved model); (iv) the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then fair market value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease)); (v) the fair market value of the Engine to be released (immediately prior to any Event of Loss suffered by such Engine and assuming that such Engine was in the condition and repair required to be maintained under the Lease); (vi) that each of the conditions specified in Section 10(b) of the Lease with respect to such Replacement Engine have been satisfied and that Lessee will not be in default, by the making and granting of the request for release and the addition of the Replacement Engine, in the performance of any of the terms and covenants of the Lease; -40- 41 (vii) that, with respect to the replacement of an Engine pursuant to Section 9(d) of the Lease, no Lease Event of Default and no Lease Default, has occurred which has not been remedied or waived; and (viii) that the release of the Engine so to be released will not be in contravention of any of the provisions of this Indenture. (3)(a) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting such Replacement Airframe or Replacement Engine and any related warranty rights to the lien of this Indenture. (b) With respect to the replacement of any Engine, such Uniform Commercial Code financing statements covering the lien created by this Indenture as deemed necessary or desirable by counsel for the Indenture Trustee to protect the lien under the Indenture in the Replacement Engine. (4) A certificate from either an aircraft engineer (who may be an employee of Lessee) or a firm of independent aircraft appraisers selected by Lessee confirming the accuracy of the information set forth in clause (2)A(vi) of this Section 5.06. (5) The opinion of in-house counsel to Lessee, or other counsel satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be lawfully released from the lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Indenture, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate -41- 42 and interest of the Owner Trustee to and the lien of this Indenture on such Replacement Aircraft or Replacement Engine. SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS. If a Replacement Airframe or Replacement Engine is being substituted as contemplated by Section 10 of the Lease, (a) the Owner Trustee and the Indenture Trustee agree for the benefit of the Certificate Holders and Lessee, subject to fulfillment of the conditions precedent and compliance by Lessee with its obligations set forth in Section 10 of the Lease and the requirements of Section 5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to execute and deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease, and (b) the provisions of this Trust Indenture shall no longer be applicable to the Airframe or Engine or Engines being replaced, which shall be released from the Lien of this Indenture. SECTION 5.08. EFFECT OF REPLACEMENT. In the event of the substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease, all provisions of this Trust Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced. SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of the Lease shall be held in accordance with the terms of such Section and the Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of the Owner Trustee under such Section. Any amounts held by the Indenture Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee may acquire the same using its best efforts. Unless otherwise expressly provided in this Trust Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Trust Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever such sale is necessary to make a distribution required by this Trust Indenture. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse all monies constituting part of the Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its individual capacity, and the Indenture Trustee, in its individual capacity, shall not be answerable or accountable under any circumstances, except (i) for their own willful misconduct or gross negligence (other than for the handling of funds, -42- 43 for which the standard of accountability shall be willful misconduct or negligence), (ii) in the case of the Indenture Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii) for liabilities that may result, in the case of the Owner Trustee, from the inaccuracy of any representation or warranty of the Owner Trustee expressly made in its individual capacity in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents) or, in the case of the Indenture Trustee (in its individual capacity), from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable for any action or inaction of the other or of the Owner Participant. SECTION 6.02. ABSENCE OF DUTIES. In the case of the Indenture Trustee, except in accordance with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the Lease or of this Trust Indenture or any other document, or to see to the maintenance of any such registration, recording or filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Lessee's covenants under the Lease with respect to the Aircraft. The Owner Participant shall not have any duty or responsibility hereunder, including, without limitation, any of the duties mentioned in clauses (i) through (v) above; provided, that nothing contained in this sentence shall limit any obligations of the Owner Participant under the Participation Agreement or relieve the Owner Participant from any restriction under Section 4.03 hereof. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR DOCUMENTS. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its individual capacity warrants that (i) the Owner Trustee has received on the Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Trustee in its individual capacity. Neither the Owner Trustee, in its individual capacity or as Owner Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual or trust capacities, makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Trust Indenture, the Trust Agreement, the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Owner Trustee made in its individual capacity and the representations and warranties of the Indenture Trustee, in each case expressly made in this Trust Indenture or in the Participation Agreement (or, upon consummation of the -43- 44 Refinancing Transaction, the Refunding Agreement). The Loan Participants, the Certificate Holders and the Owner Participant make no representation or warranty hereunder whatsoever. SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the Certificate Holders, Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by Law or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under such general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for any interest thereon (except that the Indenture Trustee shall invest all monies held as directed by Lessee so long as no Lease Event of Default or Lease Default has occurred and is continuing (or in the absence of such direction, by the Majority In Interest of Certificate Holders) in Cash Equivalents; provided, however, that any payments received, or applied hereunder, by the Indenture Trustee shall be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL. Neither the Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors (or Executive Committee thereof) of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Secured Certificates outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to Lessee the manner of ascertainment of which is not specifically described herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee and the Indenture Trustee for any action taken or omitted to be taken by them in good faith in reliance thereon. The Indenture Trustee shall assume, and shall be fully protected in assuming, that the Owner Trustee is authorized by the Trust Agreement to enter into this Trust Indenture and to take all action to be taken by it pursuant to the provisions hereof, and shall not inquire into the authorization of the Owner Trustee with respect thereto. In the administration of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled persons. SECTION 6.06. CAPACITY IN WHICH ACTING. The Owner Trustee acts hereunder solely as trustee as herein and in the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein, in the Trust Agreement and in the Participation Agreement. SECTION 6.07. COMPENSATION. The Indenture Trustee shall be entitled to reasonable compensation, including expenses and disbursements (including the reasonable fees and expenses of counsel), for all services rendered hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by Lessee, and shall have the right, on and subsequent to an Event of Default hereunder, to use or apply any monies held by it hereunder in -44- 45 the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against the Loan Participants, the Certificate Holders, the Owner Trustee or the Owner Participant for any fee as compensation for its services as trustee under this Trust Indenture. SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS. In the administration of the trusts created hereunder, the Indenture Trustee shall have the right to seek instructions from a Majority in Interest of Certificate Holders should any provision of this Trust Indenture appear to conflict with any other provision herein or should the Indenture Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no liability in refraining from acting until it receives such instructions. The Indenture Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.08. ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. SCOPE OF INDEMNIFICATION. The Owner Trustee, not in its individual capacity, but solely as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its individual and trust capacities), and its successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Trust Indenture), claims, actions, suits, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever, which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also indemnified against by any other Person under any other document) in any way relating to or arising out of this Trust Indenture or any other Operative Document to which it is a party or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, to the extent not reimbursed by Lessee. Without limiting the foregoing, the Indenture Trustee agrees that, prior to seeking indemnification from the Trust Indenture Estate, it will demand, and take such action as it may in its discretion determine to be reasonable to pursue, indemnification available to the Indenture Trustee under the Lease or the Participation Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be entitled to any indemnification for any Expenses to the extent relating to or arising from the willful misconduct or gross negligence (or negligence in the case of handling funds) of the Indenture Trustee in the performance of its duties hereunder or resulting from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) referred to in Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities under such Sections. In addition, if necessary, the Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. -45- 46 ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement including upon any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee, Lessee and the Certificate Holders. SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Certificate Holders may at any time (but only with the consent of Lessee, which consent shall not be unreasonably withheld, except that such consent shall not be necessary if a Lease Event of Default is continuing) remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Certificate Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so long as no Lease Event of Default shall have occurred and be continuing, shall be subject to Lessee's reasonable approval. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as above provided. (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee an instrument accepting such appointment and assuming the obligations of the Indenture Trustee under the Participation Agreement arising from and after the time of such appointment, and thereupon such successor Indenture Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee herein; but nevertheless upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all monies or other property then held by such predecessor Indenture Trustee hereunder. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having its principal place of business in the Borough of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations under the Operative Documents are guaranteed by an affiliated entity having) a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. (d) Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation to which substantially all the corporate trust business of -46- 47 the Indenture Trustee may be transferred, shall, subject to the terms of paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the Indenture Trustee under this Trust Indenture without further act. SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Trust Indenture Estate shall be situated or to make any claim or bring any suit with respect to or in connection with the Trust Indenture Estate, this Trust Indenture, any other Indenture Agreement, the Secured Certificates or any of the transactions contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interests of the Certificate Holders (and the Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture Trustee shall have been requested to do so by a Majority in Interest of Certificate Holders, then in any such case, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and such other instruments as may from time to time be necessary or advisable either (1) to constitute one or more bank or trust companies or one or more persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as additional trustee or trustees of all or any part of the Trust Indenture Estate, or to act as separate trustee or trustees of all or any part of the Trust Indenture Estate, in each case with such rights, powers, duties and obligations consistent with this Trust Indenture as may be provided in such supplemental indenture or other instruments as the Indenture Trustee or a Majority in Interest of Certificate Holders may deem necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional and separate trustee, subject in each case to the remaining provisions of this Section 8.03. If the Owner Trustee shall not have taken any action requested of it under this Section 8.03(a) that is permitted or required by its terms within 15 days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing provisions of this Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and perform any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee. In case any additional or separate trustee appointed under this Section 8.03(a) shall die, become incapable of acting, resign or be removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to the Indenture Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.03(a). (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Trust Indenture Estate or otherwise payable under any Operative Document to the Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights, powers, duties and obligations conferred or imposed upon any additional or separate trustee shall be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly except to the extent that applicable Law of any jurisdiction in which any particular act is to be performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of the Indenture Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Indenture Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.03 shall be subject to, and shall have the benefit of Articles IV through VIII and Article X hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. -47- 48 (c) If at any time the Indenture Trustee shall deem it no longer necessary or desirable in order to conform to any such law or take any such action or shall be advised by such counsel that it is no longer so necessary or desirable in the interest of the Certificate Holders, or in the event that the Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Certificate Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when and to the extent it could so act under Section 8.03(a) hereof. ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS. (a) Except as provided in Section 5.02 hereof, and except with respect to Excluded Payments, the Owner Trustee agrees it shall not enter into any amendment of or supplement to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee and a Majority in Interest of Certificate Holders. Anything to the contrary contained herein notwithstanding, without the necessity of the consent of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter into amendments of or additions to the Lease to modify Section 5 (except to the extent that such amendment would affect the rights or exercise of remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such amendments, modifications and changes do not and would not affect the time of, or reduce the amount of, Rent payments until after the payment in full of all Secured Obligations or otherwise adversely affect the Certificate Holders. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with the Certificate Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Certificate Holders, or does not adversely effect the Certificate Holders, but upon the written request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each holder of an affected Secured Certificate then outstanding, no such amendment of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Sections 2.10, 2.11, 2.15, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, the definitions of "Majority in Interest of Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Secured Certificate, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any -48- 49 indemnities in favor of the Certificate Holders, (iv) consent to any change in the Trust Indenture or the Lease which would permit redemption of Secured Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as permitted by Section 2.14 hereof, (v) modify any of the provisions of Section 3(d)(v) of the Lease, or modify, amend or supplement the Lease or consent to any assignment of the Lease, in either case releasing Lessee from its obligations in respect of the payment of Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. So long as no Lease Event of Default has occurred and is continuing, without the consent of Lessee no amendment or supplement to this Trust Indenture or waiver or modification of the terms hereof shall adversely affect Lessee. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Certificate Holder for any of the following purposes: (i) (a) to cure any defect or inconsistency herein or in the Secured Certificates, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Certificate Holders in its capacity solely as Certificate Holder; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Trust Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Certificate Holders, or to surrender any rights or power herein conferred upon the Owner Trustee, the Owner Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and (vii) to include on the Secured Certificates any legend as may be required by law. SECTION 9.02. TRUSTEES PROTECTED. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of Section 9.01 hereof adversely affects any right, duty, immunity or indemnity with respect to such institution under this Trust Indenture or the Lease, such institution may in its discretion decline to execute such document. SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to Section 9.01 hereof, the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each Certificate Holder at its address last set forth in the Secured Certificate Register, but the failure of the Indenture Trustee to mail such copies shall not impair or affect the validity of such document. SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST AGREEMENT AND INDENTURE SUPPLEMENT. No written request or consent of the Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof shall be required to enable the Owner Trustee to enter into any Lease Supplement specifically required by the terms of the Lease or to execute and deliver a Trust Agreement and Indenture Supplement specifically required by the terms hereof. -49- 50 ARTICLE X MISCELLANEOUS SECTION 10.01. TERMINATION OF TRUST INDENTURE. Upon (or at any time after) payment in full of the Principal Amount of, Make-Whole Amount, if any, and interest on and all other amounts due under all Secured Certificates and provided that there shall then be no other Secured Obligations due to the Certificate Holders and the Indenture Trustee hereunder or under the Participation Agreement, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft and the Engines from the Lien of this Trust Indenture and releasing the Lease, the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto from the assignment and pledge thereof hereunder and the Indenture Trustee shall execute and deliver such instrument as aforesaid and give written notice thereof to Lessee; provided, however, that this Trust Indenture and the trusts created hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property constituting part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all monies or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE HOLDERS. No holder of a Secured Certificate shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Secured Certificate or other right, title and interest of any Certificate Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Trust Indenture or entitle such holder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Trust Indenture Estate. SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING. Any sale or other conveyance of the Trust Indenture Estate, or any part thereof (including any part thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind the Certificate Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders in and to such Trust Indenture Estate or part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS. Nothing in this Trust Indenture, whether express or implied, shall be construed to give any person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or equitable right, remedy or claim under or in respect of this Trust Indenture. SECTION 10.05. NOTICES. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), with a copy to the Owner Participant addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee, -50- 51 addressed to it at its office at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to any Participant, Lessee or any Certificate Holder, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party (if any) set forth on the signature pages to the Refunding Agreement or in the Secured Certificate Register. Whenever any notice in writing is required to be given by the Owner Trustee, any Participant or the Indenture Trustee or any Certificate Holder or Lessee to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after being mailed, addressed as provided above. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Trust Indenture. SECTION 10.06. SEVERABILITY. Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS. No term or provision of this Trust Indenture or the Secured Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Owner Trustee and the Indenture Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any Secured Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 10.08. SUCCESSORS AND ASSIGNS. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the permitted successors and assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificate Holder shall bind the successors and assigns of such holder. This Trust Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby, thereby and by the Participation Agreement. Each Certificate Holder by its acceptance of a Secured Certificate agrees to be bound by this Trust Indenture and all provisions of the Participation Agreement applicable to a Loan Participant or a Certificate Holder. SECTION 10.09. HEADINGS. The headings of the various Articles and sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.10. NORMAL COMMERCIAL RELATIONS. Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or any bank or other Affiliate of such Participant may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Lessee, fully to the same extent as if this Trust Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. -51- 52 SECTION 10.11. GOVERNING LAW; COUNTERPART FORM. THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the parties hereto in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.12. VOTING BY CERTIFICATE HOLDERS. All votes of the Certificate Holders shall be governed by a vote of a Majority in Interest of Certificate Holders, except as otherwise provided herein. SECTION 10.13. BANKRUPTCY. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee hereunder), shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any of the provisions of this Trust Indenture or the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner Trustee will take any action contrary to Lessee's rights under the Lease, including the right to possession and use of, and the quiet enjoyment of, the Aircraft, except in accordance with provisions of the Lease. -52- 53 IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to be duly executed by their respective officers thereof duly authorized as of the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, as Owner Trustee By: ________________________________________________ Name: ________________________________________________ Title: STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By: ________________________________________________ Name: ________________________________________________ Title: -53- 54 ----------------------------- EXHIBIT A TO TRUST INDENTURE AND MORTGAGE ----------------------------- TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1989 B] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1989 B], dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE ") under that certain Trust Agreement [NW 1989 B] dated as of March 15, 1989 (the "TRUST AGREEMENT"), between FIRST NATIONAL BANK OF BOSTON and the Owner Participant named therein. W I T N E S S E T H: WHEREAS, the TRUST INDENTURE AND SECURITY AGREEMENT [NW 1989 B], dated as of June 12, 1996 (as amended and supplemented to the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft, and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust Agreement and Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for recordation on the date hereof with the FAA as one document; NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust Indenture Estate covers all of Owner Trustee's right, title and interest in and to the following described property: 55 AIRFRAME One airframe identified as follows:
FAA Registration Manufacturer's Manufacturer Model Number Serial Number ------------ ----- ------------ --------------
together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Four aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number ------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to any of such engines. Together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts). As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Certificate Holders, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under the Lease Supplement [of even date herewith] covering the property described above. Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III of the Trust Indenture without any preference, distinction or priority of EXHIBIT A-2 56 any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Trust Indenture Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. EXHIBIT A-3 57 IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Agreement and Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, Owner Trustee By: ____________________________________________ Name: Title: EXHIBIT A-4 58 SCHEDULE I
PRINCIPAL AMOUNT INTEREST RATE ---------------- ------------- Series A . . . . . . $49,938,000 7.67% Series B . . . . . . $16,646,000 8.07% Series C . . . . . . $16,646,000 8.97% Series D . . . . . . $ 4,494,343 10.15%
59 SECURED CERTIFICATES AMORTIZATION SERIES A AIRCRAFT: N662US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 2.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 2.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.00000000% Jul 2, 1999 0.00000000% Jan 2, 2000 2.00000000% Jul 2, 2000 2.00000000% Jan 2, 2001 0.00000000% Jul 2, 2001 2.00000000% Jan 2, 2002 0.00000000% Jul 2, 2002 2.00000000% Jan 2, 2003 0.00000000% Jul 2, 2003 2.00000000% Jan 2, 2004 0.00000000% Jul 2, 2004 4.00000000% Jan 2, 2005 0.00000000% Jul 2, 2005 4.00000000% Jan 2, 2006 0.00000000% Jul 2, 2006 4.00000000% Jan 2, 2007 0.00000000% Jul 2, 2007 4.00000000% Jan 2, 2008 0.00000000% Jul 2, 2008 4.00000000% Jan 2, 2009 0.00000000% Jul 2, 2009 6.00000000% Jan 2, 2010 0.00000000% Jul 2, 2010 0.00000000% Jan 2, 2011 11.51491449% Jul 2, 2011 0.00000000% Jan 2, 2012 19.71524290% Jul 2, 2012 0.00000000% Jan 2, 2013 21.22740198% Jul 2, 2013 0.00000000% Jan 2, 2014 5.54244063%
60 SERIES B AIRCRAFT: N662US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 2.00000000% Jul 2, 1997 0.37621050% Jan 2, 1998 1.62378950% Jul 2, 1998 2.00000000% Jan 2, 1999 0.00000000% Jul 2, 1999 2.00000000% Jan 2, 2000 0.00000000% Jul 2, 2000 2.00000000% Jan 2, 2001 0.00000000% Jul 2, 2001 2.00000000% Jan 2, 2002 0.00000000% Jul 2, 2002 2.00000000% Jan 2, 2003 0.00000000% Jul 2, 2003 2.00000000% Jan 2, 2004 0.00000000% Jul 2, 2004 4.00000000% Jan 2, 2005 0.00000000% Jul 2, 2005 4.00000000% Jan 2, 2006 0.00000000% Jul 2, 2006 4.00000000% Jan 2, 2007 0.00000000% Jul 2, 2007 4.00000000% Jan 2, 2008 0.00000000% Jul 2, 2008 4.00000000% Jan 2, 2009 0.00000000% Jul 2, 2009 6.00000000% Jan 2, 2010 0.00000000% Jul 2, 2010 30.48588850% Jan 2, 2011 27.51411150%
61 SERIES C AIRCRAFT: N662US
PERCENTAGE OF PRINCIPAL AMOUNT PAYMENT DATE TO BE PAID ------------ ------------------------------ Jan 2, 1997 2.00000000% Jul 2, 1997 2.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 2.00000000% Jan 2, 1999 0.00000000% Jul 2, 1999 2.00000000% Jan 2, 2000 0.00000000% Jul 2, 2000 2.00000000% Jan 2, 2001 0.00000000% Jul 2, 2001 2.00000000% Jan 2, 2002 0.00000000% Jul 2, 2002 2.00000000% Jan 2, 2003 0.00000000% Jul 2, 2003 4.59216629% Jan 2, 2004 0.00000000% Jul 2, 2004 1.40783371% Jan 2, 2005 0.00000000% Jul 2, 2005 4.00000000% Jan 2, 2006 0.00000000% Jul 2, 2006 19.58123273% Jan 2, 2007 0.00000000% Jul 2, 2007 26.40358044% Jan 2, 2008 0.00000000% Jul 2, 2008 30.01518683%
62 SERIES D AIRCRAFT: N662US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 14.94672302% Jan 2, 1999 0.00000000% Jul 2, 1999 25.68735853% Jan 2, 2000 0.00000000% Jul 2, 2000 9.03874048% Jan 2, 2001 0.00000000% Jul 2, 2001 26.57901277% Jan 2, 2002 0.00000000% Jul 2, 2002 23.74816519%
63 SCHEDULE II 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. 4. 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. 1996-1D, dated as of June 12, 1996. EX-4.A4 5 LEASE AGREEMENT-1989 B 1 AMENDED AND RESTATED LEASE AGREEMENT [NW 1989 B] This AMENDED AND RESTATED LEASE AGREEMENT [NW 1989 B], dated as of June 3, 1996, between FIRST SECURITY BANK OF UTAH, 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"); WITNESSETH: WHEREAS, Lessor and Lessee have entered into that certain Lease Agreement [NW 1989 B], dated as of March 15, 1989, as supplemented by Lease Supplement No. 1 [NW 1989 B], dated March 16, 1989 (the "ORIGINAL LEASE") which was recorded by the Federal Aviation Administration on March 16, 1989 and assigned Conveyance No. R40942; WHEREAS, Lessor and Lessee now desire to amend and restate the Original Lease in its entirety on the terms and conditions herein provided; and WHEREAS, Lessee and Lessor intend this Lease to constitute a lease agreement and not a security agreement; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, Lessor and Lessee agree as follows: SECTION 1. DEFINITIONS. Unless the context otherwise requires, the following terms shall have the following meanings for all purposes of this Lease Agreement [NW 1989 B] and shall be equally applicable to both the singular and the plural 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" when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "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 any of such Engines pursuant to 2 the terms of the Lease), whether or not any of such initial or substituted gines 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 Boeing 747-451 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 Law" means all applicable laws, ordinances, treaties, judgments, decrees, injunctions, writs and orders of any court, arbitrator or governmental agency or authority and rules, regulations, orders, interpretations, directives, licenses and permits of any governmental body, instrumentality, agency or authority, including, in respect of the Airframe or any Engine, all directives of any applicable civil aviation authority. "Applicable Rate" means, as of any date, the weighted average of the interest rates borne by the Secured Certificates then outstanding. "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 from time to time by Chase Manhattan Bank, N.A., at its principal office in New York, New York as its "base rate" or its equivalent successor rate if the base rate is no longer used. "Basic Rent" means, for the Basic Term, the rent payable for the Aircraft pursuant to Section 3(c) of the Lease Agreement as adjusted as provided in Section 3(d) of the Lease Agreement and, for any Renewal Term, Basic Rent determined pursuant to Section 19 of the Lease Agreement. -2- 3 "Basic Term" means the term for which the Aircraft is leased hereunder pursuant to Section 3(a) of the Lease Agreement commencing on the Commencement Date and ending on September 15, 2014. "Bill of Sale" means a full warranty bill 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 Bill of Sale and warranty shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good and marketable title to the Airframe and each Engine described in such Bill of Sale, free and clear of all liens, encumbrances and rights of others except Permitted Liens. "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; Salt Lake City, Utah; or Minneapolis, Minnesota. "Certificate Holder" means Certificate Holder as defined in the Trust Indenture. "Certificated Air Carrier" means a Citizen of the United States holding an air 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" shall mean 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. "Closing" means the consummation of the refinancing operation contemplated by Section 1 of the Refunding Agreement. "Closing Date" means the date on which the Closing shall occur. "Code" means the Internal Revenue Code of 1986, as amended through the Delivery Date. "Commencement Date" means September 15, 1989. -3- 4 "Consent and Agreement" means the Consent and Agreement [NW 1989 B], dated as of March 15, 1989, executed by the Manufacturer, as the same may be amended, modified or supplemented from time to time in accordance with the applicable provisions thereof. "Delivery Date" means March 16, 1989. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of four Pratt & Whitney Model PW4056 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 any 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 hereunder. The term "Engines" means, as of any date of determination, all Engines then leased hereunder. "Equipment Trust Agreement" means the Original Trust Indenture. "Equipment Trust Trustee" means the Equipment Trust Trustee under the Original Trust Indenture, and any entity which may from time to time be acting as Equipment Trust Trustee under the Original Trust Indenture. "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 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 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 by any governmental or purported governmental authority (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) shall have resulted in the -4- 5 loss of possession of such property by Lessee for a period in excess of 180 consecutive days or on the last day of the Term, whichever first occurs; (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, 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, if such prohibition is continuing, on the last day 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 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 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 the Commencement Date means an amount equal to the amount determined by multiplying Lessor's Cost by the percentage set forth in Exhibit B hereto opposite the Commencement Date. "Excluded Payments" shall have the meaning specified in the Trust Indenture. "Expenses" has the meaning given in Section 7(c) of the Participation Agreement. "FAA Bill of Sale" means a bill 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. -5- 6 "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 or the Luftfahrt Bundesamt of the Federal Republic of Germany. "Guarantee" means the Guarantee [NW 1989 B], dated as of the 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. "Indemnified Person" 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); provided that the Persons described in clauses (v), (vi), (vii), (viii), (x) and (xiii) are Indemnified Persons only for purposes of Section 7(c) of the Participation Agreement. "Indemnitee" has the meaning given in Section 7(b) of the Participation Agreement. "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 -6- 7 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. "Intercreditor Agreement" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Provider and the Subordination Agent. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions of the Lease. "Lease", "this Lease Agreement", "this Lease", "this Agreement", "herein", "hereof", "hereunder", "hereby" or other like words mean this Amended and Restated Lease Agreement [NW 1989 B], as the same may from time to time be further supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of the Trust Agreement, including 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 and ending on a Lease Period Date, the first such period commencing on and including the Commencement Date. "Lease Period Date" means March 15, 1990 and each succeeding September 15 and March 15 to and including March 15, 1996, July 2, 1996 and each succeeding January 2 and July 2 to and including July 2, 2014, September 15, 2014 and each succeeding March 15 and September 15, to and including the last such date in the Term. "Lease Supplement" means a Lease Supplement, substantially in the form of Exhibit A hereto, 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. "Lessor Liens" means any Lien or disposition of title or interest affecting or in respect of the Aircraft, the Airframe, any Engine, this Lease or the Trust Estate arising as a result of (i) claims against Lessor, First Security Bank of -7- 8 Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 or the succession by First Security Bank of Utah, National Association as trustee under the Trust Agreement; provided, however, that any Lien which is attributable solely to First Security Bank of Utah, National Association or the Owner Participant, as applicable, and would otherwise constitute a Lessor Lien under the Lease shall not constitute a Lessor Lien under the Lease so long as (1) the existence of such Lien poses no material risk of seizure of the Aircraft, (2) the existence of such Lien does not interfere in any way with the use or operation 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 of Utah, National Association or the Owner Participant, as the case may be, is diligently contesting such Lien and (5) the existence of such Lien does not result in threatened or actual interruption in the payment of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders. "Lessor's Cost" for the Aircraft means $125,000,000. "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 Westdeutsche Landesbank Girozentrale, acting through its New York branch, as Class A Liquidity Provider, Class B -8- 9 Liquidity Provider and Class C Liquidity Provider under the Liquidity Facilities, or any successor thereto. "Loan Participant" means for any period prior to the Closing the Original Loan Participant and its successors and assigns, and from and after the Closing each Purchaser and its successors and registered assigns, including any Certificate Holder. "Loan Participant Liens" means any Lien which arises from acts of or claims against any Certificate Holder not related to the transactions contemplated by the Operative Documents. "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 The Boeing Company, a Delaware corporation. "Manufacturer's Bill of Sale" means the bills of sale for the Aircraft on AC Form 8050-2 or such other form as may be then approved by the Federal Aviation Administration for the Aircraft, one executed by the Manufacturer in favor of Boeing Sales Corporation, a subsidiary of the Manufacturer, and one executed by Boeing Sales Corporation in favor of Lessee. "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, Stipulated Loss Values and Termination Values as of the Delivery Date. "Net Present Value of Rents" means the net present value, as of the Commencement Date, of Basic Rent set forth in Exhibit B hereto, discounted at an annual interest rate of 10.50% on a semi-annual basis. "Operative Documents" and "Operative Document" means each of the Participation Agreement, the Lease, the documents referred to in Section 4(a)(v) of the Participation Agreement (including any amendments, modifications or supplements thereto), the Refunding Agreement, the Trust Indenture, the Guarantee and the Secured Certificates. "Original Loan Participant" means [_______________], a banking institution organized under the laws of the [____________]. -9- 10 "Original Trust Indenture" means the Equipment Trust Agreement [NW 1989 B], dated as of March 15, 1989, among the Owner Trustee, Lessee and Meridian Trust Company, as supplemented by Equipment Trust Agreement and Trust Agreement Supplement No. 1 [NW 1989 B], dated March 16, 1989, and as amended by First Amendment to Equipment Trust Agreement [NW 1989 B], dated as of December 19, 1991, and as further amended, modified and supplemented prior to the Closing Date. "Owner Participant" means the [________________] and 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 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 Trust Indenture and the Secured Certificates. "Owner Trustee's Bill of Sale" means a bill of sale for the Aircraft from the Owner Trustee to the Equipment Trust Trustee. "Owner Trustee's Bills of Sale" means, collectively, the Owner Trustee's Bill of Sale and the Owner Trustee's FAA Bill of Sale for the Aircraft. "Owner Trustee's FAA Bill of Sale" means a bill 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 the Owner Trustee in favor of the Equipment Trust Trustee and dated the Delivery Date. "Participation Agreement" means that certain Participation Agreement [NW 1989 B], dated as of March 15, 1989, among Lessee, the Equipment Trust Trustee, the Initial Owner Participant, the Original Loan Participant and Lessor, as such Participation Agreement may be amended or supplemented from time to time pursuant to the applicable provisions thereof. -10- 11 "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) title to which is not required to be vested in Lessor pursuant to Section 8 hereof, 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 Refinancing Transaction. "Pass Through Trust Agreement" means the pass through trust agreement and each of the four separate pass through trust supplements referred to on Schedule I to the Refunding Agreement to be entered into by and among Lessee, the Guarantor, and each Pass Through Trustee in connection with the Refinancing Transaction. "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" 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 (vii) of Section 6 hereof. "Permitted Sublessee" means any entity listed in Exhibit E hereto and such other entities to which Lessor shall consent, such consent not to be unreasonably withheld. "Person" means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature. "Potential Default" means any event which is or after notice or passage of time, or both, would be an Event of Default pursuant to Section 14(a), (b), (e), (f) or (g) hereof. -11- 12 "Purchase Agreement" means the Purchase Agreement No. 1267, dated December 13, 1985, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1989 B], dated as of March 15, 1989, 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. "Refinancing Certificate" means a certificate of an authorized representative of the Owner Participant delivered pursuant to Section 17(a)(1) of the Participation Agreement, setting forth, among other things, the Refinancing Date, the principal amount of debt to be issued by the Owner Trustee on the Refinancing Date, and the proposed revised schedules of Excess Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages, and the proposed Amortization Schedules. "Refinancing Date" means the proposed date on which the outstanding Series BB Certificates will be redeemed and refinanced pursuant to Section 17 of the Participation Agreement. "Refinancing Expenses" means the costs, fees, commissions and other expenses payable as set forth in Section 11(a) of the Refunding Agreement. "Refinancing Secured Certificates" means the Secured Certificates to be issued by Lessor to the Purchasers pursuant to the Trust Indenture and the Refunding Agreement on the Closing Date. "Refinancing Transaction" means a refinancing transaction pursuant to Section 17 of the Participation Agreement involving, among other things, (i) the redemption of the Series BB Certificates issued on March 16, 1989 and the concurrent issuance and sale of the Refinancing Secured Certificates to the Pass Through Trustees (or their designee) and (ii) the issuance and sale of the Pass Through Certificates by the Pass Through Trustees. "Refunding Agreement" means that certain Refunding Agreement [NW 1989 B], dated as of June 3, 1996, among Lessor, Lessee, the Guarantor, the Owner Participant, the Purchasers, the Indenture Trustee and the Subordination Agent, as the same may from time to time be supplemented or amended, or the -12- 13 terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Renewal Term" shall mean any Fixed Renewal Term or Fair Market Renewal Term as those terms are defined in Section 19(a) hereof. "Rent" means Basic Rent and Supplemental Rent, collectively. "Secured Certificates" has the meaning assigned to that term in the Trust Indenture. "Series BB Certificate" means any certificate issued by the Equipment Trust Trustee under the Original Trust Indenture, substantially in the form of Exhibit A annexed thereto. "Stipulated Loss Value" with respect to the Aircraft as of any date through and including September 15, 2014, means, but subject always to the provisions of Section 3(d)(v), the amount determined by multiplying Lessor's Cost 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 8 of the Tax Indemnity Agreement). "Stipulated Loss Value" as of any date after September 15, 2014 shall be the amount determined as provided in Section 19(a) of the Lease Agreement. "Stipulated Loss Value Date" means (a) during the Interim Term, during the Basic Term through the Closing Date and during any Renewal Term, the fifteenth calendar day of each calendar month, and (b) during the Basic Term after the Closing Date, the second calendar day of each calendar month. "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. "Subsidiary" means a Person controlled by another Person. "Supplemental Rent" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Basic Rent) which Lessee -13- 14 assumes or agrees to pay under any Operative 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 Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1989 B], dated as of March 15, 1989, between the Initial Owner Participant and Lessee, as originally executed or as modified, amended or supplemented pursuant to the applicable provisions thereof. "Taxes" mean any and all fees (including, without limitation, license, documentation and registration fees), taxes (including, without limitation, income, gross receipts, sales, rental, use, turnover, value added, property (tangible and intangible), excise, franchise, capital, doing business and stamp taxes), 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 Interim Term, Basic Term and, if actually entered into, any Renewal Term. "Termination Date" means (a) during the Interim Term, during the Basic Term through the Closing Date and during any Renewal Term, the fifteenth day of each calendar month, and (b) during the Basic Term after the Closing Date, the second calendar day of each calendar month. "Termination Value" with respect to the Aircraft as of any date through and including September 15, 2014, means, but subject always to the provisions of Section 3(d)(v) hereof, the amount determined by multiplying Lessor's Cost by the percentage specified in Exhibit D hereto opposite the Termination Date with respect to which the amount is determined (as such Exhibit D of the Lease Agreement may be adjusted from time to time as provided in Section 3(d) hereof and in Section 8 of the Tax Indemnity Agreement). -14- 15 "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Messrs. Whitman & Ransom, special counsel for the Equipment Trust Trustee, and Stevens & Lee, Pennsylvania counsel for the Equipment Trust Trustee, (2) Messrs. Csaplar & Bok, counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Messrs. Shearman & Sterling, special counsel to the Original Loan Participant, such information to be furnished by the Original Loan Participant, and (4) Messrs. Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (iv) the initial fee and reasonable and actual disbursements of the Equipment Trust Trustee under the Original Trust Indenture, such information to be furnished by the Equipment Trust Trustee, (v) the fee of Avmark Inc. (or of such other appraiser as shall be acceptable to Lessee and the Owner Participant) with respect to the appraisal of the Aircraft pursuant to Section 4(a)(xx) of the Participation Agreement, such information to be furnished by the Initial Owner Participant, and (vi) the reasonable and actual fees, expenses and disbursements of Messrs. Luce, Forward, Hamilton & Scripps, special counsel to the Initial Owner Participant and Imperial Corporation of America, in connection with the preparation, execution and delivery of the Operative Documents and the closings of the transactions contemplated thereby in an aggregate amount not to exceed $190,000, such information to be furnished by the Initial Owner Participant. "Trust Agreement" means that certain Trust Agreement [NW 1989 B], dated as of March 15, 1989, between the Initial Owner Participant and The First National Bank of Boston, in its individual capacity, as originally executed or as modified, amended or supplemented pursuant to the applicable provisions thereof, including, without limitation, the Instrument of Transfer, Removal, Appointment, Assumption and Acceptance, dated May, 1996, pursuant to which First Security Bank of Utah, National Association, succeeded The First National Bank of Boston as Owner Trustee thereunder and supplementation thereof by one or more Trust Supplements entered into pursuant to the applicable provisions thereof. "Trust Estate" means the Trust Estate as that term is defined in the Trust Agreement. "Trust Indenture" or "Indenture" means that certain Trust Indenture and Security Agreement [NW 1989 B], dated as of the date hereof, between Lessor and the Indenture Trustee, as originally executed or as modified, amended or supplemented in accordance with the provisions thereof. -15- 16 "Trust Indenture Estate" has the meaning assigned to that term in the Trust Indenture. "Trust Supplement" means a supplement to the Trust Agreement and the Trust Indenture, substantially in the form of Exhibit A to the Trust Indenture. "U.S. Air Carrier" means any Certificated Air Carrier as to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the regulations under the Federal Aviation Act, or which may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. "Wet Lease" means any arrangement whereby the Lessee (or any Sublessee) agrees to furnish the Airframe and Engines or engines installed thereon to a third party pursuant to which such Airframe and Engines or engines (i) shall be operated solely by regular employees of Lessee (or any Sublessee) possessing all current certificates and licenses that would be required under the Federal Aviation Act or, if the Aircraft is not registered in the United States, all certificates and licenses required by the laws of the jurisdiction of registry, for the performance by such employees of similar functions within the United States of America or such other jurisdiction of registry (it is understood that cabin attendants need not be regular employees of Lessee (or any Sublessee)) and (ii) shall be maintained by Lessee (or any Sublessee) in accordance with its normal maintenance practices. SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby confirms that, pursuant to the Original Lease, Lessor (through its authorized representatives) accepted delivery of, and simultaneously leased to Lessee under the Original Lease, the Aircraft on the Delivery Date. Lessee hereby confirms that, pursuant to the Original Lease, Lessee (through its authorized representatives) accepted delivery of, and simultaneously leased from Lessor under the Original Lease, the Aircraft on the Delivery Date. Lessor and Lessee hereby confirm to each other that such acceptance of delivery of, and such leasing of, the Aircraft under the Original Lease and the continued leasing of the Aircraft under this Lease on the terms and conditions herein stated, shall continue to constitute irrevocable acceptance by Lessee of the Aircraft for all purposes of this Lease notwithstanding the amendment and restatement of this Lease as contemplated hereby. SECTION 3. TERM AND RENT. (a) Interim Term and Basic Term. The Interim Term shall commence on the Delivery Date and end on and include the day immediately preceding the Commencement Date unless earlier terminated pursuant to the provisions hereof. The Basic Term shall commence on the Commencement Date and end on September 15, 2014, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. (b) [Intentionally Omitted]. -16- 17 (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 installments in the amounts as provided in the next sentence. Each such installment of Basic Rent shall be equal to Lessor's Cost multiplied by the percentage for the applicable Lease Period Date specified in Exhibit B hereto and shall accrue with respect to the period specified in Exhibit B. In addition, Lessee shall pay Basic Rent on the Closing Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for the Closing Date. (d) Adjustments to Rent. (i) In the event of a refinancing or a refunding 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 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) minimize the Net Present Value of Rents to Lessee and minimize the Stipulated Loss Value and Termination Value percentages to the extent possible consistent with clause (1). (ii) In the event that (A) the Closing Date occurs other than on June 12, 1996, or (B) Refinancing Expenses paid by Lessor pursuant to Section 11(a) of the Refunding Agreement are determined to be less than 1.0049% of Lessor's Cost or (C) except for the application of Section 467 of the Code or any regulations thereunder, there shall have occurred on or after the date of the execution and delivery of the Refunding Agreement and on or prior to the Closing Date a change in any Applicable Law of, or relating to, Taxes which causes the transactions contemplated or effected by the Refunding Agreement to have adverse tax consequences to the Owner Participant or any of its Affiliates which would not have occurred but for such transactions, 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 October 1, 1996 using the same methods and assumptions used to calculate original Basic Rent and 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 and minimize the Stipulated Loss Value and Termination Value percentages to the extent possible consistent with clause (1). In such recalculation there will be no change in the amortization of the Secured Certificates. (iii) [Reserved] -17- 18 (iv) Any recalculation of Basic Rent, Excess Amount 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 F hereto. Such recalculated Basic Rent, Excess Amount 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 or any other Operative Document 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 payable simultaneously therewith by Lessee pursuant to this Lease (excluding Excluded Payments (as defined in the Trust Indenture)), 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 and interest on the Secured Certificates. It is agreed that no installment of Basic Rent or payment of Termination Value or Stipulated Loss Value or amount calculated by reference thereto shall be increased or adjusted by reason of (i) any attachment or diversion of Rent on account of (A) Lessor Liens or (B) any 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 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 cause Basic Rent from the date of such adjustment (a) to be consistent with the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Revenue Procedure 75-28, 1975-1 C.B. 752, both as in effect and as interpreted on the Delivery Date, and (b) to be consistent with Section 467 of the Code, but only to the extent such Code section is complied with as of the Delivery Date; provided, however, that for purposes of determining whether Section 467 is complied with as of the Delivery Date, if the structure of the Rent on the Delivery Date (the "INITIAL RENT STRUCTURE") is in compliance with Section 467 or any Treasury Regulations promulgated thereunder (or any successor provisions) on the Delivery Date as a result of any "grandfather" provision, transitional rule or for any other reason, then the Initial Rent Structure shall be deemed to be in compliance with Section 467 as of the Delivery Date. -18- 19 However, in the event the Initial Rent Structure is not in compliance with Section 467 as of the Delivery Date such that the Owner Participant is required to include into income a "constant rental amount", any subsequent adjustment in Basic Rent shall be in compliance with Section 467 and will provide the Owner Participant with such reduced Net Economic Return that was obtained taking into account such constant rental amount, provided that notwithstanding the foregoing, any adjustment pursuant to Section 3(d)(ii)(C) shall take into account such change in Applicable Law of, or relating to, Taxes and shall maintain the Owner Participant's Net Economic Return as if such change did not occur. (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 with respect to 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 such Section 2.10(b) or Section 2.11. Lessee also will pay to Lessor, or to whomsoever shall be entitled thereto, as Supplemental Rent, on demand, 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) in Dollars by wire transfer of immediately available funds prior to 10:30 A.M., New York time, on the due date thereof, to Lessor at its account at First Security Bank of Utah, National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124-0000-12, Account No. 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW 1989 B (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, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1989 B (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 10 Business Days prior to the date such payment of Rent is due). All payments of Supplemental Rent -19- 20 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. SECTION 4. LESSOR'S REPRESENTATIONS AND WARRANTIES. NEITHER LESSOR, THE INDENTURE TRUSTEE NOR THE OWNER PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, CONDITION, VALUE, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR ANY 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 of Utah, National Association, in its individual capacity, (i) represents and warrants that on the Delivery Date, Lessor shall have received whatever title to the Aircraft as was conveyed to it by Lessee, (ii) represents and warrants that as of the Closing Date the Aircraft shall be free of Lessor Liens (including for this purpose Liens that 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 -20- 21 not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Owner Participant, the Certificate Holders or Lessee), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. 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, 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 9(b) or 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 Section 15 hereof, 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 ten 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 location of such storage. At the time of such return, (i) Lessee will, unless otherwise requested by Lessor at least 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 such registration is prohibited by reason of the failure of the Owner Trustee or its designee to be eligible on such date to own an aircraft registered with the Federal Aviation Administration, and (ii) the Airframe will be fully equipped with the Engines, or other Pratt & Whitney PW4056 engines (or four other engines of the same make and model or four engines of the same or another manufacturer of equivalent utility, fair market value, and remaining useful life, and suitable for installation and use on the Airframe without impairing the fair market value, utility or remaining useful life of the Aircraft) 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens, and Indenture Trustee's Liens) and rights of third parties under pooling, interchange, overhaul, repair or other similar agreements or arrangements, (iii) shall be in passenger configuration and in as good 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 fair market value, utility and remaining useful life at least equal to, and shall be in as good operating condition as required by the terms hereof with respect to Engines constituting part of the Aircraft but not then installed on the Airframe, (iv) 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 -21- 22 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, (v) 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, and (vi) 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. In the event the Federal Aviation Administration shall issue any directive which would require improvement 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 this Section 5, unless it shall previously or concurrently have applied for such an extension with respect to all Boeing 747-400 aircraft in its fleet affected by such directive. If clause (iv) of the first paragraph of this Section 5(a) shall be applicable but the Airframe does not meet the conditions specified in said clause (iv), Lessee shall pay or cause to be paid to Lessor a Dollar amount computed by multiplying (i) 120% of the direct cost to Lessee (based upon the 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 (iv) 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 (v) of the first paragraph of this Section 5(a) shall be applicable but the Engines or engines do not meet the conditions specified in said clause (v), Lessee shall pay with respect to each Engine or engine or cause to be paid to Lessor as Dollar amount computed by multiplying (i) 120% of the direct cost to Lessee (based upon the 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 (ii) 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 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. -22- 23 During the last 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 thereto, provided that such cooperation shall not interfere with the normal operation 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) bill of sale with respect to each such engine, in form and substance satisfactory to Lessor (together with an opinion of counsel in form and substance reasonably satisfactory to Lessor to the effect that such full warranty bill 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens, and Indenture Trustee's Liens), against receipt from Lessor of a bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 referred to in 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 as calculated by reference to the then current market price of 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. (d) Storage Upon Return. If, at least 30 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 and Lessee's corporate overhead to be for the account of Lessor) for a period not exceeding thirty days commencing on the date of such termination, at a location in one of the forty-eight contiguous states of the United States selected by Lessee and used as a location for the parking or storage of aircraft. Not less than fifteen days prior to the end of such thirty day period, Lessor may request, and Lessee shall provide, parking facilities for an additional sixty day period. During such sixty day period, all costs relating thereto, including, without limitation, maintenance costs and other out-of-pocket expenses and parking fees (but excluding Lessee's corporate -23- 24 overhead) shall be for the account of Lessor. Lessee will maintain insurance for the Aircraft during such period not exceeding thirty days or additional sixty days, as applicable, 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 that 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 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, (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, the 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 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, (vi) Liens arising out of any judgment or award against Lessee (or any Sublessee), unless the judgment secured shall not, within 30 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 30 days after the expiration of such stay, and (vii) any other Lien with respect to which Lessee (or any Sublessee) shall have provided a bond or other security adequate in the reasonable opinion of 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) cause the Aircraft to continue to be duly registered in the name of Lessor under the Federal Aviation Act, 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 other laws 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 security interest 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 operating condition as when originally delivered by Manufacturer to Lessee, ordinary wear and tear excepted, and so as to keep the Aircraft in such condition as may be necessary to enable the applicable airworthiness certification for the -24- 25 Aircraft to be maintained in good standing at all times (other than during temporary periods of storage in accordance with applicable regulations) under the Federal Aviation Act, except when all Boeing 747-400 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 Federal Aviation Administration other than as a result of actions taken or omitted to be taken by Lessee (or, if a Sublease is then in effect, any Sublessee) (although such certification need actually be maintained only during such periods as the Aircraft is registered under such Act), 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 of maintenance, service, repair or overhaul used by Lessee with respect to similar aircraft owned or operated by Lessee and utilizing, during any period that a Sublease is in effect, the same manner of maintenance, service, repair or overhaul used by the Sublessee with respect to similar aircraft operated by the Sublessee; (iii) maintain or cause to be maintained all records, logs and other materials required to be maintained in respect of the Aircraft by the Federal Aviation Administration 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 such information as may be required to enable Lessor to file any reports required to be filed by Lessor 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), after providing written notice to Lessor, 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. 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, if a Sublease is then in effect, the 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, if a Sublease is then in effect, the Sublessee). At any time on or after the fifth anniversary of the Delivery Date, 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 in any airframe other than the Airframe; provided that so long as no Potential Default or Event of -25- 26 Default shall have occurred and be continuing at the time of such sublease, delivery, transfer or relinquishment of possession or installation, and so long as the action to be taken shall not deprive the Indenture Trustee of the 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 Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee 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 any 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 shall not be divested 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 -26- 27 (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; (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 aisle 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) enter into a Wet Lease for the Airframe and Engines or engines then installed thereon with any third party; (ix) 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) so long as the term of any sublease does not extend beyond the Term and so long as the Sublessee is not subject to a proceeding or final order under bankruptcy, insolvency or reorganization laws on the date the sublease is entered into, 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 -27- 28 approval shall not be unreasonably withheld or (3) after the fifth anniversary of the Delivery Date, with any Permitted Sublessee; provided, however, that no sublease entered into pursuant to this clause (x) shall extend beyond the date which is one year prior to the expiration of the Basic Term or any Renewal Term then in effect unless the Owner Participant shall have previously approved in writing the maintenance procedures of the Sublessee or Lessee shall have irrevocably committed to purchase the Aircraft, or (if permitted by the terms hereof) extend the Term of this Lease by a period of at least one year from the end of the proposed sublease. 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) which has a term of more than three months, shall be effectively and expressly subject and subordinate to, all the terms of this Lease and to the security interest provided in 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 the terms of any such Sublease shall not permit any Sublessee to further sublease the Aircraft or 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 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. 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 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 neither Lessor nor 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 written notice of any Sublease hereunder which has a term of more than -28- 29 three months (such notice to be given prior to entering into such Sublease, if practicable, but in any event promptly after entering into any such Sublease). (c) Insignia(c) Insignia. On or prior to the Closing Date, or as soon thereafter as practicable, Lessee agrees to affix and maintain (or cause to be affixed and maintained) 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 of Utah, National Association, as Owner Trustee Owner and Lessor and, for so long as the Airframe and each Engine shall be subject to any security interest as provided in 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, association or corporation 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 Par(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 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. 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 fair market value, utility and remaining useful life at least equal -29- 30 to, the Parts replaced assuming such replaced Parts were in the condition and repair required to be maintained by the terms hereof. 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 part 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 other than Permitted Liens 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 other than Permitted Liens 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 Federal Aviation Administration 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, after providing written notice to Lessor, contest the validity or application of any such law, rule, regulation or order in any reasonable manner which does not adversely affect Lessor; and provided, further, that Lessee's failure to make (or cause to be made) any such alterations or modifications shall not constitute noncompliance with the requirements of this paragraph (c) of this Section 8 or a breach of Lessee's -30- 31 undertaking hereunder for so long a period as may be necessary to remedy such failure, if such failure can be remedied, so long as during such period Lessee (or any Sublessee) is using due diligence and best efforts to remedy such failure. 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) deems 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, addition or removal shall materially decrease the fair market value, utility or remaining useful life of the Airframe or such Engine, or materially impair the condition or impair the airworthiness thereof, below the fair market value, utility, remaining useful life, condition or airworthiness thereof immediately prior to such alteration, modification, addition or removal assuming the Airframe or such Engine was then of the fair market value, utility and remaining useful life and in the condition and airworthiness required to be maintained by the terms of this Lease, except that the fair market value (but not the utility, condition, airworthiness or remaining useful life) of the Airframe or any Engine may be reduced from time to time by the value of Obsolete Parts which shall have been removed so long as the aggregate original cost of all Obsolete Parts which shall have been removed and not replaced shall not exceed $600,000. 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 (except those parts which Lessee has leased from others and which also qualify for removal in accordance with the next sentence) shall, without further act, vest in Lessor. Notwithstanding the foregoing sentence, Lessee (or any Sublessee) may, at any time during the Term, so long as no Event of Default shall have occurred and be continuing, remove or suffer to be removed any Part, provided that such 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 materially diminishing or impairing the fair market value, utility, condition, airworthiness or remaining useful life which the Airframe or such Engine would have had at such time had such alteration, modification or addition not occurred. 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 the property of Lessor or 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. So long as no Event of Default shall have occurred and be continuing, 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. Lessee may exercise this option either by (i) purchasing the Aircraft pursuant to paragraph (b) of this Section 9 or (ii) causing the Aircraft to be sold pursuant to paragraph (c) of this Section 9; provided, however, that Lessee may give no more than one -31- 32 Termination Notice with respect to a sale pursuant to paragraph (c) of this Section 9 during each two year period during the Term. Lessee shall give to Lessor and, if any Secured Certificates are then outstanding, the Indenture Trustee, at least ninety days' advance written notice of Lessee's intention so to terminate this Lease (any such notice, a "TERMINATION NOTICE") specifying the Lease Period Date on which Lessee intends to terminate this Lease (such specified date, a "TERMINATION DATE") and whether Lessee intends to exercise its option to purchase under Section 9(b) or its option to sell under Section 9(c); provided, however, that Lessee shall have the right to revoke such Termination Notice by written notice to Lessor and, if any Secured Certificates are then outstanding, the Indenture Trustee, not less than 20 days prior to the Termination Date, in which case this Lease shall continue in full force and effect. (b) Option to Purchase. On any Termination Date (except if the Termination Date is during the last twelve months of the Lease Term), Lessee may, but shall not be required to, purchase the Aircraft at a purchase price equal to the greater of (i) its Termination Value on the Termination Date, or (ii) its "fair market sales value" on the Termination Date determined in accordance with Section l9(c) hereof, together with a payment of the other amounts referred to in this Section 9(b). In such event, Lessor shall, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens), sell the Aircraft to Lessee on the Termination Date and, in the case of clause (1) below, exercise such rights as it has to cause the Aircraft to be released from the Lien of the Trust Indenture in exchange for, at Lessee's option, either (1) the payment in cash in Dollars in funds of the type specified in Section 3(f) hereof of an amount equal to the sum of (A) 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 such Termination Date, including, without limitation, the Make-Whole Amount, if any, due on the Secured Certificates, plus (B) all reasonable expenses incurred by Lessor and the Owner Participant in connection with such sale except those incurred and payable by Lessor as a result of an appraisal conducted pursuant to Section l9(c) hereof, plus (C) the greater of (x) the Termination Value for the Aircraft, computed as of the Termination Date and (y) the fair market sales value of the Aircraft on the Termination Date, determined in accordance with Section l9(c) hereof or (2) (A) the assumption by Lessee, pursuant to Section 8(x) of the Participation Agreement and Section 2.13 of the Trust Indenture, of all of the obligations of Lessor under the Trust Indenture, (B) the payment in cash in Dollars in funds of the type specified in Section 3(f) hereof of an amount equal to the sum of (X) 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 such Termination Date plus (Y) all reasonable expenses incurred by Lessor and the Owner Participant in connection with such sale except those incurred and payable by Lessor as a result of an appraisal conducted pursuant to Section l9(c) hereof plus (Z) the excess of the greater of (I) Termination Value for the Aircraft, computed as of the Termination Date and (II) the fair market sales value of the Aircraft on the Termination Date, determined in accordance with Section l9(c) hereof over the sum of all amounts of principal and accrued but unpaid interest with respect to the Secured Certificates assumed by Lessee pursuant to Section 8(x) of -32- 33 the Participation Agreement and Section 2.13 of the Trust Indenture. Upon payment in full of the amounts required to be paid and the performance of all acts required to be performed by Lessee pursuant to the preceding sentence, (i) the obligation of Lessee to pay Basic Rent hereunder with respect to the Aircraft for any period commencing on or after the Termination Date shall terminate and (ii) the Lease shall terminate on the Termination Date. (c) Optional Sale of the Aircraft. In the event that Lessee shall not elect to purchase the Aircraft pursuant to Section 9(b), then during the period from the giving of the notice referred to in Section 9(a) until the proposed Termination Date, Lessee, as agent for Lessor and at no expense to Lessor, shall use its best 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 person, firm or corporation affiliated with Lessee 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. Subject to the next succeeding sentence, on or before the Termination Date, subject to the release of the mortgage and security interest 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 exercise such rights as it has to cause the Aircraft to be released from the Lien thereof and shall, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for -33- 34 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 the Aircraft for cash in Dollars to such bidder(s), the total selling price realized at such sale to be 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 (u) all unpaid Basic Rent with respect to the Aircraft 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 unpaid Supplemental Rent due on or prior to such Termination Date, including, without limitation, the Make-Whole Amount, if any, due on the Secured Certificates, plus (v) the excess, if any, of (A) the Termination Value for the Aircraft, computed as of the Termination Date, over (B) the sale price of the Aircraft sold by Lessor after deducting the reasonable expenses incurred by Lessor and the Owner Participant in connection with such sale, 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 that 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 elected to purchase the Aircraft pursuant to Section 9(b), 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 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 such date together with all other amounts due thereunder as a result of the payment thereof, including 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 pay in funds of the type specified in Section 3(f) in full the unpaid principal amount of the Secured Certificates outstanding on the Termination Date plus interest accrued thereon through such date together with all other amounts due thereunder as a result of payments thereof, including Make-Whole Amount, if any, due on the Secured Certificates and, provided that 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 unpaid Supplemental Rent due on or prior to such Termination Date. If no sale shall have occurred on the Termination Date or Lessor has not made the payment contemplated by the preceding sentence and thereby caused this Lease to terminate, 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, if any, in connection with preparation for such sale (unless such failure to terminate this 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) and Lessee may give one or more additional Termination Notices. 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 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 and to exercise such rights as it has to cause the Aircraft to be released from the Lien of the Trust Indenture, against receipt of the payments provided herein. (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 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 -34- 35 Event of Loss had occurred with respect to such Engine, and Lessor shall transfer title to the replaced Engine as provided in Section 5(b). SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC. (a) Event of Loss with Respect to the Aircraft (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 days after such occurrence) give Lessor and, if any Secured Certificates are then outstanding, the Indenture Trustee written notice of such Event of Loss, and within 45 days after such Event of Loss Lessee shall give Lessor and, if any Secured Certificates are then outstanding, the Indenture Trustee 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 such election within such period Lessee shall be deemed to have elected the option set forth in clause (i) below). 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 days in advance by notice from Lessee to Lessor and the Indenture Trustee, Lessee shall: (i) pay or cause to be paid to Lessor in funds of the type specified in Section 3(f) hereof, the sum of (A) Stipulated Loss Value of the Aircraft computed as of the Stipulated Loss Value Date occurring on or immediately following the date of such Event of Loss plus (B) interest on such Stipulated Loss Value at the Applicable Rate then in effect under the Secured Certificates from and including such Stipulated Loss Value Date to, but not including, the date of any advance payment in respect of Stipulated Loss Value as provided below, and thereafter on the unpaid balance of such Stipulated Loss Value from the date of such advance payment to, but excluding, the date such Stipulated Loss Value is paid in full; provided, however, that if the Commencement Date or a Lease Period Date shall occur on or after the Stipulated Loss Value Date with respect to which Stipulated Loss Value is determined but prior to the date of such payment of the sum of the amounts specified in clauses (A) and (B) above, Lessee shall pay on the Commencement Date or such Lease Period Date an amount equal to the Basic Rent that would have been due on the Commencement Date or such Lease Period Date if such Event of Loss had not occurred, which amount shall be credited as an advance against the amounts payable pursuant to clauses (A) and (B) above, or (ii) elect to substitute an aircraft or an airframe or an airframe and one or more engines. At such time as Lessor shall have received the sum of the amounts specified in clauses (A) and (B) of 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 due on or before such date), 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 -35- 36 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens), all 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, furnish to or at the direction of Lessee a bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, and exercise such rights as it has to cause such Airframe and Engines to be released from the Lien of the Trust Indenture, and (4) Lessee will be subrogated to all claims of Lessor, if any, against third parties (except under any policies of insurance maintained by Lessor or the Owner Participant), 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, not later than the later to occur of (i) the Business Day next succeeding the 120th day following the occurrence of such Event of Loss and (ii) the Lease Period Date next succeeding 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 of the same make and model (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 fair market value, utility and remaining useful life at least equal to, and being in as good operating condition as, 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 an 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 bill of sale and a Federal Aviation Administration bill of sale, in form and substance 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) 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, (4) provide the documentation required to be provided by it 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 that 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 bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (5) provide the Owner Participant with an opinion of counsel to Lessee (who shall be reasonably satisfactory to the Owner Participant) as to the tax consequences of such -36- 37 substitution, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft 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 (except under any insurance policies maintained by Lessor or the Owner Participant) 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 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 Pratt & Whitney PW 4056 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 or utility of the Aircraft) 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 fair market value, utility and remaining useful life at least equal to, and being in as good operating condition as, the Engine with respect to which such Event of Loss occurred (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) bill 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, (iv) provide the documentation required to be provided by it 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens) all of Lessor's right, title and interest, if any, -37- 38 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 bill of sale in form and substance reasonably satisfactory to Lessee, evidencing such transfer and (B) all claims, if any, against third parties (except under any insurance policies maintained by Lessor or the Owner Participant), for damage to or loss of the Engine subject to such Event of Loss, and such Engine shall thereupon cease to be an 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. As between Lessor and Lessee, 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) if such property has not been and will not be replaced pursuant to the last paragraph of Section 10(a), after reimbursement of Lessor and the Owner Participant 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 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 Lessee and Lessor as the respective interests of Lessee and Lessor may appear or (B) if such property has been or is being replaced pursuant to the last paragraph of Section 10(a), such payments shall be paid over to, or retained by, (i) Lessee if such property has been replaced, or (ii) Lessor if such property is being replaced (to be held by Lessor until such property has been replaced), and upon completion of such replacement, such payments shall be paid over to, or retained by, Lessee; 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 and the Owner Participant 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(d) Requisition for Use of the Aircraft by the United -38- 39 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 of any thereof, Lessee shall notify Lessor of such requisition, and all of Lessee's obligations under this Lease 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 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 constitute an Event of Loss which shall be deemed to have occurred on the last day of the Term, provided, however, that Lessor may notify Lessee in writing on or before the twentieth day following 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 (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) bill 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 bill 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens) and Indenture Trustee's Liens), against receipt from Lessor of a bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 (but not the Airframe) 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. -39- 40 (f) Application of Payments During Existence of Event of Default(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 any Sublessee) if at the time of such payment or retention a Potential Default or 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 Potential Default or 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) 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 amounts of public liability and property damage insurance from time to time applicable to passenger aircraft owned or leased by Lessee of the same type as the Aircraft which comprise Lessee's fleet and (y) $300,000,000 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 passenger aircraft owned or leased by Lessee of the same type which comprise Lessee's fleet 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 name Lessor, in its individual capacity and as owner of the Aircraft, 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) 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 such insurance lapses for non-payment of premium 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), 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 days (seven days in the case of war risk and allied perils coverage) after receipt by Lessor, the Indenture Trustee and the Owner Participant, -40- 41 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 normal passenger service 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 passenger aircraft owned or leased by Lessee of the same type as the Aircraft which comprise Lessee's fleet and which are on the ground and not in normal passenger service 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 passenger aircraft owned or leased by Lessee of the same type which comprise Lessee's fleet and which are on the ground and not in normal passenger service 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 aircraft hull insurance covering the Aircraft and all-risk 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, any 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 passenger aircraft owned or leased by Lessee of the same type which comprise Lessee's fleet; 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 this paragraph (b) covering the Aircraft and any policies taken out in -41- 42 substitution or replacement for any such policies (i) shall name Lessor, as owner of the Aircraft, 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 $5,000,000 (or, if the Aircraft is then under a Sublease, in excess of $2,500,000), the proceeds in respect of such loss up to the amount of 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 $5,000,000 (or, if the Aircraft is then under a Sublease, of $2,500,000) or less or the amount of any proceeds of any loss in excess of 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 -42- 43 Trustee, (iv) shall provide that if the insurers cancel such insurance for any reason whatever, or if 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 days (seven days in the case of hull war risk and allied perils coverage) after receipt 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), 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 sub-sublessee) 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 or sub-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 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 from insurance carried by Lessee 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) that has not been and will not be 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) and the Owner Participant 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 has been or is being replaced pursuant to the last paragraph of Section 10(a), such payments shall be paid over to, or retained by, (A) Lessee if such property has been replaced or (B) Lessor if such property is being replaced (to be held by Lessor until such property has been replaced), and upon completion of such replacement, such payments shall be paid over to, or retained by, Lessee; 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) and the Owner Participant 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 from insurance carried by Lessee 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 -43- 44 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). (II) During any period that the Aircraft is on the ground and not in normal passenger service 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 passenger aircraft owned or leased by Lessee of the same type which comprise Lessee's fleet and which are on the ground and not in normal passenger service operation; provided, however, that Lessee shall maintain insurance against risk of loss or damage to the Aircraft in an amount at least equal to the Stipulated Loss Value of the Aircraft during such period that the Aircraft is on the ground and not in normal passenger service 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 Closing Date and on or before November 1 in each year thereafter during the Term commencing November 1, 1996, a report, signed by Rollins Hudig Hall 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, that all information contained in the foregoing report shall not be made available by Lessor, the Indenture Trustee or the Owner Participant to anyone except (A) to permitted transferees of Lessor's, the Owner Participant's or the Indenture Trustee's interest, and to bona fide potential transferees, who agree to hold such information confidential, (B) to Lessor's, 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 30 days (seven 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 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 may have. -44- 45 (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) hereof, insuring for a maximum amount which is less than the Stipulated Loss Value of the Aircraft) in the insurance policies covering the risks required to be insured against pursuant to this Section 11 under a program applicable to all aircraft in Lessee's fleet (without discrimination in respect of the Aircraft), 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. (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 (the obligations of which are supported by the full faith and credit of the United States Government) 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. Lessee shall provide to the Owner Participant written notice of any indemnification or insurance provided pursuant to this Section 11(f) as soon as practicable. (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 a Potential Default or an Event of Default shall have occurred and be continuing, applied against Lessee's obligations hereunder as and when due. At such time as there shall not be continuing any Potential Default or such Event of Default, -45- 46 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, Lessor, the Owner Participant or the Indenture Trustee or their respective authorized representatives may inspect the Aircraft and inspect and make copies (at Lessor, 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 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 normal operation 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) 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 normal 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 nor 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 any such inspection. SECTION 13. ASSIGNMENT. EXCEPT AS OTHERWISE PROVIDED HEREIN, LESSEE WILL NOT, WITHOUT PRIOR WRITTEN CONSENT OF LESSOR, ASSIGN ANY OF ITS RIGHTS 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 within 10 Business Days after the same shall have become due; or -46- 47 (b) Lessee shall have failed to make a payment of Supplemental Rent after the same shall have become due and such failure shall continue for 10 Business Days after Lessee's receipt of written demand therefor by the party entitled thereto (provided that any failure to pay any amount owed by Lessee under the Tax Indemnity Agreement or any failure of Lessee to pay to Lessor or the Owner Participant any Excluded Payments 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) any other covenant or agreement (except the covenants set forth in the Tax Indemnity Agreement and in clauses (iv)(B) and (v) of the first paragraph of Section 5(a) hereof) to be performed or observed by it under any Operative Document, and such failure shall continue unremedied for a period of thirty days after written notice thereof by 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 reasonable 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 the last day of the Term has not yet occurred; or (d) any representation or warranty made by Lessee herein or in the Participation Agreement, the Refunding 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 Refunding 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 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 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 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 or liquidation of its affairs -47- 48 and the continuation of any such case or other proceeding undismissed and unstayed for a period of 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 invocated for a period of 90 days after the date of entry thereof; or (f) the commencement by Lessee of a voluntary case or proceeding 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 Event 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) and in the possession of the United States government or an instrumentality or agency thereof 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 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 -48- 49 Representative for the Air 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 Aircraft 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, 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 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 the 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 the Aircraft on the Lease Period Date specified as the payment date in such notice over the fair market sales value of the Aircraft (computed as hereafter in this Section provided) as of the Lease Period Date specified as the payment date in such notice; -49- 50 (d) in the event Lessor, pursuant to paragraph (b) above, shall have sold the Aircraft, Lessor, in lieu of exercising its rights under paragraph (c) above with respect to the 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 for Lease Periods commencing after the Lease Period Date preceding such date of sale) any unpaid Basic Rent with respect to the Aircraft due prior to such date 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 the Aircraft, computed as of the Stipulated Loss Value Date on or immediately succeeding 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, as the case may be, in each case free of all rights of Lessee hereunder 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 promptly 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 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 -50- 51 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 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 and actual legal fees and other costs and expenses (including fees of the appraisers hereinabove referred to) incurred by Lessor, the Indenture Trustee and the Owner Participant by reason of the occurrence of any Event of Default or the exercise of Lessor's remedies with respect thereto, including those incurred 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 or the Owner Participant) may bid for and purchase such property. Lessor agrees to give Lessee at least 15 days' written notice of the date fixed for any public sale of any Airframe or 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, provided, however, that Lessee shall not be entitled to purchase the Aircraft so long as any Event of Default is continuing hereunder. 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 or amendment to be duly filed and recorded, and maintained -51- 52 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 will promptly provide the Owner Participant, Lessor and the Indenture Trustee with such financial information concerning Lessee or its parent corporation as is provided from time to time to shareholders of Lessee's parent corporation. Commencing in 1997, Lessee will deliver to Lessor, the Owner Participant and the Indenture Trustee (i) on or before April 30 of each year during the Term, commencing with April 30, 1997, 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 Potential Default or an Event of Default or of an event which with the giving of notice or lapse of time or both would become an Event of Default under clauses (c) or (d) of Section 14 hereof other than a failure to maintain the Aircraft in accordance with Section 7 or Section 8 hereof which does not materially impair the value of the Aircraft or a failure to maintain insurance in accordance with Section 11 hereof, (ii) within 60 days after the end of each of the first three quarterly periods of each fiscal year of Lessee, a consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of such period, together with the related consolidated statements of income and of surplus for such period, (iii) within 120 days after the close of such fiscal year, a consolidated balance sheet of Lessee and its consolidated subsidiaries prepared by it as of the close of such fiscal year, together with the related consolidated statements of income and surplus for such fiscal year, as certified by independent public accountants, including their certificate and accompanying comment, and (iv) promptly after filing with the Securities and Exchange Commission, copies of Lessee's annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Lessee agrees that if the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Treasurer or Assistant Treasurer of Lessee has actual knowledge of the existence of a Potential Default or an event which with the giving of notice or lapse of time or both would become an Event of Default under clauses (c) or (d) of Section 14 hereof other than a failure to maintain the Aircraft in accordance with Section 7 or Section 8 hereof which does not materially impair the value of the Aircraft or a failure to maintain insurance in accordance with Section 11 hereof, 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 shall reasonably request. Lessee agrees that if an officer of Lessee has knowledge of the existence of an Event of Default, Lessee shall promptly give notice thereof to Lessor and the Indenture Trustee. -52- 53 SECTION 17. NOTICES. All notices required under the terms and provisions hereof shall be by telecopy or other telecommunication means (with such telecopy or other telecommunication means to be continued 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President-Finance and Treasurer (Telecopy No. (612) 726-0665), 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 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), or to such other address or telecopy number as Lessor shall from time to time designate in writing to Lessee, and (iii) if to the Indenture Trustee or the Owner Participant, addressed to the Indenture Trustee or the Owner Participant at such address or telecopy number as 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 the Indenture Trustee or the Owner Participant at its address or telecopy number set forth on the signature pages of the Refunding Agreement. SECTION 18. NO SET-OFF, COUNTERCLAIM, ETC. This Lease is a net lease. All Rent shall be paid by Lessee to Lessor in funds of the type specified in Section 3(f). 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), 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 -53- 54 except as specifically provided herein, Lessee nonetheless agrees without limitation of the other rights or remedies of Lessor hereunder 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 OPTION; PURCHASE OPTION; VALUATION; SPECIAL PURCHASE OPTION. (a) Renewal Option. (1) Fair Market Renewal Term. Not less than 120 days before the end of the Basic Term or any Renewal Term for the Aircraft, Lessee may deliver to Lessor a written notice irrevocably electing to renew this Lease for a Renewal Term specified in such notice of not less than one year and not more than three years and for a period of months divisible by six 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"). (2) Fixed Renewal Term. Not less than 120 days before the end of the Basic Term, Lessee may deliver to Lessor a written notice irrevocably electing to renew this Lease for a single term having a duration and at a Basic Rent as determined below (any such renewal term, a "FIXED RENEWAL TERM"). At least 270 days before the end of the Basic Term Lessee shall, as a condition to its exercise of the option set forth in this Section l9(a)(2), notify Lessor of its demand for an appraisal pursuant to the appraisal procedures of Section l9(c). The appraisers so appointed shall determine, as evidenced by an appraisal reasonably satisfactory to the Owner Participant's counsel the total useful life, the remaining useful life and the future residual value of the Aircraft on the expiration date for the Fixed Renewal Term as may be set by reason of the maximum period therefor in accordance with the constraints set forth in the following sentence. The duration of the Fixed Renewal Term shall be a period specified by Lessee before the end of the Basic Term which is not more than the lesser of (y) two years and (x) that period of time (i) which would cause the Term, after giving effect to such Fixed Renewal Term, to be equal to 80% of the total useful life of the Aircraft as determined by the appraisers and (ii) at the expiration of which the residual value of the Aircraft, as estimated by the appraisers, would be at least equal to 20% of Lessor's Cost (without taking into account inflation or deflation during the Term). (3) If no written notice is delivered by Lessee to Lessor pursuant to Section l9(a)(1) or l9(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 Potential Default 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, 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, in the case of a Fair -54- 55 Market Renewal Term, to the "fair market rental value" thereof for the Renewal Term determined in accordance with Section l9(c), and equal, in the case of a Fixed Renewal Term, to 50% 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 divided by 50), which Basic Rent shall be payable in semi-annual installments in arrears, 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 Value schedule 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 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 provisions of this Section l9(a)(4) and Section l9(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 Term, determined in accordance with the provisions of this Section l9(a)(4) and Section l9(c) hereof. (b) Purchase Options. (1) At the expiration of the Basic Term, Lessee shall have the option, upon at least 120 days' irrevocable prior notice to Lessor, to purchase the Aircraft on the last Business Day of the Basic Term, for a purchase price equal to the "fair market sales value" of the Aircraft computed as of thirty days prior to such date in accordance with the procedures of Section l9(c) hereof. 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), Lessor will transfer to Lessee, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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, if the Aircraft has not been released from the Lien of the Trust Indenture, exercise such rights as it has to cause the Aircraft to be released from the Lien thereof. (2) At the expiration of any Renewal Term, Lessee shall have the option, upon at least 120 days' irrevocable prior notice to Lessor, to purchase the Aircraft on the last Business Day of such Renewal Term for a purchase price equal to the fair market sales value of the Aircraft, computed as of thirty days prior to such date in accordance with the procedures of Section 19(c) hereof. Upon such payment in full and payment of any other amounts then due hereunder (including the costs or expenses of the Owner Participant and Lessor, if any, 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens) all of the Lessor's right, title and interest in and to the Aircraft and, if the Aircraft has not been released from the Lien of the Trust Indenture, exercise such rights as it has to cause the Aircraft to be released from the Lien thereof. (c) Valuation. At any time not earlier than 365 days prior to the date on which Lessee may purchase the Aircraft pursuant to Section 9(b) or Section l9(b) hereof or renew this Lease pursuant to Section l9(a) hereof, Lessee may deliver to Lessor a revocable -55- 56 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 l9(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 by Lessee at all times 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 and under no compulsion to sell or lease and disregarding the purchase and renewal options of 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 210 days prior to the end of the Basic Term or the Renewal Term in question (or by 210 days prior to the Termination Date, in the case of Section 9(b)), 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, 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 -56- 57 to renew this Lease or purchase the Aircraft following such appraisal or elects to purchase the Aircraft pursuant to Section l9(b), Lessee shall pay all expenses of such appraisal. (d) Special Purchase Option. On March 15, 2011 (or, if March 15, 2011 is not a Business Day, the Business Day immediately succeeding March 15, 2011), Lessee shall have the option, upon at least 120 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 61.98% of Lessor's Cost. 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 61.98% of Lessor's Cost minus an amount equal to principal of and accrued but unpaid interest on any Secured Certificates 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), all unpaid Supplemental Rent due on or prior to such date, including, if Lessee has not elected to make such assumption, the amount of Make-Whole Amount, if any, which is payable on the Secured Certificates on such date), Lessor will transfer to Lessee, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 grant a mortgage and security interest in the Aircraft in favor of the Indenture Trustee for security purposes only, subject to the reservations and conditions therein 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 under the Trust Indenture 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. 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 -57- 58 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 (a) Investment of Security Funds. Any moneys held by Lessor as security hereunder for future payments to Lessee 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 Moody's 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 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 a Potential Default or 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. -58- 59 (b) Liability of Lessor Limited(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 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. To the extent permitted by applicable law, Lessee hereby waives any provision of law which renders any provisions hereof prohibited or unenforceable in any respect. 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. Except as provided in Section 8(u) of the Participation Agreement, 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. The covenants and agreements of Lessee set forth in this Lease and Lessee's obligations hereunder shall survive the expiration or other termination of this Lease to the extent required for full performance and satisfaction thereof. 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, -59- 60 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, the Refunding Agreement or the Trust Indenture, Lessor shall not interfere with Lessee's continued possession, use and operation of, the Aircraft during the Term of this Lease (it being understood that the foregoing shall not be deemed to have modified in any respect the obligations of Lessee pursuant to Section 20 hereof, which obligations are absolute and unconditional), and this Lease shall not be terminated except as expressly provided herein. SECTION 27. APPLICABILITY OF AMENDMENTS. The amendments to the Original Lease effected by this Amended and Restated Lease Agreement are applicable on and after the Closing Date. -60- 61 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to be duly executed on the day and year first above written. FIRST SECURITY BANK OF UTAH, 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 June, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: _______________________________ Title: -Signature Page- 62 EXHIBIT A TO LEASE AGREEMENT [NW 1989 B] LEASE SUPPLEMENT NO. [NW 1989 B] LEASE SUPPLEMENT NO. _ , dated __________, 19__, between First Security Bank of Utah, National Association, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement [NW 1989 B], dated as of March 15, 1989, between [____________________], as Owner Participant, and The First National Bank of Boston as predecessor to 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 Amended and Restated Lease Agreement [NW 1989 B], dated as of June __, 1996, relating to one Boeing 747-451 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 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 _______, 199_ to the Lease Agreement, has been recorded by the Federal Aviation Administration _______, 1989, 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 Boeing 747-451 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 Supplement No. 1. (2) This language for other Lease Supplements. 63 (ii) Engines: four (4) Pratt & Whitney Model PW4056 engines bearing, respectively, manufacturer's serial nos. P_______, P_______, P_______ and P_______ (each of which engines has 750 or more rated takeoff horsepower or the equivalent of such horsepower). 2. The Delivery Date of the Aircraft was March 16, 1989. Except as otherwise provided in the Lease, the Term for the Aircraft shall commence on the Delivery Date and end on September 15, 2014. 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 The Boeing Company, or any subcontractor or supplier of The Boeing Company, 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 64 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 OF UTAH, 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 ___th day of ___________, 19__. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: _______________________________ Title: - ---------------- (3) This language contained in the original counterpart only. 65 EXHIBIT B TO LEASE AGREEMENT [NW 1989 B] BASIC RENT 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. COMMENCEMENT DATE EXCESS AMOUNT (PERCENTAGE OF LESSOR'S COST) - ----------------- ------------------------------------------- Basic Rent Lease (Percentage of Period Date Lessor's Cost) - ----------------- ------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- 66 Basic Rent Lease (Percentage of Period Date Lessor's Cost) - ----------------- ------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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 67 EXHIBIT C TO LEASE AGREEMENT [NW 1989 B] 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 Value Loss Value Date Percentage - ----------------------------- ------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 68 EXHIBIT D TO LEASE AGREEMENT [NW 1989 B] Stipulated Stipulated Loss Value Loss Value Date Percentage - ----------------------------- ------------------------- - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- EXHIBIT C - PAGE 2 69 EXHIBIT D TO LEASE AGREEMENT [NW 1989 B] 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 Value Percentage - ------------------------------- ------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 70 Termination Termination Value Date Value Percentage - ------------------------------- ------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT D - PAGE 2 71 EXHIBIT E SCHEDULE OF PERMITTED SUBLESSEES AER LINGUS IRISH AEROLINEAS ARGENTINAS AEROMEXICO, AERONAVES DE MEXICO AIR AFRIQUE AIR CANADA AIR EUROPA AIR EUROPE AIR 2000 AIR FRANCE AIR NEW ZEALAND ALITALIA - LINEE AEREE ITALIANE AUSTRIAN AIRLINES BRITISH AIRWAYS CANADIAN AIRLINES INTERNATIONAL LTD. CARGOLUX CHINA AIRLINES DEUTSCHE LUFTHANSA AKTIENGESELLSCHAFT FINNAIR THE FLYING TIGER LINE INC. GARUDA IBERIA - LINEAS AEREAS DE ESPANA JAPAN AIR LINES JAPAN AIR SYSTEM KONINKLIJKE LUCHTVAART MAATSCHAPPIJ NV. (KLM) KOREAN AIR LINES LUXAIR NORDAIR OLYMPIC AIRWAYS SA PHILIPPINE AIR LINES QANTAS AIRWAYS LIMITED SWISS AIR TRANSPORT COMPANY LTD. THAI AIRWAYS INTERNATIONAL LTD. UNION DE TRANSPORTES AERIENS VARIG S.A. SINGAPORE AIRLINES AIR PORTUGAL - TAP ALL NIPPON AIRWAYS ANSETT AIRLINES OF AUSTRALIA BRITANNIA AIRWAYS CAAC - CIVIL AVIATION ADMINISTRATION OF CHINA 72 CATHAY PACIFIC AIRWAYS CONDOR FLUGDIENST DAN-AIR SERVICES ICELANDAIR MONARCH AIRLINES SABENA SCANDINAVIAN AIRLINES SYSTEM - SAS TRANS-AUSTRALIA AIRLINES - TAA TRANSBRASIL VASP MEXICANA AIRLINES ORION AIR BWIA INTERNATIONAL LAN - CHILE AIRBORNE EXPRESS FEDERAL EXPRESS PUROLATOR UNITED PARCEL SERVICE EXHIBIT E - PAGE 2 EX-4.A5 6 GUARANTEE-1989 B 1 GUARANTEE [NW 1989 B] This GUARANTEE [NW 1989 B], dated as of June 12, 1996 (as amended, modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I hereto (collectively, together with their successors and permitted assigns, the "PARTIES", and, individually, a "PARTY"). WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, has entered into a Lease Agreement [NW 1989 B], dated as of March 15, 1989, between the Lessee, as lessee, and The First National Bank of Boston, not in its individual capacity but solely as Owner Trustee (as defined therein), except as expressly provided therein (the "ORIGINAL OWNER TRUSTEE"), as lessor, and a Lease Supplement No. 1 [NW 1989 B], dated March 16, 1989 (such Lease Agreement, as so supplemented, the "ORIGINAL LEASE"), relating to one (1) Boeing 747-451 aircraft, together with four (4) Pratt & Whitney Model PW4056 engines (such aircraft and engines, and any substitute Airframe and Engines under the Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation Agreement [NW 1989 B], dated as of March 15, 1989 (the "ORIGINAL PARTICIPATION AGREEMENT"), among the Lessee, [_______________________], as owner participant (the "ORIGINAL OWNER PARTICIPANT"), and certain other parties; and WHEREAS, pursuant to an Assignment and Assumption Agreement dated as of December 19, 1991 by and among the Original Owner Participant, [_________________], as owner participant (the "OWNER PARTICIPANT"), and [_________________________________], a [__________] corporation, as parent of the Owner Participant (the "ASSIGNMENT AGREEMENT"), the Original Owner Participant transferred to the Owner Participant all of its right, title and interest in the Trust Estate, the Aircraft and the Operative Documents, including without limitation the Original Lease; and WHEREAS, pursuant to an Instrument of Transfer, Removal, Appointment, Assumption and Acceptance dated May 16, 1996 among the Owner Participant, the Original Owner Trustee and First Security Bank of Utah, National Association (the "OWNER TRUSTEE"), the Owner Trustee succeeded to all of the estates, properties, rights, powers, duties and trusts of the Original Owner Trustee as trustee under the Original Trust Agreement and the other Operative Documents to which the Original Owner Trustee was a party; and WHEREAS, the Guarantor, the Lessee, the Owner Trustee, the Owner Participant, State Street Bank and Trust Company, as indenture trustee (the "INDENTURE TRUSTEE"), and certain other parties have entered into a Refunding Agreement [NW 1989 B], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"), providing for a refinancing as contemplated by Section 17 of the Original Participation Agreement; and 2 WHEREAS, it is a condition precedent to the obligations of the parties thereto to consummate the transactions contemplated by the Refunding Agreement that the Guarantor execute and deliver this Guarantee; and WHEREAS, pursuant to the Refunding Agreement, (a) the Original Participation Agreement is being amended (as so amended, the "PARTICIPATION AGREEMENT"), (b) the Original Lease was amended and restated on June 3, 1996 (as so amended and restated, the "LEASE"), (c) the Owner Trustee and the Indenture Trustee are entering into the Trust Indenture and Security Agreement [NW 1989 B], together with a Trust Agreement and Indenture Supplement covering the Aircraft (as so supplemented, the "TRUST INDENTURE"), and new secured certificates in four series substantially in the form set forth in Section 2.01 of the Trust Indenture (the "SECURED CERTIFICATEs") will be issued, and (d) the Owner Trustee as lessor under the lease (the "LESSOR") will assign by way of collateral security certain of its right, title and interest in and to this Guarantee to the Indenture Trustee pursuant the Trust Indenture, as security for the obligations of the Lessor referred to therein; and WHEREAS, the capitalized terms used herein that are not defined herein are used herein as defined in the Lease; NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and to induce the other Parties referred to above to enter into the Refunding Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. GUARANTEE. (a) The Guarantor does hereby acknowledge that it is fully aware of the terms and conditions of the Lease, the Participation Agreement and the other Operative Documents and the transactions and the other documents contemplated thereby, and does hereby irrevocably and fully and unconditionally guarantee, as primary obligor and not as surety merely, to the Parties, as their respective interests may appear, the payment by the Lessee of all payment obligations when due under the Lease (including, without limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement and the other Operative Documents to which the Lessee is a party (such obligations of the Lessee guaranteed hereby being hereinafter referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative Documents, and the timely performance of all other obligations of the Lessee thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby agree that in the event that the Lessee fails to pay any Financial Obligation when due for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such - 2 - 3 proceeding) within five days after the date on which such Financial Obligation became due and payable and the applicable grace period has expired, the Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Financial Obligation was not paid when due and for five days after the applicable grace period has expired, the amount of such Financial Obligation. The Guarantor hereby agrees that in the event the Lessee fails to perform any Nonfinancial Obligation for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within 10 Business Days after the date on which such Nonfinancial Obligation is required to be performed (for avoidance of doubt, to include any applicable grace period), the Guarantor shall cause such Nonfinancial Obligation to be performed within 10 Business Days following the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Nonfinancial Obligation was not performed when so required and that any applicable grace period has expired. (b) The obligations of the Guarantor hereunder shall not be, to the fullest extent permitted by law, affected by: the genuineness, validity, regularity or enforceability (or lack thereof) of any of the Lessee's obligations under the Lease or any other Operative Document to which the Lessee is a party, any amendment, waiver or other modification of the Lease or such other Operative Document (except that any such amendment or other modification shall be given effect in determining the obligations of the Guarantor hereunder), or by any substitution, release or exchange of collateral for or other guaranty of any of the Obligations (except to the extent that such substitution, release or exchange is undertaken in accordance with the terms of the Operative Documents) without the consent of the Guarantor, or by any priority or preference to which any other obligations of the Lessee may be entitled over the Lessee's obligations under the Lease and the other Operative Documents to which the Lessee is a party, or by any other circumstance that might otherwise constitute a legal or equitable defense to or discharge of the obligations of a surety or guarantor including, without limitation, any defense arising out of any laws of the United States of America or any State thereof which would excuse, discharge, exempt, modify or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not, to the fullest extent permitted by law, affect the liability of the Guarantor hereunder: (a) the extension of the time for or waiver of, at any time or from time to time, without notice to the Guarantor, the Lessee's performance of or compliance with any of its obligations under the Operative Documents (except that such extension or waiver shall be given effect in determining the obligations of the Guarantor hereunder), (b) any assignment, transfer, sublease or other arrangement by which the Lessee transfers possession or loses control of the use of the Aircraft, (c) any defect in the title, condition, design, operation or fitness for use of, or damage to or loss or destruction of, the Aircraft, whether or not due to - 3 - 4 the fault of the Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or with any other Person, or any sale, transfer, lease or disposal of any of its assets or (e) any change in the ownership of any shares of capital stock of the Lessee. (c) This Guarantee is an absolute, present and continuing guaranty of payment and performance and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Lessee any unpaid amounts due or otherwise to enforce performance by the Lessee. The Guarantor specifically agrees, to the fullest extent permitted by law, that it shall not be necessary or required, and that the Guarantor shall not be entitled to require, that any Party (i) file suit or proceed to obtain or assert a claim for personal judgment against the Lessee for the Obligations, or (ii) make any effort at collection of the Obligations from the Lessee, or (iii) foreclose against or seek to realize upon any security now or hereafter existing for the Obligations, including the Trust Estate or the Trust Indenture Estate (as such term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations, or make any effort at collection of the Obligations from any such other Person, or exercise or assert any other right or remedy to which any Party is or may be entitled in connection with the Obligations or any security or other guaranty therefor, or (v) assert or file any claim against the assets of the Lessee or any other guarantor or other Person liable for the Obligations, or any part thereof, before or as a condition of enforcing the liability of the Guarantor under this Guarantee or requiring payment of said Obligations by the Guarantor hereunder, or at any time thereafter. (d) The Guarantor agrees, to the fullest extent permitted by law, that, without limiting the generality of this Guarantee, if an Event of Default shall have occurred and be continuing and the Lessor (or any assignee thereof including, without limitation, the Indenture Trustee) shall be prevented by applicable law from exercising its remedies (or any of them) under Section 15 of the Lease, the Lessor (or any assignee thereof, including, without limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive hereunder from the Guarantor, upon demand therefor the sums that would otherwise have been due from the Lessee under the Lease had such remedies been able to be exercised. The Guarantor hereby unconditionally waives, to the fullest extent permitted by law, any requirement that, as a condition precedent to the enforcement of the obligations of the Guarantor hereunder, the Lessee or all or any one or more of any other guarantors of any of the Obligations be joined as parties to any proceedings for the enforcement of any provision of this Guarantee. 2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be deemed to create any right in any Person except a Party and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person. 3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives notice of the acceptance of this Guarantee and of the performance or nonperformance by the Lessee, demand for payment from the Lessee or any other Person, notice of nonpayment or failure to perform on the part of the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent permitted by law, all other demands or notices whatsoever, - 4 - 5 other than the request for payment hereunder and notice provided for in Section 1 hereof. The obligations of the Guarantor shall be absolute and unconditional and shall remain in full force and effect until satisfaction of all Obligations hereunder and, without limiting the generality of the foregoing, to the extent not prohibited by applicable law, shall not be released, discharged or otherwise affected by the existence of any claims, set-off, defense or other rights that the Guarantor may have at any time and from time to time against any Party, whether in connection herewith or any unrelated transactions. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Financial Obligation is rescinded or must otherwise be returned by any Party upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding with respect to the Lessee or otherwise, all as though such payment had not been made. The Guarantor, by virtue of any payment or performance hereunder to a Party, shall be subrogated to such Party's claim against the Lessee or any other Person relating thereto; provided, however, that the Guarantor shall not be entitled to receive payment from the Lessee in respect of any claim against the Lessee arising from a payment by the Guarantor: (a) while an Event of Default shall have occurred and be continuing, in which case no such payment in respect of such a claim by the Guarantor may be made by the Lessee; or (b) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings relating to the Lessee, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Lessee, whether or not involving insolvency or bankruptcy proceedings, in which case the Obligations shall be paid and performed in full before any payment in respect of a claim by the Guarantor shall be made by or on behalf of the Lessee. 4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or waiver or modification of, or consent under, the terms hereof, shall be effective unless evidenced by an instrument in writing signed by the Guarantor and each Party against whom such amendment, supplement, waiver, modification or consent is to be enforced. 5. PAYMENTS. All payments by the Guarantor hereunder in respect of any Obligation shall be made in Dollars and otherwise as provided in the Lease, the Participation Agreement or any other Operative Document in which such Obligation is contained; provided that the Guarantor consents to all the terms of the Trust Indenture and agrees to make all payments hereunder directly to the Indenture Trustee until such time as the Indenture Trustee shall give notice to the Guarantor that the Lien of the Trust Indenture has been fully discharged and thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay directly to the Lessor, in its individual capacity, or to the Owner Participant or another Party, as the case may be, any amount owing to such Person as Supplemental Rent for indemnities provided in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or otherwise not constituting part of the Trust Indenture Estate (as such term is defined in the Trust Indenture). - 5 - 6 6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust Indenture, the Lessor will assign, and create a security interest in, certain of its rights hereunder to and for the benefit of the Indenture Trustee. From and after the execution and delivery of the Trust Indenture, and until receipt by the Guarantor of a written notice from the Indenture Trustee to the effect that the Trust Indenture has been fully satisfied and discharged, no remedy or election hereunder may be exercised by the Lessor or consent given by the Lessor, except by or with the prior written consent of the Indenture Trustee, and the Guarantor will make payment of all amounts hereunder that are assigned to the Indenture Trustee directly to the Indenture Trustee, and such payments shall discharge the obligations of the Guarantor to the Lessor to the extent of such payments. 7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Parties as follows: (a) It is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware. It has all requisite corporate power and authority to own and operate its properties, to carry on its business as presently conducted and to enter into and perform its obligations under this Guarantee. (b) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with or the taking of any other action in respect of, any Federal, state, municipal or other governmental department, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, is now, or under existing law in the future will be, required or necessary on its behalf to authorize the execution, delivery and performance (other than as contemplated by the Operative Documents in the case of the performance of the Non-Financial Obligations) by it of this Guarantee, or for the legality, validity, binding effect or enforceability hereof. (c) Neither the execution and delivery of this Guarantee, the performance of its obligations hereunder, nor its consummation of the transactions contemplated hereby, will conflict with or result in any breach of, or constitute a default under, or result in any creation or imposition of any Lien upon any of its property or assets under, any applicable laws or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject, or its Articles of Incorporation or by-laws. (d) The execution, delivery and performance by it of this Guarantee have been duly authorized by all necessary corporate action. This Guarantee has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). - 6 - 7 8. JURISDICTIONAL MATTERS. The Guarantor (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 Guarantee brought by any Party, 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 Guarantee may not be enforced in or by such courts. The Guarantor hereby generally consents to service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038-4892, Attention: Managing Attorney, or such office of the Guarantor in New York City as from time to time may be designated by the Guarantor in writing to the Parties. 9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Parties, with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and (c) shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of, and shall be enforceable by, each of the Parties to the fullest extent permitted by applicable laws. The headings in this Guarantee are for purposes of reference only, and shall not limit or otherwise affect the meanings hereof. 10. NOTICES. All requests, notices or other communications hereunder shall be in writing, addressed as follows: If to the Guarantor: Northwest Airlines Corporation for U.S. Mail: 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 for overnight courier: 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President -- Finance and Treasurer Telecopy No.: (612) 726-0665 If to a Party: to the address or telecopy number set forth in or pursuant to the Refunding Agreement. - 7 - 8 All requests, notices or other communications shall be given in the manner, and shall be effective at the times and under the terms, set forth in Section 13(b) of the Participation Agreement. 11. NO WAIVERS. No failure on the part of any Party to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise of such right or remedy or the exercise of any other right or remedy. 12. SURVIVAL. All representations and warranties contained herein or made in writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee regardless of any investigation made by any Party or any other Person. 13. SEVERABILITY. To the fullest extent permitted by applicable law, any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or any provision in any other Operative Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES 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 GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK. 15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by such Party in enforcing, or collecting under, this Guarantee. 16. TERMINATION. Subject to the provisions of Section 3 hereof, this Guarantee shall terminate upon the indefeasible payment and performance in full of all of the Obligations. 17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to the Obligations described in Section 1 and nothing in this Guarantee shall be deemed to constitute a guarantee of payment of any of the Secured Certificates or shall give rise to any inference that the Lessee or the Guarantor has so guaranteed such payment. - 8 - 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed as of the date first hereinabove set forth. NORTHWEST AIRLINES CORPORATION By: ------------------------------------ Name: Thomas S. Schreier, Jr. Title: Vice President - Finance and Assistant Treasurer Accepted as of the above date: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION in its individual capacity and as Owner Trustee By: ----------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY in its individual capacity and as Indenture Trustee By: ----------------------------- Name: Title: - 9 - 10 SCHEDULE I TO GUARANTEE [NW 1989 B] PARTIES First Security Bank of Utah, National Association, in its individual capacity and as Owner Trustee State Street Bank and Trust Company, as Indenture Trustee [_________________], as Owner Participant EX-4.A6 7 PARTICIPATION AGREEMENT-1989 B 1 PARTICIPATION AGREEMENT [NW 1989 B] THIS PARTICIPATION AGREEMENT [NW 1989 B] dated as of March 15, 1989, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of the State of Minnesota (herein called "Lessee"), (ii) the institution listed in Schedule I hereto and identified therein as the "Owner Participant" which executes and delivers a counterpart of this Agreement and of the Trust Agreement (as hereinafter defined) (herein called the "Owner Participant"), (iii) the institution listed in Schedule I hereto and identified therein as the "Original Holder" which executes and delivers a counterpart of this Agreement (herein called the "Original Holder"), (iv) The First National Bank of Boston, 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"), and (v) Meridian Trust Company, not in its individual capacity except as expressly provided herein, but solely as trustee under the Equipment Trust Agreement (as hereinafter defined) (herein, in such latter capacity, together with any successor trustee, called the "Equipment Trust Trustee"); WITNESSETH: WHEREAS, pursuant to the Purchase Agreement between Lessee and the Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things, certain Boeing 747-451 aircraft, one of which has been recently purchased from the Manufacturer by Lessee and is the subject of this Agreement; WHEREAS, Lessee purchased the Aircraft from the Manufacturer and intends to sell such Aircraft to the Owner Trustee for immediate lease-back; WHEREAS, subject to the terms and conditions of this Agreement, the Owner Trustee agrees to purchase the Aircraft from Lessee; WHEREAS, subject to the terms and conditions of this Agreement, the Equipment Trust Trustee on behalf of the Holders from time to time of the Certificates agrees to acquire security title to the Aircraft from the Owner Trustee; WHEREAS, concurrently with the delivery of the Aircraft to the Owner Trustee, 2 PARTICIPATION AGREEMENT NW 1989 B (i) Lessee and the Owner Trustee will enter into a Purchase Agreement Assignment [NW 1989 B], dated as of the date hereof whereby Lessee will assign to the Owner Trustee rights and interests of Lessee under the Purchase Agreement with respect to the Aircraft; and (ii) the Manufacturer will execute the Consent and Agreement [NW 1989 B], substantially in the form attached to the Purchase Agreement Assignment, with respect to the Purchase Agreement Assignment; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Participant is entering into a Trust Agreement [NW 1989 B], dated as of the date hereof, with the Owner Trustee, pursuant to which Trust Agreement the Owner Trustee agrees, among other things, to hold the Trust Estate for the use and benefit of the Owner Participant; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee, Lessee and the Equipment Trust Trustee, for the benefit of the Original Holder and the other Holders from time to time of the Certificates, are entering into the Equipment Trust Agreement [NW 1989 B], dated as of the date hereof, whereby the Owner Trustee agrees, among other things, to convey legal title to the Aircraft for security purposes only to the Equipment Trust Trustee and to deposit, mortgage and pledge with the Equipment Trust Trustee as part of the Estate all of the properties held in trust by the Owner Trustee under the Trust Agreement (other than Excluded Payments), and to lease the Aircraft back from the Equipment Trust Trustee and the Equipment Trust Trustee agrees, among other things, to issue Equipment Trust Certificates as evidence of the indebtedness to the Original Holder arising from the Original Holder's making a loan to finance the acquisition of such rights to the Aircraft, and to lease the Aircraft to the Owner Trustee; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1989 B], dated as of the date hereof (such Lease Agreement, as the same may be amended or supplemented from time to time to the extent permitted by the terms thereof and this Agreement, herein called the "Lease", such term to include, unless the context otherwise requires, the Lease Supplement referred to below) whereby, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the Aircraft on the date (the "Delivery Date") the Aircraft is sold and delivered by Lessee to the Owner Trustee under the Bill of Sale, and accepted by the Owner Trustee for all purposes thereof, such acceptance to be evidenced by the execution of the Trust Supplement covering the Aircraft, and such lease to be evidenced -2- 3 PARTICIPATION AGREEMENT NW 1989 B by the execution and delivery of a Lease Supplement covering the Aircraft; WHEREAS, the parties agree (i) that the sale of the Aircraft by Lessee to the Owner Trustee is intended as a true sale of all right, title and interest in and to the Aircraft for all purposes; (ii) that the sale of the Aircraft by the Owner Trustee to the Equipment Trust Trustee is intended to convey legal title to the Aircraft to the Equipment Trust Trustee for the sole purpose of providing the Equipment Trust Trustee with a security interest in the Aircraft, subject to the rights of Lessee under the Lease; (iii) that the lease-back of the Aircraft by the Owner Trustee from the Equipment Trust Trustee is a lease in legal form only which is intended to convey to the Owner Trustee all ownership rights in the Aircraft subject only to the rights of the Equipment Trust Trustee as a holder of legal title for security purposes; (iv) that the lease-back of the Aircraft by Lessee from the Owner Trustee pursuant to the Lease is intended as a true lease, conveying to Lessee rights as a lessee only; and (v) that for all other purposes (including tax purposes) the Owner Trustee shall be the true owner of the Aircraft; WHEREAS, to induce Lessee, the Equipment Trust Trustee and the Owner Trustee to enter into the transaction contemplated hereby, [___________], a Delaware corporation and the parent corporation of the Owner Participant, has issued the Parent Letter in favor of each of Lessee, the Equipment Trust Trustee and the Owner Trustee; WHEREAS, except as otherwise defined in this Agreement, terms used herein in capitalized form shall have the meanings attributed to them in Annex A to this Agreement; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. Participations in Lessor's Cost. (a) Agreements to Participate. Subject to the terms and conditions of this Agreement, on the Delivery Date for the Aircraft but in no event later than March 31, 1989 (and time shall be of the essence): (i) The Original Holder agrees to finance, in part, the payment of Lessor's Cost for the Aircraft by making a secured loan in an amount in Dollars equal to the amount set forth on Schedule I opposite the name of the Original Holder (the "Holder's Commitment"), by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York (ABA No. 02-100-1033), not later than 10:00 a.m., New York City time, in immediately -3- 4 PARTICIPATION AGREEMENT NW 1989 B available funds, the amount of the Holder's Commitment. The Owner Trustee shall accept such funds on behalf of the Equipment Trust Trustee, and such transfer of funds to the Owner Trustee shall be deemed the receipt by the Equipment Trust Trustee of amounts payable to it pursuant to Section 2.12 of the Equipment Trust Agreement. (ii) The Owner Participant agrees to participate in the payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft in an amount in Dollars equal to the amount set forth on Schedule I opposite the Owner Participant's name (the "Owner Participant's Commitment"), by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York (ABA No. 02-100-1033), not later than 10:00 a.m., New York City time, in immediately available funds, the amount of the Owner Participant's Commitment. The Owner Trustee shall accept such funds on behalf of the Equipment Trust Trustee, and such transfer of funds to the Owner Trustee shall be deemed the receipt by the Equipment Trust Trustee of amounts payable to it by the Owner Trustee pursuant to Section 5.03(a) of the Equipment Trust Agreement. (b) [Intentionally omitted] (c) General Provisions. The amount of the participation of the Original Holder and the Owner Participant to be made as provided above in the payment of Lessor's Cost for the Aircraft is hereinafter called such party's "Commitment" for the Aircraft. In case the Original Holder or the Owner Participant shall default in its obligation under the provisions of this Section 1, no other such party shall have any obligation to make any portion of such defaulted amount available or to increase the amount of its Commitment and the obligation of such non-defaulting party shall remain subject to the terms and conditions set forth in this Agreement. Upon receipt by the Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant to this Section 1 and the satisfaction of the conditions set forth in Section 4 hereof, Lessee shall transfer title to, and deliver, the Aircraft to the Owner Trustee, the Owner Trustee shall purchase and take title to and accept delivery of the Aircraft and the Owner Trustee shall convey legal title to the Aircraft for security purposes only to the Equipment Trust Trustee. In consideration for the transfer of title to and delivery of the Aircraft to the Owner Trustee and the transfer of legal title to the Aircraft to the Equipment Trust Trustee for security purposes only, the following payment (which shall be made simultaneously with such transfer of title and delivery) shall be made by the Owner Trustee on behalf of itself and the Equipment Trust Trustee from the amounts so furnished it by the -4- 5 PARTICIPATION AGREEMENT NW 1989 B Original Holder and the Owner Participant: to Lessee, the Lessor's Cost of the Aircraft. SECTION 2. Delivery Date. (a) Notice of Delivery Date. Lessee agrees to give the Owner Participant, the Original Holder, the Equipment Trust Trustee and the Owner Trustee telex or telegraphic or other written notice of the scheduled Delivery Date for the Aircraft not later than the second Business Day preceding the scheduled Delivery Date, which notice shall confirm the amount of Lessor's Cost for the Aircraft, the amount of the Owner Participant's Commitment and Holders' Commitment for the Aircraft and the date on which they shall be made available. The making available by the Original Holder of the Holder's Commitment as required by Section 1(a)(i) hereof shall be deemed a waiver of such notice by the Original Holder. The making available by the Owner Participant of the Owner Participant's Commitment as required by Section 1(a)(ii) hereof shall be deemed a waiver of such notice by the Owner Participant and the Owner Trustee. (b) Closing. The closing shall take place at 10:00 a.m., New York City time, on the Delivery Date at the offices of Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038. (c) Postponement of Delivery Date. The scheduled Delivery Date may be postponed from time to time (but no later than March 31, 1989) for any reason if Lessee gives the Owner Participant, the Original Holder, the Equipment Trust Trustee and the Owner Trustee telex or telecopy notice (or telephonic notice confirmed in writing) of such postponement and notice of the date to which such Delivery Date has been postponed, such notice of postponement to be received by each party no later than 3:00 p.m., New York City time, on the originally scheduled Delivery Date, and the term "Delivery Date" as used in this Agreement shall mean any such postponed "Delivery Date". SECTION 3. Sale, Purchase and Lease of Aircraft. (a) Subject to the terms and conditions of this Agreement and the Equipment Trust Agreement, the Owner Trustee and the Equipment Trust Trustee on behalf of the Original Holder shall, upon receipt by the Owner Trustee of the Owner Participant's Commitment and the Holder's Commitment, oral confirmation of such receipt by the Owner Trustee and oral instructions of the Owner Participant and the Original Holder, take the following actions concurrently on the Delivery Date: (i) The Owner Trustee shall purchase the Aircraft from Lessee and pay to Lessee the Lessor's Cost of the Aircraft; -5- 6 PARTICIPATION AGREEMENT NW 1989 B (ii) The Owner Trustee shall convey legal title to Aircraft; the Aircraft for security purposes only to the Equipment Trust Trustee; (iii) The Equipment Trust Trustee shall, pursuant to the terms of the Equipment Trust Agreement, lease the Aircraft to the Owner Trustee; and (iv) The Owner Trustee shall, pursuant to the terms of the Lease, lease the Aircraft to Lessee. (b) To accomplish such transactions, the Owner Trustee (to the extent it has not already done so) shall take the following actions with respect to the Aircraft on the Delivery Date: (i) authorize its representative or representatives (who shall be an employee or employees, or an agent or agents, of Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant to this Agreement, the Equipment Trust Agreement and the Bill of Sale; (ii) accept from Lessee the Bill of Sale and the FAA Bill of Sale for the Aircraft; (iii) take such appropriate action as may be requested by Lessee in connection with the application to the FAA for registration of the Aircraft in the name of the Owner Trustee; (iv) execute and deliver the Lease Supplement and the Trust Supplement covering the Aircraft; (v) execute and deliver the Owner Trustee's Bill of Sale for the Aircraft; (vi) execute and release for filing the Owner Trustee's FAA Bill of Sale for the Aircraft; and (vii) execute and deliver all other documents and certificates and take such other actions as are required to be executed and delivered or taken by the Owner Trustee on or before the Delivery Date pursuant to any Operative Document. (c) To accomplish such transactions, Lessee (to the extent that it has not already done so) shall take the following actions with respect to the Aircraft on the Delivery Date: (i) execute and deliver the Bill of Sale for the Aircraft to the Owner Trustee; -6- 7 PARTICIPATION AGREEMENT NW 1989 B (ii) execute and release for filing the FAA Bill of Sale for the Aircraft; (iii) accept delivery of the Aircraft for purposes of the Lease, and in accordance with the terms thereof (such acceptance to be made by the employee or employees, or agent or agents, of Lessee who are accepting delivery of the Aircraft for the Owner Trustee pursuant to Section 3(b)(i) hereof); (iv) execute and deliver the Lease Supplement; and (v) execute and deliver all other documents and certificates, and take such other actions as are required to be executed and delivered or taken by Lessee on or before the Delivery Date pursuant to any Operative Document. (d) To accomplish such transactions, subject to the satisfaction or waiver of the conditions precedent in Section 3.01 of the Equipment Trust Agreement, the Equipment Trust Trustee on behalf of the Original Holder (to the extent that it has not already done so) shall take the following actions with respect to the Aircraft on the Delivery Date: (i) authorize its representative or representatives (such acceptance to be made by the employee or employees, or agent or agents, of Lessee who are accepting delivery of the Aircraft for the Owner Trustee pursuant to Section 3(b)(i) hereof) to accept delivery of the Aircraft on the Delivery Date pursuant to this Agreement and the Equipment Trust Agreement; (ii) accept the Owner Trustee's Bills of Sale for the Aircraft from the Owner Trustee; and (iii) execute and deliver all other documents and certificates and take such other actions as are required to be executed and delivered or taken by the Equipment Trust Trustee on or before the Delivery Date pursuant to any Operative Document. SECTION 4. Conditions. (a) Conditions Precedent to Participation. It is agreed that the obligations of each of the Original Holder and the Owner Participant to participate in the payment of Lessor's Cost and to make available the amount of its respective Commitment are subject to the fulfillment to the satisfaction of, or waiver by, the Original Holder and the Owner Participant prior to or on the Delivery Date of the following conditions precedent except that paragraphs (iii), (ix)(4) (insofar as it relates to the Original Holder), (xiv), (xx), (xxi), (xxii) and (xxiii) -7- 8 PARTICIPATION AGREEMENT NW 1989 B shall not be a condition precedent to the obligation of the Original Holder and paragraphs (iv), (vii)(2) (insofar as it relates to the Owner Participant), (ix)(2), (xiii) and (xxv) shall not be a condition precedent to the obligation of the Owner Participant: (i) The Original Holder 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 interpretations thereof by appropriate regulatory authorities which, in the opinion of the Original Holder or the Owner Participant, as the case may be, or its respective counsel, would make it a violation of law or regulations for the Original Holder, the Owner Participant or Lessee to participate in the transactions contemplated by the Operative Documents. (iii) In the case of the Owner Participant, the Original Holder shall have made available the amount of its Commitment for the Aircraft in accordance with Section 1(a)(i) hereof. (iv) In the case of the Original Holder, the Owner Participant shall have made available the amount of its Commitment for the Aircraft in accordance with Section 1(a)(ii) hereof. (v) This Agreement and the following documents shall have been duly authorized, executed and delivered by the respective party or parties hereto and thereto, shall be satisfactory in form and substance to the Original Holder and the Owner Participant and shall be in full force and effect and executed counterparts or a conformed copy, as appropriate, shall have been delivered to the Original Holder and the Owner Participant, or their respective special counsel; provided that only the Original Holder shall receive executed copies of the Certificates and the Guaranties and a certified copy of the Purchase Agreement shall only be delivered to the Equipment Trust Trustee in accordance with Section 8(ff) hereof and copies of the Tax Indemnity Agreement shall only be delivered to Lessee and the Owner Participant and their respective special counsel: (1) the Purchase Agreement (insofar as it relates to the Aircraft); (2) the Purchase Agreement Assignment; -8- 9 PARTICIPATION AGREEMENT NW 1989 B (3) the Lease; (4) a Lease Supplement covering the Aircraft dated the Delivery Date; (5) the Tax Indemnity Agreement; (6) the Trust Agreement; (7) a Trust Supplement covering the Aircraft dated the Delivery Date; (8) the Bill of Sale; (9) the FAA Bill of Sale; (10) an acceptance certificate covering the Aircraft in the form agreed to by the Original Holder, 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), by the Equipment Trust Trustee or its agent (which may be a representative of Lessee), and by such representative on behalf of Lessee; (11) the Equipment Trust Agreement; (12) the Owner Trustee's Bills of Sale; (13) the Consent and Agreement; (14) the Parent Letter; and (15) the Certificates and the Guaranties. All of the foregoing documents, together with this Agreement, are sometimes referred to herein, collectively, as the "Operative Documents" and, individually, as an "Operative Document". (vi) A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the Equipment Trust Agreement 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 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 Owner Participant or the Original Holder shall have been executed -9- 10 PARTICIPATION AGREEMENT NW 1989 B and delivered by Lessee, the Owner Trustee or the Equipment Trust Trustee and duly filed. (vii) The Original Holder and the Owner Participant shall have received the following, in each case in form and substance satisfactory to it: (1) a certified copy of the Certificate of Incorporation and By-Laws of Lessee and a copy of resolutions of the board of directors of Lessee, certified by a Vice President, the Secretary or an Assistant Secretary of Lessee, duly authorizing the sale of the Aircraft and the lease by Lessee of the Aircraft under the Lease and the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft, the Equipment Trust Agreement, the Tax Indemnity Agreement and each other document required to be executed and delivered by Lessee on the Delivery Date in accordance with the provisions hereof and thereof; (2) a certified copy of the general authorizing resolutions of the boards of directors of the Equipment Trust Trustee, the Owner Trustee and the Owner Participant, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Equipment Trust Trustee, the Owner Trustee and the Owner Participant, respectively, which authorize the execution, delivery and performance by the Equipment Trust Trustee, the Owner Trustee and the Owner Participant of all of the Operative Documents to which the Equipment Trust Trustee, the Owner Trustee and the Owner Participant is a party, together with such other documents and evidence with respect to Lessee, the Manufacturer, the Owner Trustee, the Owner Participant, the Original Holder, the Parent, and the Equipment Trust Trustee, as the Original Holder or the Owner Participant, or their respective counsel, may reasonably request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement and the taking of all corporate or other proceedings in connection therewith; and (3) a certificate of Lessee as to the person or persons authorized to execute and deliver this Agreement, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft, the Equipment Trust Agreement and any other documents to be executed on behalf of Lessee in connection with the -10- 11 PARTICIPATION AGREEMENT NW 1989 B transactions contemplated hereby and as to the signatures of such person or persons. (viii) On the Delivery Date the following statements shall be true, and the Original Holder and the Owner Participant shall have received evidence satisfactory to it to the effect that: (1) upon consummation of the transactions contemplated by the Operative Documents the Equipment Trust Trustee has legal title for security purposes only (subject to filing and recording of the Manufacturer's Bill of Sale, the FAA Bill of Sale and the Owner Trustee's FAA Bill of Sale with the Federal Aviation Administration) to the Aircraft on the Delivery Date, free and clear of Liens other than Permitted Liens; (2) the Aircraft has been duly certified by the Federal Aviation Administration as to type and airworthiness in accordance with the terms of the Lease; (3) application for registration of the Aircraft in the name of the Owner Trustee has been duly made with the Federal Aviation Administration; and (4) the Manufacturer's Bill of Sale, the FAA Bill of Sale, the Owner Trustee's FAA Bill of Sale, the Trust Agreement, the Equipment Trust Agreement and the Trust Supplement and the Lease and the Lease Supplement have been duly filed for recordation (or are in the process of being so filed for recordation) with the Federal Aviation Administration pursuant to the Federal Aviation Act. (ix) On the Delivery Date, the statements set forth below shall be true and correct and the Original Holder, the Owner Participant, the Owner Trustee and the Equipment Trust Trustee shall have received: (1) an Officer's Certificate of Lessee, dated the Delivery Date, stating that (A) the representations and warranties of Lessee contained in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement are true and accurate 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 shall have been true and accurate on and as of such earlier date); (B) no event or condition has occurred and is continuing, or would result from the consummation of the transaction -11- 12 PARTICIPATION AGREEMENT NW 1989 B contemplated by the Operative Documents to which it is a party, that constitutes an Event of Default or with the giving of notice or passage of time or both would constitute an Event of Default; (C) all covenants and conditions required to be performed or fulfilled; by Lessee prior to or on the Delivery Date have been performed and fulfilled; and (D) each Operative Document to which Lessee is a party remains in full force and effect with respect to Lessee; (2) an Officer's Certificate of the Owner Participant, dated the Delivery Date, stating that (A) the representations and warranties of the Owner Participant contained in Section 8 of this Agreement are true and accurate 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 shall have been true and accurate on and as of such earlier date); (B) all covenants and conditions required to be performed or fulfilled by the Owner Participant prior to or on the Delivery Date have been performed and fulfilled; (C) no event or condition has occurred, or will result from the consummation of the transactions contemplated by the Operative Documents to which it is a party, with respect to the Owner Participant that would constitute an ETA Default or an Event of Acceleration; and (D) each Operative Document to which the Owner Participant is a party remains in full force and effect with respect to the Owner Participant; (3) an Officer's Certificate of each of the Owner Trustee and the Equipment Trust Trustee, dated the Delivery Date, stating that (A) the representations and warranties of the Owner Trustee or the Equipment Trust Trustee, as the case may be, contained in Section 8 of this Agreement are true and accurate on and as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date); (B) all covenants and conditions required to be performed or fulfilled by the Owner Trustee or the Equipment Trust Trustee, as the case may be, prior to or on the Delivery Date have been performed and fulfilled; (C) in the case of the Owner Trustee, no event or condition has occurred, or will result from the consummation of the transactions contemplated by the Operative Documents to which it is a party, with respect to the Owner Trustee that would constitute an ETA Default or an Event of Acceleration; and (D) each -12- 13 PARTICIPATION AGREEMENT NW 1989 B Operative Document to which the Owner Trustee or the Equipment Trust Trustee, as the case may be, is a party remains in fullT force and effect with respect to the Owner Trustee or the Equipment Trust Trustee, as the case may be; (4) an Officer's Certificate of the Original Holder, dated the Delivery Date, stating that (A) the representations and warranties of the Original Holder contained in Section 8 of this Agreement are true and accurate 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 shall have been true and accurate on and as of such earlier date); (B) all covenants and conditions required to be performed or fulfilled by the Original Holder prior to or on the Delivery Date have been performed and fulfilled; and (C) this Agreement is in full force and effect with respect to the Original Holder; and (5) an Officer's Certificate of the Parent, dated the Delivery Date, stating that (A) the representations and warranties of the Parent contained in the Parent Letter are true and accurate 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 shall have been true and accurate on and as of such earlier date); (B) all covenants and conditions required to be performed or fulfilled by the Parent prior to or on the Delivery Date have been performed and fulfilled; and (C) the Parent Letter remains in full force and effect. (x) (A) The Original Holder, the Owner Participant, the Owner Trustee and the Equipment Trust Trustee shall have received a favorable opinion from the General Counsel or Corporate Counsel of Lessee, in substantially the form of Exhibit II-1 hereto, and covering such other matters incident to the transactions contemplated hereby as they may reasonably request. (B) The Original Holder, the Owner Participant, the Owner Trustee and the Equipment Trust Trustee shall have received a favorable opinion from Cadwalader, Wickersham & Taft, special counsel for Lessee, in substantially the form of Exhibit II-2 hereto, and covering such other matters incident to the transactions contemplated hereby as they may reasonably request. (xi) The Original Holder, the Owner Participant, the Owner Trustee, Lessee and the Equipment Trust Trustee -13- 14 PARTICIPATION AGREEMENT NW 1989 B shall have received a favorable opinion from a counsel to the Manufacturer, in substantially the form of Exhibit II-3 hereto. (xii) The Original Holder, the Owner Participant, Lessee and the Equipment Trust Trustee shall have received a favorable opinion from Csaplar & Bok, counsel for the Owner Trustee, in substantially the form of Exhibit II-4, and covering such other matters incident to the transactions contemplated hereby as they may reasonably request. (xiii) The Original Holder, the Owner Trustee, Lessee and the Equipment Trust Trustee shall have received a favorable opinion from Luce, Forward, Hamilton & Scripps, special counsel for the Owner Participant and the Parent, in substantially the form of Exhibit II-5 hereto, and covering such other matters incident to the transactions contemplated hereby as they may reasonably request. (xiv) The Original Holder, the Owner Participant, the Owner Trustee, Lessee and the Equipment Trust Trustee shall have received a favorable opinion from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in substantially the form of Exhibit II-6 hereto, and covering such other matters incident to the transactions contemplated hereby as they may reasonably request. (xv) The Original Holder, the Owner Participant, the Owner Trustee and Lessee shall have received a favorable opinion from (A) Whitman & Ransom, special counsel for the Equipment Trust Trustee, in substantially the form of Exhibit II-7A hereto, and covering such other matters incident to the transactions contemplated hereby as they may reasonably request and (B) Stevens & Lee, Pennsylvania counsel for the Equipment Trust Trustee, in substantially the form of Exhibit II-7B hereto, and covering such other matters incident to the transactions contemplated hereby as they may reasonably request. (xvi) The Owner Participant shall have received an opinion from Avmark Inc., independent aircraft appraisers, in form and substance satisfactory to the Owner Participant, to the effect that (1) the fair market value of the Aircraft on the Delivery Date is not less than Lessor's Cost and (2) the Aircraft will have, at the end of the Basic Term, (i) at least 20% of its economic life remaining and (ii) a fair market value of at least 20% of Lessor's Cost (without taking into account any increase or decrease for inflation or deflation during the Interim Term or Basic Term or the terms of any purchase option provided in the Lease). Such appraisal shall also set forth a reasonable current estimate of the fair market value on March 15, 2011 (taking into -14- 15 PARTICIPATION AGREEMENT NW 1989 B account a reasonable estimate for inflation or deflation until such date) which shall not be more than 61.98% of Lessor's Cost and shall state that it will be commercially feasible for a third party to utilize the Aircraft at the end of the Basic Term. (xvii) The Original Holder and the Owner Participant shall have received an independent insurance broker's report, in form and substance satisfactory to them, as to the due compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (xviii) On the Delivery Date it shall be true that no Event of Loss (or event with which the passage of time would become an Event of Loss) with respect to the Airframe or any Engine has occurred. (xix) 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. (xx) The Owner Participant shall have received from Luce, Forward, Hamilton & Scripps, special counsel to the Owner Participant, a favorable opinion, in form and substance satisfactory to the Owner Participant, with respect to certain Federal income tax aspects of the transactions contemplated by the Operative Documents. (xxi) In the opinion of the Owner Participant and its special counsel, there shall have been, since January 1, 1989, no amendment, modification, addition, or change in or to the provisions of the Internal Revenue Code of 1986, as amended through such date (including for this purpose, any non-Code provisions of legislation affecting the Code such as transitional rules or effective date provisions), the regulations promulgated under the Code (including temporary or proposed 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 January 1, 1989, 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 1 of the Tax Indemnity Agreement. -15- 16 PARTICIPATION AGREEMENT NW 1989 B (xxii) In the opinion of special counsel to the Owner Participant, there shall not have been any bill introduced in Congress by a member of the House Ways and Means Committee or the Senate Finance Committee or any legislation proposed by a member of the Executive Branch of the Federal Government which is involved in a tax or policy making position the enactment 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 1 of the Tax Indemnity Agreement. (xxiii) There shall have been, since January 1, 1989, no pronouncement of the Financial Accounting Standards Board which in the opinion of the Owner Participant would adversely affect the Owner Participant's anticipated accounting treatment with respect to the transactions contemplated by the Operative Documents. (xxiv) All appropriate action required to have been taken by the Federal Aviation Administration, or any governmental or political agency, subdivision or instrumentality of the United States prior to the Delivery Date in connection with the transactions contemplated by this Agreement shall have been taken, 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. (xxv) The Original Holder shall have received from Messrs. Shearman & Sterling, special counsel for the Original Holder, a favorable opinion, satisfactory in substance and form to the Original Holder, as to such matters incident to the transactions contemplated hereby as the Original Holder may reasonably request. Promptly upon the registration of the Aircraft and the recording of the Equipment Trust Agreement, the Lease, the Lease Supplement covering the Aircraft and the Trust Supplement covering the Aircraft pursuant to the Federal Aviation Act, Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Original Holder, the Owner Participant, the Equipment Trust Trustee, the Owner Trustee and Lessee an opinion as to the recording of the Manufacturer's Bill of Sale, the due and valid registration of the Aircraft, the due recording of the FAA Bill of Sale, the Owner Trustee's FAA Bill of Sale, the Equipment Trust Agreement, such Lease Supplement, such Trust Supplement, the Lease and the Trust Agreement, the lack of filing of any intervening documents with -16- 17 PARTICIPATION AGREEMENT NW 1989 B respect to the Aircraft, and the perfection of the Equipment Trust Trustee's security interest. (b) Conditions Precedent to the Obligations of Lessee. It is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee, (B) to accept delivery of the Aircraft under the Lease and (C) to carry out its other obligations under the Operative Documents, are all subject to the fulfillment to the satisfaction of Lessee prior to or on the Delivery Date of the following conditions precedent: (i) Lessee shall have been paid Lessor's Cost for the Aircraft. (ii) The condition specified in Section 4(a)(xviii) hereof shall have been satisfied. (iii) Those documents described in Section 4(a)(v) and such other documents as have been reasonably requested by Lessee shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Lessee) in the manner specified in Section 4(a)(v), shall each be satisfactory in form and substance to Lessee, 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. (iv) Lessee shall have received a copy of the general authorizing resolutions of the boards of directors of the Equipment Trust Trustee, the Owner Trustee, the Owner Participant and the Parent, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Equipment Trust Trustee, the Owner Trustee, the Owner Participant and the Parent, respectively, which authorize the execution, delivery and performance by the Equipment Trust Trustee, the Owner Trustee, the Owner Participant and the Parent of all of the Operative Documents to which the Equipment Trust Trustee, the Owner Trustee, the Owner Participant and the Parent is a party, together with such other documents and evidence with respect to the Equipment Trust Trustee, the Owner Trustee, the Owner Participant and the Parent as Lessee or its special counsel may reasonably request in order to establish the consummation of the transactions contemplated by this Agreement, the taking of all corporate or other proceedings in connection therewith and compliance with the conditions herein set forth. (v) Lessee shall have received the certificates referred to in Section 4(a)(ix) other than Lessee's own certificate. -17- 18 PARTICIPATION AGREEMENT NW 1989 B (vi) Lessee shall have received the opinions set forth in Sections 4(a)(xi), 4(a)(xii), 4(a)(xiii), 4(a)(xiv) and 4(a)(xv), in each case addressed to Lessee and dated the Delivery Date and in each case in substantially the form of the applicable exhibit hereto, and covering such other matters incident to the transactions contemplated hereby as it may reasonably request. (vii) 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. (viii) No change shall have occurred after the date of the execution and delivery of this Agreement in applicable law or regulations thereunder or interpretations by appropriate regulatory authorities which, in the opinion of Lessee or its special counsel, would make it a violation of law or regulations for the Original Holder, the Owner Participant or Lessee to participate in the transactions contemplated by the Operative Documents. (ix) In the opinion of Lessee and its special counsel, there shall have been, since January 1, 1989, no amendment, modification, addition or change in or to the Internal Revenue Code of 1986, as amended through such date (including for this purpose, any non-Code provisions of legislation affecting the Code such as transitional rules or effective date provisions), the regulations promulgated under the Code (including temporary or proposed 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 January 1, 1989, the effect of which might give rise to an indemnity obligation under any of the Operative Documents or prevent or restrict the pass-through of investment tax credit to Lessee or increase the Net Present Value of Rents. (x) In the opinion of special counsel to Lessee, there shall have not been any bill introduced in Congress by a member of the House Ways and Means Committee or the Senate Finance Committee or any legislation proposed by a member of the Executive Branch of the Federal Government which is involved in a tax or policy making position the enactment of which might give rise to an indemnity obligation under any of the Operative Documents or prevent or restrict the pass-through of investment tax credit to Lessee. -18- 19 PARTICIPATION AGREEMENT NW 1989 B (xi) There shall have been, since January 1, 1989, no pronouncement of the Financial Accounting Standards Board which in the opinion of Lessee would adversely affect Lessee's anticipated accounting treatment with respect to the transactions contemplated by the Operative Documents. (xii) All appropriate action required to have been taken by the Federal Aviation Administration, or any governmental or political agency, subdivision or instrumentality of the United States prior to the Delivery Date in connection with the transactions contemplated by this Agreement shall have been taken, 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. (xiii) Lessee shall have received an opinion from a recognized independent aircraft appraiser selected by Lessee to the effect that (A) the Aircraft will have, at the end of the Basic Term, at least 25% of its economic life remaining, (B) the fair market value of the Aircraft on the Delivery Date is at least equal to Lessor's Cost and (C) the fair market value of the Aircraft on March 15, 2011 (taking into account a reasonable estimate for inflation during the Interim Term and the Basic Term but without taking into account any purchase or renewal options provided in the Lease) is equal to or less than 61.98% of Lessor's Cost. SECTION 5. [Intentionally Omitted] SECTION 6. Extent of Interest of Holders. No Holder shall have any further interest in, or other right with respect to, the Estate when and if the principal of, premium, if any, and interest on all Certificates held by such Holder and all other sums payable to such Holder hereunder, under the Equipment Trust Agreement and under such Certificates shall have been paid in full. The Original Holder agrees that it will look solely to the income and proceeds from the Estate to the extent available for distribution to such Holder as provided in Article 3 of the Equipment Trust Agreement and that none of the Owner Participant, the Equipment Trust Trustee or the Owner Trustee shall be personally liable to the Original Holder for any amounts payable under the Certificates, the Equipment Trust Agreement or hereunder, except as expressly provided in this Agreement or (in the case of the Equipment Trust Trustee and the Owner Trustee) in the Equipment Trust Agreement. -19- 20 PARTICIPATION AGREEMENT NW 1989 B SECTION 7. Lessee's Representations, Warranties and Indemnities. (a) In General. Lessee represents, warrants and covenants that as of the Delivery Date: (i) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is an "air carrier" within the meaning of the Federal Aviation Act operating under a certificate of public convenience and necessity issued by the Civil Aeronautics Board (or the Department of Transportation); has its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) located at Eagan, Minnesota; and has the corporate power and authority to own or hold under lease its properties wherever located or used and to enter into and perform its obligations under this Agreement, the Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Purchase Agreement Assignment, the Equipment Trust Agreement, the Lease, the Lease Supplement covering the Aircraft, and the Tax Indemnity Agreement; (ii) the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Purchase Agreement Assignment, the Equipment Trust Agreement, the Lease, the Lease Supplement covering the Aircraft, and the Tax Indemnity Agreement will, on the Delivery Date, have been duly authorized by all necessary corporate action on the part of Lessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Lessee except such as have been duly obtained or by the Delivery Date will have been duly obtained, and none of such agreements contravenes any law, judgment, government rule, regulation or order binding on Lessee or the certificate of incorporation or by-laws of Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its properties may be bound or affected; (iii) neither the execution and delivery by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Purchase Agreement Assignment, the Equipment Trust Agreement, the Lease, the Lease Supplement covering the Aircraft, and the Tax Indemnity Agreement nor the performance by Lessee of its obligations hereunder or thereunder require the consent or approval of, the giving of -20- 21 PARTICIPATION AGREEMENT NW 1989 B notice to, or the registration with, or the taking of any other action in respect of any Federal, State or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Delivery Date 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 very Date, taken or caused to be taken by Lessee), and the registration and filings referred to in Section 7(a)(vi) and (B) any normal periodic and other reporting requirements under the applicable rules and regulations of the Federal Aviation Administration to the extent required to be given or obtained only after the Delivery Date; (iv) on the Delivery Date this Agreement, the Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Purchase Agreement Assignment, the Equipment Trust Agreement, the Lease, the Lease Supplement covering the Aircraft and the Tax Indemnity Agreement will each constitute, legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof (subject to the qualifications set forth in clause (4) of the opinion of special counsel to Lessee attached as Exhibit II-2 hereto); (v) except as may have been disclosed prior to the date of execution and delivery hereof to the Owner Participant and the Original Holder in writing by a letter delivered to the Owner Participant and the Original Holder prior to the execution and delivery hereof and making reference to this Agreement, there are no pending or threatened actions or proceedings before any court or administrative agency which might materially adversely affect the ability of Lessee to perform its obligations under the Operative Documents; (vi) except for (A) the registration of the Aircraft in the name of the Owner Trustee pursuant to the Federal Aviation Act, (B) the filing for recording pursuant to said Act of the Trust Agreement, the Lease with the Lease Supplement covering the Aircraft, the Equipment Trust Agreement and the Trust Supplement attached thereto and made a part thereof, the Equipment Trust Agreement with the Trust Agreement and the Trust Supplement attached thereto and made a part thereof, the Manufacturer's Bill of Sale, the FAA Bill of Sale and the Owner Trustee's FAA Bill of Sale for the Aircraft, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such -21- 22 PARTICIPATION AGREEMENT NW 1989 B documents under the Uniform Commercial Code of Minnesota and Massachusetts and such other States as may be specified in the opinion of special counsel to Lessee attached as Exhibit II-2 hereto, and (D) the taking of possession by the Equipment Trust Trustee of the original counterpart of each of the Lease and the Lease Supplement covering the Aircraft, no further action, including any 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 in order to establish and perfect the Owner Trustee's rights and interest in, and the legal title to and security interest of the Equipment Trust Trustee in, the Aircraft as against Lessee and any third parties in any applicable jurisdictions in the United States; (vii) on 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; (viii) on the Delivery Date, the Equipment Trust Trustee will be given legal title to the Aircraft for security purposes only to hold in trust for the benefit of the Holders of the Certificates and the Equipment Trust Trustee and the Owner Trustee will together receive good and marketable title to the Aircraft free and clear of all Liens, except Permitted Liens; (ix) no part of the proceeds from the sale of the 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 O 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; (x) the statement of financial position of Lessee as of December 31, 1987 and the related statements of earnings and changes in financial position of Lessee for the period then ended, copies of which have been furnished to -22- 23 PARTICIPATION AGREEMENT NW 1989 B the Original Holder and the Owner Participant, fairly present the financial condition of Lessee as at such date and the results of operations of Lessee for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied and since December 31, 1987, there has been no material adverse change in such condition or operations; (xi) on the Delivery Date, Lessee shall not be in material default in the performance of any term or condition of the Purchase Agreement; (xii) on the Delivery Date, no governmental approval of any kind is required of the Owner Participant, the Owner Trustee or the Equipment Trust Trustee for their respective execution of or performance under this Agreement or any agreement contemplated hereby by reason of any fact or circumstance of Lessee, the nature of the Aircraft or Lessee's proposed operations or use of the Aircraft; 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 (and for which Lessee shall have established adequate reserves) so long as such proceedings do not involve any danger of the sale, forfeiture or loss of the Aircraft. (b) General Tax Indemnity. [Intentionally Omitted] -23- 24 PARTICIPATION AGREEMENT NW 1989 B (c) General Indemnity. [Intentionally Omitted] 24 25 SECTION 8. Representations, Warranties and Covenants. (a) The Owner Participant represents and warrants that it is acquiring its interest in the Trust Estate for investment and not with a present intent as to any resale or distribution thereof (subject nonetheless to any requirement of law that the disposition of its properties shall at all times be and remain within its control) and that neither it nor anyone acting on its behalf has directly or indirectly offered any interest in the Trust Estate or any Certificates or any similar securities for sale to, or solicited any offer to acquire any of the same from, anyone. The Owner Participant covenants and warrants that it will not transfer all or any portion of its interest in the Trust Estate except in accordance with Section 8(n) of this Agreement. (b) Lessee represents and warrants that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly -25- 26 PARTICIPATION AGREEMENT NW 1989 B offered any interest in the Trust Estate for sale to, or solicited any offer to acquire any of the same from, anyone other than the Owner Participant and not more than 40 institutions believed capable of evaluating and bearing the risks of investment in the transaction contemplated hereby. Lessee represents that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any Certificate or Certificates for sale to, or solicited any offer to acquire any of the same from, anyone other than the Original Holder and not more than 10 institutions believed capable of evaluating and bearing the risks of investment in the transaction contemplated hereby. (c) Each of the Owner Participant and The First National Bank of Boston, 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" as defined in Section 101(16) of the Federal Aviation Act. The Owner Participant agrees, solely for the benefit of Lessee and the Holders, that if (i) it shall cease to be a "citizen of the United States" within the meaning of Section 101(16) of the Federal Aviation Act 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 voting trust or other similar arrangements or take any other action as may be necessary to prevent any deregistration or maintain the United States registration of the Aircraft; provided, however, that during any period during which the Aircraft shall be registered in a country other than the United States pursuant to Section 8(f) hereof the Owner Participant shall take the actions referred to in this sentence only if, and promptly after being, directed to do so by Lessee upon Lessee's determination to re-register the Aircraft in the United States. It is understood that: (A) the Owner Participant shall be liable to any of the other parties hereto and any Holder for any damages suffered by any such other party or any Holder as the result of the representation and warranty of the Owner Participant in the first sentence of this Section 8(c) proving to be untrue as of the Delivery Date; and (B) the Owner Participant shall be liable to Lessee, any Sublessee and the Holders for any damages which may be suffered by Lessee, any Sublessee or the Holders as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). The First National Bank of Boston, in its individual capacity, agrees that if at any time a Responsible Officer or responsible employee -26- 27 PARTICIPATION AGREEMENT NW 1989 B of the Corporate Trust Department of The First National Bank of Boston shall obtain Actual Knowledge that The First National Bank of Boston has ceased to be a "citizen of the United States" within the meaning of Section 101(16) of the Federal Aviation Act, 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 Holders, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or The First National Bank of Boston, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Equipment Trust Trustee and the Owner Participant 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) The First National Bank of Boston 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 Boston, Massachusetts. The First National Bank of Boston in its individual capacity agrees that it will not change the location of such office to a location outside of Boston, Massachusetts without prior written notice to all parties to this Agreement. The First National Bank of Boston 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, this Agreement, the Equipment Trust Agreement, the Trust Supplement, the Lease, the Lease Supplement covering the Aircraft, the Guaranties, and the Purchase Agreement Assignment, 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. The First National Bank of Boston in its individual capacity represents that it has not offered any interest in the Trust Estate or any Certificate or Certificates for sale to, or solicited any offer to acquire the same from, anyone, and that no responsible officer or responsible employee of the Corporate Trust Department of The First National Bank of Boston has knowledge of any such offer or solicitation except as described in Section 8(b). (e) The Owner Trustee shall, promptly upon receipt of monies from the Equipment Trust Trustee pursuant to Section 7.01 of the Equipment Trust Agreement, pay an amount equal to such -27- 28 PARTICIPATION AGREEMENT NW 1989 B monies to Lessee as a rebate of the Rent theretofore paid under the Lease. (f) Each of the Original Holder, the Owner Participant and the Equipment Trust Trustee agrees that, at any time on or after the fifth anniversary of the Delivery Date, but subject to the matters set forth in this Section 8(f), including the second paragraph hereof, Lessee at its expense and with the prior written consent of the Owner Participant, may register the Aircraft in a country other than the United States in the name of the Owner Trustee (or, if appropriate, in the name of Lessee or a Sublessee as a "lessee" or a "sublessee"). Upon receipt of such request and consent, the Owner Participant shall instruct the Owner Trustee to, and the Equipment Trust Trustee shall, take whatever action is necessary or appropriate to effectuate such change of registration, if prior thereto the Original Holder, the Owner Participant and the Equipment Trust Trustee shall have received: (i) a written request by the Company for such change of registration; (ii) (A) a statement in writing of Standard & Poor's Corporation, Moody's Investors Service, Inc. or other rating agency of recognized national standing, to the effect that on any date not earlier than 60 days prior to such change of registration, the Certificates were rated not less than BBB/Baa2 or equivalent rating, and (B) a statement of any such rating agency (which may but need not be the same rating agency furnishing the statement referred to in the immediately preceding clause (A)) to the effect that after giving effect to such change in registration, the Certificates will be rated not less than the rating thereof in effect immediately prior to such change of registration; (iii) an Officer's Certificate of Lessee to the effect that (A) Lessee will be in compliance with the insurance provisions of the Lease immediately after giving effect to such change of registration, (B) Lessee will pay all expenses of the Owner Participant, the Owner Trustee and the Equipment Trust Trustee in connection therewith, and (C) such new country of registry imposes aircraft maintenance standards not materially different from those of the FAA; (iv) an Opinion of Counsel to the effect that such change of registration will not (A) expose the Owner Participant, the Original Holder, the Owner Trustee or the Equipment Trust Trustee to any risk (other than the risk of imposition of any tax) which they are not indemnified against under Section 7(c) of this Agreement (as in effect at such time or as proposed to be amended in connection therewith), (B) affect the lien of the Equipment Trust -28- 29 PARTICIPATION AGREEMENT NW 1989 B Agreement as a first priority lien on the Aircraft and on the amounts of Rent payable under the Lease which are assigned as security to the Equipment Trust Trustee, or (C) result in the imposition of, or increase in the amount of, any Tax for which Lessee is not required to indemnify an Indemnitee pursuant to Section 7(b) of this Agreement (as in effect at such time or as proposed to be amended in connection therewith) or pursuant to the Tax Indemnity Agreement; and (v) a favorable opinion, of counsel reasonably satisfactory to the Original Holder, the Owner Participant and the Equipment Trust Trustee in the proposed jurisdiction of registry, to the effect that (A) the terms (including, without limitation, the governing-law, service-of-process and jurisdiction-submission provisions thereof) of the Lease and the Equipment Trust Agreement are legal, valid, binding and enforceable in such country, (B) it is not necessary for the Owner Participant, the Owner Trustee, the Holders or the Equipment Trust Trustee to register or qualify to do business in such country, (C) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such country (it being understood 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 obtained to cover such risk), and (D) to such further effect with respect to such other matters as the Owner Participant may reasonably request. If the Owner Participant shall not have determined, acting reasonably, that the proposed country of registration would not provide substantially equivalent protection for the rights of owner participants and lessors in similar transactions as provided under United States law, the Owner Participant shall not unreasonably withhold its consent to such change of registration, provided that, in addition to the matters referred to in (i) through (v) above, (I) the Opinion of Counsel referred to in clause (iv) above shall be satisfactory to the Owner Participant; (II) unless Lessee shall have agreed to provide insurance covering the risk of requisition of use of the Aircraft by the government of such jurisdiction so long as the Aircraft is registered under the laws of such jurisdiction, the Opinion of Counsel referred to in clause (v) above shall also be to the effect that the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into United States Dollars -29- 30 PARTICIPATION AGREEMENT NW 1989 B for the loss of use of the Aircraft in the event of the requisition by such government of such use; and (III) it is understood that, in making its determinations under this Section 8(f), the Owner Participant shall be entitled to take into consideration the relative creditworthiness of the government of the proposed country of registration. (g) The Owner Participant represents and warrants as follows: (i) the Owner Participant is a corporation duly organized and validly existing in good standing under the laws of the State of California, and has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under this Agreement, the Tax Indemnity Agreement and the Trust Agreement; (ii) this Agreement, the Tax Indemnity Agreement and the Trust Agreement have been duly authorized by all necessary corporate action on the part of the Owner Participant, do not require any approval not already obtained of stockholders of the Owner Participant or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of the Owner Participant, and have been duly executed and delivered by the Owner Participant, and neither the execution and delivery thereof by the Owner Participant, nor the consummation of the transactions contemplated thereby by the Owner Participant, nor compliance by the Owner Participant with any of the terms and provisions thereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order 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 financing or the citizenship requirements of the Owner Participant under applicable aviation law) or contravene or result in any breach of or constitute any 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, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Owner Participant is a party or by which it or its properties may be bound or affected; -30- 31 PARTICIPATION AGREEMENT NW 1989 B (iii) each of this Agreement, the Tax Indemnity Agreement and the Trust Agreement constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant in accordance with the terms thereof (subject to the qualifications on enforceability set forth in the opinion of special counsel to the Owner Participant and the Parent attached as Exhibit II-5 hereto); (iv) except as may have been disclosed prior to the date of execution and delivery hereof to the Original Holder and Lessee in writing by a letter delivered to the Original Holder and Lessee prior to the execution and delivery hereof and making reference to this Agreement, there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which, if determined adversely to the Owner Participant, would materially adversely affect the financial condition of the Owner Participant or the ability of the Owner Participant to perform its obligations under this Agreement, the Tax Indemnity Agreement and the Trust Agreement; and (v) on the Delivery Date, there will be no Lessor Liens attributable to the Owner Participant (including for this purpose Liens that would be Lessor Liens but for the proviso to the definition of Lessor Liens), and, upon the acquisition by the Owner Trustee of title to the Aircraft, there will be no Lessor Liens attributable to the Owner Participant affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Estate. (h) Each of The First National Bank of Boston in its individual capacity and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate or the Estate. Each of The First National Bank of Boston in its individual capacity and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of The First National Bank of Boston in its individual capacity and the Owner Participant agrees to make restitution to the Trust Estate or the Estate for any actual diminution of the assets of the Trust Estate or the Estate, as the case may be, resulting from such Lessor Liens attributable to it. The Owner Participant agrees to make restitution to the Trust Estate or the Estate for any actual diminution of the assets of the Trust Estate or the Estate, as the case may be, resulting from any Taxes or Expenses (as such terms are defined in Section 7 hereof) imposed on the Trust Estate or the Estate against which Lessee is not required to indemnify the Trust Estate, the Estate or the Original Holder -31- 32 PARTICIPATION AGREEMENT NW 1989 B pursuant to Section 7 hereof, except for taxes referred to in Sections 7(b)(ii)(13) and (14). (i) Meridian Trust Company in its individual capacity covenants and agrees that it shall not cause or permit to exist any Trustee's Liens with respect to the Trust Estate or the Estate. Meridian 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 Trustee's Liens. Meridian Trust Company in its individual capacity agrees to make restitution to the Estate for any actual diminution of the assets of the Trust Estate or the Estate resulting from such Trustee's Liens. (j) The Owner Participant represents and warrants that it has a Net Worth in excess of $50,000,000 on the Delivery Date and covenants and agrees that it shall maintain a Net Worth in excess of $50,000,000 until such time as it shall have satisfied all of its obligations under the Operative Documents. The Owner Participant further covenants and agrees that it shall deliver to the Lessee, within 45 days after the end of each quarter of each fiscal year of the Owner Participant, a certificate of a financial officer of the Owner Participant which shall certify as to the Net Worth of the Owner Participant as of the end of such quarter and shall notify the Lessee if at any time the Owner Participant's Net Worth is less than $50,000,000, provided that no such notice shall be required where the Parent has complied with the corresponding notice requirements set forth in the Parent Letter. If at any time the Owner Participant or, if the Owner Participant is a Partnership Transferee (as defined in Section 8(n)), [__________________], has Actual Knowledge that its Net Worth is less than $50,000,000, the Owner Participant or [__________________], as applicable, covenants and agrees that it shall immediately transfer all of its right, title and interest in and to this Agreement, the Trust Estate and the Trust Agreement to a "Transferee" meeting the requirements of clause (A) or (B) of the definition of "Transferee" in Section 8(n) which is not an Affiliate of the Owner Participant or [__________________], as applicable, and which meets all of the other requirements of Section 8(n), provided that the Owner Participant or [__________________], as applicable, shall not be required to make such transfer for a period of up to 60 days from the date it has such Actual Knowledge if and so long as the Owner Participant or [__________________], as applicable, is proceeding with due diligence to comply with the requirements of the first sentence of this Section 8(j). "Net Worth" shall mean the excess of total assets over total liabilities, determined in accordance with generally accepted accounting principles consistently applied. (k) The Owner Trustee shall, on any Redemption Date, pay to Lessee, as a rebate of the Rent theretofore paid, the -32- 33 PARTICIPATION AGREEMENT NW 1989 B amount, if any, by which the estimated premium paid by Lessee exceeds the actual premium due in the case of a redemption pursuant to Section 6.01(B), (C) or (E) of the Equipment Trust Agreement. (l) Lessee or any Affiliate of Lessee shall not, directly or indirectly, purchase any outstanding Certificates; provided, however, that during the period between any Lease Period Date and the next succeeding Lease Period Date, Lessee may purchase Certificates maturing on such next succeeding Lease Period Date; provided, further, however, that any and all such Certificates so purchased shall be surrendered for cancellation on such Lease Period Date, as provided in Section 3(c) of the Lease. Lessee represents and warrants that in the event that Lessee exercises its purchase option pursuant to Section 19(d) of the Lease and does not assume pursuant to Section 8(x) of the Participation Agreement and Section 11.01(6) of the Equipment Trust Agreement all of the obligations of Lessor under the Equipment Trust Agreement and the Guaranties, the purchase price of 61.98% of Lessor's Cost, together with any installment of Basic Rent due on the date the Aircraft is purchased pursuant to Section 19(d) (if Basic Rent is payable in arrears on such date as indicated on Exhibit B), will be at least sufficient to pay in full any payments then required to be made on account of the principal of and interest on the Certificates. (m) The Equipment Trust Trustee in its individual capacity represents and warrants to and covenants and agrees with Lessee, the Owner Trustee, the Original Holder and the Owner Participant as follows: (i) it is a "citizen of the United States" as defined in Section 101(16) of the Federal Aviation Act, will notify promptly all parties to this Agreement if in its reasonable opinion its status as a "citizen of the United States" is likely to change and that it will resign as Equipment Trust Trustee as provided in Section 9.08 of the Equipment Trust Agreement if it should cease to be a "citizen of the United States"; (ii) it is a Pennsylvania trust company duly organized and validly existing in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to enter into and perform its obligations under the Equipment Trust Agreement and this Agreement and to issue the Certificates to be delivered on the Delivery Date; (iii) the Equipment Trust Agreement and this Agreement, and the issuance of the Certificates to be delivered on the Delivery Date have been duly authorized by all necessary corporate action on its part, and neither the -33- 34 PARTICIPATION AGREEMENT NW 1989 B execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or Pennsylvania law or regulation relating to its trust powers or contravene or result in any breach of, or constitute any default under its charter or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (iv) each of the Certificates to be delivered on the Delivery Date, the Equipment Trust Agreement, the Trust Supplement and this Agreement has been duly executed and delivered by it and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, the Certificates to be delivered on the Delivery Date, the Equipment Trust Agreement, the Trust Supplement and this Agreement is the legal, valid and binding obligation of the Equipment Trust Trustee, enforceable in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. (n) The Owner Participant will not 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 to any person or entity, unless (i) the Owner Participant is not in default in the performance of any of its obligations hereunder or under the Trust Agreement, (ii) the proposed transferee is a "Transferee" (as defined below), (iii) the Owner Participant shall have delivered to the Owner Trustee, Lessee and the Equipment Trust Trustee an opinion of counsel reasonably satisfactory to Lessee to the effect that such transfer does not violate any Federal securities law then in effect and is otherwise permitted by this Section 8(n), and that each agreement to be delivered pursuant to this Section 8(n) is the legal, valid and binding obligation of the Transferee, any guarantor, the Parent and [__________________], as applicable, subject to the qualification on enforceability set forth in the opinion of the Owner Participant's counsel attached as Exhibit II-5 hereto, and (iv) Lessee shall have (1) received an opinion (in form and substance satisfactory to Lessee in its reasonable judgment) of counsel to the Owner Participant (who shall be reasonably satisfactory to Lessee) to the effect that such transfer will not result in a material risk of loss of tax benefits (including, without limitation, recapture of investment tax credit) to or a material 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 or increase in the tax liability of Lessee. A "Transferee" shall mean any of (A) a bank or other financial institution with a combined capital, surplus and -34- 35 PARTICIPATION AGREEMENT NW 1989 B undivided profits of at least $50,000,000 or a corporation whose net worth is at least $50,000,000 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 Equipment Trust Trustee and Lessee a guaranty satisfactory to the Owner Trustee, Lessee, and the Equipment Trust Trustee with respect to the Transferee's obligations as Owner Participant, in the case of the Owner Trustee, under the Trust Agreement and, in the case of the Equipment Trust Trustee and Lessee, the Owner Participant's obligations hereunder including, but not limited to, Section 8(c) and Section 8(h) hereof, or (C) any direct or indirect wholly-owned subsidiary of the Parent, provided that the Parent furnishes to the Owner Trustee, the Equipment Trust Trustee and Lessee a letter in the form of the Parent Letter reasonably satisfactory to the Owner Trustee, the Equipment Trust Trustee and Lessee with respect to the Transferee, or (D) a limited partnership provided that (i) [__________________] is the sole general partner of such limited partnership and no other partner of such limited partnership is of a type described in the final proviso to this sentence, (ii) [____________________] satisfies the requirements of clause (A) above, and (iii) the Parent furnishes to the Owner Trustee, the Equipment Trust Trustee and Lessee a letter in the form of the Parent Letter satisfactory to the Owner Trustee and Lessee with respect to [__________________] in its individual capacity and as general partner of such Transferee; provided, however, that without the prior written consent of Lessee, 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 or, if the Transferee is a Partnership Transferee (as hereinafter defined), each partner of such Transferee, is a "citizen of the United States" within the meaning of Section 101(16) of the Federal Aviation Act, 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, (O) the Transferee enters into an agreement or agreements, in form and substance reasonably satisfactory to the Owner Trustee, the Equipment Trust Trustee and Lessee, 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 Trust Agreement, the Tax Indemnity Agreement and this Agreement -35- 36 PARTICIPATION AGREEMENT NW 1989 B (to the extent of the participation so transferred to it), (P) such transfer does not violate any provision of the Federal Aviation Act, or any rules or regulations promulgated thereunder or create a relationship which would be in violation thereof or violate any provisions of the Securities Act of 1933, as amended, the Trust Indenture Act, or any other applicable law, (Q) the transferor Owner Participant assumes the risk of any loss of Interest Deductions, California Depreciation Deductions, Amortization Deductions, FSC Benefits and ACRS Deductions and the risk of any Inclusion Event (each as defined in the Tax Indemnity Agreement) resulting from such transfer, and (R) the transferor Owner Participant pays all of the reasonable expenses (including, without limitation, fees and expenses of counsel) incurred by the transferor Owner Participant, the Transferee the Owner Trustee, Lessee and the Equipment Trust Trustee in connection with such transfer. In addition to the foregoing conditions, each such transfer to a Transferee described in clause (D) above (a "Partnership Transferee") shall be subject to the additional conditions that (I) each of the Partnership Transferee and [__________________] in its individual capacity enter into such amendments to this Agreement, the Trust Agreement and the Tax Indemnity Agreement, in form and substance reasonably satisfactory to the Owner Trustee and Lessee, as Lessee shall require to take into account the Owner Participant's status as a limited partnership and not a corporation and to make [__________________] a party thereto in its individual capacity, provided that Lessee shall not be required to bear any increased or additional risks or to pay any increased or additional amounts as a result of any such amendment over those it would bear if the Owner Participant were to continue to be a corporation, such amendments, to include, without limitation, (a) undertakings by each of the Partnership Transferee and [__________________] in its individual capacity that [ ] shall remain the sole general partner of the Partnership Transferee and shall not transfer any of its right, title or interest as general partner in the Partnership Transferee at any time while this Agreement remains in effect, it shall not remove [__________________] as general partner or admit any additional general partners to the Partnership Transferee, it shall not amend or modify the limited partnership agreement, certificate of limited partnership or any other governing instruments of the Partnership Transferee (except for the admission of limited partners), without the prior written consent of Lessee, which consent shall not be unreasonably withheld provided that such amendment or modification does not violate or conflict with the terms of this Section 8(n), it shall not admit to the Partnership Transferee as a limited partner any Person which does not satisfy the requirements of clause (III) of this Section 8(n) and it shall cause each limited partner of the Partnership Transferee to enter into an agreement or agreements as provided in clause (III) of this Section 8(n), (b) an amendment to the definition of "Lessor Liens" to include any Liens attributable to the Partnership -36- 37 PARTICIPATION AGREEMENT NW 1989 B Transferee or any partner thereof and (c) a guaranty by [ ] in its individual capacity with respect to the obligations of the Partnership Transferee under this Agreement, the Trust Agreement and the Tax Indemnity Agreement, as so amended, (II) [ ] transfers 100% of the Owner Participant's right, title and interest hereunder to such Partnership Transferee and (III) each limited partner of the Partnership Transferee shall (a) have a net worth in excess of $50,000,000, determined in accordance with generally accepted accounting principles and not be of a type described in the final proviso to the second sentence of this Section 8(n) and (b) execute and deliver an agreement or agreements reasonably satisfactory to Lessee pursuant to which such limited partner agrees (i) to perform and comply with any obligations which a limited partner may have pursuant to Section 7(c) of this Agreement and the Tax Indemnity Agreement (as amended pursuant to this Section 8(n)), (ii) to 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 or the Estate and to promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it, (iii) that the provisions of Section 8(c) of this Agreement are applicable to it as if it were the Owner Participant and to be liable for any damages suffered as a result of its failure to comply with its obligations pursuant to such Section 8(c) and (iv) to withhold consent or approval to any action inconsistent with clause (I)(a) above and not to transfer any of its right, title or interest in the Partnership Transferee at any time while this Agreement remains in effect except to a Person which becomes a limited partner of the Partnership Transferee and satisfies the requirements of this clause (III). 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 its obligations arising under the Operative Documents after the date of such transfer except to the extent fairly attributable to acts or events occurring on or prior thereto and not assumed by the transferee Owner Participant (in each case, to the extent of the participation so transferred) provided that any reference in this Section 8(n) to "[ ]" shall continue to be a reference to "[ ]" only and shall not be deemed a reference to any Transferee. (o) Notwithstanding the provisions of Section 8(x) hereof, Lessee shall not be entitled to assume the Guaranties on a Termination Date or on the date for purchase of the Aircraft pursuant to Section 19(d) of the Lease if on such Termination -37- 38 PARTICIPATION AGREEMENT NW 1989 B Date or such date pursuant to Section 19(d) of the Lease 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) The First National Bank of Boston and Meridian Trust Company, each in its individual capacity, agrees for the benefit of the Owner Participant and Lessee to comply with the terms of the Equipment Trust Agreement which it is required to comply with in its individual capacity. (q) (A) Each of the Original Holder and the Owner Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Certificate or any interests represented thereby with the assets of any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1) of the Code. After the Delivery Date, each of the Original Holder and the Owner Participant agrees that it shall not take any action with respect to its participation in the transactions contemplated hereby that would result in a prohibited transaction under Section 406 or 407 of ERISA or Section 4975 of the Code. (B) Lessee represents and warrants that: none of (i) the execution and delivery of this Agreement, (ii) the initial purchase by the Original Holder of the Certificates, and (iii) the initial acquisition by the Owner Participant of its beneficial interest in the Trust Estate will involve any prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation being made in reliance upon and subject to the accuracy of the representations contained in subparagraph (A) of this Section 8(q)). (r) The Owner Participant, the Owner Trustee and the Equipment Trust Trustee agree for the benefit of the Manufacturer and Lessee that they will use reasonable care not to 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, (B) in connection with the financing of the Aircraft and the other transactions contemplated by the Operative Documents (including any transfer of Certificates or the Owner Participant's beneficial interest in the Trust Estate and any exercise of remedies under the Lease and the Equipment Trust Agreement), (C) with the prior written consent of the Manufacturer and Lessee, or (D) in the case of the Owner Trustee, so much of the Purchase Agreement as has been assigned to it under the Purchase Agreement Assignment and not specifically reserved to Lessee under Section 1 thereof, to bona fide potential purchasers of the Aircraft. Any disclosure as -38- 39 PARTICIPATION AGREEMENT NW 1989 B contemplated by clause (B) or (D) of the preceding sentence, including disclosure to counsel for the Owner Participant, the Owner Trustee or the Equipment Trust Trustee, shall include a requirement that the entity to which such information is disclosed shall make undertakings substantially the same as those contained herein. For the purposes of this Section 8(r), disclosure to any counsel or other agent of the Owner Participant, the Owner Trustee or the Equipment Trust Trustee by the Manufacturer or Lessee or counsel for either of them in connection with the transactions contemplated hereby shall be deemed to be disclosure to such Participant, the Owner Trustee or the Equipment Trust Trustee, as the case may be. (s) The Owner Trustee and the Owner Participant severally, not jointly, represent and warrant that none of the funds provided by the Original Holder pursuant to Section l(a) 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 assuming that the proceeds are applied as contemplated by the provisions of this Agreement. (t) The Original Holder represents and warrants that neither it nor anyone acting in its behalf has offered any Certificates for sale to, or solicited any offer to buy any Certificate from, any person or entity. The Original Holder represents and warrants and covenants and agrees: (i) that this Agreement has been duly authorized, executed and delivered by the Original Holder and this Agreement constitutes a legal, valid and binding obligation of the Original Holder enforceable against the Original Holder in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that the Original Holder is a duly organized and validly existing banking institution under the laws of the Netherlands acting through its Cayman Islands branch; and (iii) that the Original Holder has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. The Original Holder represents and warrants that the Certificates to be issued to it pursuant to the Equipment Trust Agreement are being acquired by it for investment and not with a view to distribution (it being understood that the Original Holder may pledge or assign as security its interest in each Certificate issued to it), provided that the disposition of its property shall at all times be and -39- 40 PARTICIPATION AGREEMENT NW 1989 B remain within its control, and subject to the right of the Original Holder to sell, transfer or otherwise dispose of any Certificate or any portion thereof, or to grant participations therein, in a manner which in itself does not require registration under the Securities Act of 1933, as amended. The Original Holder covenants and agrees that it shall not cause or permit to exist an Original Holder Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. The Original Holder agrees that it will promptly, at its own expense, take such other action as may be necessary duly to discharge any Original Holder Lien. The Original Holder agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Original Holder Lien attributable to it. (u) The Owner Participant and the Owner Trustee will elect to treat Lessee as having acquired the Aircraft pursuant to Section 48(d) of the Code so as to permit Lessee to claim any available investment tax credit with respect to the Aircraft. The Owner Participant, the Owner Trustee and Lessee each agree, to file timely with all parties and with the Internal Revenue Service the appropriate statements required by Treas. Reg. Section 1.48-4(f) with respect to such election, in the manner reasonably prepared by Lessee. The Owner Participant and the Owner Trustee each agrees that it has not made nor will it make any representation with respect to the accuracy of the information set forth in paragraphs 5 or 6 of such election. (v) The First National Bank of Boston in its individual capacity represents and warrants that: (i) the lien of the Equipment Trust Agreement on the collateral purported to be created thereby will be free and clear of Lessor Liens attributable to The First National Bank of Boston in its individual capacity, and there are no Liens affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Estate resulting from any act or claim against The First National Bank of Boston in its individual capacity arising out of any event or condition not related to the ownership, leasing, use or operation of the Aircraft or to any other transaction contemplated by this Agreement or any of the Operative Documents, including any Lien resulting from the nonpayment by The First National Bank of Boston in its individual capacity of any Taxes (as defined in Section 7(b)(i) hereof) imposed or measured by its net income; (ii) there has not occurred any event which constitutes (or to the best of its knowledge would, with the passage of time or the giving of notice or both, constitute) an Event of Acceleration which has been caused by or relates -40- 41 PARTICIPATION AGREEMENT NW 1989 B to The First National Bank of Boston in its individual capacity and which is presently continuing; (iii) it is a national banking association duly organized and validly existing in good standing under the laws of the United States of America and has full power and authority to enter into and perform its obligations under each Operative Document to which it is a party and to execute and deliver the Guaranties to be delivered on the Delivery Date; (iv) each Operative Document to which it is a party has been duly authorized by all necessary action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate the charter or by-laws of the First National Sank of Boston in its individual capacity, any Federal or Massachusetts law or regulation relating to its banking or trust powers or contravene or result in any breach of, or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected or any judgment or order binding on it; (v) each Operative Document to which it is a party has been duly executed and delivered by it and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, each of this Agreement, the Trust Agreement, the Lease, the Lease Supplement covering the Aircraft, the Equipment Trust Agreement, the Trust Supplement covering the Aircraft and the Guaranties to be delivered on the Delivery Date is the legal, valid and binding obligation of the Owner Trustee, enforceable against the Owner Trustee in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (vi) there are no pending or, to the knowledge of the Owner Trustee, in its individual capacity, threatened actions or proceedings against the Owner Trustee, in its individual capacity, before any court or administrative agency which, if determined adversely to the Owner Trustee, in its individual capacity, would materially adversely affect the ability of the Owner Trustee, in its individual capacity or as trustee, to perform its obligations under each of the Operative Documents to which it is or will be a party. (w) The Owner Participant covenants and agrees that if (i) Lessee has elected pursuant to Section 9(a) of the Lease to -41- 42 PARTICIPATION AGREEMENT NW 1989 B 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) of the Lease 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 excess of the highest bid received on or before the Termination Date over the price for which the Aircraft may subsequently be sold, 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 F to the Lease. (x) Each of the Owner Participant, the Owner Trustee, the Equipment Trust Trustee, and Lessee covenants and agrees that if Lessee elects (a) to terminate the Lease pursuant to Section 9(a) of the Lease and to purchase the Aircraft pursuant to Section 9(b) of the Lease, (b) to purchase the Aircraft pursuant to Section 19(b) of the Lease, or (c) to terminate the Lease and purchase the Aircraft pursuant to Section 19(d) of the Lease, each of the parties will execute and deliver appropriate documentation transferring all their 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). In addition, if Lessee elects to assume the obligations of the Owner Trustee pursuant to the Equipment Trust Agreement and the Guaranties, 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 Equipment Trust Agreement, amending the Equipment Trust Agreement to provide for the lease of the Aircraft and the Engines thereunder by the Equipment Trust Trustee to Lessee on terms and conditions no less favorable to the Equipment Trust Trustee and the Holders than those of the Lease as originally executed (including, without limitation, the terms and conditions contained in Sections 6, 7, 8, 9, 10, 11 and 12 of the Lease (as originally executed), assigning all of the rights and obligations of the Owner Trustee under the Purchase Agreement Assignment to Lessee, subject to the Lien of the Equipment Trust Agreement (together with an assumption by Lessee of all of the Owner Trustee's obligations under the Purchase Agreement Assignment), releasing the Owner Participant and the Owner Trustee from all future obligations in respect of the Certificates, the Guaranties and the Equipment -42- 43 PARTICIPATION AGREEMENT NW 1989 B Trust Agreement, and will take all such other actions as are reasonably necessary to permit such assumption by Lessee. It shall be a condition to such assumption by Lessee that (x) the Holders and the Equipment Trust Trustee shall not be materially adversely affected by the actions taken pursuant to the preceding sentence, (y) Lessee is solvent at the time of such assumption and (z) Lessee shall deliver to the Equipment Trust Trustee an Opinion of Counsel to the effect that (A) the protections of Section 1110 of the Federal Bankruptcy Code (or any successor provision) afforded to the Equipment Trust Trustee by said section will not be less than such protections immediately prior to such assumption by Lessee, (B) the conditions set forth in the preceding sentence have been met and (C) the Equipment Trust Agreement will comply with the Trust Indenture Act following such assumption. Lessee agrees that if it so elects to purchase the Aircraft pursuant to Section 9(b) of the Lease and assume the obligations of the Owner Trustee pursuant to the Equipment Trust Agreement and the Guaranties, the Aircraft will not thereafter be the subject of any leveraged-lease or sale and lease-back transaction in which Lessee or any Affiliate of Lessee is the lessee, a sublessee or a guarantor of the obligations of any lessee or sublessee. (y) 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 citizen of the United States as defined in Section 101(16) of the Federal Aviation Act and shall be a United States 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 Equipment Trust Trustee and the Owner Participant an agreement in form and substance reasonably satisfactory to the Owner Participant and the Owner Trustee, containing an assumption by such successor corporation or Person of the due and punctual performance and observance of each covenant and condition of this Agreement, the Equipment Trust 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 Event of Default under the Lease shall have occurred and be continuing; and -43- 44 PARTICIPATION AGREEMENT NW 1989 B (iv) Lessee shall have delivered to the Owner Trustee, the Equipment Trust Trustee and the Owner Participant a certificate signed by the President or any Vice President and by the Secretary or an Assistant Secretary of Lessee, and an opinion of counsel reasonably satisfactory to the Owner Participant and the Owner Trustee, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (ii) above comply with this Section 8(y) and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety in accordance with this 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 Section 8(y) from its liability hereunder. (z) Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and re-filing of the Lease, the Lease Supplement, the Trust Agreement, the Equipment Trust Agreement and the Trust Supplement and any financing statements or other instruments as are necessary to maintain, so long as the Equipment Trust Agreement or the Lease is in effect, the perfection of the security interest created by the Equipment Trust Agreement (including title solely for security purposes) and any security interest that may be claimed to have been created by the Lease and the ownership interest of the Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the Equipment Trust 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. (aa) Section 3 of the Lease contemplates that, under certain circumstances, the Owner Participant will make certain recalculations of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the Owner Participant hereby agrees to make such recalculations as and when contemplated by the Lease and subject to all the terms and conditions of the Lease and promptly to take such further actions as may be necessary or desirable to give effect to and to cause the Owner -44- 45 PARTICIPATION AGREEMENT NW 1989 B Trustee to give effect to the provisions of Section 3 of the Lease. (bb) The Owner Participant hereby agrees to notify Lessee or cause Lessee to be notified by telex or telegram not later than 2:00 P.M., New York time, on the third Business Day prior to the day for which an Excess Amount is indicated stating whether or not the Owner Participant intends to pay such amount in full by 10:30 A.M., New York time, on the due date. (cc) The Owner Participant hereby agrees with Lessee that it will pay, or cause to be paid, all costs and expenses that are for the account of the Owner Trustee pursuant to Section 5(d) of the Lease. (dd) The Original Holder agrees to notify each of the Equipment Trust Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual interest expected to accrue on the Certificates during each Interest Period promptly after the commencement of such Interest Period and after the occurrence of any event that would cause such actual interest expected to accrue during such Interest Period to change from the amount previously notified. (ee) The Owner Participant hereby agrees with Lessee, and only with Lessee, and not for the benefit of any other party to this Agreement, that it promptly will pay the Owner Trustee any funds necessary to enable the Owner Trustee promptly to pay to Lessee the full amount of any Reimbursement Amount owed to Lessee. (ff) Lessee shall deliver a copy of the Purchase Agreement (insofar as it relates to the Aircraft) to the Equipment Trust Trustee upon the request of the Equipment Trust Trustee during any period when an Event of Default shall have occurred and be continuing. (gg) 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, (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 Certificates or to the Equipment Trust 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 Certificates and (iii) any Holder(s) of the Certificates which are parties to this Agreement or the Equipment Trust Trustee actually receives any Excess Payment (as hereinafter -45- 46 PARTICIPATION AGREEMENT NW 1989 B 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 Equipment Trust 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(gg), "Excess Payment" means the amount by which such payment exceeds the amount which would have been received by the Holder(s) of the Certificates or the Equipment Trust Trustee if the Owner Trustee (in its individual capacity) or the Owner Participant has not become subject to the recourse liability referred to in (ii) above. Nothing contained in this Section 8(gg) shall prevent the Holder of a Certificate or the Equipment Trust 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 Participation Agreement or the Equipment Trust Agreement (and any exhibits or annexes thereto). SECTION 9. Lessee's Right of Quiet Enjoyment. Each party to this Agreement acknowledges notice of, and consents in all respects to, the terms of the Lease, and expressly, severally and as to its own actions only, agrees that, notwithstanding any of the provisions of any of the Operative Documents, so long as no Event of Default has occurred and is continuing, it shall not take or cause to be taken any action contrary to Lessee's rights under the Lease, including without limitation, the right to possession and use of the Aircraft (it being understood that the foregoing shall not be deemed to have modified in any respect the obligations of Lessee pursuant to Section 20 of the Lease, which obligations are absolute and unconditional). SECTION 10. Other Documents. Each of the Owner Participant and the Owner Trustee hereby (A) agrees with Lessee, the Holders and the Equipment Trust Trustee to comply with all of the terms of the Trust Agreement (as the same may hereafter be amended or supplemented from time to time in accordance with the terms thereof) applicable to it; and (B) agrees with Lessee, the Holders and the Equipment Trust Trustee not to amend, supplement or otherwise modify any provision of the Trust Agreement in a manner adversely effecting such party without the prior written consent of such party. The Equipment Trust 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 which consent shall not be unreasonably withheld. -46- 47 PARTICIPATION AGREEMENT NW 1989 B SECTION 11. Certain Covenants of Lessee. Lessee covenants and agrees with each of the Original Holder, the Owner Participant, the Equipment Trust 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 Equipment Trust 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 use its best efforts to 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 Equipment Trust Agreement, and all supplements and amendments to the Equipment Trust 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 Manufacturer's Bill of Sale, the FAA Bill of Sale, and the Owner Trustee's FAA Bill of Sale, the Lease Supplement covering the Aircraft and the Trust Supplement, the Lease and the Equipment Trust Agreement there shall be filed for recording with the Federal Aviation Administration the following documents in the following order of priority; first, the Manufacturer's Bill of Sale, the FAA Bill of Sale, and the Owner Trustee's FAA Bill of Sale, second, the Equipment Trust Agreement, with the Trust Agreement and the Trust Supplement attached, and third, the Lease, with the Lease Supplement covering the Aircraft, the Equipment Trust Agreement and the Trust Supplement attached. Lessee agrees to furnish the Owner Participant, the Owner Trustee and the Equipment Trust Trustee with copies of certified copies of the foregoing documents as promptly as practicable following the issuance of same by the Federal Aviation Administration. -47- 48 PARTICIPATION AGREEMENT NW 1989 B SECTION 12. Owner for Federal and State Tax Purposes. It is hereby agreed among the Equipment Trust Trustee, Lessee, the Original Holder, the Owner Participant and the Owner Trustee that for Federal and State 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 and State income tax purposes. SECTION 13. Definitions; Notices; Consent to Jurisdiction. (a) Unless the context otherwise requires, all capitalized terms used herein shall have the meanings set forth in Annex A hereto for all purposes of this Agreement. (b) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by prepaid Telex, TWX or telegram (with messenger delivery specified in the case of a telegram), 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 by any party hereto in a notice sent or delivered to each other party hereto 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 Telex, TWX or telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Equipment Trust Trustee, the Original Holder 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. (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 -48- 49 PARTICIPATION AGREEMENT NW 1989 B 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, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, 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 Equipment Trust Trustee. The agreement set forth in this Section 13(c) is given solely for the benefit of the parties, their permitted successors and assigns, and is not intended to and shall not inure to the benefit of any other person. SECTION 14. Change of Situs of Owner Trust. The Owner Participant agrees that if, at any time, the Trust Estate becomes subject to any Taxes (as defined in Section 7(b) hereof) 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 may reasonably request, (B) the rights and obligations under the Operative Documents of the Owner Participant shall not be altered as a result of the taking of such action, (C) the lien of the Equipment Trust Agreement on the Estate shall not be adversely affected by such action, (D) the Owner Participant shall have received an opinion or opinions of counsel satisfactory to the Owner Participant, in scope, form and substance satisfactory to the Owner Participant 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 Owner Trustee, the Equipment Trust 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 ACRS Deductions or an Inclusion Event (as defined in the Tax Indemnity Agreement) with respect to which Lessee is not required to indemnify the -48- 50 PARTICIPATION AGREEMENT NW 1989 B 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), (V) if such removal involves the replacement of the Owner Trustee, substantially covering the matters described in the opinion of counsel delivered pursuant to Section 4(a)(xii) hereof and (VI) covering such other matters as the Owner Participant may reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner Participant and the Owner Trustee on a net after-tax basis against any and all reasonable and actual costs and expenses including counsel fees and disbursements, registration fees, recording or filing fees and taxes incurred by the Owner Trustee and the Owner Participant in connection with such change of situs. SECTION 15. Miscellaneous. (a) The Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor. (b) The representations, warranties, indemnities and agreements of Lessee, the Owner Trustee, the Equipment Trust Trustee, the Original Holder and the Owner Participant provided for in this Agreement, and Lessee's, the Owner Trustee's, the Equipment Trust Trustee's, the Original Holder's and the Owner Participant's obligation under any and all thereof, shall survive the making available of the Holders' Commitment and the Owner Participant's Commitment, the delivery or return of the Aircraft, the transfer of any interest by the Owner Participant in the Trust 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 Equipment Trust Trustee and the Owner Trustee. The terms of this Agreement shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, the Owner Participant and its successors and assigns, each Holder and its successors and registered assigns, the Equipment Trust Trustee and its successors as Equipment Trust Trustee under the Equipment Trust -49- 51 PARTICIPATION AGREEMENT NW 1989 B Agreement and the Owner Trustee and its successors as Owner Trustee under the Trust Agreement. 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 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 cotrustee 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. SECTION 16. Expenses. (a) Invoices and Payment. Each of the Owner Trustee, the Equipment Trust Trustee, the Original Holder, the Owner Participant, and Lessee shall promptly submit to the Owner Trustee for its prompt approval (which shall not be unreasonably withheld) copies of invoices of the Transaction Expenses for which it is responsible for providing information as they are received (but in no event later than April 20, 1989). If the Aircraft is delivered, accepted and leased, the Owner Participant agrees to transfer to the Owner Trustee no later than May 5, 1989 such amount as shall be necessary in order to enable the Owner Trustee to pay Transaction Expenses. To the extent of funds received by it, the Owner Trustee agrees to pay all invoices of Transaction Expenses that have been approved by it promptly upon receipt thereof. -50- 52 PARTICIPATION AGREEMENT NW 1989 B (b) Payment of Other Expenses. Notwithstanding the provisions of Section 16(a), Lessee agrees to pay the fees, expenses and disbursements of Messrs. Cadwalader, Wickersham & Taft, special counsel for Lessee, and the Owner Participant agrees to pay the fees, expenses and disbursements of Messrs. Luce, Forward, Hamilton & Scripps, special counsel to the Owner Participant and the Parent, in connection with the preparation, execution and delivery of the Operative Documents and the closings of the transactions contemplated thereby which do not constitute Transaction Expenses. (c) Payment by the Owner Participant and Lessee. Notwithstanding the provisions of Section 16(a), if the Aircraft shall not be delivered, accepted and leased, the Owner Participant shall pay its own Transaction Expenses and Lessee shall pay its own Transaction Expenses and those of the Owner Trustee and the Equipment Trust Trustee. (d) Certain Payments by Lessee. If the aggregate amount of Transaction Expenses determined pursuant to Section 16(a) exceeds 0.75% of Lessor's Cost, then Lessee shall reimburse any party hereto for Transaction Expenses incurred by it in such amounts as Lessee shall determine in its discretion up to an aggregate amount equal to the lesser of (i) such excess and (ii) $50,000. Any payments made by Lessee pursuant to this Section 16(d) shall satisfy the obligation to pay Transaction Expenses pursuant to Section 16(a) to the extent paid but shall not be considered paid by Lessor for purposes of Section 3(d)(ii) of the Lease. SECTION 17. Optional Redemption of Certificates. (a) In the event that at any time Lessee shall have given written notice to the Owner Participant, the Owner Trustee and the Equipment Trust Trustee that there be effected a voluntary redemption of the Certificates as part of a refunding or refinancing operation, the Owner Participant agrees to negotiate promptly in good faith to conclude an agreement with Lessee as to the terms of such refunding or refinancing operation (including the terms of any debt to be issued in connection with such refunding or refinancing operation) and upon such agreement: (1) within ten Business Days after the reaching of such agreement, the Owner Participant will deliver to Lessee and the Equipment Trust Trustee a certificate of an authorized representative of the Owner Participant (the "Refinancing Certificate") setting forth (i) the proposed date on which the outstanding Certificates will be redeemed, which date shall give sufficient time for any notice of redemption to be given to Holders of the Certificates, any new debt will be issued and the other aspects of such refunding or -51- 53 PARTICIPATION AGREEMENT NW 1989 B refinancing operation 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 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 F 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 schedules of Basic Rent percentages, debt amortization, Stipulated Loss Value percentages and Termination Value percentages (such information, whether as so 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 a financing or loan agreement (which may involve an underwriting agreement in connection with a public offering of such debt 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 and/or the Equipment Trust 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 at least equal to the aggregate principal amount of all Certificates outstanding on the Refinancing Date (such debt securities, the "New Debt"), (ii) the application of the proceeds of the sale of the New Debt to the redemption of all such 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; -52- 54 PARTICIPATION AGREEMENT NW 1989 B (3) 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 refunding 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 Certificates and will enter into such amendments and supplements to the Equipment Trust Agreement (or a new equipment trust agreement, indenture or other security agreement) as may be necessary to effect such refunding or refinancing; (5) unless otherwise agreed by the Owner Participant, Lessee shall pay or reimburse all of the expenses of such refunding or refinancing (including the fees and expenses of counsel); 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, (B) minimizes the Net Present Value of Rents to Lessee and minimizes the Stipulated Loss Value and Termination Value percentages to the extent possible consistent with clause (A), (C) is consistent with the provisions of Section 3 of the Lease and (D) uses the same methodology and assumptions used by the Owner Participant in determining Basic Rent, Excess Amounts, Stipulated Loss Values and Termination Values on the Delivery Date (except to the extent such assumptions 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). (b) In the case of a refunding or refinancing involving a public offering of the New Debt, Lessee shall have the right to purchase such debt securities and apply such securities as a credit against its obligation to pay Rent to the extent provided for in Section 8(1) hereof, provided that in connection with such refunding or refinancing Lessee shall have agreed to indemnify the Owner Participant with respect to such right in a manner reasonably satisfactory to the Owner Participant. -53- 55 PARTICIPATION AGREEMENT NW 1989 B (c) The Certificates shall not be subject to voluntary redemption by the Owner Trustee or the Equipment Trust Trustee without the consent of Lessee. (d) Unless otherwise agreed to in writing by the Owner Participant, only three such refunding or refinancing operations shall be permitted. Unless otherwise agreed, any refinancing shall not change the amount of the Owner Participant's Commitment and shall be for all Outstanding Certificates. (e) Notwithstanding anything to the contrary contained in this Agreement or any of the other Operative Documents, the Original Holder, the Owner Participant, the Owner Trustee, the Equipment Trust Trustee and Lessee agree that in connection with the first refunding or refinancing operation under this Section 17, if such operation involves the offering and sale pursuant to a registration statement filed with the SEC of Certificates issued under the Equipment Trust Agreement (the "Public Certificates"), the provisions of this Section 17(e) shall govern such refunding or refinancing to the exclusion of the other provisions of this Section 17: (1) not later than the effective date of the registration statement filed with the SEC which relates to the Public Certificates (the "Effective Date"), the Owner Participant shall prepare and submit to Lessee revised schedules of Basic Rent and Excess Amount percentages, debt amortization, Stipulated Loss Value percentages and Termination Value percentages for attachment to the Lease Amendment referred to in clause 7 below, which schedules shall be based on the principal amounts, maturities, and interest rates of the Public Certificates (as such principal amounts and maturities shall have been specified by the Owner Participant), and Lessee shall have verified such calculations in accordance with this Agreement; (2) on the closing date for the issuance and sale of the Public Certificates (the "Closing Date"), the Equipment Trust Trustee shall redeem all of the outstanding Certificates by payment to the Holders thereof in accordance with Section 6.01(c) of the Equipment Trust Agreement of an amount equal to the unpaid principal of and accrued and unpaid interest on the Certificates as provided in clause 3 below plus the additional amount set forth in clause 4 below and shall authenticate and deliver the Public Certificates in an initial aggregate principal amount which shall equal or exceed the principal amount of the Certificates being redeemed, and the Owner Trustee shall execute and deliver the Guaranties relating to the Public Certificates; -54- 56 PARTICIPATION AGREEMENT NW 1989 B (3) the Equipment Trust Trustee shall pay the unpaid principal amount of the Certificates being redeemed with the proceeds from the sale of the Public Certificates and shall pay the accrued and unpaid interest on such Certificates from amounts provided to the Equipment Trust Trustee by the Owner Trustee as ETA Rent, which amounts shall be paid to the Owner Trustee by the Owner Participant, in the event that the Closing Date occurs on or prior to the Commencement Date, which amounts the Owner Participant agrees to pay to Lessor in immediately available funds on the Closing Date, or from amounts paid to the Owner Trustee by Lessee as advance Rent under the Lease, in the event that the Closing Date occurs after the Commencement Date, which amount Lessee agrees to pay to the Owner Trustee in immediately available funds on the Closing Date and for which Lessee shall be entitled to a credit against future payments of Basic Rent due under the Lease; (4) Lessee shall pay to the Owner Trustee as Supplemental Rent under the Lease in immediately available funds an amount equal to any Funding Loss Amount due and payable on the Certificates being redeemed on the Closing Date pursuant to Section 6.01(C) of the Equipment Trust Agreement and the Owner Trustee shall pay such Funding Loss Amount to the Equipment Trust Trustee as ETA Rent under the Equipment Trust Agreement; (5) not later than the Closing Date, the parties hereto shall execute and deliver a refunding agreement in the form attached as Exhibit I to this Agreement (the "Refunding Agreement") and shall perform their obligations as expressly provided therein; (6) not later than the Closing Date, the Owner Trustee, the Equipment Trust Trustee and Lessee shall execute and deliver an amendment to the Equipment Trust Agreement in the form attached as an exhibit to the Refunding Agreement; (7) not later than the Closing Date, the Owner Trustee and Lessee shall execute and deliver an amendment to the Lease Agreement in the form attached as an exhibit to the Refunding Agreement; (8) not later than the Closing Date, the parties hereto shall execute and deliver such other amendments to the Operative Documents which shall be required pursuant to the terms of the Refunding Agreement; and -55- 57 PARTICIPATION AGREEMENT NW 1989 B (9) on the Closing Date, the Owner Participant shall pay to the Owner Trustee for reimbursement to Lessee an amount equal to the underwriting discounts and commissions payable in connection with the sale of the Public Certificates. Such payment shall be made by the Owner Participant in immediately available funds and paid by the Owner Trustee to Lessee upon receipt by the Owner Trustee, and shall constitute "Transaction Expenses" as defined in Annex A hereto. -56- 58 PARTICIPATION AGREEMENT NW 1989 B 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, NC., Lessee By: ----------------------------------------- Title: Vice President Address: Minneapolis/St. Paul International Airport St. Paul, Minnesota 55111 Attn: Chief Financial Officer Telex No. 29-7024 Answerback: NWAIR STP A [_______________________], Owner Participant By: ----------------------------------------- Title: President By: ----------------------------------------- Title: Address: Telecopy No: 59 SCHEDULE I [NW 1989 B] Commitments
Commitment ----------
EX-4.A7 8 FIRST AMENDMENT TO PARTICIPATION AGREEMENT -1989 B 1 FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1989 B] This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1989 B], dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) [ ], a [ ] corporation (the "OWNER PARTICIPANT"), as successor to [ ], a [ ] corporation (the "ORIGINAL OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH Trustee") under each of the four separate Pass Through Trust Agreements (as defined below), (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 (as defined below), and (vi) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Trust Indenture (as defined below). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; W I T N E S S E T H: WHEREAS, Lessee, the Original Owner Participant, [ ] as Original Holder (the "ORIGINAL LOAN PARTICIPANT"), The First National Bank of Boston, as owner trustee (the "ORIGINAL OWNER TRUSTEE"), and Meridian Trust Company, as Equipment Trust Trustee (the "EQUIPMENT TRUST TRUSTEE") entered into the Participation Agreement [NW 1989 B], dated as of March 15, 1989 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 747-451 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Trustee, the Lessee and the Equipment Trust Trustee entered into the Equipment Trust Agreement [NW 1989 B], dated as of March 15, 1989, as supplemented by Equipment Trust Agreement and Trust Agreement Supplement No. 1 [NW 1989 B], dated March 16, 1989 (collectively, the "ORIGINAL EQUIPMENT TRUST AGREEMENT"), pursuant to which the Original Owner Trustee issued to the Original Loan Participant Series BB Certificates substantially in the form set forth in Exhibit A thereto (the "ORIGINAL CERTIFICATES") as evidence of the loan then being made by the Original Loan Participant in participating in the payment of Lessor's Cost; 2 WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Trustee and Lessee entered into the Lease Agreement [NW 1989 B] relating to the Aircraft, dated as of March 15, 1989, as supplemented by Lease Supplement No. 1 [NW 1989 B] dated March 16, 1989 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Original Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease from such Original Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Participant and the Original Owner Trustee entered into the Trust Agreement [NW 1989 B], dated as of March 15, 1989 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Participant entered into a Tax Indemnity Agreement [NW 1989 B] relating to the Aircraft, dated as of March 15, 1989 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Lessee, the Owner Trustee and the Indenture Trustee entered into a Purchase Agreement Assignment [NW 1989 B], dated as of March 15, 1989, and the Manufacturer entered into a Consent and Agreement [NW 1989 B], dated as of March 15, 1989 (collectively, the "ORIGINAL PURCHASE AGREEMENT ASSIGNMENT"); WHEREAS, pursuant to an Instrument of Transfer, Removal, Appointment, Assumption and Acceptance, dated May 16, 1996, the Owner Trustee succeeded to all of the estates, properties, rights, powers, duties and trusts of the Original Owner Trustee under the Trust Agreement and the other Operative Documents to which the Original Owner Trustee was a party; WHEREAS, pursuant to an Assignment and Assumption Agreement dated as of December 19, 1991 (the "ASSIGNMENT AND ASSUMPTION AGREEMENT"), between and among the Original Owner Participant, the Owner Participant and [ ] ("[ ]") as parent of the Owner Participant, the Original Owner Participant transferred to the Owner Participant all of its right, title and interest in the Trust Estate, the Aircraft and the Operative Documents; WHEREAS, concurrently with the execution and delivery of the Assignment and Assumption Agreement, [ ] entered into a Guaranty (the "PARENT GUARANTY") under which [ ] guaranteed to Lessee, the Original Owner Trustee, the Equipment Trust Trustee and the Original Owner Participant obligations of the Owner Participant; -2- 3 WHEREAS, the Original Equipment Trust Agreement was amended by the First Amendment to Equipment Trust Agreement [NW 1989 B] dated as of December 19, 1991 (as so amended, the "EQUIPMENT TRUST AGREEMENT"); WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Certificates as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and Lessee has given its written notice to the Owner Participant, the Owner Trustee and the Equipment Trust Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent have entered into the Refunding Agreement [NW 1989 B], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have entered into the Trust Indenture and Security Agreement [NW 1989 B], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue secured certificates substantially in the form set forth in Section 2.01 thereof (the "SECURED CERTIFICATES") in four series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the Amended and Restated Lease Agreement [NW 1989 B], dated as of June 3, 1996 (the "LEASE") amending and restating the Original Lease; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1989 B] dated as of June 3, 1996 (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, at the Closing, the Lessee, the Owner Trustee and the Indenture Trustee will enter into the First Amendment to Purchase Agreement Assignment [NW 1989 B], dated as of the Refinancing Date, and the Manufacturer will enter into the First Amendment to Consent and Agreement [NW 1989 B], dated as of the Refinancing Date (collectively, the "PAA AMENDMENT NO. 1"; the Original Purchase Agreement Assignment, as amended by the PAA Amendment No. 1, the "PURCHASE AGREEMENT ASSIGNMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Guarantor has entered into the Guarantee [NW 1989 B] (the "GUARANTEE"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in Section 1 of the -3- 4 Refunding Agreement), four 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 at the Closing 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 Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (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 (other than Northwest Airlines 1996-1D Pass Through Trust) with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent entered into the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts. NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Participation Agreement is amended as follows: SECTION 1. AMENDMENT OF PREMISES OF THE ORIGINAL PARTICIPATION AGREEMENT. The last WHEREAS clause of the Original Participation Agreement is hereby amended in its entirety to read as follows: WHEREAS, certain terms are used herein as defined in Section 13(a) hereof. SECTION 2. AMENDMENT OF SECTION 4(a) OF THE ORIGINAL PARTICIPATION AGREEMENT. The last sentence of Section 4(a)(v) of the Original Participation Agreement is hereby deleted in its entirety. SECTION 3. AMENDMENT OF SECTION 7(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. (a) Section 7(b)(i) of the Original Participation Agreement is hereby amended by (i) deleting all of the words and punctuation through the end of the first parenthetical clause in the first sentence and substituting therefor the following: Indemnity. Except as provided in Section 7(b)(ii) hereof, Lessee shall pay, and on written demand shall indemnify and hold harmless each of (i) the Owner Participant, the Owner Trustee, both in its individual capacity and as -4- 5 trustee under the Trust Agreement, the Trust Estate and 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 (each of the entities described in clauses (i), (ii) and (iii), referred to as an "INDEMNITEE"). (ii) replacing the words "or Estate" at the end of clause (i)(F) with the word "and", (iii) deleting clause (D) of Section 7(b)(i) in its entirety and substituting therefor the following: any or all of the Operative Documents, the Refunding Agreement or the issuance of the certificates issued pursuant to the Original Trust Indenture, the Secured Certificates, the Pass Through Certificates or the refinancing thereof and any other documents contemplated hereby or thereby and amendments and supplements hereto and thereto or the execution, delivery or performance of any thereof or the issuance, acquisition, holding or subsequent transfer thereof, and (iii) deleting clause (E) of Section 7(b)(i) in its entirety and substituting therefor the following: the payment of the principal of, or interest or premium on, or other amounts payable with respect to the Certificates or the Secured Certificates, (b) Section 7(b)(ii) of the Original Participation Agreement is hereby amended by (i) adding the words "and (iii) Taxes imposed by withholding on or with respect to the Secured Certificates or any payments in connection therewith" after the word "jurisdiction" in clause 7(b)(ii)(1), (ii) deleting the words and punctuation "Commonwealth of Massachusetts, the State of California" and substituting therefor the words and punctuation "State of Utah, the State of Delaware" in clause 7(b)(ii)(2), (iii) substituting the words, punctuation and numbers "Section 7(b)(ii)(1)(ii) or (iii)" for the words, punctuation and numbers "Section 7(b)(ii)(1)(ii)" in the last parenthetical of Section 7(b)(ii)(2), (iv) adding the words "or (D) in connection with any refinancing (including pursuant to the Refunding Agreement), provided that this clause (4) shall not apply to the transfer by The First National Bank of Boston to the First Security Bank of Utah, National Association" at the end of clause 7(b)(ii)(4), (v) deleting the words "Original Holder, the Equipment Trust Trustee or the Estate" in the second line of clause 7(b)(ii)(5) and substituting therefor the words "Indenture Trustee and the Trust Indenture Estate", (vi) deleting the words "Equipment Trust Trustee" in clause 7(b)(ii)(7) and substituting therefor the words "Indenture Trustee" and (vii) deleting the words "Original Holder" in clauses 7(b)(ii)(13) and 7(b)(ii)(14) and substituting therefor the words "Indenture Trustee or Trust Indenture Estate". SECTION 4. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement is hereby amended by (i) deleting the first sentence thereof, (ii) deleting the word "and" between the words "expenses" and "Transaction Expenses" in the second parenthetical phrase of the first paragraph thereof and substituting a comma therefor, (iii) inserting after the phrase "to Section 16" in such -5- 6 second parenthetical phrase the words "and Refinancing Expenses to the extent not required to be paid by the Owner Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement", (iv) inserting the words and punctuation "and, only in the case of an Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words "the terms thereof" in clause (1) of the first paragraph thereof, (v) inserting the word "Secured" before the word "Certificates" and by adding the words "the Pass Through Trust Certificates (and any replacements thereof) and the certificates issued pursuant to the Original Trust Indenture (and any replacements thereof)" after the word "Certificates" in clause (4) of the first paragraph thereof and by inserting the word "Secured" before the word "Certificates" in the fourth paragraph thereof, (vi) deleting the word "or" prior to clause (5) of the first paragraph thereof and substituting a comma therefor and adding the following clause (6) after the end of such clause (5): "or (6) arising from the application of Part 4 or Part 5 of Subtitle B of Title I of ERISA or Section 4975 of the Code", (vii) adding the words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after the words "Operative Documents" in each of clauses (A) and (B) of the proviso in the first paragraph thereof, (viii) deleting the words "Original Holder Lien" and "Trustee's Liens" in clause (B) of the proviso in the first paragraph of Section 7(c) and substituting therefor the words "Loan Participant Liens" and "Indenture Trustee's Liens", respectively, (ix) adding the words and punctuation ", the Indenture" after the word "Lease" in the second parenthetical of clause (D) of the proviso in the first paragraph of Section 7(c) and by adding the words "and other than the transfer from The First National Bank of Boston to First Security Bank of Utah, National Association" at the end of such parenthetical after the words "Equipment Trust Agreement"), (x) deleting all of the words in such clause (D) appearing after the word "Lease" the second time such word appears therein and before the semicolon, (xi) adding the words and punctuation ", provided, that this clause (E) shall not be deemed to exclude Taxes, penalties, interest or charges of any nature whatsoever imposed under Section 4975 of the Code or Section 502(i) or Section 502(l) of ERISA" at the end of clause (E) of the proviso to the first paragraph thereof, (xii) adding the words "other than any transfer from The First National Bank of Boston to First Security Bank of Utah, National Association" at the end of clause (G) of the proviso to the first paragraph of Section 7(c), (xiii) deleting the words "Equipment Trust Trustee" and "Equipment Trust Agreement" in clause (H) of the proviso in the first paragraph of Section 7(c) and substituting therefor the words "Indenture Trustee" and "Trust Indenture", respectively, (xiv) deleting the words "Section 9.07 of the Equipment Trust Agreement" in the seventh paragraph of Section 7(c) and substituting therefor the words "Section 5.03 or 7.01 of the Trust Indenture", and (xv) deleting the words "Equipment Trust Trustee" in the last paragraph of Section 7(c) and substituting therefor the words "Indenture Trustee". SECTION 5. AMENDMENT OF SECTION 8(c) OF THE ORIGINAL PARTICIPATION AGREEMENT. The second, third, fourth, fifth and sixth sentences of Section 8(c) of the Original Participation Agreement are hereby amended in their entirety to read as follows: The Owner Participant agrees, solely for the benefit of Lessee and the Certificate Holders, 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 -6- 7 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 arrangements or take any other action as may be necessary to prevent any deregistration and to maintain the United States registration of the Aircraft; provided, however, that during any period during which the Aircraft shall be registered in a country other than the United States pursuant to Section 8(f) hereof, the Owner Participant shall take the actions referred to in this sentence only if, and promptly after being, directed to do so by Lessee upon Lessee's determination to re-register the Aircraft in the United States. It is agreed that: (A) the Owner Participant shall be liable to pay on request to each of the other parties hereto 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 in the first sentence of this Section 8(c) 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 Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). First Security Bank of Utah, National Association, in its individual capacity, agrees that if at any time a responsible officer or responsible employee of the Corporate Trust Department of First Security Bank of Utah, National Association, shall obtain actual knowledge that First Security Bank of Utah, 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 Certificate Holders, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or First Security Bank of Utah, National Association, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an event which would constitute an Event of Default but for lapse of time or the giving of notice or both) shall not have occurred and be continuing under the Lease due to non-compliance by Lessee with the registration requirements in the Lease. -7- 8 SECTION 6. AMENDMENT OF SECTION 8(d) OF THE ORIGINAL PARTICIPATION AGREEMENT. The first and second sentences of Section 8(d) of the Original Participation Agreement are hereby amended in their entirety to read as follows: First Security Bank of Utah, 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 in which it is a party are kept is Salt Lake City, Utah. First Security Bank of Utah, National Association, in its individual capacity, agrees that it will not change the location of its principal place of business or 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 to are kept to a location outside of Salt Lake City, Utah, without the prior written notice to all parties. SECTION 7. AMENDMENT OF SECTION 8(e) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(e) of the Original Participation Agreement is hereby deleted in its entirety. SECTION 8. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Each of the Owner Participant and the Indenture Trustee agrees that, at any time on or after the fifth anniversary of the Delivery Date, but subject to the matters set forth in this Section 8(f), including the second paragraph hereof, Lessee at its expense and with the prior written consent of the Owner Participant, may register the Aircraft in a country other than the United States in the name of the Owner Trustee (or, if appropriate, in the name of Lessee or a Sublessee as a "lessee" or a "sublessee"). Upon receipt of such request and consent, the Owner Participant shall instruct the Owner Trustee to, and the Indenture Trustee shall, take whatever action is necessary or appropriate to effectuate such change of registration, if prior thereto the Owner Participant and the Indenture Trustee shall have received: (i) a written request by the Company for such change of registration; (ii) an officer's certificate of Lessee to the effect that (A) Lessee will be in compliance with the insurance provisions of the Lease immediately after giving effect to such change of registration, (B) Lessee will pay all expenses of the Owner Participant, the Owner Trustee and the Indenture Trustee in connection therewith, and (C) such new country of registry imposes aircraft maintenance standards not materially different from those of the FAA; -8- 9 (iii) an opinion of counsel (which may be the General Counsel or an Associate General Counsel of Lessee, Cadwalader, Wickersham & Taft or a successor firm, or other counsel designated by Lessee and reasonably satisfactory to the Owner Participant) to the effect that such change of registration will not (A) expose the Owner Participant, the Owner Trustee or the Indenture Trustee to any risk (other than the risk of imposition of any tax) which they are not indemnified against under Section 7(c) of this Agreement (as in effect at such time or as proposed to be amended in connection therewith), (B) affect the lien of the Trust Indenture as a first priority lien on the Aircraft and on the amounts of Rent payable under the Lease which are assigned as security to the Indenture Trustee, or (C) result in the imposition of, or increase in the amount of, any Tax for which Lessee is not required to indemnify an Indemnitee pursuant to Section 7(b) of this Agreement (as in effect at such time or as proposed to be amended in connection therewith) or pursuant to the Tax Indemnity Agreement; and (iv) a favorable opinion, of counsel reasonably satisfactory to the Owner Participant in the proposed jurisdiction of registry, to the effect that (A) the terms (including, without limitation, the governing-law, service-of-process and jurisdiction-submission provisions thereof) of the Lease and the Trust Indenture are legal, valid, binding and enforceable in such country, (B) it is not necessary for the Owner Participant, the Owner Trustee or the Indenture Trustee to register or qualify to do business in such country, (C) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such country (it being understood 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 obtained to cover such risk), and (D) to such further effect with respect to such other matters as the Owner Participant may reasonably request. If the Owner Participant shall not have determined, acting reasonably, that the proposed country of registration would not provide substantially equivalent protection for the rights of owner participants and lessors in similar transactions as provided under United States law, the Owner Participant shall not unreasonably withhold its consent to such change of registration, provided that, in addition to the matters referred to in (i) through (iv) above, (I) the opinion of counsel referred to in clause (iii) above shall be satisfactory to the Owner Participant; (II) unless Lessee shall have agreed to provide insurance covering the risk of requisition of use of the Aircraft by the government -9- 10 of such jurisdiction so long as the Aircraft is registered under the laws of such jurisdiction, the opinion of counsel referred to in clause (iv) above shall also be to the effect that the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into United States Dollars for the loss of use of the Aircraft in the event of the requisition by such government of such use; and (III) it is understood that, in making its determinations under this Section 8(f), the Owner Participant shall be entitled to take into consideration the relative creditworthiness of the government of the proposed country of registration. SECTION 9. AMENDMENT OF SECTION 8(h) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(h) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Each of First Security Bank of Utah, National Association, in its individual capacity and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of First Security Bank of Utah, National Association, in its individual capacity and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of First Security Bank of Utah, National Association, in its individual capacity and the Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such 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 (as such terms are defined in Section 7 hereof) imposed on the Trust Estate against which Lessee is not required to indemnify the Trust Estate pursuant to Section 7 hereof but excluding Taxes referred to in Section 7(b)(ii)(3) hereof. SECTION 10. AMENDMENT OF SECTION 8(i) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(i) of the Original Participation Agreement is hereby amended in its entirety to read as follows: State Street Bank and Trust Company, in its individual capacity, covenants and agrees that it shall not cause or permit to exist any Lien with respect to the Aircraft or any other portion of the Trust Estate 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 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 -10- 11 the extent such acts arise or such failure arises from or constitute gross negligence or willful misconduct, (C) claims against the Indenture Trustee relating to Taxes or Expenses (as such terms are defined in Section 7 hereof) 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, 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. SECTION 11. AMENDMENT OF SECTION 8(k) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(k) of the Original Participation Agreement is hereby deleted in its entirety. SECTION 12. AMENDMENT OF SECTION 8(l) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(l) of the Original Participation Agreement is hereby deleted in its entirety. SECTION 13. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby amended by deleting the words "Equipment Trust Trustee" each time they appear and replacing them with the words "Indenture Trustee". SECTION 14. AMENDMENT OF SECTION 8(o) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(o) of the Original Participation Agreement is hereby amended by (i) adding after the comma in the second line thereof the words and punctuation "unless waived by the Certificate Holders," and (ii) deleting the word "Guaranties" and substituting therefor the words "Secured Certificates". SECTION 15. AMENDMENT OF SECTION 8(p) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(p) of the Original Participation Agreement is hereby amended to read in its entirety as follows: First Security Bank of Utah, National Association, and State Street Bank and Trust Company, each in its individual capacity, agrees for the benefit of Lessee and the Owner Participant to comply with the terms of the Trust Indenture which it is required to comply with in its individual capacity. SECTION 16. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement is hereby amended to read in its entirety as follows: -11- 12 The Owner Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Secured Certificate or any interests represented thereby with the assets of any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1) of the Code. Each Loan Participant, by its acceptance of a Secured Certificate, 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 of such Secured Certificate (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 Section 406 of ERISA); provided, that no such transfer shall be effective, and the Indenture Trustee shall not register any Secured Certificate until the intended transferee has made, or is deemed to have made, one of the representations referred to above. 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 Section 406 of ERISA); provided, that no such transfer shall be effective and any attempt by the Owner Participant to make such a transfer shall be null and void and of no effect until the intended transferee has made, or is deemed to have made, one of the representations referred to in this sentence. The Pass Through Trustee agrees that it will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of the initial supplement (other than the initial supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust Agreement without the prior written consent of the Owner Participant. SECTION 17. AMENDMENT OF SECTION 8(r) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(r) of the Original Participation Agreement is hereby amended by (i) deleting the words "Equipment Trust Trustee" each time it appears and substituting therefor the words "Indenture Trustee", and (ii) deleting the words "Equipment Trust Agreement" in the first parenthetical thereof and substituting therefor the words "Trust Indenture". SECTION 18. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Each of the Owner Participant, the Owner Trustee, the Indenture Trustee, each Loan Participant and Lessee covenants and agrees that if Lessee -12- 13 elects to purchase the Aircraft pursuant to Section 9(b), Section 19(b) or 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 pursuant to Section 9(b) or 19(d) of the Lease, 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. Lessee agrees that if it so elects to purchase the Aircraft pursuant to Section 9(b) of the Lease and assume the obligations of the Owner Trustee pursuant to the Trust Indenture and the Secured Certificates, the Aircraft will not thereafter be the subject of any leveraged lease or sale and lease-back transaction in which Lessee or any Affiliate of Lessee is the lessee, a sublessee or a guarantor of the obligations of any lessee or sublessee. 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. Section1110; 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. Section1110. SECTION 19. AMENDMENT OF SECTION 8(y) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(y) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation "citizen of the United States as defined in Section 101(16) of the Federal Aviation Act and shall be a United States certificated air carrier" in Section 8(y)(i) and replacing them with the words "Certificated Air Carrier", (ii) deleting the words "Equipment Trust Trustee" in Sections 8(y)(ii) and 8(y)(iv) and substituting therefor the words "Indenture Trustee", (iii) deleting the words "Equipment Trust Agreement" in Section 8(y)(ii) and substituting therefor the words "Trust Indenture", and (iv) inserting in Section 8(y)(ii) after the words "Purchase Agreement Assignment", the words and punctuation ", the Refunding Agreement". -13- 14 SECTION 20. AMENDMENT OF SECTION 8(z) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(z) is hereby amended to read in its entirety as follows: Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust Supplement and any financing statements or other instruments as are necessary to maintain, so long as the Trust Indenture or the Lease is in effect, the perfection of the security interests created by the Trust Indenture and any security interest that may be claimed to have been created by the Lease and the interest of the Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the Indenture Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable them to take such action. Lessee will notify the Owner Trustee, the Owner Participant and the Indenture Trustee of any change in the location of its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) promptly after making such change or in any event within the period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. SECTION 21. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement is hereby deleted in its entirety. SECTION 22. AMENDMENT OF SECTION 8(ee) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(ee) of the Original Participation Agreement is hereby deleted in its entirety. SECTION 23. AMENDMENT OF SECTION 8(ff) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(ff) of the Original Participation Agreement is hereby amended by deleting the words "Equipment Trust Trustee" each time they appear and substituting therefor the words "Indenture Trustee". SECTION 24. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement is hereby amended by (i) deleting the words "Equipment Trust Trustee" each time they appear and substituting therefor the words "Indenture Trustee", (ii) deleting the words and punctuation "Holder(s) of Certificates" and the word and punctuation "Holder(s)" each time they appear and in each case substituting therefor the words "Certificate Holders", (iii) deleting the words "the Holder of a Certificate" in the last sentence of Section 8(gg) and substituting therefor the words "any Certificate Holder", and (iv) deleting the word "Certificates" in clause (ii) of the first sentence thereof and substituting therefor the words "Secured Certificates". -14- 15 SECTION 25. AMENDMENT OF SECTION 8 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8 of the Original Participation Agreement is hereby amended by adding the following new subsections at the end thereof: (hh) Each Loan Participant represents, warrants, covenants and agrees as to itself: (i) that this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of its jurisdiction of incorporation; and (iii) that such Loan Participant has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. (ii) Each Loan Participant represents and warrants that the Secured Certificate to be issued to it pursuant to the Trust Indenture and held for it by the Subordination Agent is being acquired by it without 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 violate the registration requirements under the Securities Act of 1933, as amended. (jj) State Street Bank and Trust Company represents, warrants and covenants, in its individual capacity, to Lessee, the Owner Trustee and each Participant as follows: (i) it is a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other 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 trust agreement or other similar arrangement is likely to change and will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other similar arrangement; (ii) it is a Massachusetts trust company duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the requisite corporate power, authority and -15- 16 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 and the Refunding Agreement and to enter into and perform its obligations under the Trust Indenture, this Agreement, the Refunding Agreement and each other Operative Document to which it is a party or by which it is bound and to authenticate the Secured Certificates to be delivered on the Closing Date; (iii) the execution and delivery, or the assumption of rights and obligations, by the Indenture Trustee of or under the Trust Indenture, this Agreement, the Refunding Agreement and each other Operative Document to which it is a party or by which it is bound and the authentication of the Secured Certificates to be delivered on the Closing Date have been duly authorized by all necessary corporate action on its part, and neither such execution and delivery or assumption nor its performance of any of the terms and provisions thereof will violate any Federal or state law or governmental rule or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under, its charter or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (iv) each of the Trust Indenture, the Refunding Agreement and the Participation Agreement has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, in accordance with its terms except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; (v) 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 or by which it is bound; and -16- 17 (vi) there are no Indenture Trustee's Liens on the Aircraft or any portion of the Trust Estate. (kk) First Security Bank of Utah, National Association, and State Street Bank and Trust Company, National Association, each in its individual capacity, agree 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. (ll) 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. (mm) 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. (nn) Each Loan Participant and the Subordination Agent hereby represents, warrants and agrees that it shall not permit the transfer of 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(q)(A), 8(gg), 8(hh), 8(ii) and 8(ll) hereof and this Section 8(nn) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture). SECTION 26. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended by (i) deleting the words "Equipment Trust Trustee" in the three places in which it appears and substituting therefor the words "Indenture Trustee", (ii) inserting the word "Certificate" before the word "Holders" in the two places in which it appears, and (iii) adding the following at the end of the first sentence thereof: -17- 18 ; and (C) agrees with Lessee and the Loan Participants not to revoke the Trust Agreement without the prior written consent of Lessee, such consent not to be unreasonably withheld, and, so long as the Trust Indenture is in effect, the Loan Participants. SECTION 27. AMENDMENT OF SECTION 11 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 11 of the Original Participation Agreement is hereby amended by (i) deleting the words "Equipment Trust Trustee" in each place in which it appears and substituting therefor the words "Indenture Trustee", (ii) deleting the words "Original Holder" in the first sentence and substituting therefor the words "Loan Participants" and (iii) deleting the words and punctuation "the Equipment Trust Agreement, and all supplements to the Equipment Trust Agreement" in the second line of Section 11(b) and substituting therefor the words and punctuation ", the Trust Indenture, all supplements to the Trust Indenture". SECTION 28. AMENDMENT OF SECTION 12 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 12 of the Original Participation Agreement is hereby amended by inserting the words and punctuation "the Indenture Trustee," following the word "among" in the first line thereof. SECTION 29. AMENDMENT OF SECTION 13(a) OF THE ORIGINAL PARTICIPATION AGREEMENT Capitalized terms used herein without definition shall have the meanings set forth in the Lease. SECTION 30. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby amended by (i) inserting the words and punctuation "the Indenture Trustee," immediately before the word "Lessee" in clause (A) of the second sentence thereof, and (ii) deleting the words "at the foot of this Agreement" in clause(A) of the second sentence thereof and substituting therefor the words "on the signature pages to the Refunding Agreement". SECTION 31. AMENDMENT OF SECTION 13(c) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(c) of the Original Participation Agreement is hereby amended by deleting the words "Equipment Trust Trustee" in the penultimate sentence thereof and substituting therefor the words "the Indenture Trustee". SECTION 32. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION AGREEMENT therefor the words "Trust Indenture" and (ii) deleting the words "Equipment Trust Trustee" in clause (D)(III) thereof and substituting therefor the words "Indenture Trustee". SECTION 33. AMENDMENT OF SECTION 15(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(b) of the Original Participation Agreement is hereby amended by (i) -18- 19 inserting the words and punctuation "the Indenture Trustee, the Loan Participant," before the word "Lessee" in the second line thereof and (ii) inserting the words and punctuation "the Indenture Trustee's, the Loan Participant's" before the word "Lessee's" in the fourth line thereof. SECTION 34. AMENDMENT OF SECTION 15(c) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(c) of the Original Participation Agreement is hereby amended by (i) deleting the words "Equipment Trust Trustee" in the second sentence thereof and substituting therefor the words "Indenture Trustee", (ii) inserting the words and punctuation ", the Indenture Trustee and its successors as Indenture Trustee under the Trust Indenture" after the words "Equipment Trust Agreement" in the third sentence thereof, and (iii) adding the word "Certificate" before the word "Holder" in the third sentence thereof. SECTION 35. AMENDMENT OF SECTION 17 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is hereby amended to read in its entirety as follows: (a) Lessee shall have the right to refinance 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 (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. Upon such agreement: (1) within ten Business Days after the reaching of such agreement, the Owner Participant will deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REFINANCING CERTIFICATE") setting forth (i) the proposed date on which the outstanding Secured Certificates will be redeemed, any new debt will be issued and the other aspects of such refinancing will be consummated (such date, the "REFINANCING DATE") and (ii) the following information calculated pursuant to the provisions of paragraph (6) of this Section 17(a): (A) 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 -19- 20 pursuant to Exhibit F 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 a public offering of such debt to be issued by the Owner Trustee 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"), (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; (5) unless otherwise agreed by the Owner Participant, Lessee shall pay or reimburse all of the expenses of such refunding or refinancing (including fees and expenses of counsel); (6) when calculating any of the information required to be set forth -20- 21 in a Refinancing Certificate, the Owner Participant shall make such calculations in a manner which (A) maintains the Owner Participant's Net Economic Return, (B) minimizes the Net Present Value of Rents to Lessee and minimizes the Stipulated Loss Value and Termination Value percentages to the extent possible consistent with clause (A), (C) is consistent with the provisions of Section 3 of the Lease and (D) uses the same methodology and assumptions used by the Owner Participant in determining Basic Rent, Excess Amounts, Stipulated Loss Values and Termination Values on the Delivery Date (except to the extent such assumptions 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 (7) in connection with any proposed refinancing, if, on the date which is two Business Days prior to the last date on which notice of revocation of redemption may be given pursuant to Section 2.12(b) of the Trust Indenture, the Owner Participant is not satisfied in its sole discretion that such refinancing will occur on the date specified for such refinancing in the notice provided pursuant to Section 2.11 of the Trust Indenture, then Lessee shall not effect such proposed refinancing and shall provide notice to such effect to the Indenture Trustee pursuant to Section 2.12(b) of the Indenture. (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 36. DELETION OF ANNEX A TO THE ORIGINAL PARTICIPATION AGREEMENT. The Original Participation Agreement is hereby amended by deleting Annex A thereto in its entirety. SECTION 37. AMENDMENT OF SCHEDULE I TO THE ORIGINAL PARTICIPATION AGREEMENT. Schedule I to the Original Participation Agreement is hereby amended by deleting paragraph 1 thereof in its entirety and substituting "Payments made to the Owner Participant shall be made to [ ]. SECTION 38. DELETION OF EXHIBIT I TO THE ORIGINAL PARTICIPATION AGREEMENT. The Original Participation Agreement is hereby amended by deleting Exhibit I thereto in its entirety. SECTION 39. RATIFICATION; EFFECTIVENESS. Except as hereby modified, the Original Participation Agreement shall continue in full force and effect as originally executed. The amendments to the Original Participation Agreement set forth herein shall be effective as of the date hereof. From and after the date of this Amendment, each and every reference in the Participation Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or -21- 22 similar words or phrases referring to the Participation Agreement or any word or phrase referring to a section or provision of the Participation Agreement is deemed for all purposes to be a reference to the Participation Agreement or such section or provision as amended pursuant to this Amendment. SECTION 40. MISCELLANEOUS. (a) Each of the parties hereto agrees that the transactions contemplated hereby and by the Refunding Agreement shall constitute one of the three refinancing operations permitted in Section 17 of the Original Participation Agreement. (b) Each party hereto acknowledges and agrees that the Purchaser is a Loan Participant under the Participation Agreement, the Lease and the other Operative Documents, and is entitled to the benefits of the covenants and other provisions therein running in favor of the Loan Participants, and to the security purported to be afforded by the Trust Indenture, but that (i) the Purchaser has no liability arising out of any event or condition which occurred or existed prior to the Closing, (ii) the Purchaser is making no representations or warranties other than those set forth therein or in the Refunding Agreement, and (iii) the Purchaser has no liability or obligation under any covenant in any of such agreements for any period prior to the Closing. (c) This Amendment 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 Amendment 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 Amendment shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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. THIS AMENDMENT 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 AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -22- 23 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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: ___________________________________ Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: ___________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ___________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, as Loan Participant By: ___________________________________ Name: Title: -23- 24 [ ], as Owner Participant By: ___________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Subordination Agent By: ___________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee By: ___________________________________ Name: Title: -24- 25 SCHEDULE I TO PARTICIPATION AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. 4. 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. 1996-1D, dated as of June 12, 1996. EX-4.A8 9 REFUNDING AGREEMENT-1989 B 1 REFUNDING AGREEMENT [NW 1989 B] This REFUNDING AGREEMENT [NW 1989 B], dated as of June 3, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii) [ ], a [ ] corporation (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the four separate Pass Through Trust Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "INDENTURE TRUSTEE") under the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease (as defined below) as if the Closing Date had occurred. W I T N E S S E T H: WHEREAS, the Lessee, [ ] as the owner participant (the "ORIGINAL OWNER PARTICIPANT"), as the Original Holder (the "ORIGINAL LOAN PARTICIPANT"), The First National Bank of Boston as the owner trustee (the "ORIGINAL OWNER TRUSTEE"), and Meridian Trust Company as the equipment trust trustee (the "EQUIPMENT TRUST TRUSTEE") entered into the Participation Agreement [NW 1989 B], dated as of March 15, 1989 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 747-451 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Trustee, the Lessee and the Equipment Trust Trustee, entered into the Equipment Trust Agreement [NW 1989 B], dated as of March 15, 1989, as supplemented by Equipment Trust Agreement and Trust Agreement Supplement No. 1 [NW 1989 B], dated March 16, 1989 (collectively, the "ORIGINAL EQUIPMENT TRUST AGREEMENT"), pursuant to which the Original Owner Trustee issued to the Original Loan Participant Series BB Certificates substantially in the form set forth in Exhibit A thereto (the "ORIGINAL CERTIFICATES") as evidence of the loan then being made by the Original Loan Participant in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Trustee and the Lessee entered into the Lease Agreement [NW 1989 B] relating to the Aircraft, dated as of March 15, 1989, as supplemented by Lease Supplement No. 1 [NW 1989 B] dated March 16, 1989 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Original Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from such Original Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Participant and the Original Owner Trustee entered into the Trust Agreement [NW 1989 B], dated as of March 15, 1989 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Participant entered into a Tax Indemnity Agreement [NW 1989 B] relating to the Aircraft, dated as of March 15, 1989 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee; 2 WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Lessee, the Owner Trustee and the Indenture Trustee entered into a Purchase Agreement Assignment [NW 1989 B], dated as of March 15, 1989, and the Manufacturer entered into a Consent and Agreement [NW 1989 B], dated as of March 15, 1989 (collectively, the "ORIGINAL PURCHASE AGREEMENT ASSIGNMENT"); WHEREAS, pursuant to an Instrument of Transfer, Removal, Appointment, Assumption and Acceptance among the Owner Participant, the Original Owner Trustee and the Owner Trustee, dated May 16, 1996 (the "INSTRUMENT OF TRANSFER"), the Owner Trustee succeeded to all of the estates, properties, rights, powers, duties and trusts of the Original Owner Trustee under the Trust Agreement and the other Operative Documents to which the Original Owner Trustee was a party; WHEREAS, pursuant to an Assignment and Assumption Agreement dated as of December 19, 1991 (the "ASSIGNMENT AND ASSUMPTION AGREEMENT") by and among the Original Owner Participant, the Owner Participant and [ ] as parent of the Owner Participant, the Original Owner Participant transferred to the Owner Participant all of its right, title and interest in the Trust Estate, the Aircraft and the Operative Documents; WHEREAS, concurrently with the execution and delivery of the Assignment and Assumption Agreement, [ ] entered into a Guaranty (the "PARENT GUARANTY") under which [ ] guaranteed to Lessee, the Original Owner Trustee, the Equipment Trust Trustee and the Original Owner Participant obligations of the Owner Participant; WHEREAS, the Original Equipment Trust Agreement was amended by the First Amendment to Equipment Trust Agreement [NW 1989 B] dated as of December 19, 1991 (as so amended, the "EQUIPMENT TRUST AGREEMENT"); WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Certificates as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and the Lessee has given its written notice to the Owner Participant, the Owner Trustee and the Equipment Trust Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will enter into the Trust Indenture and Security Agreement [NW 1989 B], dated as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "SECURED CERTIFICATES") in four series; WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Trustee and the Lessee entered into the Amended and Restated Lease Agreement [NW 1989 B], dated as of the date hereof (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended and restated by the Lease Amendment No. 1, the "LEASE"), containing amendments, modifications and additions necessary to give effect to the transactions described herein; WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into the First Amendment to Trust Agreement [NW 1989 B], dated as of the Refinancing Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Participant and the Lessee entered into the First Amendment to Tax Indemnity Agreement [1989 B], dated as of the date hereof (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); -2- 3 WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent will enter into the First Amendment to Participation Agreement [NW 1989 B], dated as of the Refinancing Date (the "PA AMENDMENT NO. 1"; the Original Participation Agreement, as amended by the PA Amendment No. 1, the "PARTICIPATION AGREEMENT"); WHEREAS, at the Closing, the Lessee, the Owner Trustee and the Indenture Trustee will enter into the First Amendment to Purchase Agreement Assignment [NW 1989 B], dated as of the Refinancing Date, and the Manufacturer will enter into the First Amendment to Consent and Agreement [NW 1989 B], dated as of the Refinancing Date (collectively, the "PAA AMENDMENT NO. 1"; the Original Purchase Agreement Assignment, as amended by the PAA Amendment No. 1, the "PURCHASE AGREEMENT ASSIGNMENT"); WHEREAS, at the Closing, the Guarantor will enter into the Guarantee [NW 1989 B] (the "GUARANTEE"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, four 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 at the Closing 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, at the Closing, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into three revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of Certificates of each Pass Through Trust (other than Northwest Airlines 1996-1D 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 Refinancing Date (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts. NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. PURCHASE OF SECURED CERTIFICATES; REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on June 12, 1996 or on such other date agreed to by the parties hereto (the "REFINANCING DATE"): (i) immediately prior to the Closing, the Lessee shall pay to the Owner Trustee, as a payment of Basic Rent under the Lease, an amount equal to the unpaid interest on the Original Certificates accrued up to but not including the Refinancing Date, and as Supplemental Rent on an after tax basis any Funding Loss Amount (as defined in the Equipment Trust Agreement) payable in respect of the Original Certificates; -3- 4 (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Secured Certificates being issued to such Pass Through Trustee as set forth in clause (vii) below; (iii) provided that the Owner Trustee receives sufficient monies pursuant to Sections 1(a)(i) and (ii) hereof or from the Lessee as a payment of Supplemental Rent (which Supplemental Rent shall be paid on an after tax basis) under the Lease, the Owner Trustee shall pay to the Equipment Trust Trustee for the benefit of the holders of Original Certificates an amount equal to the aggregate principal amount of Original Certificates outstanding on the Refinancing Date, together with accrued and unpaid interest on the Original Certificates and Funding Loss Amount, if any, up to but not including the Refinancing Date, and all other amounts payable to the holders of Original Certificates under the Equipment Trust Agreement and the Original Participation Agreement; (iv) pursuant to the Equipment Trust Agreement, the Equipment Trust Trustee shall disburse to the holders of the Original Certificates the amounts of principal and interest, Funding Loss Amount, and other amounts, if any, described in clause (iii) above, owing to them on the Refinancing Date with respect to the Original Certificates as a prepayment of the Original Certificates; (v) simultaneously with the disbursement by the Equipment Trust Trustee of amounts described in clause (iv) above to the holders of the Original Certificates, (a) the Equipment Trust Trustee shall receive the Original Certificates for cancellation and (b) the Owner Trustee shall obtain from the Equipment Trust Trustee, pursuant to Section 10.01 of the Equipment Trust Agreement, proper instruments acknowledging satisfaction and discharge of the Equipment Trust Agreement and a full warranty bill of sale for the Aircraft, executed by the Equipment Trust Trustee in favor of the Owner Trustee (the "BILL OF SALE"), together with any other documents required to be executed upon expiration of the ETA Lease Term (as defined by reference in the Original Participation Agreement) pursuant to Section 5.02 of the Equipment Trust Agreement (including UCC termination statements and termination and discharge instruments in due form for filing with the FAA); (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture; (vii) the Owner Trustee shall issue, pursuant to Article II of the 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; (viii) appropriate UCC termination statements and termination instruments evidencing the termination and discharge of the Equipment Trust Agreement and the release of the liens created thereby shall be duly filed with the FAA and in all necessary or advisable state or local jurisdictions; and (ix) the Owner Trustee shall use the excess of the amounts received by it pursuant to clauses (i) and (ii) above over the amount paid by it pursuant to clause (iii) above to pay the Refinancing Expenses pursuant to Section 11(a) hereof up to an amount equal to 1.0049% of Lessor's Cost. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. -4- 5 (c) In case any Pass Through Trustee shall for any reason fail to purchase the Secured Certificates pursuant to Section 1(a) above on or prior to June 12, 1996 or such other date as shall be agreed in writing by the parties hereto, the written notice given by the Lessee pursuant to Section 17 of the Original Participation Agreement shall be deemed never to have been given, none of the Owner Participant, the Owner Trustee nor the Lessee shall have any obligation to pay to the holders of Original Certificates any amount in respect of the prepayment of the Original Certificates, the Original Certificates shall remain outstanding and in full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall not take place. (d) The closing (the "CLOSING") of the transactions described in this Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such other place as the parties hereto may agree. (e) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Refinancing Date. (f) In order to facilitate the transactions contemplated hereby, the Lessee and the Guarantor have entered into the Underwriting Agreement, dated the date hereof, among the Lessee, the Guarantor and the several underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to the terms and conditions hereof, the Lessee and the Guarantor will enter into each of the Pass Through Trust Agreements and will undertake to perform certain administrative and ministerial duties under such Pass Through Trust Agreements. SECTION 2. SECURED CERTIFICATES. The Secured Certificates shall be payable as to principal in accordance with the terms of the Indenture, and the Secured Certificates shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Secured Certificates in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, 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 in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Secured Certificates shall be dated and authenticated as of the Refinancing Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee and the Owner Participant to make the payments and participate in the transactions contemplated by this Agreement on the Refinancing Date are subject to the fulfillment, prior to or on the Refinancing Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder, and paragraph (r) shall not be a condition precedent to the obligations of the Pass Through Trustee hereunder): (a) The Owner Trustee shall have tendered the Secured Certificates to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Secured Certificates and shall have tendered the Secured Certificates to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts or conformed copies of the following documents, and any such documents provided to the Owner Participant pursuant to this Section 3(b) shall be reasonably satisfactory in form and substance to the Owner Participant: (1) this Agreement; -5- 6 (2) the Lease Amendment No. 1; (3) the Indenture; (4) the PA Amendment No. l; (5) each of the Pass Through Trust Agreements; (6) the Intercreditor Agreement; (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts; (8) the Guarantee; (9) the PAA Amendment No. 1; (10) the Trust Agreement Amendment No. 1; (11) an instrument of termination evidencing and effecting the satisfaction, discharge and termination of the Equipment Trust Agreement and transfer of title to the Aircraft (the "ETA TERMINATION"); and (12) the Bill of Sale. (c) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Lessee and the Guarantor (as the case may be) as to the person or persons authorized to execute and deliver this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the TIA Amendment No. 1, the Pass Through Trust Agreements, the PAA Amendment No. 1, the Guarantee and any other documents to be executed on behalf of the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Lessee and the Guarantor or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the 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 the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby; and (3) a copy of the certificate of incorporation of the Lessee and the Guarantor, certified by the Secretary of State of the State of Minnesota in the case of the 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 the Lessee and the Guarantor, certified by the Secretary or Assistant Secretary of the 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 the 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 Refinancing Date, as to the due incorporation and good standing of the Lessee or the Guarantor (as the case may be) in such state. -6- 7 (d) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received a certificate signed by an authorized officer of the Lessee (and, with respect to the matters set forth in clauses (4) and (5) below, of the Guarantor), dated the Refinancing Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Original Lease and has a current, valid certificate of airworthiness; (2) the FAA Bill of Sale and the Original Lease have been duly recorded, and the Original Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49, United States Code, relating to aviation (the "FEDERAL AVIATION ACT"); (3) the Aircraft has been registered with the FAA in the name of the Owner Trustee and the Lessee has authority to operate the Aircraft; (4) the representations and warranties contained herein of the Lessee and the Guarantor are correct as though made on and as of the Refinancing Date, except to the extent that such representations and warranties (other than those contained in clause (v) of Section 8(d)) relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (5) there has been no material adverse change in the financial condition of the Guarantor and its subsidiaries, taken as a whole, since December 31, 1995. (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement, the Indenture, the PA Amendment No. 1, the PAA Amendment No. 1, 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 and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary or an Assistant Secretary of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Refinancing 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). (f) The Pass Through Trustee and the Owner Participant each shall have received the following: -7- 8 (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement, the PA Amendment No. 1, the PAA Amendment No. 1, the Instrument of Transfer, the Trust Agreement Amendment No. 1 and any other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the 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; (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 Refinancing Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Refinancing 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). (g) The Pass Through Trustee and the Owner Trustee each shall have received a certificate signed by an authorized officer of the Owner Participant, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Refinancing 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). (h) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an independent insurance broker's report as to the due compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (i) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for the Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal department, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee and the Owner Participant each shall have received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form and substance satisfactory to each of them. (l) The Pass Through Trustee and the Owner Trustee each shall have received an opinion addressed to it from [ ], special counsel for the Owner Participant, and an opinion addressed to it from corporate counsel to the Owner Participant, in each case in form and substance satisfactory to each of them. -8- 9 (m) The Pass Through Trustee shall have received an opinion of White & Case, special counsel to the Liquidity Provider and of in-house German counsel to the Liquidity Provider, each in form and substance satisfactory to the Pass Through Trustee. (n) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The 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. (p) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustees to make the payments described in Section l(a)(ii) or for the Owner Trustee or the Owner Participant to participate in the transactions contemplated by this Agreement on the Refinancing Date. (q) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee or the Guarantor which are required in connection with the Pass Through Trustee's making of the payments described in Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Refinancing Date shall have been duly obtained. (r) The Lessee and the Owner Participant shall each have executed and delivered to the other the TIA Amendment No. 1. Promptly following the recording of the ETA Termination, the Lease Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of the ETA Termination, the Lease Amendment No. 1 and the Indenture. SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH TRUSTEE, ETC. (a) The obligations of the Lessee and the Guarantor to participate in the transactions contemplated by this Agreement and to execute and deliver each of the Pass Through Trust Agreements, the PAA Amendment No. 1, the Guarantee and the PA Amendment No. 1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion referred to in subsections (j) through (n) of Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter from counsel rendering such opinion authorizing the Lessee and the Guarantor to rely on such opinion as if it were addressed to the Lessee and the Guarantor, (ii) each certificate referred to in subsections (e) through (g) of Section 3, (iii) executed counterparts or conformed copies of the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1, and (iv) such other documents and evidence with respect to each other party hereto as the Lessee, the Guarantor or their counsel 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) The respective obligations of each of the Lessee, the Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Pass Through Trustee are correct as though made on and as of the Refinancing 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), (ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special counsel for the -9- 10 Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to each other party hereto as it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. EXECUTION AND DELIVERY OF THE INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Indenture. The Lessee and the Guarantor, by execution and delivery hereof, consent to such execution and delivery of the Indenture. The Indenture shall be effective as of the Refinancing Date. SECTION 6. AMENDMENT OF THE ORIGINAL LEASE AND THE ORIGINAL PURCHASE AGREEMENT ASSIGNMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, by execution and delivery hereof, consent to the amendment to the Original Lease effected by, and request and instruct the Owner Trustee to execute and deliver the Lease Amendment No. 1 and the PAA Amendment No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to execute and deliver, the Lease Amendment No. 1 and the PAA Amendment No. 1. The Lease Amendment No. 1 and the PAA Amendment No. 1 shall be effective as provided therein. The execution and delivery by the Owner Trustee and the Owner Participant of the Lease Amendment No. 1 and the TIA Amendment No. 1 shall not be deemed to constitute satisfaction of a waiver by the Owner Participant or the Owner Trustee of the conditions precedent set forth herein. SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the execution and delivery of the PA Amendment No. 1 by each of the parties thereto, the Original Participation Agreement shall be amended as set forth in the PA Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall be a party thereto from and after the Refinancing Date to the extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing Date. SECTION 7A. AMENDMENT OF THE ORIGINAL TRUST AGREEMENT. The Lessee consents to the Trust Agreement Amendment No. 1. SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) each of the 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 on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under (i) in the case of the Lessee, this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the PAA Amendment No. 1, the TIA Amendment No. 1 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 Guarantee, 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 or the ability of the Lessee or the Guarantor to perform their respective obligations under the Operative Documents; -10- 11 (b) the 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; (c) the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Guarantee, the PAA Amendment No. 1, the TIA Amendment No. 1, the Underwriting Agreement and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, and the performance of the obligations of the Lessee or the Guarantor (as the case may be) under this Agreement, the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Guarantee, the Underwriting Agreement, the Purchase Agreement Assignment and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, have been duly authorized by all necessary corporate action on the part of the 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 the 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, judgment or order binding on the Lessee or the Guarantor (as the case may be) or the certificate of incorporation or by-laws of the 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 the Lessee or the Guarantor (as the case may be) under, any indenture, mortgage, contract or other agreement to which the 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 or the ability of the Lessee or the Guarantor to perform their respective obligations under the Operative Documents; (d) neither the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Guarantee, the PAA Amendment No. 1, the TIA Amendment No. 1, the Underwriting Agreement or any other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, nor the performance of the obligations of the Lessee or the Guarantor (as the case may be) hereunder or under the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Guarantee, the Underwriting Agreement, the Purchase Agreement Assignment or the other Operative Documents to which the Lessee or the Guarantor (as the case may be) is a party, nor the consummation by the Lessee or the Guarantor (as the case may be) 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 in respect of, the Department of Transportation, the FAA, or any other federal, state or foreign governmental authority having jurisdiction, other than (i) 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, (ii) 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, (iii) the consents, approvals, notices, registrations and other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement, (iv) the registrations and filings referred to in Section 8(f), and (v) 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 or the ability of the Lessee or the Guarantor to perform its respective obligations under any of the Operative Documents to which it is a party and upon the occurrence of the Closing, the registrations, filings, qualifications, consents, approvals, notices and other -11- 12 actions referred to in clause (i) through (iv) above will have been duly made, obtained, given, taken or effected; (e) this Agreement constitutes, and each of the Participation Agreement, the Pass Through Trust Agreements, the Tax Indemnity Agreement, the Purchase Agreement Assignment and the Lease, when the PA Amendment No. 1, the TIA Amendment No. 1, the PAA Amendment No. 1 and the Lease Amendment No. 1 shall have been executed and delivered by each of the parties thereto, will constitute, the legal, valid and binding obligations of the Lessee or the Guarantor (as the case may be) enforceable against the 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, 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; (f) except for the filings and registrations referred to in Section 7(a)(vi) of the Participation Agreement, such filings and registrations as shall have been made or effected subsequent thereto and the filing for recording pursuant to the Federal Aviation Act of the Indenture, the ETA Termination and the Lease Amendment No. 1, no further action, including the 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 rights and interest in the Aircraft as against the 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 other than (i) the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease and the Lease Amendment No. 1 (to the extent the Lease constitutes chattel paper), (ii) the filing of financing statements with respect to the security interests created by the Indenture under the Uniform Commercial Code of Utah and (iii) the filing of continuation statements at periodic intervals with respect to the Uniform Commercial Code financing statements in effect on the Refinancing Date covering the security interests created by the Indenture or describing the Lease as a lease; (g) neither the Lessee, the Guarantor nor any of their affiliates has directly or indirectly offered the Secured Certificates or 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; (h) neither the Lessee nor the Guarantor is an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (i) 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; and (j) 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. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the parties below represents, warrants and covenants to each of the other parties to this Agreement and to the Liquidity Provider as follows: -12- 13 (a) The Owner Trustee, in its individual capacity (except as provided in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7) and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and (11) below) as Owner Trustee, represents and warrants that: (1) 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, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver the Instrument of Transfer and to carry out the terms of the Original Trust Agreement, and has, or had on the respective dates of execution thereof or assumption of rights and obligations thereunder (assuming the authorization, execution and delivery of the Assignment and Assumption Agreement by the Owner Participant), as Owner Trustee, and to the extent expressly provided herein or therein, in its individual capacity, the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Secured Certificates, the Lease, the PA Amendment No. 1, the Trust Agreement Amendment No. 1, the PAA Amendment No. 1 and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) 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 and (assuming the due authorization, execution and delivery of the Assignment and Assumption Agreement by the Owner Participant), this Agreement constitutes and each of the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Indenture, when entered into, the Lease, when the Lease Amendment No. 1 shall have been entered into, the Purchase Agreement Assignment, when the PAA Amendment No. 1 shall have been entered into, and the Trust Agreement, when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity, or as Owner Trustee, as the case may be, enforceable against it in its individual capacity or as Owner Trustee, as the case may be, in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of the Assignment and Assumption Agreement by the Owner Participant, the Owner Trustee has duly authorized, and on the Refinancing 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 Indenture, and each Secured Certificate on the Refinancing Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Secured Certificate and the Indenture; (4) neither the execution and delivery by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, the Instrument of Transfer, the PA Amendment No. 1, the Indenture, the Lease Amendment No. 1, the PAA Amendment No. 1, the Trust Agreement Amendment No. 1, the Secured Certificates or any other Operative Document to which it is a party, 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 hereby or 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 hereof and 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 -13- 14 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; (5) 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 Indenture, the Lease, 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 8(d); (6) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (7) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (8) 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 redemption of the Original Certificates or 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 (1), (2), (3) and (4) 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 of Utah, 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; -14- 15 (9) 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 (1), (2), (3) and (4) above; (10) 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. (11) 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, the Original Loan Participant 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; and (12) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (b) The Owner Participant represents and warrants that: (1) 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, has, or had on the respective dates of execution thereof or assumption of rights and obligations thereunder, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Original Participation Agreement, the Original Tax Indemnity Agreement, the Assignment and Assumption Agreement, the Original Trust Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; and this Agreement and the assumption of obligations under the Original Participation Agreement, the Original Tax Indemnity Agreement and the Original Trust Agreement have been duly authorized, executed and delivered by it; and this Agreement constitutes, and each of the Participation Agreement when the PA Amendment No. 1 shall have been entered into, the Tax Indemnity Agreement when the TIA Amendment No. 1 shall have been entered into and the Trust Agreement when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their 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; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1, the Trust Agreement Amendment No. 1 or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or 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 -15- 16 applicable law), or (y) will contravene the provisions of, or constitutes or has constituted or will constitute a default 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; (3) 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 or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 or the Trust Agreement Amendment No. 1; (4) there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or arbitrator which would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Participation Agreement, the Tax Indemnity Agreement and the Trust Agreement; (5) 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 refinancing contemplated hereby and agreed to herein by the Owner Participant, the 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 was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Refinancing 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 that 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 Indenture, (D) which the Owner Participant 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). (c) The Pass Through Trustee represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements, the Intercreditor Agreement and the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Pass Through -16- 17 Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery of the PA Amendment No. 1) the Participation Agreement, will 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; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the performance by the Pass Through Trustee of the Participation 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; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby or by the Participation Agreement, 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; (5) 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, the Intercreditor Agreement or the Participation 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 as a grantor trust under subpart E, Part I of Subchapter J of the Code, such trusts will not be subject to any Taxes imposed by the Commonwealth of Massachusetts or any political subdivision thereof; (6) 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 Participation Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) 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 -17- 18 Person or solicited any offer to acquire any Secured Certificates from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Secured Certificate for sale to any Person, or to solicit any offer to acquire any Secured Certificate from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) 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, the Lessee or the Guarantor. (d) The Subordination Agent represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement and, when the PA Amendment No. 1 has been executed and delivered by each of the parties thereto, the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent each of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery by the Subordination Agent of the PA Amendment No. 1), the Participation Agreement, will 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; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the Participation Agreement, or the performance by the Subordination Agent of the Participation 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; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby or by the Participation Agreement requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) 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 -18- 19 Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or the Participation 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); (6) 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 PA Amendment No. 1, the Participation Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) 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 (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter, the Lessee or the Guarantor. SECTION 10. NOTICES. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and any such notice shall become effective upon being deposited in the United States mail, with proper postage for first-class registered or certified mail prepaid, or when delivered personally or, if promptly confirmed by mail as provided above, when dispatched by facsimile or other written telecommunication, addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement. SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent and the Indenture Trustee in connection with the transactions contemplated by this 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) shall be paid promptly by the Owner Trustee solely from the proceeds received from the issuance of the Secured Certificates which are in excess of the aggregate principal amount of Original Certificates outstanding on the Refinancing Date, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Secured Certificates issued under the Indenture of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for the Underwriters, and (E) special counsel, if any, to the holders of Original Certificates; (2) the reasonable fees, expenses and disbursements of [ ], special counsel for the Owner Participant, and [ ], -19- 20 financial advisor to the Owner Participant (but, in the case of [ ], only to the extent provided in the letter agreement dated April 5, 1996, between the Lessee and the Owner Participant); (3) underwriting fees and commissions; (4) the initial fees and expenses of the Indenture Trustee, the Owner Trustee, the Liquidity Provider, the Pass Through Trustee and the Subordination Agent; (5) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States; and (6) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that Refinancing Expenses are in excess of 1.0049% of Lessor's Cost, or exceed the amount the Owner Trustee is required to pay under Section 11(a) hereof, the Lessee shall pay on an after tax basis any and all Refinancing Expenses which are in excess of 1.0049% of Lessor's Cost or in excess of the amounts the Owner Trustee is required to pay under Section 11(a) hereof. In the event that the transactions contemplated by this Section 11 and the agreements referred to herein are not consummated, the Lessee shall bear and pay all costs, expenses and fees referred to in this Section 11. SECTION 12. 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. SECTION 13. MISCELLANEOUS. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations, warranties and agreements herein of the Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee, and the Lessee's, the Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the Subordination Agent's and the Pass Through Trustee's obligations under any and all thereof, shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. (b) This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only 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 each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and, subject to the terms of the Participation 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 Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject to the provisions of the Participation Agreement, its successors and permitted assigns. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. No purchaser or holder of any Secured Certificates shall be deemed to be a successor or assign of any holder of Original Certificates. -20- 21 SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -21- 22 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. NORTHWEST AIRLINES, INC., as Lessee By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 NORTHWEST AIRLINES CORPORATION, as Guarantor By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -22- 23 [ ] as Owner Participant By: ______________________________________ Name: Title: Address: _____________________________ with a copy to: -23- 24 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By: _____________________________________________ Name: Title: Address: Two International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Facsimile: (617) 664-5371 -24- 25 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 By: _____________________________________________ Name: Title: Address: c/o State Street Bank and Trust Company Two International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Facsimile: (617) 664-5371 -25- 26 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By: _____________________________________________ Name: Title: Address: Two International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Facsimile: (617) 664-5371 -26- 27 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as otherwise provided herein, but solely as Owner Trustee By: ______________________________________________ Name: Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Department Facsimile: (801) 246-5053 -27- 28 SCHEDULE I TO REFUNDING AGREEMENT PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement dated as of the Closing Date among Northwest Airlines Corporation, Northwest Airlines, Inc. and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1A dated as of the Closing Date. 2. Pass Through Trust Agreement dated as of the Closing Date among Northwest Airlines Corporation, Northwest Airlines, Inc. and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1B dated as of the Closing Date. 3. Pass Through Trust Agreement dated as of the Closing Date among Northwest Airlines Corporation, Northwest Airlines, Inc. and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1C dated as of the Closing Date. 4. Pass Through Trust Agreement dated as of the Closing Date among Northwest Airlines Corporation, Northwest Airlines, Inc. and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1D dated as of the Closing Date. 29 SCHEDULE II TO REFUNDING AGREEMENT SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
Interest Rate Principal Purchase Purchaser and Maturity Amount Price --------- ------------- --------- -------- Northwest Airlines Pass Through Trust 1996-1A [ _ ]% Secured Certificates due [ ] $[ ] $[ ] 1996-1B [ _ ]% Secured Certificates due [ ] $[ ] $[ ] 1996-1C [ _ ]% Secured Certificates due [ ] $[ ] $[ ] 1996-1D [ _ ]% Secured Certificates due [ ] $[ ] $[ ]
EX-4.B1 10 TRUST AGREEMENT-1990 A 1 TRUST AGREEMENT [NW 1990 A] This TRUST AGREEMENT [NW 1990 A] dated as of August 23, 1990 between [_______________________], a [________] corporation (the "Original Owner Participant"), and The First National Bank of Boston, a national banking association (in its individual capacity, "The First National Bank of Boston") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "Owner Trustee"); W I T N E S S E T H: ARTICLE I DEFINITIONS AND TERMS SECTION 1.01. Certain Definitions. Unless the context shall otherwise require and except as contained in this Section 1.01, the capitalized terms used herein shall have the respective meanings assigned thereto in the Lease (as hereinafter defined) for all purposes hereof. All definitions contained in this Section 1.01 shall be equally applicable to both the singular and plural forms of the terms defined. For all purposes of this Trust Agreement the following terms shall have the following meanings: "Excluded Payments" has the meaning ascribed to such term in the Trust Indenture. "Indenture Event of Default" has the meaning which the term "Event of Default" has in the Trust Indenture. "Lease" means that certain Lease Agreement [NW 1990 A], to be dated as of the date hereof, and to be entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of this Trust Agreement as said Lease Agreement may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Trust Agreement. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Event of Default" has the meaning which the term "Event of Default" has in the Lease. "Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns. 2 "Majority in Interest of Owner Participants" at any time means the Owner Participant or Owner Participants which then hold more than 50% of the Ownership Interests of all Owner Participants, except that if there shall then be an Owner Participant that holds more than 50% but less than 100% of the Ownership Interests of all Owner Participants, "Majority in Interest of Owner Participants" shall mean such Owner Participant and one other Owner Participant. "Owner Participant" means the Original Owner Participant and each Subsequent Owner Participant to the extent that the same shall, at the relevant time, have an Ownership Interest. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by this Trust Agreement, which percentage shall be: (i) in the case of the Original Owner Participant (A) so long as it shall be the sole Owner Participant, 100% and (B) if it shall no longer be the sole Owner Participant, the percentage of such undivided interest in the Trust Estate which it shall not have transferred to any Subsequent Owner Participant; and (ii) in the case of any Subsequent Owner Participant, the percentage of such undivided interest in the Trust Estate specified in the agreement pursuant to which such Subsequent Owner Participant becomes an Owner Participant as provided in the definition of "Subsequent Owner Participant" which it shall not have transferred to any Subsequent Owner Participant. "Participation Agreement" has the meaning ascribed to such term in the Lease. "Replacement Airframe" has the meaning ascribed to such term in the Trust Indenture. "Replacement Engine" has the meaning ascribed to such term in the Trust Indenture. "Subsequent Owner Participant" means any corporation to which the Original Owner Participant or any transferee from the Original Owner Participant or any subsequent Owner Participant shall have transferred at any time after the Delivery Date all or any part of the undivided right, title and interest originally held by the Original Owner Participant in this Trust Agreement, the Trust Estate and the Participation Agreement, to the extent permitted by Section 8.01 of this Trust Agreement and Section 8 of the Participation Agreement, provided that any such transfer: (i) shall be effected by a written agreement, in form and substance reasonably satisfactory to the Owner Trustee in its individual capacity, among such transferee, its transferor and the Owner Trustee, which shall (A) specify the percentage of the Ownership Interest of such transferee so transferred to it and (B) provide that such transferee thereby becomes a party to, and beneficiary of, this Trust Agreement and an Owner Participant for all purposes hereof and that such transferee assumes all of the obligations of its transferor under this Trust Agreement to the extent of such transferee's Ownership Interest; and (ii) so long as the Lease shall be in effect or the Secured Certificates remain unpaid, such transferee and its -3- 3 transferor shall have complied with all of the terms of Section 8(n) of the Participation Agreement. "Trust Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participants, American Telephone and Telegraph Company, the Loan Participants or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participants, to the Indenture Trustee, to the Owner Trustee, in its individual capacity, or to the Loan Participants or any other holder of a Secured Certificate, or to any of their respective directors, officers, employees, servants and agents, pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. "Trust Indenture Estate" has the meaning ascribed to such term in the Trust Indenture. "Trust Office" shall mean the principal corporate trust office of the Owner Trustee at 150 Royall Street, Canton, Massachusetts 02021, Attention: Manager - Corporate Trust, or the principal corporate trust office of any successor Owner Trustee. "Trust Supplement" means a supplement to the Trust Indenture and to this Trust Agreement in substantially the form of Exhibit A to the Trust Indenture which shall particularly describe the Aircraft, and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Trust Agreement. ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS; DECLARATION OF TRUST SECTION 2.01. Authority to Execute Documents. The Original Owner Participant hereby authorizes and directs the Owner Trustee to execute and deliver the Operative Documents and any other agreements, instruments or documents to which the Owner Trustee is a party in the respective forms thereof in which delivered from time to time by the Owner Participants to the Owner Trustee for execution and delivery and, subject to the terms hereof, to perform its duties and, upon instructions from a Majority in Interest of Owner Participants, exercise its rights under said Operative Documents in accordance with the terms thereof. SECTION 2.02. Declaration of Trust. The Owner Trustee hereby declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the -4- 4 Owner Participants, subject, however, to the provisions of and the Lien created by the Trust Indenture and to the provisions of the Lease. ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF SECURED CERTIFICATES SECTION 3.01. Acceptance of Aircraft. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participants that it will, on the Delivery Date, subject to due compliance with the terms of Section 3.02 hereof: (a) purchase the Aircraft pursuant to the Participation Agreement and the Bill of Sale; (b) accept from Lessee the delivery of the Bill of Sale and the FAA Bill of Sale; (c) cause the Aircraft to be leased to Lessee under the Lease, and in furtherance thereof execute and deliver a Lease Supplement covering the Aircraft; (d) execute and deliver the Trust Supplement covering the Aircraft; (e) issue to the Loan Participants Secured Certificates in the amounts and otherwise as provided in Section 1(a) of the Participation Agreement; (f) execute and deliver the financing statements referred to in Section 4(a)(vi) of the Participation Agreement, together with all other agreements, documents and instruments referred to in Section 4 of the Participation Agreement to which the Owner Trustee is a party; and (g) effect the registration of the Aircraft in the name of the Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of Sale; (ii) an application for registration of the Aircraft in the name of the Owner Trustee (including without limitation an affidavit from the Owner Trustee in compliance with the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement. SECTION 3.02. Conditions Precedent. The right and obligation of the Owner Trustee to take the action required by Section 3.01 hereof with respect to the Aircraft shall be subject to the following conditions precedent: (a) the Original Owner Participant shall have made the full amount of its Commitment set forth in Schedule I of the Participation Agreement available to the -5- 5 Owner Trustee, in immediately available funds, in accordance with Section 1 of the Participation Agreement; and (b) the terms and conditions of Section 4 of the Participation Agreement, insofar as they relate to the Aircraft, shall have been complied with in a manner satisfactory to the Original Owner Participant and the Owner Trustee. SECTION 3.03. Authorization in Respect of a Termination of the Lease and Assumption of the Secured Certificates. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participants that it will, take the actions specified to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement upon Lessee's purchasing the Aircraft pursuant to Section 9(b) or Section 19(d) of the Lease and upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in accordance with the provisions of such Section 8(x). SECTION 3.04. Authorization in Respect of a Replacement Airframe or Replacement Engines. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participants that it will, in the event of a Replacement Airframe and Replacement Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a Replacement Engine being substituted pursuant to Section 10(b) of the Lease, subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease, as the case may be: (a) to the extent not previously accomplished by a prior authorization, authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees of Lessee) to accept delivery of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engines; (b) accept from Lessee or other vendor of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine a bill of sale or bills of sale (if tendered), and the invoice, if any, with respect to the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine being furnished pursuant to Section 10(a) or (b) of the Lease; (c) in the case of a Replacement Airframe, make application to the Federal Aviation Administration for the registration in the name of the Owner Trustee of the Aircraft of which such Replacement Airframe is a part; (d) execute and deliver a Lease Supplement and a Trust Supplement covering (i) the Aircraft of which such Replacement Airframe is part or (ii) such Replacement Engine, as the case may be; (e) transfer its interest in (without recourse except as to obligations in respect of Lessor's Liens, including for this purpose Liens that would be Lessor's Liens but for the proviso to the definition of Lessor's Liens) to the Airframe and Engines (if any) or the Engine being replaced to Lessee; -6- 6 (f) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Airframe and Engines or engines (if any) or the Engine or engine being replaced from the lien created under the Trust Indenture and release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such replaced Airframe and Engines, if any, or Engine) from the assignment and pledge under the Trust Indenture; and (g) upon instructions from a Majority in Interest of Owner Participants, take such further action as may be contemplated by clauses (A) and (B) of the third paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of Section 10(b) of the Lease, as the case may be. SECTION 3.05. Trust Agreement Remaining in Full Force and Effect. In the event of the substitution of a Replacement Airframe for the Airframe or the substitution of a Replacement Engine for any Engine or engine, all provisions of this Trust Agreement relating to such replaced Airframe or Engine or engine shall be applicable to such Replacement Airframe or Replacement Engine with the same force and effect as if such Replacement Airframe or Replacement Engine were the same airframe or engine as the Airframe or Engine being replaced but for the Event of Loss with respect to such Airframe or Engine. SECTION 3.06. Authorization in Respect of a Return of an Engine. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participants that it will, in the event of an engine being transferred to the Owner Trustee pursuant to Section 5(b) of the Lease, subject to due compliance with the terms of such Section 5(b): (a) accept from Lessee the bill of sale with respect to such engine contemplated by such Section 5(b) (if tendered); (b) transfer its interest in (without recourse except as to obligations in respect of Lessor's Liens, including for this purpose Liens that would be Lessor's Liens but for the proviso to the definition of Lessor's Liens) and to an Engine to Lessee as contemplated by such Section 5(b); and (c) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Engine being transferred to Lessee pursuant to such Section 5(b) from the lien of the Trust Indenture and to release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such Engine) from the assignment and pledge under the Trust Indenture. -7- 7 ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE SECTION 4.01. Distribution of Payments. (a) Payments to Indenture Trustee. Until the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with the provisions of Article III of the Trust Indenture. (b) Payments to Owner Trustee; Other Parties. After the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, any payment of the type referred to in Section 4.01(a) hereof (other than Excluded Payments) received by the Owner Trustee, any payments received from the Indenture Trustee other than as specified in Section 4.01(d) hereof and any other amount received as part of the Trust Estate and for the application or distribution of which no provision is made herein, shall be distributed forthwith upon receipt by the Owner Trustee in the following order of priority: first, so much of such payment as shall be required to reimburse the Owner Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof shall be retained by the Owner Trustee; second, so much of the remainder for which provision as to the application thereof is contained in the Lease or any of the other Operative Documents shall be applied and distributed in accordance with the terms of the Lease or such other Operative Document; and third, the balance, if any, shall be paid ratably to each Owner Participant in proportion to such Owner Participant's Ownership Interest. (c) Certain Distributions to Owner Participant. All amounts from time to time distributable by the Indenture Trustee to the Owner Participants pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be distributed by the Owner Trustee to each Owner Participant in proportion to such Owner Participant's Ownership Interest and in accordance with the provisions of Article III of the Trust Indenture. (d) Excluded Payments. Any Excluded Payments received by the Owner Trustee shall be paid by the Owner Trustee to the person to whom such Excluded Payments are payable under the provisions of the Participation Agreement, the Tax Indemnity Agreement or the Lease. SECTION 4.02. Method of Payments. The Owner Trustee shall make distributions or cause distributions to be made to each Owner Participant pursuant to this Article IV by transferring by wire transfer the amount to be distributed to such account or accounts of such Owner Participant as such Owner Participant may designate from time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner Trustee will, -8- 8 if so requested by such Owner Participant in writing, pay any or all amounts payable to such Owner Participant pursuant to this Article IV either (i) by crediting such amount or amounts to an account or accounts maintained by such Owner Participant with the Owner Trustee in its individual capacity in immediately available funds, (ii) by payment at the Trust Office of the Owner Trustee, in immediately available funds, or (iii) by mailing an official bank check or checks in such amount or amounts payable to such Owner Participant at such address as such Owner Participant shall have designated in writing to the Owner Trustee. ARTICLE V DUTIES OF THE OWNER TRUSTEE SECTION 5.01. Notice of Event of Default. If the Owner Trustee shall have knowledge of a Lease Event of Default or Indenture Event of Default (or an event which with the passage of time or the giving of notice or both would constitute a Lease Event of Default or an Indenture Event of Default) the Owner Trustee shall give to each Owner Participant prompt telephonic or telex notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten days after the Owner Trustee shall first have knowledge of such event. Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain from taking such action, not inconsistent with the provisions of the Trust Indenture, with respect to such Lease Event of Default, Indenture Event of Default or other event as the Owner Trustee shall be directed in writing by a Majority in Interest of Owner Participants. If the Owner Trustee shall not have received instructions as above provided within 20 days after the mailing of such notice to the Owner Participants, the Owner Trustee until instructed otherwise in accordance with the preceding sentence may, but shall be under no duty to, take or refrain from taking such action with respect to such Lease Event of Default, Indenture Event of Default or other event, not inconsistent with the provisions of the Trust Indenture, as it shall deem advisable in the best interests of the Owner Participants. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by a responsible officer or responsible employee of the Corporate Trust Division of the Owner Trustee in his or her capacity as such, the Owner Trustee shall not be deemed to have knowledge of a Lease Event of Default, Indenture Event of Default or other event referred to in this Section 5.01 unless notified in writing by the Indenture Trustee, one or more of the Owner Participants or Lessee. SECTION 5.02. Action Upon Instructions. Subject to the terms of Sections 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Owner Participants, the Owner Trustee will take such of the following -9- 9 actions, not inconsistent with the provisions of the Trust Indenture, as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder or under any of the Operative Documents to which the Owner Trustee is a party or in respect of all or any part of the Trust Estate as shall be specified in such instructions (including entering into agreements referred to in clause (i) of the definition of "Subsequent Owner Participant"); (ii) take such action to preserve or protect the Trust Estate (including the discharge of Liens) as may be specified in such instructions; (iii) approve as satisfactory to it all matters required by the terms of the Lease or the other Operative Documents to be satisfactory to the Owner Trustee, it being understood that without written instructions of a Majority in Interest of Owner Participants, the Owner Trustee shall not approve any such matter as satisfactory to it (it being understood that the provisions of Sections 3.03, 3.04 and 3.06 hereof do not constitute instructions by the Owner Participant for the Owner Trustee to approve of or consent to the matters to be approved of or consented to by the Owner Trustee in the sections of the Lease referred to in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of Lessee under the Operative Documents, after the expiration or earlier termination of the Lease, deliver the Aircraft to the Owner Participants in accordance with such instructions, convey all of the Owner Trustee's right, title and interest in and to the Aircraft for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or net lease the Aircraft on such terms and to such lessee or lessees as shall be designated in such instructions. SECTION 5.03. Indemnification. The Owner Trustee shall not be required to take any action under Section 5.01 (other than the giving of the notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have been indemnified by the Owner Participants, in manner and form satisfactory to the Owner Trustee, against any liability, cost or expense (including reasonable counsel fees and disbursements) which may be incurred in connection therewith; and, if a Majority in Interest of Owner Participants shall have directed the Owner Trustee to take any such action or refrain from taking any action, each Owner Participant agrees to furnish such indemnity as shall be required (severally and ratably according to their respective Ownership Interests) and, in addition, to the extent not otherwise paid pursuant to the provisions of the Lease or of the Participation Agreement, to pay (severally and ratably according to their respective Ownership Interests) the reasonable compensation of the Owner Trustee for the services performed or to be performed by it pursuant to such direction and any fees and disbursements of counsel or agents employed by the Owner Trustee in connection therewith. The Owner Trustee shall not be required to take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably determine, or shall have been advised by counsel, that such action is contrary to the terms of any of the Operative Documents to which the Owner Trustee is a party, or is otherwise contrary to law. SECTION 5.04. No Duties Except as Specified in Trust Agreement or Instructions. The Owner Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with any of the Operative Documents to which the Owner Trustee is a party, except as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, or (to the -10- 10 extent not inconsistent with the provisions of the Trust Indenture) as expressly provided by the terms hereof or in written instructions from a Majority in Interest of Owner Participants received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or obligations shall be read into this Trust Agreement against the Owner Trustee. The First National Bank of Boston agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof) promptly take such action as may be necessary to duly discharge and satisfy in full all Lessor Liens which it is required to discharge pursuant to Section 8(h) of the Participation Agreement and otherwise comply with the terms of said Section binding on it. SECTION 5.05. Satisfaction of Conditions Precedent. Anything herein to the contrary notwithstanding, the Owner Trustee shall comply with the provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of special counsel for the Owner Trustee, of all the applicable conditions precedent specified in Section 3.02 hereof and in Section 4 of the Participation Agreement. SECTION 5.06. No Action Except Under Specified Documents or Instructions. The Owner Trustee shall not have any power, right or authority to, and the Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate except (i) as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, (ii) as expressly provided by the terms hereof, or (iii) as expressly provided in written instructions from a Majority in Interest of Owner Participants pursuant to Section 5.01 or 5.02 hereof. ARTICLE VI THE OWNER TRUSTEE SECTION 6.01. Acceptance of Trusts and Duties. The First National Bank of Boston accepts the trusts hereby created and agrees to perform the same but only upon the terms hereof applicable to it. The Owner Trustee also agrees to receive and disburse all monies received by it constituting part of the Trust Estate upon the terms hereof. The First National Bank of Boston shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence, (b) for performance of the terms of the last sentence of Section 5.04 hereof, (c) for its or the Owner Trustee's failure to use ordinary care to disburse funds and (d) for liabilities that may result from the inaccuracy of any representation or warranty of it (or from the failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation Agreement. SECTION 6.02. Absence of Certain Duties. Except in accordance with written instructions furnished pursuant to Section 5.02 hereof and except as provided in, and without limiting the generality of, Section 5.04 hereof and the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor The First National Bank of Boston shall have any duty (i) to see -11- 11 to any recording or filing of any Operative Document or of any supplement to any thereof or to see to the maintenance of any such recording or filing or any other filing of reports with the Federal Aviation Administration or other governmental agencies, except that The First National Bank of Boston, in its individual capacity, shall comply with the reporting requirements set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall, to the extent that information for that purpose is supplied by Lessee pursuant to any of the Operative Documents, complete and timely submit (and furnish each Owner Participant with a copy of) any and all reports relating to the Aircraft which may from time to time be required by the Federal Aviation Administration or any government or governmental authority having jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, other than to forward to each Owner Participant copies of all reports and other written information which the Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against any part of the Trust Indenture Estate or the Trust Estate, except as provided in Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and records with respect to the Aircraft at any time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture Trustee and each of the Owner Participants, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease or any other Operative Document. SECTION 6.03. No Representations or Warranties as to Certain Matters. NEITHER THE OWNER TRUSTEE NOR THE FIRST NATIONAL BANK OF BOSTON MAKES OR SHALL BE DEEMED TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that The First National Bank of Boston in its individual capacity warrants that on the Delivery Date the Owner Trustee shall have received whatever title was conveyed to it by Lessee and that the Aircraft shall during the Lease Term be free of Lessor Liens attributable to it, or (b) any representation or warranty as to the validity, legality or enforceability of this Trust Agreement or any Operative Document to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof except to the extent that any such statement is expressly made herein or therein as a representation by The First National Bank of Boston in its individual capacity or by the Owner Trustee and except that The First National Bank of Boston in its individual capacity hereby represents and warrants that this Trust Agreement has been, and (assuming due authorization, execution and delivery by the Original Owner Participant of this Trust Agreement) the Operative Documents to which it or the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by it or the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the -12- 12 case may be, duly authorized to execute and deliver such instruments on behalf of itself or the Owner Trustee, as the case may be. SECTION 6.04. No Segregation of Monies Required; No Interest. Except as provided in Section 22 of the Lease, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law, and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. SECTION 6.05. Reliance Upon Certificates, Counsel and Agents. The Owner Trustee shall incur no liability to anyone in acting in reliance upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Unless other evidence in respect thereof is specifically prescribed herein, any request, direction, order or demand of the Owner Participants or Lessee mentioned herein or in any of the Operative Documents to which the Owner Trustee is a party shall be sufficiently evidenced by written instruments signed by a person purporting to be the chairman of the board, the president or any vice president or a managing director and in the name of any such Owner Participant or Lessee, as the case may be. The Owner Trustee may accept a copy of a resolution of the Board of Directors or Executive Committee of Lessee, certified by the Secretary of Lessee as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or Committee and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Owner Trustee may for all purposes hereof rely on a certificate signed by a person purporting to be the Chairman of the Board, the President or any Vice President or a managing director of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. In the administration of trusts hereunder, the Owner Trustee may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may, at the expense of the Trust Estate, consult with counsel, accountants and other skilled persons to be selected and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such agent, attorney, counsel, accountant or other skilled person appointed by it with due care hereunder. SECTION 6.06. Not Acting in Individual Capacity. In acting hereunder, the Owner Trustee acts solely as trustee and not in its individual capacity except as otherwise expressly provided herein; and, subject to the terms of the Participation Agreement and the Trust Indenture, all persons, other than the Owner Participants, as provided herein, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Trust Estate for payment or satisfaction thereof. SECTION 6.07. Fees; Compensation. Except as provided in Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the Owner -13- 13 Participants or (subject to the provisions of the Trust Indenture) the Trust Estate for any fee as compensation for its services hereunder; provided, however, that the Owner Trustee shall have a lien upon the Trust Estate (subject, however, to the lien of the Trust Indenture) for any such fee not paid by Lessee as contemplated by the last paragraph of Section 7(c) of the Participation Agreement. SECTION 6.08. Tax Returns. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all monies under this Trust Agreement or any agreement contemplated hereby. The Owner Participants shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Owner Participants. The Owner Trustee shall be responsible for causing to be prepared, at the request of a Majority in Interest of Owner Participants, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. Each Owner Participant, upon request, will furnish the Owner Trustee with all such information as may be reasonably required from any such Owner Participant in connection with the preparation of such income tax returns. ARTICLE VII INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANTS SECTION 7.01. Owner Participants to Indemnify Owner Trustee. The Owner Participants hereby severally agree, each in proportion to its Ownership Interest, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and hereby indemnify, protect, save and keep harmless The First National Bank of Boston in its individual capacity and its successors, assigns, legal representatives, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by The First National Bank of Boston in its individual capacity on or measured by any compensation received by The First National Bank of Boston in its individual capacity for its services hereunder), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and including without limitation any liability of an owner, any strict liability and any liability without fault) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against The First National Bank of Boston in its individual capacity (whether or not also indemnified against by Lessee under the Lease or under the Participation Agreement or also indemnified against by any other person) in any way relating to or arising out of this Trust Agreement or any of the Operative Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of the Owner Trustee or The First National Bank of Boston in its individual capacity hereunder, except (a) in the case of -14- 14 willful misconduct or gross negligence on the part of the Owner Trustee or The First National Bank of Boston in its individual capacity in the performance or non-performance of its duties hereunder or (b) those resulting from the inaccuracy of any representation or warranty of the Owner Trustee or The First National Bank of Boston in its individual capacity (or from the failure of the Owner Trustee or The First National Bank of Boston in its individual capacity to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture or, with respect to representations or warranties of The First National Bank of Boston in its individual capacity only, in Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the Participation Agreement or in any of the other Operative Documents or (c) as may result from a breach by The First National Bank of Boston in its individual capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in the case of the failure to use ordinary care on the part of the Owner Trustee or The First National Bank of Boston in its individual capacity in the disbursement of funds. The indemnities contained in this Section 7.01 extend to The First National Bank of Boston only in its individual capacity and shall not be construed as indemnities of the Trust Indenture Estate or the Trust Estate (except to the extent, if any, that The First National Bank of Boston in its individual capacity has been reimbursed by the Trust Indenture Estate or the Trust Estate for amounts covered by the indemnities contained in this Section 7.01). The indemnities contained in this Section 7.01 shall survive the termination of this Trust Agreement. In addition, if necessary, The First National Bank of Boston in its individual capacity shall be entitled to indemnification from the Trust Estate, subject to the Lien of the Trust Indenture, for any liability, obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee, the Owner Participants or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same The First National Bank of Boston in its individual capacity shall have a Lien on the Trust Estate, subject to the Lien of the Trust Indenture, which shall be prior to any interest therein of the Owner Participants. The payor of any indemnity under this Article VII shall be subrogated to any right of the person indemnified in respect of the matter as to which such indemnity was paid. ARTICLE VIII TRANSFER OF AN OWNER PARTICIPANT'S INTEREST SECTION 8.01. Transfer of Interests. All provisions of Section 8(n) of the Participation Agreement shall (with the same force and effect as if set forth in full, mutatis mutandis, in this Section 8.01) be applicable to any assignment, conveyance or other transfer by any Owner Participant of any of its right, title or interest in and to the Participation Agreement, the Trust Estate or this Trust Agreement. If there is more than one Owner Participant, no assignment, conveyance or other transfer by any Owner Participant of any of its right, title or interest in and to the Participation Agreement, this Trust Agreement or the Trust Estate shall be valid unless each other Owner Participant's prior written consent is given to such assignment, conveyance or other transfer. -15- 15 ARTICLE IX SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES SECTION 9.01. Resignation of Owner Trustee; Appointment of Successor. (a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the Participation Agreement and (ii) may resign at any time without cause by giving at least 60 days' prior written notice to each Owner Participant, the Indenture Trustee and Lessee, such resignation to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In addition, a Majority in Interest of Owner Participants may at any time remove the Owner Trustee without cause by a notice in writing delivered to the Owner Trustee, all other Owner Participants, the Indenture Trustee and Lessee, such removal to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or removal of the Owner Trustee, a Majority in Interest of Owner Participants may appoint a successor Owner Trustee by an instrument signed by such Owner Participants. If a successor Owner Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Owner Trustee, any Owner Participant, Lessee or the Indenture Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor shall have been appointed as above provided. Any successor Owner Trustee so appointed by such court shall immediately and without further act be superseded by any successor Owner Trustee appointed as above provided. (b) Execution and Delivery of Documents, etc. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee an instrument accepting such appointment, and thereupon such successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts hereunder with like effect as if originally named the Owner Trustee herein; but nevertheless, upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to such successor Owner Trustee all monies or other property then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will execute such documents as are provided to it by such successor Owner Trustee and will take such further actions as are requested of it by such successor Owner Trustee as are reasonably required to cause registration of the Aircraft included in the Trust Estate to be transferred upon the records of the Federal Aviation Administration, or other governmental authority having jurisdiction, into the name of the successor Owner Trustee. (c) Qualification. Any successor Owner Trustee, however appointed, shall be a "citizen of the United States" within the meaning of Section 101(16) of the Federal Aviation Act and shall also be a bank or trust company organized under the laws of the United States or -16- 16 any state thereof having a combined capital and surplus of at least $50,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. (d) Merger, etc. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee may be transferred, shall, subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without further act. SECTION 9.02. Co-Trustees and Separate Trustees. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of the Owner Participants or the Owner Trustee, or the Owner Trustee shall have been directed to do so by a Majority in Interest of Owner Participants, the Owner Trustee and each Owner Participant shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a "citizen of the United States" as defined in Section 101(16) of the Federal Aviation Act) approved by the Owner Trustee and a Majority in Interest of Owner Participants, either to act as co-trustee, jointly with the Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as an "additional trustee"). In the event the Owner Participants shall not have joined in the execution of such agreements supplemental hereto within ten days after the receipt of a written request from the Owner Trustee so to do, or in case a Lease Event of Default or Indenture Event of Default shall occur and be continuing, the Owner Trustee may act under the foregoing provisions of this Section 9.02 without the concurrence of the Owner Participants; and the Owner Participants hereby appoint the Owner Trustee their agent and attorney-in-fact to act for them under the foregoing provisions of this Section 9.02 in either of such contingencies. Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed -17- 17 (including the holding of title to the Trust Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; (E) a Majority in Interest of Owner Participants, at any time, by an instrument in writing may remove any such additional trustee. In the event that the Owner Participants shall not have joined in the execution of any such instrument within ten days after the receipt of a written request from the Owner Trustee so to do, the Owner Trustee shall have the power to remove any such additional trustee without the concurrence of the Owner Participants; and the Owner Participants hereby appoint the Owner Trustee their agent and attorney-in-fact for them in such connection in such contingency; and (F) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, the Trust Indenture or affect the interests of the Indenture Trustee or the holders of the Secured Certificates in the Trust Indenture Estate. ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS SECTION 10.01. Supplements and Amendments. (a) Supplements and Amendments. This Trust Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Owner Trustee and a Majority in Interest of Owner Participants. Subject to Section 10.02 hereof and Section 10(B) of the Participation Agreement, the Owner Trustee will execute any amendment, supplement or other modification of this Trust Agreement or of any other Operative Document to which the Owner Trustee is a party which it is requested to execute by a Majority in Interest of Owner Participants, except that the Owner Trustee shall not execute any such amendment, supplement or other modification which, by the express provisions of any of the above documents, requires the consent of any other party unless such consent shall have been obtained; and provided that, without the prior written consent of each Owner Participant: (i) no such supplement, amendment or modification shall (A) modify any of the provisions of this Section 10.01, the definition of "Majority in Interest of Owner Participants" in Section 1.01 hereof or Article IV hereof, (B) reduce, modify or amend any indemnities in favor of any Owner Participant as set forth in Section 7 of the Participation Agreement or in the Tax Indemnity -18- 18 Agreement, (C) reduce the amount or extend the time of payment of Basic Rent, Supplemental Rent, Termination Value or Stipulated Loss Value for the Aircraft as set forth in the Lease and (ii) no such supplement, amendment or modification shall require any Owner Participant to invest or advance funds or shall entail any additional personal liability or the surrender of any indemnification, claim or individual right on the part of any Owner Participant with respect to any agreement or obligation. (b) Delivery of Amendments and Supplements to Certain Parties. A signed copy of each amendment or supplement referred to in Section 10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each holder of a Secured Certificate. SECTION 10.02. Discretion as to Execution of Documents. Prior to executing any document required to be executed by it pursuant to the terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its counsel to the effect that the execution of such document is authorized hereunder. If in the opinion of the Owner Trustee any such document adversely affects any right, duty, immunity or indemnity in favor of the Owner Trustee hereunder or under any other Operative Document to which the Owner Trustee is a party, the Owner Trustee may in its discretion decline to execute such document. SECTION 10.03. Absence of Requirements as to Form. It shall not be necessary for any written request furnished pursuant to Section 10.01 hereof to specify the particular form of the proposed documents to be executed pursuant to such Section, but it shall be sufficient if such request shall indicate the substance thereof. SECTION 10.04. Distribution of Documents. Promptly after the execution by the Owner Trustee of any document entered into pursuant to Section 10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof to each Owner Participant, but the failure of the Owner Trustee to mail such conformed copy shall not impair or affect the validity of such document. SECTION 10.05. No Request Needed as to Lease Supplement and Trust Supplement. No written request pursuant to Section 10.01 hereof shall be required to enable the Owner Trustee to enter into the Lease Supplement covering the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and Section 3.01 hereof. ARTICLE XI MISCELLANEOUS SECTION 11.01. Termination of Trust Agreement. This Trust Agreement and the trusts created hereby shall be of no further force or effect upon the earlier of (a) both the final discharge of the Trust Indenture pursuant to Section 10.01 thereof and the sale or other final disposition by the Owner Trustee of all property constituting part of the Trust Estate and -19- 19 the final distribution by the Owner Trustee of all monies or other property or proceeds constituting part of the Trust Estate in accordance with Article IV hereof, provided that at such time Lessee shall have fully complied with all of the terms of the Lease and the Participation Agreement or (b) twenty-one years less one day after the death of the last survivor of all of the descendants of the grandparents of David Rockefeller living on the date of the earliest execution of this Trust Agreement by any party hereto; otherwise this Trust Agreement and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 11.02. Owner Participants Have No Legal Title in Trust Estate. The Owner Participants shall not have legal title to any part of the Trust Estate. No transfer, by operation of law or otherwise, of any right, title and interest of the Owner Participant in and to the Trust Estate hereunder shall operate to terminate this Trust Agreement or the trusts hereunder or entitle any successors or transferees of the Owner Participants to an accounting or to the transfer of legal title to any part of the Trust Estate. SECTION 11.03. Assignment, Sale, etc. of Aircraft. Any assignment, sale, transfer or other conveyance of its interest in the Aircraft by the Owner Trustee made pursuant to the terms hereof or of the Lease or the Participation Agreement shall bind the Owner Participants and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Owner Participants in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. SECTION 11.04. Trust Agreement for Benefit of Certain Parties Only. Except for the terms of Section 8(n) of the Participation Agreement incorporated in Article VIII hereof and except as otherwise provided in Article IX hereof, nothing herein, whether expressed or implied, shall be construed to give any person other than the Owner Trustee and the Owner Participants any legal or equitable right, remedy or claim under or in respect of this Trust Agreement; but this Trust Agreement shall be held to be for the sole and exclusive benefit of the Owner Trustee and the Owner Participants. SECTION 11.05. Notices; Consent to Jurisdiction. (a) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by prepaid Telex, TWX or telegram (with messenger delivery specified in the case of a telegram), or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 11.05(a). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.05(a), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective Telex, TWX or telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the -20- 20 Owner Participant, to the respective addresses set forth below the signatures of such parties on the signature page of the Participation Agreement, or (B) if to a Subsequent 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. (b) Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Trust Agreement, the Participation Agreement, 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 the Participation 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. SECTION 11.06. Severability. Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.07. Waivers, etc. No term or provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing entered into in compliance with the terms of Article X hereof; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. SECTION 11.08. Counterparts. This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.09. Binding Effect, etc. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participants, their successors and, to the extent permitted by Article VIII hereof, their assigns. Any request, notice, direction, consent, waiver or other instrument or action by an Owner Participant shall bind its successors and assigns. Any Owner Participant which shall cease to have any Ownership Interest shall thereupon cease to -21- 21 be a party hereto or an Owner Participant for any reason and shall have no further obligations hereunder. SECTION 11.10. Headings; References. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11. Governing Law. This Trust 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 Trust Agreement has been delivered in the State of New York. -22- 22 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [Owner Participant] BY ________________________________ Title: THE FIRST NATIONAL BANK OF BOSTON By ________________________________ Title: -23- 23 [Document 2.09] TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1990 A] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1990 A], dated August 23, 1990 (herein called the "Trust Supplement") of THE FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee (herein called the "Owner Trustee"), under the Trust Agreement [NW 1990 A], dated as of August 23, 1990 (herein called the "Trust Agreement"), between the Owner Trustee and the Owner Participant named therein. WITNESSETH: WHEREAS, the Trust Agreement provides for the execution and delivery of one or more Supplements thereto substantially in the form hereof, which shall particularly describe the Aircraft and any Replacement Airframe or Replacement Engine included in the property covered by the Trust Agreement. WHEREAS, the Trust Indenture and Security Agreement [NW 1990 A], dated as of August 23, 1990 (herein called the "Indenture"), between the Owner Trustee and The Connecticut Bank and Trust Company, National Association, as Indenture Trustee (herein called the "Indenture Trustee"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft (such term and other defined terms in the Indenture being herein used with the same meanings) and any Replacement Airframe or Replacement Engine included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft, Replacement Airframe or Replacement Engine, as the case may be, to the Indenture Trustee. WHEREAS, the Indenture relates to the Airframe and Engines described below, and a counterpart of the Indenture is attached hereto and made a part hereof and this Trust Agreement and Indenture Supplement, together with such counterpart of the Indenture, is being filed for recordation on the date hereof with the Federal Aviation Administration as one document. NOW, THEREFORE, This Supplement Witnesseth, that, to secure the prompt payment of the Original Amount of, premium, if any, and interest on, and all other amounts due with respect to, all Secured Certificates from time to time outstanding under the Indenture and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions in the Indenture and in the Participation Agreement for the benefit of the Indenture Trustee, the Loan Participants and the holders of the Secured Certificates and in the Secured Certificates contained, and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Loan Participants and/or the holders of the 24 Secured Certificates, and for the uses and purposes and subject to the terms and provisions of the Indenture, and in consideration of the premises and of the covenants contained in the Indenture, and of the acceptance of the Secured Certificates by the holders thereof, and of the sum of $1.00 paid to the Owner Trustee by the Indenture Trustee at or before the delivery hereof, the receipt whereof is hereby acknowledged; the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Loan Participants and the holders from time to time of the Secured Certificates, upon the trusts created by the Indenture, all right, title and interest of the Owner Trustee in, to and under the following described property: AIRFRAME One airframe identified as follows:
FAA Registration Manufacturer's Manufacturer Model Number Serial Number ------------------ ------------------ ------------ -------------- The Boeing Company 747-451 N669US _____
together with all appliances, equipment, instruments and accessories (including, without limitation, radio and radar) from time to time thereto belonging, in which the Owner Trustee has an interest and installed in or appurtenant to said aircraft. AIRCRAFT ENGINES Four aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer's Manufacturer Model Serial Number ------------------------------- ------- -------------- United Technologies Corporation PW 4056 P71____ Pratt & Whitney Aircraft Group United Technologies Corporation PW 4056 P71____ Pratt & Whitney Aircraft Group
Manufacturer's Manufacturer Model Serial Number ------------------------------- ------- -------------- United Technologies Corporation PW 4056 P71____ Pratt & Whitney Aircraft Group
-2- 25 United Technologies Corporation PW 4056 P71____ Pratt & Whitney Aircraft Group together with all equipment and accessories thereto belonging, by whomsoever manufactured, in which the Owner Trustee has an interest and installed in or appurtenant to said aircraft engines. Together with all substitutions, replacements and renewals of the property above described, and all property which shall hereafter become physically attached to or incorporated in the property above described, whether the Owner Trustee now has or shall hereafter acquire an interest therein. As further security for the obligations referred to above and secured by the Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Loan Participants and of the holders from time to time of the Secured Certificates, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under Lease Supplement No. 1 of even date (other than Excluded Payments, if any) covering the property described above. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, for the benefit and security of the Loan Participants and the holders from time to time of the Secured Certificates for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and to the Trust Agreement and shall form a part of each, and the Trust Agreement and the Indenture are each hereby incorporated by reference herein and each is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the delivered Aircraft referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Indenture. -3- 26 IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. THE FIRST NATIONAL BANK OF BOSTON, not in its Individual Capacity but Solely as Owner Trustee, Owner Trustee, By: _______________________________ Title: -4- EX-4.B2 11 FIRST AMENDMENT TO TRUST AGREEMENT-1990 A 1 FIRST AMENDMENT TO TRUST AGREEMENT [NW 1990 A] This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1990 A] (this "AMENDMENT") dated as of June 12, 1996 between [______________________], a [_______] corporation (the "OWNER PARTICIPANT"), and First Security Bank of Utah, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee (the "OWNER TRUSTEE"), as successor to The First National Bank of Boston (the "ORIGINAL OWNER TRUSTEE"). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the respective meanings attributed thereto in or pursuant to the Trust Agreement defined below. W I T N E S S E T H: WHEREAS, the Owner Participant and the Original Owner Trustee entered into a Trust Agreement [NW 1990 A] dated as of August 23, 1990, supplemented by a Trust Agreement and Indenture Supplement [NW 1990 A] dated August 23, 1990 covering the Aircraft (the "ORIGINAL TRUST AGREEMENT," and as so supplemented and as amended hereby and from time to time, the "TRUST AGREEMENT"), pursuant to which the Owner Trustee agrees, among other things, to hold the Trust Estate for the use and benefit of the Owner Participant; WHEREAS, pursuant to the Lease Agreement [NW 1990 A] dated as of August 23, 1990 between the Original Owner Trustee and Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), as supplemented by the Lease Supplement No. 1 [NW 1990 A] dated August 23, 1990 (as so supplemented, the "ORIGINAL LEASE"), the Lessee has leased the Aircraft from the Owner Trustee; WHEREAS, pursuant to an Instrument of Transfer, Removal, Appointment, Assumption and Acceptance [NW 1990 A] dated May 28, 1996 among the Owner Participant, the Original Owner Trustee and the Owner Trustee (the "INSTRUMENT OF TRANSFER"), the Owner Trustee succeeded to all the estates, properties, rights, powers and trusts of the Original Owner Trustee as Owner Trustee under the Trust Agreement, including, without limitation, all right, title and interest of the Owner Trustee in and to the Aircraft and in, to and under the Original Lease and the other Operative Documents; WHEREAS, the Lessee, Northwest Airlines Corporation, a Delaware corporation, as guarantor, the Owner Trustee, the Owner Participant and certain other parties have entered into a Refunding Agreement [NW 1990 A] dated as of June 3, 1996 (the "REFUNDING AGREEMENT"), providing for a refinancing operation as contemplated by Section 17 of the Original Participation Agreement; 2 WHEREAS, on June 3, 1996, the Lessee and the Owner Trustee entered into the First Amendment to Lease Agreement [NW 1990 A], containing amendments, modifications and additions to the Original Lease necessary to give effect to the transactions described in the Refunding Agreement (the Original Lease as so amended, the "LEASE"); and WHEREAS, the Owner Participant and the Owner Trustee wish to amend the Original Trust Agreement as set forth herein to give effect to the transactions contemplated by the Refunding Agreement. NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. AMENDMENT OF SECTION 1.01 OF THE ORIGINAL TRUST AGREEMENT. Section 1.01 of the Original Trust Agreement is hereby amended by deleting in the definition of "Trust Office" the words, numbers and punctuation "150 Royall Street, Canton, Massachusetts 02021, Attention: Manager - Corporate Trust" and substituting therefor the words, numbers and punctuation "79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department". SECTION 2. AMENDMENT OF SECTION 5.04 OF THE ORIGINAL TRUST AGREEMENT. Section 5.04 of the Original Trust Agreement is hereby amended by deleting the words "The First National Bank of Boston" and substituting therefor the words and punctuation "First Security Bank of Utah, National Association". SECTION 3. AMENDMENT OF SECTION 6.01 OF THE ORIGINAL TRUST AGREEMENT. Section 6.01 of the Original Trust Agreement is hereby amended by deleting the words "The First National Bank of Boston" each time such words appear and substituting therefor the words and punctuation "First Security Bank of Utah, National Association". SECTION 4. AMENDMENT OF SECTION 6.02 OF THE ORIGINAL TRUST AGREEMENT. Section 6.02 of the Original Trust Agreement is hereby amended by deleting the words "The First National Bank of Boston" each time such words appear and substituting therefor the words and punctuation "First Security Bank of Utah, National Association". SECTION 5. AMENDMENT OF SECTION 6.03 OF THE ORIGINAL TRUST AGREEMENT. Section 6.03 of the Original Trust Agreement is hereby amended by deleting the words "THE FIRST NATIONAL BANK OF BOSTON" and substituting therefor the words and punctuation "FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION" and by deleting the words "The First National Bank of Boston" each time such words appear and substituting therefor the words and punctuation "First Security Bank of Utah, National Association". SECTION 6. AMENDMENT OF SECTION 7.01 OF THE ORIGINAL TRUST AGREEMENT. Section 7.01 of the Original Trust Agreement is hereby amended by deleting the words "The 2 3 First National Bank of Boston" each time such words appear and substituting therefor the words and punctuation "First Security Bank of Utah, National Association". SECTION 7. AMENDMENT OF SECTION 11.11 OF THE ORIGINAL TRUST AGREEMENT. Section 11.11 of the Original Trust Agreement is hereby amended by deleting the first sentence thereof and substituting therefor the following: "THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE." SECTION 8. ACKNOWLEDGMENTS AND DIRECTION. (a) The parties hereto acknowledge and confirm that, pursuant to the Instrument of Transfer, the Owner Trustee succeeded to all the estates, properties, rights, powers and trusts of the Original Owner Trustee as trustee under the Trust Agreement with like effect as if originally named the Owner Trustee therein, including without limitation all right, title and interest of the Owner Trustee in and to the Aircraft and in, to and under the Lease and the other Operative Documents. (b) Pursuant to and in conformity with Section 10.01(a) of the Trust Agreement, the Owner Participant hereby requests the Owner Trustee to execute this Amendment. The Owner Participant represents and warrants that it is a Majority in Interest of Owner Participants. SECTION 9. RATIFICATION. Except as modified hereby and by the Instrument of Transfer, the Original Trust Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Trust Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Trust Agreement or any word or phrase referring to a section or provision of the Trust Agreement is deemed for all purposes to be a reference to the Trust Agreement or such section or provision as amended by this Amendment. SECTION 10. MISCELLANEOUS. This Amendment 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. The terms of this Amendment shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII of the Original Trust Agreement as amended hereby, its assigns. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. 3 4 IN WITNESS WHEREOF, the parties hereto have each caused this Amendment to be duly executed as of the day and year first written above. [Owner Participant] By: --------------------------------- Title: ------------------------------ FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By: --------------------------------- Title: ------------------------------ 4 EX-4.B3 12 TRUST INDENTURE-1990 A 1 AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1990 A] AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1990 A], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Owner Trustee under the Trust Agreement referred to below (together with its successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity, except as expressly stated herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE"). W I T N E S S E T H WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and The First National Bank of Boston in its individual capacity have entered into the Trust Agreement whereby, among other things, (i) the Owner Trustee has established a certain trust for the use and benefit of the Owner Participant subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of, and with the priority of payment to, the holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has been authorized and directed to execute and deliver this Trust Indenture; WHEREAS, (i) The First National Bank of Boston, as owner trustee, and The Connecticut Bank and Trust Company, National Association entered into the Trust Indenture and Security Agreement [NW 1990 A] dated as of August 23, 1990 (the "ORIGINAL INDENTURE"), (ii) The First National Bank of Boston, as owner trustee, and The Connecticut Bank and Trust Company, National Association entered into the Trust Agreement and Indenture Supplement [NW 1990 A] (the "SUPPLEMENT") dated August 23, 1990 to the Original Indenture, (iii) the Original Indenture and the Supplement were recorded by the Federal Aviation Administration on August 23, 1990 and were assigned Conveyance No. [Q56550] and (iv) the Lease Agreement [NW 1990 A] dated as of even date with the Original Indenture between The First National Bank of Boston, as owner trustee, and Lessee and the Lease Supplement No. 1 [NW 1990 A] were recorded by the Federal Aviation Administration on August 23, 1990 and were assigned Conveyance No. [Q56551] and (v) pursuant to the Original Indenture, The First National Bank of Boston, as owner trustee, issued and sold to the Loan Participant Secured Certificates (as defined in the Original Indenture); WHEREAS, pursuant to an Instrument of Transfer, Removal, Appointment, Assumption and Acceptance among the Owner Participant, the Original Owner Trustee and the Owner Trustee dated May 28, 1996 (the "INSTRUMENT OF TRANSFER", the Owner Trustee succeeded to all of the estates, properties, rights, powers, duties and trusts of the Original Owner Trustee under the Trust Agreement and the other Operative Documents to which the Original Owner Trustee was a party; WHEREAS, pursuant to an Instrument of Assignment and Acceptance of Trust Indenture and Security Agreement [NW 1990 A] dated as of July 14, 1991, the Indenture Trustee succeeded to the Original Indenture Trustee as indenture trustee under the Original Indenture and the other Operative Documents to which the Original Indenture Trustee was a party; WHEREAS, the parties have agreed that subject to certain conditions, Lessee shall have the right to cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Secured Certificates issued to the Loan Participant pursuant to the Original Indenture shall be redeemed and new Secured 2 Certificates (the "REFINANCING SECURED CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Trust Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Refinancing Secured Certificates and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of all of the Owner Trustee's right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Certificate Holders, subject to Section 2.15 and Article III hereof; WHEREAS, all things have been done to make the Secured Certificates, when executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid, binding and enforceable obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Trust Indenture the valid, binding and legal obligation of the Owner Trustee for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened: -2- 3 GRANTING CLAUSE NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Secured Certificates from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions herein and in the Participation Agreement and the Secured Certificates contained, for the benefit of the Certificate Holders and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Certificate Holders by the Owner Trustee and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Secured Certificates by the holders thereof, and for other good and valuable consideration the receipt and adequacy whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors in trust and assigns, for the security and benefit of the Certificate Holders, a first priority security interest in and mortgage lien on all right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges, other than Excluded Payments (which collectively, excluding Excluded Payments but including all property hereafter specifically subjected to the Lien of this Trust Indenture by the Trust Agreement and Indenture Supplement or any mortgage supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines and all replacements thereof and substitutions therefor in which the Owner Trustee shall from time to time acquire title as provided herein and in the Lease), all as more particularly described in the Trust Agreement and Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Trust Indenture; (2) the Lease and any Lease Supplement and all Rent thereunder (including, without limitation, all amounts of Basic Rent, Supplemental Rent, and payments of any kind thereunder, but excluding any Excluded Payments) and the Guarantee; (3) the Purchase Agreement (to the extent specified in the Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent and Agreement and the Bill of Sale; (4) all rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the lien of this Trust Indenture; (5) all insurance and requisition proceeds with respect to the Aircraft, including but not limited to the insurance required under Section 11 of the Lease, but excluding Excluded Payments; (6) all rights of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under the Participation Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder, but excluding Excluded Payments; (7) all monies and securities from time to time deposited (other than Excluded Payments) or required to be deposited with the Indenture Trustee pursuant to any terms of this Trust Indenture or the Lease or required hereby or by the Lease to be held by the Indenture Trustee hereunder; and (8) all proceeds of the foregoing. BUT EXCLUDING from the foregoing and from the Trust Indenture Estate all Excluded Payments, and the right to enforce and collect the same, and SUBJECT TO all of the terms and conditions of this Trust Indenture and the rights of the Owner Trustee and the Owner Participant hereunder. -3- 4 Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the original executed counterpart of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt is attached), and executed copies of the Participation Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and its successors and assigns, in trust for the benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III hereof without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (8) inclusive above, subject to the terms and provisions set forth in this Trust Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Owner Trustee shall remain liable under each of the Indenture Agreements to which it is a party, to perform all of the obligations assumed by it thereunder, except to the extent prohibited or excluded from doing so pursuant to the terms and provisions thereof, and the Indenture Trustee and the Certificate Holders shall have no obligation or liability under the Indenture Agreements, by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to any of the Indenture Agreements to which it is a party, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, and with full power (in the name of the Owner Trustee or otherwise) to ask for, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds but in all cases excluding Excluded Payments) due and to become due under or arising out of the Indenture Agreements, and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Without limiting the generality of the foregoing, but subject to the rights of the Owner Trustee and the Owner Participant hereunder, during the continuance of any Event of Default under this Trust Indenture, the Indenture Trustee shall have the right under such power of attorney to accept any offer in connection with the exercise of remedies as set forth herein of any purchaser to purchase the Airframe and Engines and upon such purchase to execute and deliver in the name of and on behalf of the Owner Trustee an appropriate bill of sale and other instruments of transfer relating to the Airframe and Engines, when purchased by such purchaser, and to perform all other necessary or appropriate acts with respect to any such purchase, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or appropriate to protect and preserve the right, title and interest of the Indenture Trustee in and to such Rents and other sums and the security intended to be afforded hereby; provided, however, that no action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or liabilities of the Owner Trustee to any Person beyond those obligations and liabilities specifically set forth in this Trust Indenture and in the other Operative Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture shall not have been fully discharged, to make all payments of Rent (other than Excluded Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to, or as directed by, the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Trust Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Trust Indenture. -4- 5 The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem necessary or desirable to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be created hereby or to obtain for the Indenture Trustee the full benefits of the assignment hereunder and of the rights and powers herein granted. The parties hereto acknowledge that neither the Owner Trustee in its individual capacity nor the Owner Participant shall have any obligation as to any recording, filing, refiling or re-recording of any documents or instruments in regard to maintaining the perfection of the security interests created hereunder, in the Trust Indenture Estate or any security interest that may be claimed to have been created by the Lease or the ownership interest of the Owner Trustee in the Aircraft. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants and agrees that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee and its predecessor(s) in this transaction, and that it will not, except as otherwise provided in this Trust Indenture and except with respect to Excluded Payments to which it is entitled, (i) accept any payment from Lessee under any Indenture Agreement, (ii) enter into any agreement amending or supplementing any Indenture Agreement, (iii) execute any waiver or modification of, or consent under, the terms of, or exercise any rights, powers or privileges under, any Indenture Agreement, (iv) settle or compromise any claim (other than those relating to an Excluded Payment) arising under any Indenture Agreement or (v) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any Indenture Agreement to arbitration thereunder. The Owner Trustee does hereby further agree that it will not without the written consent of the Indenture Trustee: (a) collect or agree to the receipt or collection of any payment of Rent (other than Excluded Payments), including Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease prior to the date for the payment thereof provided for by the Lease or assign, transfer or hypothecate (other than to the Indenture Trustee hereunder) any payment of Rent, including Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease, then due or to accrue in the future under the Lease in respect of the Airframe and Engines; or (b) except as contemplated by the Trust Agreement in connection with the appointment of a successor owner trustee, sell, mortgage, transfer, assign or hypothecate (other than to the Indenture Trustee hereunder) its interest in the Airframe and Engines or any part thereof or in any amount to be received by it from the use or disposition of the Airframe and Engines, other than amounts distributed to it pursuant to Article III hereof. It is hereby further agreed that any and all property described or referred to in the granting clauses hereof which is hereafter acquired by the Owner Trustee shall ipso facto, and without any further conveyance, assignment or act on the part of the Owner Trustee or the Indenture Trustee, become and be subject to the Lien herein granted as fully and completely as though specifically described herein, but nothing contained in this paragraph shall be deemed to modify or change the obligations of the Owner Trustee contained in the foregoing paragraphs. The Owner Trustee does hereby ratify and confirm the Lease and does hereby agree that it will not violate any covenant or agreement made by it therein, herein or in any other Owner Trustee Documents. Notwithstanding the Granting Clause or any of the foregoing paragraphs, there is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excluded Payments. -5- 6 IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "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. "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 hereof. "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 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. "Cash Equivalents" shall mean the investments specified in Section 22(a) of the Lease. "Certificate Holder" shall mean any holder from time to time of one or more Secured Certificates. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Continuous Stay Period" shall have the meaning specified in Section 4.04(a) hereof. "Corporate Trust Department" or "Trust Office" means the principal corporate trust office of the Owner Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, 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 Two International Place, 4th Floor, Boston, Massachusetts 02110, 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 Owner Participant and each Certificate Holder. -6- 7 "Debt" shall mean any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments or for the deferred purchase price of property, goods or services. "Debt 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" means any event or condition that with the giving of notice or the lapse of time or both would become an Event of Default or a Lease Event of Default (excluding Lease Events of Default related to Excluded Payments). "Dollars" and "$" shall mean the lawful currency of the United States of America. "Enforcement Date" shall have meaning specified in Section 4.03 hereof. "Event of Default" shall have the meaning specified in Section 4.02 hereof. "Excess Amount" shall have the meaning specified in Section 2.03(b) hereof. "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 hereof, the amounts payable to the Owner Trustee pursuant to clauses 2(B)(y) and 2(B)(z) of Section 9(b) of the Lease or 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. "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 Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Guarantor" shall have the meaning specified in the Lease. "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 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 -7- 8 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. "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" shall mean that certain Lease Agreement [NW 1990 A], dated as of August 23, 1990, entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of the Original Trust Indenture, as said Lease Agreement has been, or may from time to time be, supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Indenture. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Default" shall mean any event or condition that with the giving of notice or the lapse of time or both would become a Lease Event of Default. "Lease Event of Default" shall mean an "Event of Default" as defined in the Lease. "Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Lessee Operative Documents" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. "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 hereof (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 (plus, in the case of Series C and D Secured Certificates, 75 basis points) 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 -8- 9 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. "Mortgaged Property" shall have the meaning specified in Section 3.03 hereof. "Owner Indemnitee" shall have the meaning specified in the definition of Excluded Payments herein. "Owner Participant" shall mean [ ], so long as such party shall have any interest in the Trust Estate, and transferees thereof as permitted by Section 8 of the Participation Agreement. "PA Amendment No. 1" shall mean the First Amendment to Participation Agreement [NW 1990 A], dated as of the Closing Date, among Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and State Street Bank and Trust Company, in its individual capacity and as Indenture Trustee. "Participants" shall mean and include the Loan Participants and the Owner Participant. "Participation Agreement" shall mean that certain Participation Agreement [NW 1990 A], dated as of August 23, 1990, among the Owner Trustee, the Indenture Trustee, Lessee and the Participants, as amended by the PA Amendment No. 1, as the same may from time to time be supplemented or further amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Past Due Rate" shall mean, with respect to the Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in effect from time to time. "Payment Date" shall mean each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Secured Certificates have been paid in full. "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. "QIB" shall have the meaning specified in Section 2.08 hereof. "Replacement Airframe" shall mean any airframe substituted for the Airframe pursuant to Section 5.06 hereof. "Replacement Engine" shall mean any engine substituted for an Engine pursuant to Section 5.06 hereof. "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. "Section 1110 Period" shall have the meaning specified in Section 4.04(a) hereof. -9- 10 "Secured Certificates" shall mean and include any Secured Certificates issued hereunder, and issued in exchange therefor or replacement thereof. "Secured Obligations" shall have the meaning specified in Section 2.06 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Holder" shall have the meaning specified in Section 2.15(c) hereof. "Series A" or "Series A Secured Certificates" means Secured Certificates issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A." "Series B" or "Series B Secured Certificates" means Secured Certificates issued and designated as "Series B" hereunder, 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" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series C." "Series D" or "Series D Secured Certificates" means Secured Certificates issued and designated as "Series D" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series D." "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. "Transactions" means the transactions contemplated by the Participation Agreement and the other Operative Documents. "Trust Agreement and Indenture Supplement" shall mean a supplement to the Trust Agreement and to this Indenture, in substantially the form of Exhibit A hereto, 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. "Trust Indenture", "this Trust Indenture", "the Trust Indenture", "Indenture", "this Indenture" and "the Indenture" shall mean this Amended and Restated Trust Indenture and Security Agreement [NW 1990 A] as it may from time to time be supplemented or amended as herein provided, including supplementing by the Trust Agreement and Indenture Supplement pursuant hereto. "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 this Trust Indenture, excluding Excluded Payments. SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this Trust Indenture the terms used but not defined herein are used as defined in the Lease. -10- 11 ARTICLE II THE SECURED CERTIFICATES SECTION 2.01. FORM OF SECURED CERTIFICATES. The Secured Certificates shall be substantially in the form set forth below: THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [NW 1990 A] DATED AS OF AUGUST 23, 1990. SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION WITH THE BOEING MODEL 747-451 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N669US. No.____ Date: [______,__] $_______________________ INTEREST RATE MATURITY DATE [________] [________,________] FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1990 A], dated as of August 23, 1990, between the Owner Participant named therein and The First National Bank of Boston (herein as such Trust Agreement may be supplemented or amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Interest Rate indicated above. The Principal Amount of this Secured Certificate shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Secured Certificate set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including _______, _____. Notwithstanding the foregoing, the final payment made on this Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Secured Certificate. Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "TRUST INDENTURE" means the Amended and Restated Trust Indenture and Security Agreement [NW 1990 A], dated as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from -11- 12 time to time. All other capitalized terms used in this Secured Certificate and not defined herein shall have the respective meanings assigned in the Trust Indenture. This Secured Certificate shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Trust Indenture or the Participation Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Trust Indenture and each holder hereof, by its acceptance of this Secured Certificate, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the holder hereof as above provided and that none of the Owner Participant, the Owner Trustee or the Indenture Trustee is personally liable or liable in any manner extending to any assets other than the Trust Indenture Estate to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Trust Indenture or in the Participation Agreement, for any liability under the Trust Indenture or the Participation Agreement; provided, however, that nothing herein contained shall limit, restrict or impair the right of the Indenture Trustee, subject always to the terms and provisions of the Trust Indenture, to accelerate the maturity of this Secured Certificate upon occurrence of an Event of Default under the Trust Indenture in accordance with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment against the Owner Trustee on this Secured Certificate for purposes of realizing upon the Trust Indenture Estate and to exercise all rights and remedies provided under the Trust Indenture or otherwise realize upon the Trust Indenture Estate. There shall be maintained a Secured Certificate Register for the purpose of registering transfers and exchanges of Secured Certificates at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Trust Indenture. The Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Trust Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Secured Certificate, except that in the case of any final payment with respect to this Secured Certificate, the Secured Certificate shall be surrendered promptly thereafter by the Indenture Trustee to the Owner Trustee for cancellation. The holder hereof, by its acceptance of this Secured Certificate, agrees that, except as provided in the Trust Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts hereunder) to the date of such payment, second, to the payment of the Principal Amount of this Secured Certificate then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of Principal Amount of this Secured Certificate remaining unpaid in the inverse order of their normal maturity. This Secured Certificate is one of the Secured Certificates referred to in the Trust Indenture which have been or are to be issued by the Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Secured Certificates. The provisions of this Secured Certificate are subject to the Trust Indenture. Reference is hereby made to the Trust Indenture and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Secured Certificate and the rights and obligations of the holders of, and -12- 13 the nature and extent of the security for, any other Secured Certificates executed and delivered under the Trust Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust Indenture, to all of which terms and conditions in the Trust Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Secured Certificate. As provided in the Trust Indenture and subject to certain limitations therein set forth, this Secured Certificate is exchangeable for a like aggregate Principal Amount of Secured Certificates of different authorized denominations, as requested by the holder surrendering the same. Prior to due presentment for registration of transfer of this Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the person in whose name this Secured Certificate is registered as the owner hereof for all purposes whether or not this Secured Certificate be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Secured Certificate is subject to redemption as provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This Secured Certificate is also subject to assumption by Lessee as provided in Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.14 of the Trust Indenture but not otherwise. [The indebtedness evidenced by this Secured Certificate is, to the extent and in the manner provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Trust Indenture) in respect of [Series A Secured Certificates](1)[Series A and Series B Secured Certificates](2) [Series A, Series B and Series C Secured Certificates](3), and this Secured Certificate is issued subject to such provisions. The Certificate Holder of this Secured Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]** Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Secured Certificate shall not be entitled to any benefit under the Trust Indenture or be valid or obligatory for any purpose. THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. * * * - --------------- (1) To be inserted in the case of a Series B Secured Certificate. (2) To be inserted in the case of a Series C Secured Certificate. (3) To be inserted in the case of a Series D Secured Certificate. ** To be inserted for each Secured Certificate other than any Series A Secured Certificate. -13- 14 IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Certificate to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By______________________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Secured Certificates referred to in the within-mentioned Trust Indenture. STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By______________________________________ Name: Title: -14- 15 SCHEDULE I SECURED CERTIFICATES AMORTIZATION Percentage of Principal Amount Payment Date to be Paid ------------ ---------------- [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES. The Secured Certificates shall be dated the date of issuance thereof, shall be issued in four separate series consisting of Series A, Series B, Series C and Series D and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Agreements as set forth in Schedule II hereto in connection therewith and (ii) the Secured Certificates issued under the Original Indenture shall be concurrently redeemed. The Secured Certificates shall be issued in registered form only. The Secured Certificates shall be issued in denominations of $1,000 and integral multiples thereof, except that one Secured Certificate of each Series may be in an amount that is not an integral multiple of $1,000. Each Secured Certificate shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Secured Certificate shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Secured Certificates. Notwithstanding the foregoing, the final payment made under each Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Secured Certificate. Each Secured Certificate shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Certificate Holders, (iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass Through Trustees, in each case pursuant to Section 7 of the Participation Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Advances (as -15- 16 defined in the Liquidity Facilities) under any Liquidity Facility except to the extent included in Net Interest and Related Charges, and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used in this Section, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes, plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Secured Certificate (other than any Series D Secured Certificate) a fraction, the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes issued under Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any Series D Secured Certificates or Series D Equipment Notes. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to the Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount which would be payable if such drawings bore interest at the Designated Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding Liquidity Facility) which result from any Interest Drawing, Final Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities). As used in this Section "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) except with respect to that portion of any Final Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section, a Payment Default when used in connection with a Secured Certificate or Equipment Note means a default in the payment of principal thereof or interest thereon other than a default in the payment of principal or interest on a Series D Equipment Note which has not been cured other than solely because of acceleration. The following terms are used in this Section as defined in the Intercreditor Agreement without regard to any amendment, modification or supplement thereto after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and Series D Equipment Notes. The Secured Certificates shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Secured Certificates bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Secured Certificates or did not hold such offices at the respective dates of such Secured Certificates. The Owner Trustee may from time to time execute and deliver Secured Certificates with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Secured Certificates shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Secured Certificates to be authenticated hereunder on original issue with respect to the Aircraft. No Secured Certificate shall be secured by or entitled to any benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears on such Secured Certificate a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Secured Certificates shall be conclusive evidence, and the only evidence, that such Secured Certificate has been duly authenticated and delivered hereunder. -16- 17 SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY. (a) Without impairing any of the other rights, powers, remedies, privileges, liens or security interests of the Certificate Holders under this Trust Indenture, each Certificate Holder, by its acceptance of a Secured Certificate, agrees that as between it and the Owner Trustee, except as expressly provided in this Trust Indenture, the Participation Agreement or any other Operative Document, (i) the obligation to make all payments of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Secured Certificates, and the performance by the Owner Trustee of every obligation or covenant contained in this Trust Indenture and in the Participation Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Trust Indenture and any agreement referred to herein other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Trust Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Owner Trustee is responsible for, or is making, in its individual capacity, for which there would be personal liability of the Owner Trustee), no recourse shall be had with respect to this Trust Indenture 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, and (ii) none of the Owner Trustee, in its individual capacity, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Participation Agreement or any of the other Operative Documents or under the Secured Certificates except as expressly provided herein or in the Participation Agreement; provided, however, that nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Trust Indenture or such other agreements of rights and remedies against the Trust Estate. These provisions are not intended as any release or discharge of the indebtedness represented by the Secured Certificates and the Trust Indenture, but are intended only as a covenant not to sue the Owner Participant, the Owner Trustee or the Indenture Trustee in their individual capacities, except as expressly provided herein or in the Participation Agreement, for a deficiency with respect to such indebtedness, the indebtedness represented by this Trust Indenture and the Secured Certificates to remain in full force and effect as fully as though these provisions were not contained in this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders have expressly reserved all their rights and remedies against the Trust Indenture Estate, including the right, in the event of a default in the payment of all or part of the Principal Amount of, interest on, Make-Whole Amount, if any, or any other amount due with respect to any Secured Certificate within the periods provided for in Section 4.02(b) hereof, or upon the occurrence and continuation of any other Event of Default under this Trust Indenture, to foreclose upon this Trust Indenture, and/or to receive the proceeds from the Trust Indenture Estate and otherwise to enforce any other right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner Participant from personal liability, or constitute a covenant not to sue the Owner Participant, for any breach by it of any of its covenants, representations or warranties contained in the Participation Agreement or for any of the payments it has agreed to make pursuant to the Participation Agreement or (y) release the Owner Trustee or constitute a covenant not to sue the Owner Trustee for any breach by it of any representations, warranties or covenants of the Owner Trustee contained in the Operative Documents or (z) release the Owner Trustee in its individual capacity from personal liability, or constitute a covenant not to sue the Owner Trustee in its individual capacity for any breach by it of any representations, warranties or covenants of the Owner Trustee made in its individual capacity in the Operative Documents. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, 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 any Certificate Holder or the Indenture Trustee, -17- 18 directly or indirectly (other than the recourse liability of the Owner Trustee (in its individual capacity), to make payment on account of any amount payable as principal, Make-Whole Amount, if any, interest or other amounts on the Secured Certificates or under this Indenture and (iii) any Certificate Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Owner Trustee (in its individual capacity) or the Owner Participant on account of clause (ii) above, then such Certificate Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Trustee (in its individual capacity) or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a Certificate Holder 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 clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Certificate Holder 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 the Participation Agreement or this Trust Indenture (and any exhibits or annexes hereto or thereto) or by separate agreement or from retaining any amount paid by Owner Participant under Section 2.14 or 4.03 hereof. SECTION 2.04. METHOD OF PAYMENT. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Secured Certificate or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Certificate Holders in the manner provided herein. The Owner Trustee shall not have any responsibility for the distribution of such payment to any Certificate Holder. Notwithstanding the foregoing or any provision in any Secured Certificate to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such holder's Secured Certificate or Secured Certificates to such holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such holder with a bank located in the continental United States the amount to be distributed to such holder, for credit to the account of such holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate such holders for loss of use of funds at the Debt Rate until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Secured Certificate, except that, in the case of the final payment in respect of any Secured Certificate, such Secured Certificate shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Secured Certificate is registered on the Secured Certificate Register as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable with respect to such Secured Certificate and for all other purposes, and none of the Owner Trustee or the Indenture Trustee shall be affected by any notice to the contrary. So long as any signatory to the Participation Agreement or nominee thereof shall be a registered Certificate Holder, all payments to it shall be made to the account of such Certificate Holder specified in Schedule I thereto and otherwise in the manner provided in or pursuant to the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. -18- 19 (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Secured Certificate (and such exclusion and withholding shall constitute payment in respect of such Secured Certificate) any and all United States withholding taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Secured Certificates, to withhold such amounts (and such withholding shall constitute payment in respect of such Secured Certificate) and timely pay the same to the appropriate authority in the name of and on behalf of the Certificate Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Certificate Holder (with a copy to the Owner Trustee and Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Certificate Holder may reasonably request from time to time. If a Certificate Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Secured Certificate(s) held by such holder is made (but prior to the making of such payment), or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by Law (after taking into account any applicable exemptions claimed by the Certificate Holder) to be withheld from payments hereunder or under the Secured Certificates held by such holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Secured Certificates held by such holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Certificate Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Secured Certificates held by such holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Certificate Holder withholding taxes at the appropriate rate under Law and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. SECTION 2.05. APPLICATION OF PAYMENTS. In the case of each Secured Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; -19- 20 Second: to the payment of the Principal Amount of such Secured Certificate (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Secured Certificate; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Secured Certificate remaining unpaid (provided that such Secured Certificate shall not be subject to redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Secured Certificate in the inverse order of their normal maturity. SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE. A Certificate Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Secured Certificates held by such Certificate Holder and all other sums then payable to such Certificate Holder hereunder and under the other Operative Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall have been paid in full. SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED CERTIFICATES. The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the registration of Secured Certificates and the registration of transfers of Secured Certificates. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Secured Certificate Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the purpose of registering Secured Certificates and transfers of Secured Certificates as herein provided. A holder of any Secured Certificate intending to exchange such Secured Certificate shall surrender such Secured Certificate to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Secured Certificate, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Secured Certificate, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Secured Certificates of a like aggregate Principal Amount and of the same series. At the option of the Certificate Holder, Secured Certificates may be exchanged for other Secured Certificates of any authorized denominations of a like aggregate Principal Amount, upon surrender of the Secured Certificates to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Secured Certificates are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Secured Certificates which the Certificate Holder making the exchange is entitled to receive. All Secured Certificates issued upon any registration of transfer or exchange of Secured Certificates (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Trust Indenture, as the Secured Certificates surrendered upon such registration of transfer or exchange. Every Secured Certificate presented or surrendered for registration of transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Certificate Holder or such holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of any applicable state. The Indenture Trustee shall make a notation on each new Secured Certificate of the amount of all payments of Principal Amount previously made on the old Secured Certificate or Secured Certificates with respect to which such new Secured Certificate is issued and the date to which interest on such old Secured Certificate or Secured Certificates has been paid. Interest shall be deemed to have been paid on such new Secured Certificate to the date on which interest shall have been paid on such old Secured Certificate, and all payments of the Principal Amount marked on such new Secured Certificate, as provided above, shall be deemed to have been -20- 21 made thereon. The Owner Trustee shall not be required to exchange any surrendered Secured Certificates as provided above during the ten-day period preceding the due date of any payment on such Secured Certificate. The Owner Trustee shall in all cases deem the Person in whose name any Secured Certificate shall have been issued and registered as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable by the Owner Trustee with respect to such Secured Certificate and for all purposes until a notice stating otherwise is received from the Indenture Trustee and such change is reflected on the Secured Certificate Register. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of a Secured Certificate. Any such transferee of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to the provisions of the Participation Agreement applicable to Certificate Holders, including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(x), 8(hh), 10, 13(b), 13(c), 15(b) and 15(c), and shall be deemed to have represented and warranted (except as provided above), and covenanted, to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by the original Loan Participant in the Participation Agreement. Subject to compliance by the Certificate Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates upon transfer or exchange within 10 Business Days of the date a Secured Certificate is surrendered for transfer or exchange. SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED CERTIFICATES. If any Secured Certificate shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the holder of such Secured Certificate, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Secured Certificate, payable in the same Principal Amount dated the same date and captioned as issued in connection with the Aircraft. If the Secured Certificate being replaced has become mutilated, such Secured Certificate shall be surrendered to the Indenture Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the Secured Certificate being replaced has been destroyed, lost or stolen, the holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be required by them to save the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Secured Certificate and of the ownership thereof. If a "qualified institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen Secured Certificate, then the written indemnity of such QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Secured Certificate. Subject to compliance by the Certificate Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates within 10 Business Days of the date of the written request therefor from the Certificate Holder. SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION. (a) No service charge shall be made to a Certificate Holder for any registration of transfer or exchange of Secured Certificates, but the Indenture Trustee, as Secured Certificate Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Secured Certificates; provided, however, that neither the Owner Trustee nor the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Secured Certificates surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Secured Certificates. -21- 22 SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES. (a) On the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders but without Make-Whole Amount. (b) If the Lease is terminated with respect to the Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the Lease is so terminated all the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES. Any or all of the Secured Certificates may be redeemed by the Owner Trustee in connection with a transaction described in, and subject to the terms and conditions of, Section 17 of the Participation Agreement upon at least 30 days' revocable prior written notice to the Indenture Trustee and the Certificate Holders, and the Secured Certificates shall, as provided in Section 17 of the Participation Agreement, be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION. (a) Neither any redemption of any Secured Certificate nor any purchase by the Owner Trustee of any Secured Certificate may be made except to the extent and in the manner expressly permitted by this Trust Indenture. No purchase of any Secured Certificate may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Secured Certificates shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Certificate Holder of such Secured Certificates to be redeemed or purchased, at such Certificate Holder's address appearing in the Secured Certificate Register; provided that, in the case of a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be deemed revoked in the event that the Lease does not in fact terminate on the specified termination date or if notice of such redemption shall have been given in connection with a refinancing of Secured Certificates and the Indenture Trustee receives written notice of such revocation from Lessee or the Owner Trustee not later than three days prior to the redemption date. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Secured Certificate, and that, if any such Secured Certificates are then outstanding, interest on such Secured Certificates shall cease to accrue on and after such redemption date, and (4) the place or places where such Secured Certificates are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Secured Certificates to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption date in immediately available funds the redemption price of the Secured Certificates to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid (and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee or at -22- 23 any office or agency maintained for such purposes pursuant to Section 2.07, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Secured Certificates then outstanding shall cease to bear interest. Upon surrender of any such Secured Certificate for redemption or purchase in accordance with said notice, such Secured Certificate shall be redeemed at the redemption price. If any Secured Certificate called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Secured Certificate as of such redemption date. SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE. If, in accordance with Section 8(x) of the Participation Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a full recourse basis) all of the obligations of the Owner Trustee hereunder, under the Secured Certificates and all other Operative Documents by supplemental indenture satisfactory to the Indenture Trustee (which shall contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease and (ii) other provisions necessary or advisable to effectuate such assumption), then upon delivery of such supplemental indenture, payment by Lessee of all expenses (including reasonable fees and expenses of counsel) for the Owner Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of the Secured Certificates and other amounts owing to the Certificate Holders substantially in the form of the Guarantee, and delivery of an opinion of counsel for Lessee that such assumption has been duly and validly effected, the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Secured Certificates and all other Operative Documents and the Owner Participant shall be released and discharged from any further obligations under the Participation Agreement and any other Operative Document to which it is a party, except with respect to any such obligations that accrued prior thereto. SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.14, purchase all but not less than all of the Secured Certificates outstanding hereunder, and each Certificate Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Secured Certificates and except against Liens on such Secured Certificates arising by, through or under such holder), all of the right, title and interest of such Certificate Holder in and to the Trust Indenture Estate, this Trust Indenture and the Secured Certificates held by it, and such purchaser or its nominee shall assume all of such holder's obligations under the Participation Agreement and hereunder. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Participation Agreement to the holder thereof. Such option to purchase the Secured Certificates may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default, the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Secured Certificates shall -23- 24 become irrevocable upon the sixteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Certificate Holders will comply with all the provisions of Section 2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes, charges and expenses required pursuant to Section 2.09 in connection with the issuance of such new Secured Certificate shall be borne by the Owner Participant. SECTION 2.15. SUBORDINATION. (a) The Owner Trustee and, by acceptance of its Secured Certificates of any Series, each Certificate Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g) hereof, except as expressly provided in Article III hereof. (b) By the acceptance of its Secured Certificates of any Series (other than Series A), each Certificate Holder of such Series agrees that in the event that such Certificate Holder, in its capacity as a Certificate Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.15 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article III hereof. (c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured Obligations in respect of Series A Secured Certificates have been paid in full, (ii) after the Secured Obligations in respect of Series A Secured Certificates have been paid in full, the Certificate Holders of Series B until the Secured Obligations in respect of Series B Secured Certificates have been paid in full and (iii) after the Secured Obligations in respect of Series B Secured Certificates have been paid in full, the Certificate Holders of Series C until the Secured Obligations in respect of Series C Secured Certificates have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. BASIC RENT DISTRIBUTION. Except as otherwise provided in Section 3.03 hereof, each installment of Basic Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly distributed in the following order of priority: FIRST, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Secured Certificates shall be distributed to the Certificate Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Secured Certificate -24- 25 bears to the aggregate amount of the payments then due under all Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Secured Certificates shall be distributed to the Certificate Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Secured Certificate bears to the aggregate amount of the payments then due under all Series B Secured Certificates; (iii) after giving effect to paragraph (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series C Secured Certificates shall be distributed to the Certificate Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Secured Certificate bears to the aggregate amount of the payments then due under all Series C Secured Certificates; and (iv) after giving effect to paragraph (iii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series D Secured Certificates shall be distributed to the Certificate Holders of Series D ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series D Secured Certificate bears to the aggregate amount of the payments then due under all Series D Secured Certificates; and SECOND, the balance, if any, of such installment remaining thereafter shall be distributed to the Owner Trustee; provided, however, that if an Event of Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "Second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 5.09 hereof until whichever of the following shall first occur: (i) all Events of Default shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "Second" without reference to this proviso, (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of such Section 3.03, or (iii) the 120th day after the receipt of such payment in which case such payment shall be distributed as provided in this clause "Second" without reference to this proviso. SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION; REFINANCING. Except as otherwise provided in Section 3.03 hereof, any payments received by the Indenture Trustee (i) with respect to the Aircraft as the result of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a refinancing of the Secured Certificates pursuant to Section 17 of the Participation Agreement shall be applied to redemption of the Secured Certificates and -25- 26 to all other amounts payable hereunder or to the Indenture Trustee or any Certificate Holder under the Participation Agreement by applying such funds in the following order of priority: FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for any reasonable costs or expenses incurred in connection with such redemption for which they are entitled to reimbursement, or indemnity by Lessee, under the Operative Documents and then (b) to pay any other amounts then due to the Indenture Trustee and the Certificate Holders under this Trust Indenture, the Participation Agreement or the Secured Certificates; SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, to pay the amounts specified in paragraph (ii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series B Secured Certificates; (iii) after giving effect to paragraph (ii) above, to pay the amounts specified in paragraph (iii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series C Secured Certificates; and (iv) after giving effect to paragraph (iii) above, to pay the amounts specified in paragraph (iv) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series D Secured Certificates; and THIRD, as provided in clause "Fourth" of Section 3.03 hereof; provided, however, that if a Replacement Airframe or Replacement Engine shall be substituted for the Airframe or Engine subject to such Event of Loss as provided in Section 10 of the Lease and in accordance with Section 5.06 hereof, any insurance, condemnation or similar proceeds which result from such Event of Loss and are paid over to the Indenture Trustee shall be held by the Indenture Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be invested as provided in Section 5.09 hereof) as additional security for the obligations of Lessee under the Lessee Operative Documents and, unless otherwise applied pursuant to the Lease, such proceeds (and such investment earnings) shall be released to Lessee at Lessee's written request upon the release of such damaged Airframe or Engine and the replacement thereof as provided in the Lease. SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT. Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Section 15 of the Lease or Article IV hereof) after both an Event of Default shall have occurred and be continuing and the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, as well as all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly distributed by the Indenture Trustee in the following order of priority: FIRST, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate (all such property being herein called the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) incurred by the Indenture Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, -26- 27 reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Certificate Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or any Certificate Holder, liquidated or otherwise, upon such Event of Default shall be applied by the Indenture Trustee as between itself and the Certificate Holders in reimbursement of such expenses and any other expenses for which the Indenture Trustee or the Certificate Holders are entitled to reimbursement under any Operative Document and in the case the aggregate amount to be so distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as shall be required to reimburse the then existing or prior Certificate Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to such then existing or prior Certificate Holders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Certificate Holder pursuant to said Section 5.03 hereof; THIRD, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid -27- 28 Principal Amount of all Series C Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (iv) after giving effect to paragraph (iii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series D Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series D Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series D, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series D Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series D Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and FOURTH, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee. No Make-Whole Amount shall be due and payable on the Secured Certificates as a consequence of the acceleration of the Secured Certificates. SECTION 3.04. CERTAIN PAYMENTS. (a) Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in this Trust Indenture and for which such provision is made in the Lease, the Participation Agreement or any other Operative Document shall be applied forthwith to the purpose for which such payment was made in accordance with the terms of the Lease, the Participation Agreement or such other Operative Document, as the case may be. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of the Participation Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the third paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the third paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) [Intentionally Omitted] (d) Notwithstanding anything to the contrary contained in this Article III, any amounts received by the Indenture Trustee which constitute Excluded Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. (e) Notwithstanding any provision of this Trust Indenture to the contrary, any amounts held by the Indenture Trustee that would, but for the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall, notwithstanding the provisions of said Section, be distributed to Lessee unless and until a Lease Event of Default shall have occurred and be continuing. -28- 29 SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any other Operative Document shall be distributed by the Indenture Trustee to the extent received or realized at any time (i) prior to the payment in full of all Secured Obligations due the Certificate Holders, in the order of priority specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in full of all Secured Obligations due the Certificate Holders, in the following order of priority: FIRST, to the extent payments or amounts described in clause "First" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "First" of Section 3.03 hereof, and SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof. Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04 hereof, all payments received and amounts realized by the Indenture Trustee under the Lease or otherwise with respect to the Aircraft (including, without limitation, all amounts realized upon the sale or release of the Aircraft after the termination of the Lease with respect thereto), to the extent received or realized at any time after payment in full of all Secured Obligations due the Certificate Holders, shall be distributed by the Indenture Trustee in the order of priority specified in clause (ii) of the immediately preceding sentence of this Section 3.05. SECTION 3.06. PAYMENTS TO OWNER TRUSTEE. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account (within the time limits contemplated by Section 2.04(a)) specified in Schedule I to the Participation Agreement. SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE. All payments received by the Indenture Trustee pursuant to the Guarantee shall be distributed forthwith by the Indenture Trustee in the same order of priority, and in the same manner, as it would have distributed the payment in respect of which such payment under the Guarantee was received. ARTICLE IV COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. COVENANTS OF OWNER TRUSTEE. The Owner Trustee hereby covenants and agrees (the covenants and agreements only in clause (b) below being made by the Owner Trustee in its individual capacity) as follows: -29- 30 (a) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Secured Certificates and hereunder in accordance with the terms of the Secured Certificates and this Trust Indenture and all amounts, if any, payable by it to the Certificate Holders under the Participation Agreement; (b) the Owner Trustee in its individual capacity covenants and agrees that it shall not, directly or indirectly, cause or permit to exist a Lessor Lien attributable to it in its individual capacity with respect to the Aircraft or any other portion of the Trust Estate; that it will promptly, at its own expense, take such action as may be necessary to duly discharge such Lessor Lien attributable to it in its individual capacity; and that it will make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Lessor Liens attributable to it in its individual capacity; (c) in the event the Owner Trustee shall have Actual Knowledge of an Event of Default, a Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Event of Default, Default or Event of Loss to the Indenture Trustee, each Certificate Holder, Lessee and the Owner Participant; (d) the Owner Trustee will furnish to the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of any Termination Notice and a copy of each report or notice received pursuant to Section 9(a) and 11(c) of the Lease to the extent that the same shall not have been furnished to the Indenture Trustee pursuant to the Lease; (e) except pursuant to the Operative Documents or with the consent of the Indenture Trustee (acting pursuant to instructions given in accordance with Section 9.01 hereof), the Owner Trustee will not contract for, create, incur, assume or suffer to exist any Debt, and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the Debt of any other person; and (f) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. EVENT OF DEFAULT. "EVENT OF DEFAULT" means any of the following events (whatever the reason for such Event of Default and whether 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): (a) any Lease Event of Default (provided that any such Lease Event of Default caused solely by a failure of Lessee to pay to the Owner Trustee or the Owner Participant when due any amount that is included in the definition of Excluded Payments shall not constitute an Event of Default unless notice is given by the Owner Trustee to the Indenture Trustee that such failure shall constitute an Event of Default); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due and payable under any Secured Certificate or hereunder (other than any such failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof or as a result of a Lease Event of Default or a Lease Default) and such failure shall have continued unremedied for ten Business Days in the case of any payment of Principal Amount or interest -30- 31 or Make-Whole Amount, if any, thereon and, in the case of any other amount, for ten Business Days after the Owner Trustee or the Owner Participant receives written demand from the Indenture Trustee or any Certificate Holder; or (c) any Lien required to be discharged by the Owner Trustee, in its individual capacity pursuant to Section 4.01(b) hereof or in its individual or trust capacity pursuant to Section 8(h) of the Participation Agreement, or by the Owner Participant pursuant to Section 8(h) of the Participation Agreement shall remain undischarged for a period of 30 days after the Owner Trustee and the Owner Participant shall have received written notice from the Indenture Trustee or any Certificate Holder of such Lien; or (d) any representation or warranty made by the Owner Participant or the Owner Trustee herein, in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in any certificate furnished by the Owner Participant or the Owner Trustee to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents shall prove to have been false or incorrect when made in any material respect and continues to be material; and if such misrepresentation is capable of being corrected and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 60 days (or, without affecting Section 4.02(f) hereof, in the case of the representations made in Section 8(c) of the Participation Agreement as to the citizenship of the Owner Trustee in its individual capacity or of the Owner Participant, respectively, as soon as is reasonably practicable but in any event within 60 days) following notice thereof from the Indenture Trustee or any Certificate Holder to the Owner Trustee or the Owner Participant, as the case may be; or (e) other than as provided in (c) above or (f) below, any failure by the Owner Trustee or Owner Participant to observe or perform any other covenant or obligation of the Owner Trustee or Owner Participant, as the case may be, for the benefit of the Indenture Trustee or the Certificate Holders contained in the Participation Agreement, Section 4.01(a) of the Trust Agreement, the Secured Certificates or this Trust Indenture which is not remedied within a period of 60 days after notice thereof has been given to the Owner Trustee and the Owner Participant; or (f) if at any time when the Aircraft is registered under the laws of the United States, the Owner Participant shall not be a Citizen of the United States, and as the result thereof the registration of the Aircraft under the Federal Aviation Act, and regulations then applicable thereunder, shall cease to be effective; provided that no Event of Default shall be deemed to have occurred under this paragraph (f) unless such circumstances continue unremedied for more than 60 days after the Owner Participant has Actual Knowledge of the state of facts that resulted in such ineffectiveness and of such loss of citizenship; or (g) at any time either (i) the commencement of an involuntary case or other proceeding in respect of the Owner Participant, the Owner Trustee or the Trust Estate 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 seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii) the commencement by the Owner Participant, the Owner Trustee or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee or the Trust Estate to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or the making by the Owner Participant, the Owner Trustee or the Trust Estate of any assignment for the benefit of creditors or the Owner Participant -31- 32 or the Owner Trustee shall take any action to authorize any of the foregoing; provided, however, that an event referred to in this Section 4.02(g) with respect to the Owner Participant shall not constitute an Event of Default if within 30 days of the commencement of the case or proceeding a final non-appealable order, judgment or decree shall be entered in such case or proceeding by a court or a trustee, custodian, receiver or liquidator, to the effect that, no part of the Trust Estate (except for the Owner Participant's beneficial interest therein) and no right, title or interest under the Trust Indenture Estate shall be included in, or be subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 4.02(g). SECTION 4.03. CERTAIN RIGHTS. The Indenture Trustee shall give the Certificate Holders, the Owner Trustee and the Owner Participant prompt written notice of any Event of Default of which the Indenture Trustee has Actual Knowledge and, if any such Event of Default results from a Lease Event of Default, shall give the Certificate Holders, the Owner Trustee and the Owner Participant not less than ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence and consummate the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the provisions of Section 15 of the Lease. If an Event of Default shall have occurred and be continuing, the Owner Trustee shall have the following rights hereunder, any of which may be exercised directly by the Owner Participant. If as a result of the occurrence of an Event of Default in respect of the nonpayment by Lessee of Basic Rent due under the Lease, the Indenture Trustee shall have insufficient funds to make any payment of Principal Amount and interest on any Secured Certificate on the day it becomes due and payable, the Owner Trustee or the Owner Participant may, but shall not be obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the manner provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an amount equal to the portion of the Principal Amount and interest (including interest, if any, on any overdue payments of such portion of Principal Amount and interest) then due and payable on the Secured Certificates, and, unless the Owner Trustee has cured Events of Default in respect of payments of Basic Rent on each of the three immediately preceding Basic Rent payment dates, or the Owner Trustee has cured six previous Events of Default in respect of payments of Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any Event of Default which would otherwise have arisen on account of the nonpayment by Lessee of such installment of Basic Rent (but not any other Default or Event of Default which shall have occurred and be continuing). If any Event of Default (other than in respect of the nonpayment of Basic Rent by Lessee) which can be cured has occurred, the Owner Trustee or the Owner Participant may, but shall not be obligated to, cure such Event of Default prior to the Enforcement Date as is necessary to accomplish the observance or performance of the defaulted covenant, condition or agreement. Except as hereinafter in this Section 4.03 provided, the Owner Trustee shall not, as a result of exercising the right to cure any such Event of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable under the Lease for or on account of costs or expenses incurred in connection with the exercise of such right, nor shall any claim of the Owner Trustee against Lessee or any other party for the repayment of such costs or expenses impair the prior right and security interest of the Indenture Trustee in and to the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner Participant pursuant to the first or second preceding paragraphs of this Section 4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be subrogated to the rights of the Indenture Trustee and the Certificate Holders in respect of the Basic Rent which was overdue at the time of such payment and interest payable by Lessee on account of its being overdue and any Supplemental Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant to the immediately preceding paragraph (but in either case shall have no rights as a secured party hereunder), and thereafter, the Owner Trustee or the Owner Participant, as the case may be, shall be entitled to receive such overdue Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt thereof by the Indenture Trustee (and shall be entitled to bring an action against Lessee to enforce such payment); provided, however, that (i) if the Principal Amount and -32- 33 interest on the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to all Secured Certificates shall have been paid in full, be subordinate to the rights of the Indenture Trustee and the Certificate Holders in respect of such payment of overdue Basic Rent, Supplemental Rent and such interest and (ii) the Owner Trustee shall not be entitled to seek to recover any such payment (or any payment in lieu thereof) except pursuant to the foregoing right of subrogation by demand or suit for damages. SECTION 4.04. REMEDIES. (a) Subject to the provisions of Section 2.14 hereof, if an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, then and in every such case the Indenture Trustee may, subject to the second paragraph of this Section 4.04(a), on and after the Enforcement Date if such Event of Default results from a Lease Event of Default, exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article IV and shall have and may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and, in the event such Event of Default is also a Lease Event of Default, any and all of the remedies pursuant to Section 15 of the Lease and may take possession of all or any part of the properties covered or intended to be covered by the Lien created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee and Lessee and all persons claiming under any of them wholly or partly therefrom, provided, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Trust Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder as a result of an Event of Default which arises solely by reason of one or more events or circumstances which constitute a Lease Event of Default unless the Indenture Trustee as security assignee of the Owner Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 15 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person. In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any rights or remedy of the Indenture Trustee hereunder) to participate in such proceedings. It is expressly understood and agreed that, subject only to the immediately preceding paragraph, the inability, described in such paragraphs, of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising any or all of its rights, powers and remedies under this Trust Indenture, including, without limitation, this Article IV. -33- 34 (b) If an Event of Default shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery of written notice or notices to the Owner Trustee and the Owner Participant, declare all the Secured Certificates to be due and payable, whereupon the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued but unpaid interest thereon (without Make-Whole Amount) and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. This Section 4.04(b), however, is subject to the condition that, if at any time after the Principal Amount of the Secured Certificates shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Secured Certificates and all other amounts payable under the Secured Certificates (except the Principal Amount of the Secured Certificates which by such declaration shall have become payable) shall have been duly paid, and every other Default and Event of Default with respect to any covenant or provision of this Trust Indenture shall have been cured, then and in every such case a Majority in Interest of Certificate Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. (c) Any Certificate Holder shall be entitled, at any sale pursuant to Section 15 of the Lease or this Section 4.04, to credit against any purchase price bid at such sale by such holder all or any part of the unpaid obligations owing to such Certificate Holder and secured by the Lien of this Trust Indenture (but only to the extent that such purchase price would have been paid to such Certificate Holder pursuant to Article III hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c) were not given effect). (d) In the event of any sale of the Trust Indenture Estate, or any part thereof, pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Trust Indenture, the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued interest thereon, and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any Mortgaged Property or take any action with respect to any Mortgaged Property so acquired by it if such acquisition or action would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. RETURN OF AIRCRAFT, ETC. (a) If an Event of Default shall have occurred and be continuing, subject to Sections 4.03 and 4.04 hereof, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Mortgaged Property included in the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents to the fullest extent permitted by applicable law, and (ii) pursue all or part of such Mortgaged Property wherever it may be found and, in the event that a Lease Event of Default has occurred and is continuing, may enter any of the premises of Lessee wherever such Mortgaged Property may be or be supposed to be and search for such Mortgaged Property and take possession of and remove such Mortgaged Property. All expenses of -34- 35 obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Trust Indenture. (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Mortgaged Property, make all such expenditures for maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modifications or alterations to and of the Mortgaged Property, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the Mortgaged Property and to carry on the business and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Mortgaged Property, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modification or alteration of the Mortgaged Property or any part thereof as the Indenture Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Mortgaged Property and every part thereof, except Excluded Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Trust Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, improvement, modification or alteration of the Mortgaged Property and of conducting the business thereof, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Mortgaged Property or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Trust Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee with respect hereto. SECTION 4.06. REMEDIES CUMULATIVE. Each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or Lessee or to be an acquiescence therein. SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS. In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Trust Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Owner Trustee, the Indenture Trustee and Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Mortgaged Property, and all rights, remedies and powers of the Owner Trustee, the Indenture Trustee or Lessee shall continue as if no such proceedings had been instituted. SECTION 4.08. WAIVER OF PAST DEFAULTS. Upon written instruction from a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Default hereunder and its consequences and upon any such waiver such Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or other Default or impair any right consequent -35- 36 thereon; provided, that in the absence of written instructions from all the Certificate Holders, the Indenture Trustee shall not waive any Default (i) in the payment of the Principal Amount, Make-Whole Amount, if any, and interest and other amounts due under any Secured Certificate then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Certificate Holder. SECTION 4.09. APPOINTMENT OF RECEIVER. The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee thereof) for all or any part of the Mortgaged Property, whether such receivership be incidental to a proposed sale of the Mortgaged Property or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Mortgaged Property shall be entitled to exercise all the rights and powers of the Indenture Trustee with respect to the Mortgaged Property. SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC. The Owner Trustee irrevocably appoints the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture, whether pursuant to foreclosure or power of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Owner Trustee hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Trust Indenture, the right of any Certificate Holder to receive payment of principal of, and premium, if any, and interest on a Secured Certificate on or after the respective due dates expressed in such Secured Certificate, or to bring suit for the enforcement of any such payment on or after such respective dates in accordance with the terms hereof, shall not be impaired or affected without the consent of such Certificate Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default arising from a failure to pay Rent, the Indenture Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms of Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default or Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture Trustee shall not have received instructions as above provided within 20 days after mailing notice of such Event of Default to the Certificate Holders, the Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default or Default as it shall determine advisable in the best interests of the -36- 37 Certificate Holders. If the Indenture Trustee shall at any time declare the Lease to be in default pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall forthwith notify the Owner Participant, the Certificate Holders, the Owner Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall not be deemed to have knowledge of a Default or an Event of Default (except, in the case of the Indenture Trustee, the failure of Lessee to pay any installment of Basic Rent within one Business Day after the same shall become due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee, the Owner Participant or one or more Certificate Holders. SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, subject to the terms of this Section 5.02, take such of the following actions as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder as shall be specified in such instructions; (ii) give such notice or direction or exercise such right, remedy or power under the Lease, the Participation Agreement, the Purchase Agreement, or any other part of the Trust Indenture Estate as shall be specified in such instructions; and (iii) after the occurrence and during the continuance of an Event of Default, approve as satisfactory to the Indenture Trustee all matters required by the terms of the Lease to be satisfactory to the Owner Trustee, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall not approve any such matter as satisfactory to the Indenture Trustee; provided, that anything contained in this Trust Indenture, the Lease or the other Operative Documents to the contrary notwithstanding: (1) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excluded Payments from Lessee or the Guarantor, exercise any election or option or make any decision or determination or to give or receive any notice, consent, waiver or approval in respect of any Excluded Payment and seek legal or equitable remedies to require Lessee or the Guarantor to maintain the insurance coverage referred to in Section 11 of the Lease; provided, that the rights referred to in this clause (1) shall not be deemed to include the exercise of any remedies provided for in Section 15 of the Lease other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by Lessee or the Guarantor of such amounts included in Excluded Payments or performance by Lessee or the Guarantor of such insurance covenant, or to recover damages for the breach thereof or for specific performance of any covenant of Lessee or the Guarantor; (2) unless an Event of Default and an Indenture Trustee Event shall have occurred and be continuing and except as provided in clause (4) below, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Event of Default shall have occurred and be continuing, no amendment, modification, waiver or consent in respect of the Lease shall affect the amount or timing of, or the right to enforce payment of, any Excluded Payment; (3) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which any thereof is permitted or required to give or furnish to -37- 38 the Owner Trustee or Lessor pursuant to any Operative Document (including pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 11(e) of the Lease specifically confers on Lessor or the Owner Participant, (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of Lessor under Section 21 of the Lease and (v) to give notices of default under Section 14 of the Lease; (4) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee shall have the right to the exclusion of the Indenture Trustee to adjust Rent, Stipulated Loss Values and Termination Values as provided in Section 3(d) of the Lease and to select counsel with respect to any opinion relating to tax matters to be delivered solely to the Owner Participant; (5) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee may, without the consent of the Indenture Trustee, (i) solicit and make bids with respect to the Aircraft under Section 9 of the Lease in respect of a termination of the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales value" and "fair market rental value" under Section 19 of the Lease for all purposes except following an Event of Default pursuant to Section 15 of the Lease, and (iii) make an election pursuant to and in accordance with the provisions of Section 9(c) of the Lease; and (6) so long as no Event of Default shall have occurred and be continuing, except as provided in clauses (2) and (3) above, all rights of the "Lessor" under the Lease shall be exercised by the Owner Trustee to the exclusion of the Indenture Trustee including, without limitation, the right to (i) exercise all rights with respect to Lessee's use and operation, modification or maintenance of the Aircraft and any Engine which the Lease specifically confers on Lessor, and (ii) consent to and approve any assignment pursuant to Section 13 of the Lease; provided that the foregoing shall not limit (A) any rights separately granted to the Indenture Trustee under the Operative Documents or (B) the right of the Indenture Trustee to receive any funds to be delivered to the "Lessor" under the Lease (except with respect to Excluded Payments) and under the Purchase Agreement. Notwithstanding anything to the contrary contained herein, the Indenture Trustee shall have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) declare the Lease to be in default under Section 15 thereof and (B) subject only to the provisions of Sections 4.03, 4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15 (other than in connection with Excluded Payments) at any time that a Lease Event of Default shall have occurred and be continuing. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as specified by Lessee pursuant to Section 8(e) of the Participation Agreement or as may be specified from time to time in written instructions of a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee will furnish to each Certificate Holder (and, during the continuation of an Indenture Trustee Event, to the Owner Trustee and Owner Participant), promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder, including, without limitation, a copy of any Termination Notice (as defined in the Lease) and a copy of each report or notice received pursuant to Sections 9(a) and 11(c) of the Lease, respectively, to the extent that the same shall not have been furnished to such Certificate Holder pursuant hereto or to the Lease. (b) If any Lease Event of Default shall have occurred and be continuing and the Owner Trustee shall not have cured fully such Lease Event of Default under and in accordance with Section 4.03 hereof, on request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall declare the Lease to be in default -38- 39 pursuant to Section 15 thereof and exercise those remedies specified by such Certificate Holders. The Indenture Trustee agrees to provide to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with such declaration by the Indenture Trustee, notice of such declaration by the Indenture Trustee. SECTION 5.03. INDEMNIFICATION. The Indenture Trustee shall not be under any obligation to take any action under this Trust Indenture and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds or otherwise incur the risk of any financial liability in the performance of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (the written indemnity of any Certificate Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Indenture Trustee shall be accepted as reasonable assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture or any other Operative Document be deemed to impose a duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or of the Lease or is otherwise contrary to Law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR INSTRUCTIONS. The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Trust Indenture or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Trust Indenture or as expressly provided in written instructions from Certificate Holders as provided in this Trust Indenture; and no implied duties or obligations shall be read into this Trust Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof), promptly take such action as may be necessary duly to discharge all liens and encumbrances on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the ownership of the Aircraft or the administration of the Trust Indenture Estate or any other transaction pursuant to this Trust Indenture or any document included in the Trust Indenture Estate. SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR INSTRUCTIONS. The Owner Trustee and the Indenture Trustee agree that they will not use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate except (i) as required by the terms of the Lease or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Trust Indenture and in accordance with the express terms hereof. SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES. At any time an Airframe or Engine is to be replaced under or pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of Default is continuing, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid, but only upon compliance by Lessee with the applicable provisions of Section 10 of the Lease and upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee, requesting such release specifically describing the Airframe and/or Engine(s) so to be released. -39- 40 (2) A certificate signed by a duly authorized officer of Lessee stating the following: A. With respect to the Replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe to be received (including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number) as consideration for the Airframe to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of such Replacement Airframe free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Airframe will on such date be in good working order and condition, and that such Replacement Airframe has been or, substantially concurrently with such withdrawal, will be duly registered in the name of the Owner Trustee under the Federal Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and that Lessee will have the full right and authority to use such Replacement Airframe; (iv) the existence of the insurance required by Section 11 of the Lease with respect to such Replacement Airframe and the payment of all premiums then due thereon; (v) that the Replacement Airframe is of the same or an improved model as the Airframe requested to be released from this Indenture; (vi) the fair market value of the Replacement Airframe as of the date of such certificate (which value in the judgment of Lessee shall be not less than the then fair market value of the Airframe requested to be released) (assuming such Airframe was in the condition and repair required to be maintained under the Lease); -40- 41 (vii) the fair market value of the Airframe immediately prior to the date the Airframe suffered an Event of Loss (assuming such Airframe was in the condition and repair required to be maintained under the Lease); (viii) that no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default, has occurred which has not been remedied or waived, and that Lessee will not be in default, by the making and granting of the request for release and the addition of a Replacement Airframe, in the performance of any of the terms and covenants of the Lease; and (ix) that the release of the Airframe so to be released will not be in contravention of any of the provisions of this Indenture; or B. with respect to the replacement of any Engine: (i) a description of the Engine which shall be identified by manufacturer's serial number; (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) as consideration for the Engine to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Engine will on such date be in good working order and condition and that such Replacement Engine is substantially the same as the Engine to be released (or as improved model); (iv) the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then fair market value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease)); (v) the fair market value of the Engine to be released (immediately prior to any Event of Loss suffered by such Engine and assuming that such Engine was in the condition and repair required to be maintained under the Lease); -41- 42 (vi) that each of the conditions specified in Section 10(b) of the Lease with respect to such Replacement Engine have been satisfied and that Lessee will not be in default, by the making and granting of the request for release and the addition of the Replacement Engine, in the performance of any of the terms and covenants of the Lease; (vii) that, with respect to the replacement of an Engine pursuant to Section 9(d) of the Lease, no Lease Event of Default and no Lease Default has occurred which has not been remedied or waived; and (viii) that the release of the Engine so to be released will not be in contravention of any of the provisions of this Indenture. (3) (a) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting such Replacement Airframe or Replacement Engine and any related warranty rights to the lien of this Indenture. (b) With respect to the replacement of any Engine, such Uniform Commercial Code financing statements covering the lien created by this Indenture as deemed necessary or desirable by counsel for the Indenture Trustee to protect the lien under the Indenture in the Replacement Engine. (4) A certificate from either an aircraft engineer (who may be an employee of Lessee) or a firm of independent aircraft appraisers selected by Lessee confirming the accuracy of the information set forth in clause (2)A(vi) of this Section 5.06. (5) The opinion of in-house counsel to Lessee, or other counsel satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be lawfully released from the lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the lien of this Indenture and covered by the -42- 43 Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Indenture, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate and interest of the Owner Trustee to and the lien of this Indenture on such Replacement Aircraft or Replacement Engine. SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS. If a Replacement Airframe or Replacement Engine is being substituted as contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Certificate Holders and Lessee, subject to fulfillment of the conditions precedent and compliance by Lessee with its obligations set forth in Section 10 of the Lease and the requirements of Section 5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to execute and deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease. SECTION 5.08. EFFECT OF REPLACEMENT. In the event of the substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced, and (b) the provisions of this Trust Indenture shall no longer be applicable to the Airframe or Engine or Engines being replaced, which shall be released from the Lien of this Indenture. SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of the Lease shall be held in accordance with the terms of such Section and the Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of the Owner Trustee under such Section. Any amounts held by the Indenture Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee may acquire the same using its best efforts. Unless otherwise expressly provided in this Trust Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Trust Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever such sale is necessary to make a distribution required by this Trust Indenture. -43- 44 ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse all monies constituting part of the Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its individual capacity, and the Indenture Trustee, in its individual capacity, shall not be answerable or accountable under any circumstances, except (i) for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be willful misconduct or negligence), (ii) in the case of the Indenture Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii) for liabilities that may result, in the case of the Owner Trustee, from the inaccuracy of any representation or warranty of the Owner Trustee expressly made in its individual capacity in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents) or, in the case of the Indenture Trustee (in its individual capacity), from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable for any action or inaction of the other or of the Owner Participant. SECTION 6.02. ABSENCE OF DUTIES. In the case of the Indenture Trustee, except in accordance with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the Lease or of this Trust Indenture or any other document, or to see to the maintenance of any such registration, recording or filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Lessee's covenants under the Lease with respect to the Aircraft. The Owner Participant shall not have any duty or responsibility hereunder, including, without limitation, any of the duties mentioned in clauses (i) through (v) above; provided, that nothing contained in this sentence shall limit any obligations of the Owner Participant under the Participation Agreement or relieve the Owner Participant from any restriction under Section 4.03 hereof. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR DOCUMENTS. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT NOR THE OWNER PARTICIPANT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its individual capacity warrants that (i) the Owner -44- 45 Trustee has received on the Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Trustee in its individual capacity. Neither the Owner Trustee, in its individual capacity or as Owner Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual or trust capacities, makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Trust Indenture, the Trust Agreement, the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Owner Trustee made in its individual capacity and the representations and warranties of the Indenture Trustee, in each case expressly made in this Trust Indenture or in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement). The Loan Participants, the Certificate Holders and the Owner Participant make no representation or warranty hereunder whatsoever. SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the Certificate Holders, Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by Law or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under such general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for any interest thereon (except that the Indenture Trustee shall invest all monies held as directed by Lessee so long as no Lease Event of Default or Lease Default has occurred and is continuing (or in the absence of such direction, by the Majority In Interest of Certificate Holders) in Cash Equivalents; provided, however, that any payments received, or applied hereunder, by the Indenture Trustee shall be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL. Neither the Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors (or Executive Committee thereof) of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Secured Certificates outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to Lessee the manner of ascertainment of which is not specifically described herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee and the Indenture Trustee for any action taken or omitted to be taken by them in good faith in reliance thereon. The Indenture Trustee shall assume, and shall be fully protected in assuming, that the Owner Trustee is authorized by the Trust Agreement to enter into this Trust Indenture and to take all action to be taken by it pursuant to the provisions hereof, and shall not inquire into the authorization of the Owner Trustee with respect thereto. In the administration of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled persons. -45- 46 SECTION 6.06. CAPACITY IN WHICH ACTING. The Owner Trustee acts hereunder solely as trustee as herein and in the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein, in the Trust Agreement and in the Participation Agreement. SECTION 6.07. COMPENSATION. The Indenture Trustee shall be entitled to reasonable compensation, including expenses and disbursements (including the reasonable fees and expenses of counsel), for all services rendered hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by Lessee, and shall have the right, on and subsequent to an Event of Default hereunder, to use or apply any monies held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against the Loan Participants, the Certificate Holders, the Owner Trustee or the Owner Participant for any fee as compensation for its services as trustee under this Trust Indenture. SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS. In the administration of the trusts created hereunder, the Indenture Trustee shall have the right to seek instructions from a Majority in Interest of Certificate Holders should any provision of this Trust Indenture appear to conflict with any other provision herein or should the Indenture Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no liability in refraining from acting until it receives such instructions. The Indenture Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.08. ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. SCOPE OF INDEMNIFICATION. The Owner Trustee, not in its individual capacity, but solely as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its individual and trust capacities), and its successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Trust Indenture), claims, actions, suits, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever, which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also indemnified against by any other Person under any other document) in any way relating to or arising out of this Trust Indenture or any other Operative Document to which it is a party or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, to the extent not reimbursed by Lessee. Without limiting the foregoing, the Indenture Trustee agrees that, prior to seeking indemnification from the Trust Indenture Estate, it will demand, and take such action as it may in its discretion determine to be reasonable to pursue, indemnification available to the Indenture Trustee under the Lease or the Participation Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be entitled to any indemnification for any Expenses to the extent relating to or arising from the willful misconduct or gross negligence (or negligence in the case of handling funds) of the Indenture Trustee in the performance of its duties hereunder or resulting from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) referred to in Section 6.03 hereof, or as provided in Section 6.01 -46- 47 hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities under such Sections. In addition, if necessary, the Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement including upon any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee, Lessee and the Certificate Holders. SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Certificate Holders may at any time (but only with the consent of Lessee, which consent shall not be unreasonably withheld, except that such consent shall not be necessary if a Lease Event of Default is continuing) remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Certificate Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so long as no Lease Event of Default shall have occurred and be continuing, shall be subject to Lessee's reasonable approval. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as above provided. (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee an instrument accepting such appointment and assuming the obligations of the Indenture Trustee under the Participation Agreement arising from and after the time of such appointment, and thereupon such successor Indenture Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee herein; but nevertheless upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all monies or other property then held by such predecessor Indenture Trustee hereunder. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having its principal place of business in the Borough of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; Hartford, Connecticut; or Boston, -47- 48 Massachusetts and having (or whose obligations under the Operative Documents are guaranteed by an affiliated entity having) a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. (d) Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Indenture Trustee may be transferred, shall, subject to the terms of paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the Indenture Trustee under this Trust Indenture without further act. SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Trust Indenture Estate shall be situated or to make any claim or bring any suit with respect to or in connection with the Trust Indenture Estate, this Trust Indenture, any other Indenture Agreement, the Secured Certificates or any of the transactions contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interests of the Certificate Holders (and the Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture Trustee shall have been requested to do so by a Majority in Interest of Certificate Holders, then in any such case, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and such other instruments as may from time to time be necessary or advisable either (1) to constitute one or more bank or trust companies or one or more persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as additional trustee or trustees of all or any part of the Trust Indenture Estate, or to act as separate trustee or trustees of all or any part of the Trust Indenture Estate, in each case with such rights, powers, duties and obligations consistent with this Trust Indenture as may be provided in such supplemental indenture or other instruments as the Indenture Trustee or a Majority in Interest of Certificate Holders may deem necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional and separate trustee, subject in each case to the remaining provisions of this Section 8.03. If the Owner Trustee shall not have taken any action requested of it under this Section 8.03(a) that is permitted or required by its terms within 15 days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing provisions of this Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and perform any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee. In case any additional or separate trustee appointed under this Section 8.03(a) shall die, become incapable of acting, resign or be removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to the Indenture Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.03(a). (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Trust Indenture Estate or otherwise payable under any Operative Document to the Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights, powers, duties and obligations conferred or imposed upon any additional or separate trustee shall be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly except to the extent that applicable Law of any jurisdiction in which any particular act is to be performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of the Indenture Trustee or a Majority in -48- 49 Interest of Certificate Holders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Indenture Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.03 shall be subject to, and shall have the benefit of Articles IV through VIII and Article X hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. (c) If at any time the Indenture Trustee shall deem it no longer necessary or desirable in order to conform to any such law or take any such action or shall be advised by such counsel that it is no longer so necessary or desirable in the interest of the Certificate Holders, or in the event that the Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Certificate Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when and to the extent it could so act under Section 8.03(a) hereof. ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS. (a) Except as provided in Section 5.02 hereof, and except with respect to Excluded Payments, the Owner Trustee agrees it shall not enter into any amendment of or supplement to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee and a Majority in Interest of Certificate Holders. Anything to the contrary contained herein notwithstanding, without the necessity of the consent of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter into amendments of or additions to the Lease to modify Section 5 (except to the extent that such amendment would affect the rights or exercise of remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such amendments, modifications and changes do not and would not affect the time of, or reduce the amount of, Rent payments until after the payment in full of all Secured Obligations or otherwise adversely affect the Certificate Holders. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with the Certificate Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Certificate Holders, or does not adversely effect the Certificate Holders, but upon the written request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each holder of an affected Secured Certificate then outstanding, no such amendment of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement or waiver or modification of the terms of, or consent -49- 50 under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an Event of Default) of the Lease, the definitions of "Event of Default", "Default", "Lease Event of Default", "Lease Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Secured Certificate, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in favor of the Certificate Holders, (iv) consent to any change in the Trust Indenture or the Lease which would permit redemption of Secured Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as permitted by Section 2.14 hereof, (v) modify any of the provisions of Section 3(d)(v) of the Lease, or modify, amend or supplement the Lease or consent to any assignment of the Lease, in either case releasing Lessee from its obligations in respect of the payment of Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. So long as no Lease Event of Default has occurred and is continuing, without the consent of Lessee no amendment or supplement to this Trust Indenture or waiver or modification of the terms hereof shall adversely affect Lessee. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Certificate Holder for any of the following purposes: (i) (a) to cure any defect or inconsistency herein or in the Secured Certificates, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Certificate Holders in its capacity solely as Certificate Holder; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Trust Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Certificate Holders, or to surrender any rights or power herein conferred upon the Owner Trustee, the Owner Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and (vii) to include on the Secured Certificates any legend as may be required by law. SECTION 9.02. TRUSTEES PROTECTED. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of Section 9.01 hereof adversely affects any right, duty, immunity or indemnity with respect to such institution under this Trust Indenture or the Lease, such institution may in its discretion decline to execute such document. SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to Section 9.01 hereof, the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each Certificate Holder at its address last set forth in the Secured Certificate Register, but the failure of the Indenture Trustee to mail such copies shall not impair or affect the validity of such document. -50- 51 SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST AGREEMENT AND INDENTURE SUPPLEMENT. No written request or consent of the Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof shall be required to enable the Owner Trustee to enter into any Lease Supplement specifically required by the terms of the Lease or to execute and deliver a Trust Agreement and Indenture Supplement specifically required by the terms hereof. ARTICLE X MISCELLANEOUS SECTION 10.01. TERMINATION OF TRUST INDENTURE. Upon (or at any time after) payment in full of the Principal Amount of, Make-Whole Amount, if any, and interest on and all other amounts due under all Secured Certificates and provided that there shall then be no other Secured Obligations due to the Certificate Holders and the Indenture Trustee hereunder or under the Participation Agreement, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft and the Engines from the Lien of this Trust Indenture and releasing the Lease, the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto from the assignment and pledge thereof hereunder and the Indenture Trustee shall execute and deliver such instrument as aforesaid and give written notice thereof to Lessee; provided, however, that this Trust Indenture and the trusts created hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property constituting part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all monies or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE HOLDERS. No holder of a Secured Certificate shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Secured Certificate or other right, title and interest of any Certificate Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Trust Indenture or entitle such holder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Trust Indenture Estate. SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING. Any sale or other conveyance of the Trust Indenture Estate, or any part thereof (including any part thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind the Certificate Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders in and to such Trust Indenture Estate or part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS. Nothing in this Trust Indenture, whether express or implied, shall be construed to give any person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or equitable right, remedy or claim under or in respect of this Trust Indenture. -51- 52 SECTION 10.05. NOTICES. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053) with a copy to the Owner Participant addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee, addressed to it at its office at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to any Participant, Lessee or any Certificate Holder, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party (if any) set forth on the signature pages to the Refunding Agreement or in the Secured Certificate Register. Whenever any notice in writing is required to be given by the Owner Trustee, any Participant or the Indenture Trustee or any Certificate Holder or Lessee to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after being mailed, addressed as provided above. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Trust Indenture. SECTION 10.06. SEVERABILITY. Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS. No term or provision of this Trust Indenture or the Secured Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Owner Trustee and the Indenture Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any Secured Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 10.08. SUCCESSORS AND ASSIGNS. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the permitted successors and assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificate Holder shall bind the successors and assigns of such holder. This Trust Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby, thereby and by the Participation Agreement. Each Certificate Holder by its acceptance of a Secured Certificate agrees to be bound by this Trust Indenture and all provisions of the Participation Agreement applicable to a Loan Participant or a Certificate Holder. SECTION 10.09. HEADINGS. The headings of the various Articles and sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. -52- 53 SECTION 10.10. NORMAL COMMERCIAL RELATIONS. Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or any bank or other Affiliate of such Participant may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Lessee, fully to the same extent as if this Trust Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.11. GOVERNING LAW; COUNTERPART FORM. THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the parties hereto in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.12. VOTING BY CERTIFICATE HOLDERS. All votes of the Certificate Holders shall be governed by a vote of a Majority in Interest of Certificate Holders, except as otherwise provided herein. SECTION 10.13. BANKRUPTCY. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee hereunder), shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14. NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any of the provisions of this Trust Indenture or the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner Trustee will take any action contrary to Lessee's rights under the Lease, including the right to possession and use of, and the quiet enjoyment of, the Aircraft, except in accordance with provisions of the Lease. * * * -53- 54 IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to be duly executed by their respective officers thereof duly authorized as of the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, as Owner Trustee By:___________________________ Name:_________________________ Title: STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By:___________________________ Name:_________________________ Title: -54- 55 EXHIBIT A TO TRUST INDENTURE AND MORTGAGE TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1990 A] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1990 A], dated _______ __, _____ (herein called this "TRUST AGREEMENT AND INDENTURE SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1990 A] dated as of August 23, 1990 (the "TRUST AGREEMENT"), between FIRST NATIONAL BANK OF BOSTON and the Owner Participant named therein. W I T N E S S E T H: WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1990 A], dated as of June 12, 1996 (as amended and supplemented to the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft, and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust Agreement and Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for recordation on the date hereof with the FAA as one document; NOW, THEREFORE, this Trust Agreement and Indenture Supplement witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust Indenture Estate covers all of Owner Trustee's right, title and interest in and to the following described property: 56 AIRFRAME One airframe identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number ------------ ----- ------------ -------------- together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Four aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows: Manufacturer Manufacturer's Model Serial Number ------------ -------------------- ------------- together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to any of such engines. Together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts). As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Certificate Holders, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under the Lease Supplement [of even date herewith] covering the property described above. Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III of the Trust Indenture without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity EXHIBIT A-2 57 thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Agreement and Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Trust Agreement and Indenture Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Agreement and Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. EXHIBIT A-3 58 IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Agreement and Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, Owner Trustee By:_____________________________________ Name: Title: 59 SCHEDULE I
PRINCIPAL AMOUNT INTEREST RATE ---------------- ------------- Series A . . . . . . $51,475,500 7.67% Series B . . . . . . $17,158,500 8.07% Series C . . . . . . $17,158,341 8.97% Series D . . . . . . $12,657,657 10.15%
60 SECURED CERTIFICATES AMORTIZATION SERIES A AIRCRAFT: N669US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 2.00000194% Jul 2, 1997 0.00000000% Jan 2, 1998 2.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.00000000% Jul 2, 1999 0.00000000% Jan 2, 2000 2.00000000% Jul 2, 2000 0.00000000% Jan 2, 2001 2.00000000% Jul 2, 2001 0.00000000% Jan 2, 2002 2.00000000% Jul 2, 2002 0.00000000% Jan 2, 2003 2.00000000% Jul 2, 2003 0.00000000% Jan 2, 2004 2.00000000% Jul 2, 2004 0.00000000% Jan 2, 2005 2.00000000% Jul 2, 2005 0.00000000% Jan 2, 2006 4.00000000% Jul 2, 2006 0.00000000% Jan 2, 2007 4.00000000% Jul 2, 2007 0.00000000% Jan 2, 2008 4.00000000% Jul 2, 2008 0.00000000% Jan 2, 2009 4.00000000% Jul 2, 2009 0.00000000% Jan 2, 2010 4.00000000% Jul 2, 2010 0.00000000% Jan 2, 2011 3.00000000% Jul 2, 2011 14.83361793% Jan 2, 2012 0.00000000% Jul 2, 2012 21.03333625% Jan 2, 2013 0.35130110% Jul 2, 2013 21.85343707% Jan 2, 2014 0.87919496% Jul 2, 2014 0.00000000% Jan 2, 2015 0.04911074%
61 SERIES B AIRCRAFT: N669US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 2.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 2.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.00000000% Jul 2, 1999 0.00000000% Jan 2, 2000 2.00000000% Jul 2, 2000 0.00000000% Jan 2, 2001 2.00000000% Jul 2, 2001 0.00000000% Jan 2, 2002 2.00000000% Jul 2, 2002 0.00000000% Jan 2, 2003 2.00000000% Jul 2, 2003 0.00000000% Jan 2, 2004 2.00000000% Jul 2, 2004 0.00000000% Jan 2, 2005 2.00000000% Jul 2, 2005 0.00000000% Jan 2, 2006 4.00000000% Jul 2, 2006 0.00000000% Jan 2, 2007 4.00000000% Jul 2, 2007 0.00000000% Jan 2, 2008 4.00000000% Jul 2, 2008 0.00000000% Jan 2, 2009 22.92187546% Jul 2, 2009 0.00000000% Jan 2, 2010 40.91090713% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 6.16721741%
62 SERIES C AIRCRAFT: N669US
PERCENTAGE OF PRINCIPAL PAYMENT DATE AMOUNT TO BE PAID ------------ ----------------------- Jan 2, 1997 1.99909187% Jul 2, 1997 0.00000000% Jan 2, 1998 2.00001853% Jul 2, 1998 0.00000000% Jan 2, 1999 2.00001853% Jul 2, 1999 0.00000000% Jan 2, 2000 2.00001853% Jul 2, 2000 0.00000000% Jan 2, 2001 2.00001853% Jul 2, 2001 0.00000000% Jan 2, 2002 2.00001853% Jul 2, 2002 0.00000000% Jan 2, 2003 2.00001853% Jul 2, 2003 0.00000000% Jan 2, 2004 2.00001853% Jul 2, 2004 0.00000000% Jan 2, 2005 2.00001853% Jul 2, 2005 0.00000000% Jan 2, 2006 13.48560446% Jul 2, 2006 0.00000000% Jan 2, 2007 25.50879482% Jul 2, 2007 0.00000000% Jan 2, 2008 29.04015021% Jul 2, 2008 0.00000000% Jan 2, 2009 13.96621037%
63 SERIES D AIRCRAFT: N669US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 25.34999171% Jul 2, 1997 0.00000000% Jan 2, 1998 5.40351978% Jul 2, 1998 0.00000000% Jan 2, 1999 7.03779538% Jul 2, 1999 0.00000000% Jan 2, 2000 8.83795477% Jul 2, 2000 0.00000000% Jan 2, 2001 10.82083359% Jul 2, 2001 0.00000000% Jan 2, 2002 9.81057553% Jul 2, 2002 0.00000000% Jan 2, 2003 9.74941097% Jul 2, 2003 0.00000000% Jan 2, 2004 11.98943059% Jul 2, 2004 0.00000000% Jan 2, 2005 11.00048769%
64 SCHEDULE II PASS THROUGH TRUST AGREEMENTS 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. 4. 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. 1996-1D, dated as of the June 12, 1996. EX-4.B4 13 LEASE AGREEMENT-1990 A 1 LEASE AGREEMENT [NW 1990 A] This LEASE AGREEMENT [NW 1990 A], dated as of August 23, 1990, between THE FIRST NATIONAL BANK OF BOSTON, 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"); WITNESSETH: SECTION 1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for all purposes of this Lease Agreement [NW 1990 A] 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 any 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 Boeing 747-451 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 2 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. "Assumed Interest Rate" has the meaning set forth in Section 3(c) hereof. "Bank" means Algemene Bank Nederland N.V., Cayman Islands Branch. "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 Commencement Date and ending on February 23, 2015. "Bill of Sale" means a full warranty bill 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 Bill of Sale shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good and marketable title to the Airframe and each Engine described in such Bill 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 New York, New York; Hartford, Connecticut; Boston, Massachusetts; or Minneapolis, Minnesota. "Certificate Holder" means Certificate Holder as defined in the Trust Indenture. -2- 3 "Civil Reserve Air Fleet Program" shall mean the Civil Reserve Air Fleet Program administered by the United States Government pursuant to Executive Order No. 11490, as amended, or any substantially similar program. "Code" means the Internal Revenue Code of 1986, as amended through the Delivery Date. "Commencement Date" means February 23, 1991. "Commitment" means the commitment of a Loan Participant 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 1990 A], 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. "Debt Rate" has the meaning set forth in the Trust Indenture. "Default" means any event which with the giving of notice or the lapse of time or both would become an Event of Default pursuant to Section 14(a), (b), (e), (f) or (g) hereof. "Delivery Date" means the date of the 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, 1997. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of the four Pratt & Whitney Model PW4056 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 any 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 hereunder. The term -3- 4 "Engines" means, as of any date of determination, all Engines then leased hereunder. "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 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) shall have resulted in the loss of possession of such property by Lessee for a period in excess of 180 consecutive days; (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, 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, but in any event if such use shall have been prohibited for a period of three consecutive years, provided that no Event of Loss shall be deemed to have occurred if such prohibition has been applicable to Lessee's entire U.S. registered fleet of Boeing Model 747-400 aircraft and Lessee, prior to the expiration of such three 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; (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 the Interim Term or any Renewal Term) and shall have continued for 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 -4- 5 respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the Airframe. "Excess Amount" for the Commencement Date means an amount equal to the amount determined by multiplying Lessor's Cost by the percentage set forth in column 3 of Exhibit B hereto opposite the Commencement Date; provided, however, that, to the extent that the aggregate amount of interest due and payable on the Commencement Date on the Secured Certificates for the period from and including the Delivery Date to but excluding the Commencement Date is less than the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Commencement Date if such Secured Certificates had borne interest at the Assumed Interest Rate for such period, the corresponding percentage set forth in column 3 of Exhibit B shall be decreased by an amount equal to such differential. "Expenses" means any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, out-of-pocket costs, expenses and disbursements (including reasonable legal fees and expenses and Transaction Expenses to the extent not required to be paid by the Owner Trustee pursuant to Section 16 hereof but excluding internal costs and expenses such as salaries and overhead), of whatsoever kind and nature. "FAA Bill of Sale" means a bill 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 the Federal Aviation Act of 1958, as amended from time to time. "Federal Aviation Administration" and "FAA" mean the United States Federal Aviation Administration and any successor agency or agencies thereto. "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 or the Luftfahrt Bundesamt of the Federal Republic of Germany. "Indemnitee" means the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Loan Participants and each other Certificate Holder, -5- 6 and each of their respective Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents. "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 from acts or claims against the Indenture Trustee not related to the transactions contemplated by the Operative Documents. "Interest Period" means Interest Period as defined in the Trust Indenture. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions hereof. "Lease Agreement", "this Lease Agreement", "this Lease", "this Agreement", "herein", "hereof", "hereunder", "hereby" or other like words mean this Lease Agreement [NW 1990 A] 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 semi-annual periods throughout the Basic Term and any Renewal Term ending on a Lease Period Date, the first such period commencing on and including the Commencement Date. "Lease Period Date" means August 23, 1991 and each succeeding February 23 and August 23, 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 -6- 7 relates to the Aircraft), the FAA Bill of Sale, the Bill 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, The First National Bank of Boston, 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 The First National Bank of Boston, 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 The First National Bank of Boston, in its individual capacity, with respect to Taxes or Expenses against which Lessee is not required to indemnify the Owner Participant, Lessor or The First National Bank of Boston, 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 The First National Bank of Boston 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 seizure of the Aircraft, (2) the existence of such Lien does not interfere in any way with the use or operation 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) The First National Bank of Boston 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 The First National Bank of Boston or the Owner Participant, as appropriate). "Lessor's Cost" for the Aircraft means $127,500,000. "Lien" means any mortgage, pledge, lien, charge, claim, encumbrance, lease, sublease, sub- sublease or security interest. "Loan Participant" means each institution executing the Participation Agreement as a Loan Participant, and its respective successors and assigns, and any Certificate Holder; at any time when there is only one Certificate Holder, "each Loan Participant" shall mean such Certificate Holder. -7- 8 "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. "Manufacturer" means The Boeing Company, a Delaware corporation. "Manufacturer Documents" means the Purchase Agreement and the Consent and Agreement. "Manufacturer's FAA Bills of Sale" means the bills of sale for the Aircraft on AC Form 8050-2 or such other form as may be then approved by the Federal Aviation Administration for the Aircraft, one executed by the Manufacturer in favor of Boeing Sales Corporation, a subsidiary of the Manufacturer, and one executed by Boeing Sales Corporation in favor of Lessee. "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, Excess Amount, Stipulated Loss Value and Termination Value percentages as of the Delivery Date. "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 a rate per Lease Period equal to (a) 10.5 percent divided by (b) the number of Lease Periods per year. "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 Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Purchase Agreement Assignment and the Consent and Agreement. "Owner Participant" means the corporation executing the Participation Agreement as the Owner Participant and 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. -8- 9 "Owner Participant Parent" means [__________________] its Affiliates, and [_____________________], but only so long as the corporation executing the Participation Agreement as the Owner Participant retains any portion of its right, title and interest in and to the Trust Agreement, the Trust Estate and the Participation 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 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 1990 A], dated as of the date hereof, among Lessee, the Loan Participants, the Indenture Trustee, the Owner Participant and Owner Trustee, as such Participation Agreement may be amended or supplemented from time to time pursuant to the applicable provisions thereof. "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. "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 (vii) of Section 6 hereof. -9- 10 "Permitted Sublessee" means any entity listed in Exhibit F hereto and such other entities to which Lessor and the Indenture Trustee shall consent. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Prepaid Rent" has the meaning assigned in Section 3(g) hereof. "Purchase Agreement" means the Purchase Agreement No. 1267, dated December 13, 1985, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1990 A], 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. "Reimbursement Amount" has the meaning set forth in Section 3(g) hereof. "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. "Rent Differential Amount" has the meaning set forth in Section 3(c) hereof. "Secured Certificates" shall have the meaning assigned to that term in the Trust Indenture. "Special Purchase Price" shall mean 56.0% of Lessor's Cost. "Stipulated Loss Value" with respect to the Aircraft as of any date through and including February 23, 2015, means, but subject always to the provisions of Section 3(d)(v), 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 8 of the Tax Indemnity Agreement). To the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Lease Period in which such Stipulated Loss Value Date occurs up to -10- 11 and including such Stipulated Loss Value Date is greater or less than the amount included in calculating the percentage set forth in Exhibit C with respect to such Stipulated Loss Value Date on account of such interest, the corresponding percentage set forth in Exhibit C shall be adjusted appropriately to compensate for such differential. "Stipulated Loss Value" as of any date after February 23, 2015 shall be the amount determined as provided in Section 19(a) hereof. "Stipulated Loss Value Date" means the twenty-third calendar day of each calendar month during the Interim Term, 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. "Supplemental Rent" means all amounts, liabilities and obligations (other than Basic Rent) which Lessee assumes or agrees to pay to Lessor or others hereunder, under the Participation Agreement, under the Tax Indemnity Agreement or under any of the other Operative Documents. The parties acknowledge that Supplemental Rent is a general category and, accordingly, agree that any provision of any Operative Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment. "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"). "Tax Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1990 A], dated as of the date hereof, between the Owner Participant and Lessee, as originally executed or as modified, amended or supplemented pursuant to the applicable provisions thereof. "Term" means the Interim Term, Basic Term and, if actually entered into, any Renewal Term. "Termination Date" has the meaning set forth in Section 9(a) hereof. -11- 12 "Termination Value" with respect to the Aircraft as of any date through and including February 23, 2015, means, but subject always to the provisions of Section 3(d)(v), 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 8 of the Tax Indemnity Agreement). In the event that the Termination Date with respect to which Termination Value is determined is a date on which Basic Rent is payable in advance as indicated on Exhibit B, to the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Lease Period ending on such Termination Date is greater or less than the amount included in calculating the corresponding percentage set forth in Exhibit D with respect to such Termination Date on account of such interest, the corresponding percentage set forth in Exhibit D shall be adjusted appropriately to compensate for such differential. "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Messrs. Day, Berry & Howard, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Messrs. Csaplar & Bok, counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Messrs. White & Case, special counsel to the Loan Participants, such information to be furnished by the Loan Participants, and (4) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust Indenture, such information to be furnished by the Indenture Trustee, (v) the fee of Avmark Inc. (or of such other appraiser as shall be acceptable to Lessee and the Owner Participant) with respect to the appraisal of the Aircraft pursuant to Section 4(a)(xx) of the Participation Agreement, such information to be furnished by the Owner Participant, (vi) the reasonable and actual fees, expenses and disbursements of [______________________], special counsel to the Owner Participant, such information to be furnished by the Owner Participant, and (vii) the fee payable to [_______________________], on the Delivery Date. "Trust Agreement" means that certain Trust Agreement [NW 1990 A], dated as of the date hereof, between the Owner Participant and The First National Bank of Boston, in its individual capacity, as originally executed or as modified, amended or supplemented pursuant to the applicable provisions -12- 13 thereof, including, without limitation, supplementation thereof by one or more Trust Supplements entered into pursuant to the applicable provisions thereof. "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 1990 A], dated as of the date hereof, between Lessor and the Indenture Trustee, as originally executed or as modified, amended or supplemented in accordance with the provisions thereof. "Trust Supplement" means a supplement to the Trust Agreement and the Trust Indenture, substantially in the form of Exhibit A to the Trust Indenture. "U.S. Air Carrier" means any United States air carrier as to which there is in force a certificate issued pursuant to Section 401 of the Federal Aviation Act of 1958, as amended, and as to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the regulations under such 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 for the performance by such employees of similar functions within the United States of America (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 Section 4(a) of the Participation Agreement) to accept the transfer of title to and simultaneously to lease to Lessee hereunder, and Lessee hereby agrees (subject to satisfaction of the conditions set forth in Section 4(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) Interim Term and Basic Term. The Interim Term shall commence on the Delivery Date and end on and include the day immediately preceding the Commencement Date unless earlier terminated pursuant to the provisions hereof. The Basic Term shall commence on the Commencement Date and end on February 23, 2015, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. -13- 14 (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 48 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 applicable Lease Period Date specified in Exhibit B hereto. Although the Basic Rent percentages set forth in Exhibit B hereto have been computed on the assumption that the rate of interest on the Secured Certificates throughout the Term will be 10.5% per annum, computed on the basis of a 360-day year of twelve 30-day months (the "Assumed Interest Rate"), Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, each installment of Basic Rent shall be increased or decreased (but not below zero), as the case may be, by the Rent Differential Amount (as defined herein). For purposes hereof, "Rent Differential Amount" shall mean, as of any Lease Period Date with respect to the Basic Term, the difference between (i) the aggregate amount of interest due and payable on such Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on such Lease Period Date if such Secured Certificates had borne interest at the Assumed Interest Rate, in each case for the period from and including the Lease Period Date (or the Commencement Date in the case of the first Lease Period) next preceding such Lease Period Date to but excluding such Lease Period Date. If, as of any Lease Period Date, the amount determined in accordance with clause (i) of the immediately preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Basic Rent payable on such Lease Period Date shall be increased by the Rent Differential Amount. If, as of any Lease Period Date, the amount determined in accordance with such clause (ii) shall exceed the amount determined in accordance with such clause (i), the amount of Basic Rent due on such Lease Period Date shall be decreased (but not below zero) by the Rent Differential Amount. Notwithstanding the foregoing, the amount of Basic Rent due on any Lease Period Date prior to the second anniversary of the Commencement Date shall not be decreased below an amount equal to 1% of Lessor's Cost. (d) Adjustments to Basic Rent. (i) In the event that (A) the Delivery Date occurs other than on August 23, 1990, or (B) Transaction Expenses paid by Lessor pursuant to Section 16(a) of the Participation Agreement are determined to be other than 0.5% 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 April 1, 1991 using the same methods and -14- 15 assumptions used to calculate original Rent and 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. (ii) In the event of a refinancing or a refunding 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 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. (iii) Whenever Basic Rent is recalculated pursuant to this Section 3(d), the Owner Participant shall redetermine the Excess Amounts set forth in column 3 of Exhibit B in a manner consistent with such recalculation. In addition, (X) any recalculation of Basic Rent, Stipulated Loss Value or Termination Value percentages made pursuant to this Section 3(d) shall take into account any decrease in the Excess Amount with respect to the Commencement Date required by the proviso to the definition of "Excess Amount", and (Y) at the time of any payment of Stipulated Loss Value or Termination Value, the Stipulated Loss Value percentage set forth in Exhibit C or the Termination Value percentage set forth in Exhibit D, by reference to which the amount of such payment is determined shall be recalculated to take into account any decrease in the Excess Amount with respect to the Commencement Date or any Lease Period Date that has not theretofore been taken into account in accordance with clause (X) of this sentence. (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 -15- 16 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 or any Loan Participant or a Certificate Holder not related to the 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 Section Section 4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc. 75-28 Section 4.08(1) shall be applied on a prospective basis from the date of such adjustment) 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 when due any amount of premium payable when due under the Trust Indenture and shall pay amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when the same shall become due and payable. 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 office at 150 Royall Street, Canton, Massachusetts 02021 (or such other office of Lessor in the continental United States or such other account 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 -16- 17 as the Trust Indenture shall not have been fully discharged, Lessor hereby 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 the office of the Indenture Trustee, One Constitution Plaza, Hartford, Connecticut 06115, Attention: Corporate Trust Department (or such other office of the Indenture Trustee in the continental United States as the Indenture Trustee shall direct in a notice to Lessee at least 10 Business Days prior to the date such payment of Rent is due). 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 at One Constitution Plaza, Hartford, Connecticut, Attention: Corporate Trust Department, in funds of the type specified in Section 3(f) hereof by 10:30 A.M. New York time on the Commencement Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall on the Commencement Date, prepay on the Commencement 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 shall, under all circumstances and whether or not an Event of Default shall be continuing on the Commencement Date, pay as Basic Rent (and not as Prepaid Rent) on the Commencement Date an amount equal to the excess, if any, of the interest to be paid on the Secured Certificates on such date over the Excess Amount payable on such date; provided, further, that Lessee will also pay to the Indenture Trustee, on demand, as Supplemental Rent, to the extent permitted by applicable law, interest at the Applicable Rate 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 -17- 18 unreimbursed portion thereof at a rate to be agreed between Lessee and Lessor (and consented to by the Owner Participant) or in the absence of such an agreement and consent at the rate equal to the Base Rate as in effect on the date such amount is paid plus 5% per annum 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"). Upon at least five days prior written notice to the Indenture Trustee, 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 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. 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 The First National Bank of Boston, 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 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 so long as this Lease shall not have been declared in default pursuant to Section 15 hereof, (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 as defined in Section 101(16) of the Federal Aviation Act and agrees that if at any time it shall cease to be a -18- 19 "citizen of the United States" within the meaning of Section 101(16) of the Federal Aviation Act, 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. 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, 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 9(b) or 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 ten 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 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 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; the Airframe will be fully equipped with the Engines (or other Pratt & Whitney Model PW4056 engines or four engines of the same or another manufacturer of 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 four engines shall be of the same make, model and manufacturer) 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, 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 commercial passenger configuration and 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, (iv) 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 -19- 20 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, (v) 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, (vi) 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, and (vii) shall have no outstanding airworthiness directives issued by the FAA requiring terminating action by the date of return. In the event the Federal Aviation Administration 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 this Section 5, unless it shall previously or concurrently have applied for such an extension with respect to all Boeing 747-400 aircraft in its fleet affected by such directive. If clause (iv) of the first paragraph of this Section 5(a) shall be applicable but the Airframe does not meet the conditions specified in said clause (iv), 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 (iv) 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 (v) of the first paragraph of this Section 5(a) shall be applicable but the Engines or engines do not meet the conditions specified in said clause (v), 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 -20- 21 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. During the last 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 thereto, provided that such cooperation shall not interfere with the normal operation 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) bill 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 bill 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, Loan Participant Liens and Indenture Trustee Liens), against receipt from Lessor of a bill 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 that would be Lessor Liens but for the proviso to 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 being 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. (d) Storage Upon Return. If, at least 30 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 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 -21- 22 parking or storage of aircraft. Lessee will maintain insurance for the Aircraft during such period not exceeding thirty 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, Loan Participant Liens, and Indenture Trustee's Liens, (iv) Liens for taxes of Lessee (or any 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, (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, the 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 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, (vi) Liens arising out of any judgment or award against Lessee (or any Sublessee), unless the judgment secured shall not, within 30 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 30 days after the expiration of such stay, and (vii) any other Lien with respect to which Lessee (or any Sublessee) shall have provided a bond or other security adequate in the reasonable opinion of 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 so as to keep the Aircraft in such condition as may be necessary to enable the applicable airworthiness certification for the Aircraft to be maintained in good standing at all times (other than temporary periods of storage in accordance with applicable regulations) -22- 23 under the Federal Aviation Act, except when all Boeing 747-400 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 Federal Aviation Administration other than as a result of actions taken or omitted to be taken by Lessee (or, if a Sublease is then in effect, by Lessee or any Sublessee) (although such certification need actually be maintained only during such periods as the Aircraft is registered under such Act), 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 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 or such other manner as shall have been approved by the Owner Participant pursuant to Section 7(b); (iii) maintain or cause to be maintained all records, logs and other materials required to be maintained in respect of the Aircraft by the Federal Aviation Administration 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), after providing written notice to Lessor, 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. Lessee will not operate the Aircraft, or permit any Sublessee to operate the Aircraft, in or to 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, if a Sublease is then in effect, the 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, if a Sublease is then in effect, the Sublessee). 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 -23- 24 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 or similar arrangement; provided that, so long as no Default 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 or similar arrangement, 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 Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee 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 any 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 thereof) 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 shall not be divested 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 -24- 25 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; (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 Military Airlift 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; (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 promptly be provided to Lessor; or -25- 26 (x) so long as the term of any sublease does not extend beyond the Term and so long as the Sublessee is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date the sublease is entered into, Lessee may, at any time, enter into any sublease with (1) a U.S. Air Carrier, (2) any Person approved in writing by the Owner Participant and the Indenture Trustee, which approval shall not be unreasonably withheld or (3) after the Depreciation Period, with any Permitted Sublessee, provided, however, that (A) no sublease entered into pursuant to this clause (x) shall extend beyond the date which is six months prior to the expiration of the Basic Term or any Renewal Term then in effect unless the Owner Participant shall have previously approved in writing the maintenance procedures of the Sublessee, or Lessee shall have irrevocably committed to purchase the Aircraft or (if permitted by the terms hereof) extend the Term of this Lease for a period ending at least six months from the end of the proposed sublease and (B) in the event that (x) there has been no downgrade of Lessee's long term senior unsecured debt rating in the twelve month period preceding the date of Lessee's entering into a sublease with a Person described in clause (3) of this subparagraph and on such date such debt is rated BB+ or lower by Standard & Poor's Corporation and Ba1 or lower by Moody's Investors Service or (y) there has been a downgrade of Lessee's long term senior unsecured debt rating in the twelve month period preceding the date of Lessee's entering into a sublease with a Person described in clause (3) of this subparagraph and on such date such debt is rated BB+ or lower by Standard & Poor's Corporation or Ba1 or lower by Moody's Investors Service, Lessee may not enter into such sublease with such Person unless the country of such Sublessee's domicile imposes aircraft maintenance standards substantially equivalent to those required by the FAA, the Civil Aviation Authority of the United Kingdom, the Direction Generale de l'Aviation Civile of the French Republic or the Luftfahrt Bundesamt of the Federal Republic of Germany, and Lessor, the Owner Participant and the Indenture Trustee shall have received a favorable opinion of counsel (which counsel and opinion are reasonably satisfactory to Lessor, the Owner Participant and the Indenture Trustee) in the jurisdiction of the Sublessee's domicile (a) that the terms (including, without limitation, the governing law, service of process and jurisdictional-submission provisions thereof) of the Sublease, the Lease and the Trust Indenture are legal, valid, binding and enforceable in such jurisdiction against third parties to substantially the same extent as in the United States, (b) that it is not necessary for the Owner Participant, Lessor, the Indenture Trustee or the Loan Participants to register or qualify to do business in such jurisdiction, (c) that there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being understood that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, Lessor and the Indenture Trustee, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant, Lessor and the Indenture Trustee is obtained to cover such risk) and (d) that there exist no -26- 27 possessory rights in favor of such Sublessee under the laws of such jurisdiction which would, upon bankruptcy of Lessee or other default by Lessee or Sublessee, prevent the return of the Aircraft to Lessor in accordance with and where permitted by the terms of Sections 14 and 15 of the Lease upon the exercise by Lessor of its remedies under Section 15 of the Lease and the practical realization by Lessor of its rights and benefits under said Section 15. 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) which has a term of more than three months, shall be effectively and 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 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 by this paragraph (b) shall expressly prohibit any further 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 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 written notice of any Sublease hereunder which has a term of more than three months (such notice to be given prior to entering into such Sublease, if practicable, but in any event promptly after entering into any such Sublease). -27- 28 (c) Insignia. On or prior to the Delivery Date, or as soon thereafter as practicable, Lessee agrees to affix and maintain (or cause to be affixed and maintained) in the cockpit of the Airframe adjacent to the airworthiness certificate therein and on each Engine a nameplate bearing the inscription: Leased From The First National Bank of Boston, 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 The Connecticut Bank and Trust Company, National Association, 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, association or corporation 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 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. 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. 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 -28- 29 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 other than Permitted Liens 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 other than Permitted Liens 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 Federal Aviation Administration 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. 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 -29- 30 that no such alteration, modification or addition shall diminish the value, utility or remaining useful life of the Airframe or such Engine, or materially impair the condition or impair the airworthiness thereof, below the value, utility, condition, airworthiness, or remaining useful life thereof immediately prior to such alteration, modification or addition assuming the Airframe or such Engine was then of the value and utility and in the condition and airworthiness required to be maintained by the terms of this Lease, except that the value (but not the utility, condition, airworthiness 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 original cost of all Obsolete Parts which shall have been removed and not replaced shall not exceed $600,000. 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 (except those parts which Lessee has leased from others) (the "Additional Parts") shall, without further act, vest in Lessor. Notwithstanding the foregoing sentence, Lessee (or any Sublessee) may, at any time during the Term, so long as no Event of Default shall have occurred and be continuing, 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, condition, remaining useful life or airworthiness which the Airframe or such Engine would have had at such time had such alteration, modification or addition not occurred. 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) So long as no Event of Default shall have occurred and be continuing, Lessee shall have the right to elect to terminate this Lease on the Lease Period Date occurring in February, 1997, February, 2000, February, 2003, February, 2006 or February, 2009. Lessee shall exercise this option by purchasing the Aircraft pursuant to paragraph (b) of this Section 9. (2) So long as no Event of Default shall have occurred and be continuing, 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 ninety days' revocable advance written notice (or, if such termination is being elected pursuant to Section 9(a)(2) of this Lease, 180 days' advance revocable 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 -30- 31 intends to terminate this Lease in accordance with this Section 9 (such specified date, a "Termination Date") and (ii) whether or not Lessee has determined that the Aircraft is obsolete or surplus to its needs. In addition, in the case of a termination pursuant to Section 9(a)(1), Lessee agrees that it shall deliver to the Indenture Trustee and Lessor at least twenty Business Days irrevocable notice of its election to purchase the Aircraft pursuant to Section 9(b). (b) Option to Purchase. In the event that Lessee shall have exercised its right to terminate this Lease under Section 9(a)(1) and Lessee shall have given its irrevocable notice pursuant to Section 9(a)(3), then on the Termination Date specified in Section 9(a)(3), Lessee shall purchase the Aircraft for an amount determined in accordance with the next succeeding sentence. In such event, Lessor shall, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso to the definition of Lessor Liens), sell the Aircraft to Lessee in exchange for, at Lessee's option, either (1) immediately available funds in an amount equal to the sum of (A) 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 with respect to the Aircraft due on or prior to such Termination Date plus (B) all reasonable expenses incurred by Lessor in connection with such sale except those incurred and payable by Lessor as a result of an appraisal conducted pursuant to Section 19(c) hereof, plus (C) the greater of (x) the Termination Value for the Aircraft, computed as of the Termination Date or (y) the fair market sales value of the Aircraft on the Termination Date, determined in accordance with Section 19(c) hereof, plus (E) the premium, if any, due on the Secured Certificates; or (2) (A) the assumption by Lessee, pursuant to Section 8(x) of the Participation Agreement and Section 2.15 of the Trust Indenture, of all of the obligations of Lessor under the Trust Indenture and the Secured Certificates, (B) the payment in immediately available funds in an amount equal to the sum of (x) 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 with respect to the Aircraft due on or prior to such Termination Date plus (y) all reasonable expenses incurred by Lessor in connection with such sale except those incurred and payable by Lessor as a result of an appraisal conducted pursuant to Section 19(c) hereof plus (z) the excess of the greater of (I) the Termination Value for the Aircraft, computed as of the Termination Date and (II) the fair market sales value of the Aircraft on the Termination Date, determined in accordance with Section 19(c) hereof over the unpaid principal of the Secured Certificates outstanding as of such date after giving effect to the application of Rent paid pursuant to clause (x) above. Upon payment in full of the amounts required to be paid and the performance of all acts required to be performed by Lessee pursuant to the preceding sentence, (i) the obligation of Lessee to pay Basic Rent hereunder with respect to the Aircraft for any period commencing on or after the Termination Date shall terminate and (ii) this Lease shall terminate on the Termination Date. (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), -31- 32 Lessee, as agent for Lessor and at no expense to Lessor, shall use its best 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 that would be Lessor Liens but for the proviso to 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 selling price realized at such sale to be 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 sale 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 premium, 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 that would be Lessor Liens but for the proviso to 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 -32- 33 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 premium, 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 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 premium, if any, due on the Secured Certificates and, provided that 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 due on or prior to the Termination Date and the premium, if any, due on the Secured Certificates. 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, 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 Sections 9(a)(1) and (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 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 four 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 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). 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 days after such occurrence) give Lessor written -33- 34 notice of such Event of Loss, and within 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). 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) the third Business Day following the receipt of insurance proceeds in respect of such occurrence but not earlier than thirty days after such occurrence, Lessee shall: (i) pay or cause to be paid to Lessor in funds of the type specified in Section 3(f) hereof, the sum of (A) the Stipulated Loss Value of the Aircraft computed as of the Stipulated Loss Value Date occurring on or immediately following the date of such Event of Loss plus (B) interest on such Stipulated Loss Value at the Applicable Rate then in effect from and including such Stipulated Loss Value Date to, but not including, the date of any advance payment in respect of Stipulated Loss Value as provided below, and thereafter on the unpaid balance of such Stipulated Loss Value from the date of such advance payment to, but excluding, the date such Stipulated Loss Value is paid in full; provided, however, that if a Lease Period Date shall occur after the Stipulated Loss Value Date with respect to which Stipulated Loss Value is determined but prior to the date of such payment of the sum of the amounts specified in clauses (A) and (B) above, 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, which amount shall be credited as an advance against the amounts payable pursuant to clauses (A) and (B) above, or (ii) provided that no Event of Default shall have occurred and be continuing, elect to 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 not later than the Business Day next following the end of such period the amount specified in clause (i) of this Section 10(a). At such time as Lessor shall have received the sum of the amounts specified in clauses (A) and (B) of 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 that would be Lessor Liens but for the proviso to the definition of Lessor Liens), all 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 -34- 35 subject to such Event of Loss, and furnish to or at the direction of Lessee a bill 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, not later than the later to occur of (i) the Business Day next succeeding the 120th day following the occurrence of such Event of Loss and (ii) the Lease Period Date next succeeding 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, and being in as good an operating condition as, 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 bill of sale and a Federal Aviation Administration bill of sale, in form and substance 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, together with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft and, if not, other counsel chosen by Lessee and reasonably acceptable to Lessor) addressed to Lessor and satisfactory to Lessor stating the same legal opinions referred to in Section 5.06(5) of the Trust Indenture, and an opinion of counsel chosen by Lessee and reasonably acceptable to the Owner Participant as to the tax consequences (without any requirement as to the nature of such tax consequences) to Lessor and the Owner Participant of such substitution, 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 that would be Lessor Liens but for the proviso to 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 bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft and, if not, other counsel chosen by -35- 36 Lessee and reasonably acceptable to Lessor) reasonably satisfactory to Lessor to the effect that Lessor and the Indenture Trustee as assignee of Lessor should be entitled to the benefits of Section 1110 of the U.S. Bankruptcy Code with respect to the substitute 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 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 Pratt & Whitney Model PW4056 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) 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, and being in as good an operating condition as, 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) bill 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 that would be Lessor Liens but for the proviso to 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 bill 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 -36- 37 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 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 -37- 38 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 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 (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) bill 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 bill 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, Loan Participant Liens and Indenture Trustee Liens, against receipt from Lessor of a bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso to 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. (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 a Default or 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 -38- 39 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 Default or 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) 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 amounts of public liability and property damage insurance from time to time applicable to aircraft owned or operated by Lessee of the same type as the Aircraft which comprise Lessee's fleet and (y) such amount per occurrence as shall have been agreed to on the Delivery Date by the Owner Participant 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 owned by Lessee of the same type which comprise Lessee's fleet 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, the Loan Participants, the Owner Participant and the Owner Participant Parent (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, the Loan Participants, the Owner Participant and the Owner Participant Parent (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) and shall insure Lessor, the Indenture Trustee, the Loan Participants, the Owner Participant and the Owner Participant Parent (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, the Loan Participants, the Owner Participant or the Owner Participant Parent (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 Trustee, the Loan Participants, the Owner Participant or the Owner Participant Parent (or, if any Sublease shall be in effect, Lessee in its capacity as sublessor under the Sublease) for thirty days (seven days in the case of war risk and allied perils coverage) after receipt by Lessor, the Indenture Trustee, the Loan Participants, the Owner Participant, the Owner Participant Parent, respectively, of written notice by such insurers of such cancellation, lapse or change; -39- 40 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, the Loan Participants, the Owner Participant or the Owner Participant Parent (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, the Loan Participants, the Owner Participant or the Owner Participant Parent (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, the Owner Participant, the Loan Participants or the Owner Participant Parent (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 of the same type as the Aircraft which comprise Lessee's fleet and 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 of the same type which comprise Lessee's fleet and 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 aircraft hull insurance covering the Aircraft and all-risk 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, any 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 by Lessee of the same type which comprise Lessee's fleet; 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 this paragraph (b) covering the Aircraft and any policies taken out in substitution or replacement for any such -40- 41 policies (i) shall name Lessor, as owner trustee, the Indenture Trustee, the Loan Participants 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 $3,000,000 (or, if the Aircraft is then under a Sublease, in excess of $1,500,000), 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 $3,000,000 (or, if the Aircraft is then under a Sublease, of $1,500,000) 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 a Default or 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, the Loan Participants or the Owner Participant, such cancellation, lapse or change shall not be effective as to Lessor, the Indenture Trustee, the Loan Participants or the Owner Participant (or, if any Sublease shall be in effect, Lessee in its capacity as sublessor under the Sublease) for thirty days (seven days in the case of hull war risk and allied perils coverage) after receipt 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), 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, the Loan Participants 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) and shall insure the respective interests of Lessor, the Indenture Trustee, the Loan Participants 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 -41- 42 by Lessor, the Loan Participants, 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 Loan Participants, the Owner 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 Loan Participants, the Owner Participant or Lessee (or any Sublessee) to the extent of any moneys due to Lessor, the Indenture Trustee, the Loan Participants 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 -42- 43 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). (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 by Lessee of the same type which comprise Lessee's fleet 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, 1991, a report, signed by Marsh & McLennan, Incorporated 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, 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 30 days (seven 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, -43- 44 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 may have. (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) hereof insuring for a maximum amount which is less than the Stipulated Loss Value of the Aircraft) in the insurance policies covering the risks required to be insured against pursuant to this Section 11 in amounts with respect to the Aircraft not in excess of three percent (3%) of Lessee's tangible net worth determined in accordance with generally accepted accounting principles consistently applied. (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. (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 a Default or 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 a Default or an Event of Default shall have occurred and be continuing, applied against Lessee's obligations hereunder as and when due. At such time as there shall not be continuing any such Default or 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, Lessor, the Owner Participant or the Indenture Trustee or their respective authorized representatives may 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 -44- 45 maintenance of the Aircraft; any such inspection of the Aircraft shall be 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 normal operation 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) 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 normal 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 within 10 Business Days after the same shall have become due; or (b) Lessee shall have failed to make a payment of Supplemental Rent after the same shall have become due and such failure shall continue for 10 Business Days after Lessee's receipt of written demand therefor by the party entitled thereto (provided that any failure to pay any 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 -45- 46 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) any other covenant or agreement (except the covenants set forth in the Tax Indemnity Agreement and in clauses (iv)(B) and (v) of the first paragraph of Section 5(a) hereof) to be performed or observed by it under any Operative Document, and such failure shall continue unremedied for a period of thirty days after written notice thereof by 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 the last day of the Term has not yet occurred; 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) 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 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 or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 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 -46- 47 sequestration shall be final or shall remain in force undismissed, unstayed or unvacated for a period of 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 60 days' (or such lesser period as may then be applicable under the Military Airlift 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 Military Airlift 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, -47- 48 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 the 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 installment of Basic Rent for the Aircraft due for Lease Periods commencing on or after the Commencement 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 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, -48- 49 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, any unpaid Basic Rent with respect to the Aircraft due prior to such date 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 (and assuming no purchase option encumbrances on the Aircraft), 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 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 -49- 50 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 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) may bid for and purchase such property. Lessor agrees to give Lessee at least 15 days' written notice of the date fixed for any public sale of any Airframe or 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 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 -50- 51 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. Commencing in 1991, 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 or of an event which with the giving of notice or lapse of time or both would become an Event of Default. Lessee agrees that if the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Treasurer or Assistant Treasurer of Lessee has actual knowledge of the existence of a Default or an event which with the giving of notice or lapse of time or both would become an Event of 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 shall 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 shall reasonably request. Lessee will deliver to Lessor, the Owner Participant and the Indenture Trustee (i) within 60 days after the end of each of the first three quarterly periods of each fiscal year of Lessee, consolidated and consolidating balance sheets of NWA Inc. ("NWA") and its consolidated subsidiaries prepared by NWA in accordance with generally accepted accounting principles as of the close of such period, together with the related consolidated statements of income and surplus and cash flow for such period, and (ii) within 120 days after the close of such fiscal year, consolidated and consolidating balance sheets of NWA and its consolidated subsidiaries prepared by NWA in accordance with generally accepted accounting principles as of the close of such fiscal year, together with the related consolidated statements of income and surplus and cash flow for such fiscal year, as audited and certified by independent public accountants, including their certificate and accompanying comment. SECTION 17. Notices. All notices required under the terms and provisions hereof shall be by cable, telex or other telecommunication means (with such cable, telex 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, any telex to be deemed received upon receipt by the party transmitting the telex of such other party's callback code at the end of such telex (receipt of confirmation in writing not being necessary to the effectiveness of any telex), addressed: -51- 52 (i) if to Lessee, at Minneapolis/St. Paul International Airport, St. Paul, Minnesota 55111, Attention: Chief Financial Officer (Telex No. 29-7024, Answerback NWAIR STP A), or to such other address or telex number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at Corporate Trust Division, Blue Hills Office Park, 150 Royall Street, Canton, Massachusetts 02021, Attention: Manager - Corporate Trust (Telex No. 499-6527; Answerback BOSBK BSN), or to such other address or telex 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 telex 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 telex 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 -52- 53 otherwise, to terminate, cancel, quit or surrender this Lease except in accordance with the express terms hereof. SECTION 19. Renewal Option; Purchase Options; Valuation. (a) Renewal Option. (1) Fair Market Renewal Term. Not less than 120 days before the end of the Basic Term or any Renewal Term for the Aircraft, Lessee may deliver to Lessor a written notice irrevocably electing to renew this Lease for a renewal term of one year 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)(1) more than five times. (2) Fixed Renewal Term. Not less than 120 days before the end of the Basic Term, Lessee may deliver to Lessor a written notice irrevocably electing to renew this Lease for a single renewal term having a duration and at a Basic Rent as determined below (any such renewal term, a "Fixed Renewal Term"). At least 270 days before the end of the Basic Term Lessee shall, as a condition to its exercise of the option set forth in this Section 19(a)(2), notify Lessor of its demand for an appraisal pursuant to Section 19(c). The appraisers so appointed shall determine as evidenced by an appraisal reasonably satisfactory to the Owner Participant's counsel the total useful life, the remaining useful life of the Aircraft, the maximum Fixed Renewal Term and the fair market sales value of the Aircraft at the beginning and end of the Fixed Renewal Term. The duration of the Fixed Renewal Term shall be a period specified by Lessee before the end of the Basic Term which is not less than one year and not more than the lesser of (A) two years and (B) that period of time (i) which would cause the Term, after giving effect to such Fixed Renewal Term, to be equal to 80% of the total useful life of the Aircraft as determined by the appraisers and (ii) at the expiration of which the residual value of the Aircraft, as estimated by the appraisers, would be at least equal to 20% of Lessor's Cost (without taking into account inflation or deflation during the Term). (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 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 in the case of a Fair Market Renewal Term to the "fair market rental value" thereof determined in accordance with Section 19(c) and equal in the case of a Fixed Renewal Term to 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 48), which Basic Rent shall be payable in semi-annual installments in arrears unless in the case of a Fixed -53- 54 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 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 120 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 fair market sales value of the Aircraft. 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 that would be Lessor Liens but for the proviso to 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 365 days prior to the date on which Lessee may purchase the Aircraft pursuant to Section 9(b) or Section 19(b) hereof or renew this Lease pursuant to Section 19(a)(1) 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 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 -54- 55 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 270 days prior to the end of the Basic Term or the Renewal Term in question (or by 270 days prior to the Termination Date, in the case of Section 9(b)), 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, 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 February 23, 2011 (or, if February 23, 2011 is not a Business Day, the Business Day immediately preceding February 23, 2011), Lessee shall have the option, upon at least 120 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 2.15 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 -55- 56 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 that would be Lessor Liens but for the proviso to 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 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 as Mortgagee under the Trust Indenture 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. -56- 57 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 obligations of, or guaranteed by, the United States Government maturing within 90 days after such investment, open market commercial paper of any corporation incorporated under the laws of the United States of America or any State thereof rated P-1 or its equivalent by Moody's Investors Service, Inc. or A-1 or its equivalent by Standard & Poor's Corporation or certificates of deposit maturing within 90 days after such investment issued by commercial banks organized under the laws of the United States or of any political subdivision thereof having a combined capital and surplus in excess of $100,000,000 which banks or their holding companies have a rating of Aa or its equivalent by Moody's Investors Service, Inc., or AA or its equivalent by Standard & Poor's Corporation; 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 the lesser of $10,000,000 or 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 a Default or 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 -57- 58 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. 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 continued possession, use and operation of, the Aircraft during the Term of this Lease (it being understood that the foregoing shall not be deemed to have modified in any respect the obligations of Lessee pursuant to Section 20 hereof, which obligations are absolute and unconditional), and this Lease shall not be terminated except as expressly provided herein. -58- 59 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease to be duly executed as of the day and year first above written. THE FIRST NATIONAL BANK OF BOSTON 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 August, 1990. THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, Indenture Trustee BY: ------------------------------------ Title: 60 EXHIBIT A TO LEASE AGREEMENT [NW 1990 A] LEASE SUPPLEMENT NO. __ [NW 1990 A] LEASE SUPPLEMENT NO. __, dated _________, 19___, between The FIRST NATIONAL BANK OF BOSTON, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement [NW 1990 A], dated as of August 23, 1990, 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 1990 A], dated as of August 23, 1990, relating to one Boeing 747-451 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 ________________, 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 Boeing 747-451 aircraft (the "Aircraft"), which Aircraft as of the date hereof consists of the following components: - ---------------------------------- (1) This language for Lease Supplement No. 1. (2) This language for other Lease Supplements. 61 (i) Airframe: FAA Registration No. ______; Manufacturer's serial no. _____; and (ii) Engines: four (4) Pratt & Whitney Model PW4056 engines bearing, respectively, manufacturer's serial nos. P______, P______, P______ and P______ (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 _________ __, 2015. 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 the Boeing Company, or any subcontractor or supplier of the Boeing Company, 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. A-2 62 IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Supplement to be duly executed on the day and year first above written. THE FIRST NATIONAL BANK OF BOSTON, 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 __th day of _______________, 19__. THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, Indenture Trustee BY -------------------------------------- TITLE: - ---------------------------------- (3) This language contained in the original counterpart only. A-3 63 EXHIBIT B TO LEASE AGREEMENT [NW 1990 A] BASIC RENT AND EXCESS AMOUNT SCHEDULE
1 2 3 Basic Rent Excess Amount Lease Commencement (Percentage of (Percentage of Period Date Lessor's Cost) Lessor's Cost) Date - ------------ -------------- -------------- ------
64 BASIC RENT AND EXCESS AMOUNT SCHEDULE
1 2 3 Lease Basic Rent Excess Amount Period (Percentage of (Percentage of Date Lessor's Cost) Lessor's Cost) ------------ -------------- --------------
* Denotes payment in arrears from preceding Lease Period Date (or Commencement 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. B-2 65 EXHIBIT C TO LEASE AGREEMENT [NW 1990 A] STIPULATED LOSS VALUE SCHEDULE
Stipulated Stipulated Loss Loss Value Date Value Percentage --------------- ----------------
66 EXHIBIT D TO LEASE AGREEMENT [NW 1990 A] TERMINATION VALUE SCHEDULE
Termination Termination Value Date Percentage ----------- -----------------
67 EXHIBIT E RENT RECALCULATION AND INDEMNIFICATION VERIFICATION Any recalculation of Basic Rent, Excess Amounts, Stipulated Loss Value percentages and Termination Value percentages pursuant to the Lease and any calculation of any payment to the Owner Participant or Lessee under the Tax Indemnity Agreement or Section 7(b) of the Participation Agreement 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, 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 and, in the case of any payment due to the Owner Participant or Lessee under the Tax Indemnity Agreement or Section 7(b) of the Participation Agreement, any information reasonably necessary for such verification requested by such firm. In the event of a verification under clause (B) of this Exhibit E 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 this Exhibit E 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 7 or more basis points or there is a material error in the computation of the indemnity payment in the Owner Participant's original statement in the Owner Participant's favor (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. 68 EXHIBIT F SCHEDULE OF PERMITTED SUBLESSEES AER LINGUS IRISH AEROLINEAS ARGENTINAS AEROMEXICO, AEROVIAS DE MEXICO AIR AFRIQUE AIR CANADA AIR EUROPA AIR EUROPE AIR 2000 AIR FRANCE AIR NEW ZEALAND ALITALIA - LINEE AEREE ITALIANE AUSTRIAN AIRLINES BRITISH AIRWAYS CANADIAN AIRLINES INTERNATIONAL LTD. CARGOLUX CHINA AIRLINES DEUTSCHE LUFTHANSA AKTIENGESELLSCHAFT FINNAIR THE FLYING TIGER LINE INC. GARUDA IBERIA - LINEAS AEREAS DE ESPANA JAPAN AIR LINES JAPAN AIR SYSTEM KONINKLIJKE LUCHTVAART MAATSCHAPPIJ NV. (KLM) KOREAN AIR LINES LUXAIR NORDAIR OLYMPIC AIRWAYS SA PHILIPPINE AIR LINES QANTAS AIRWAYS LIMITED SWISS AIR TRANSPORT COMPANY LTD. THAI AIRWAYS INTERNATIONAL LTD. UNION DE TRANSPORTS AERIENS VARIG S.A. SINGAPORE AIRLINES AIR PORTUGAL - TAP ALL NIPPON AIRWAYS ANSETT AIRLINES OF AUSTRALIA BRITANNIA AIRWAYS 69 CAAC - CIVIL AVIATIONS ADMINISTRATION OF CHINA CATHAY PACIFIC AIRWAYS CONDOR FLUGDIENST DAN-AIR SERVICES ICELANDAIR MONARCH AIRLINES SABENA SCANDINAVIAN AIRLINES SYSTEM - SAS TRANS-AUSTRALIA AIRLINES - TAA TRANSBRASIL VASP MEXICANA AIRLINES ORION AIR BWIA INTERNATIONAL LAN - CHILE AIRBORNE EXPRESS FEDERAL EXPRESS PUROLATOR UNITED PARCEL SERVICE F-2 EX-4.B5 14 FIRST AMENDMENT TO LEASE AGREEMENT-1990 A 1 FIRST AMENDMENT TO LEASE AGREEMENT [NW 1990 A] This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1990 A], dated as of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee under the Trust Agreement [NW 1990 A], dated as of August 23, 1990 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a certain Lease Agreement [NW 1990 A], dated as of August 23, 1990 (the "ORIGINAL LEASE"), between Lessee and The First National Bank of Boston, as owner trustee (the Original Lease, as supplemented by Lease Supplement No. 1 [NW 1990 A] ("LEASE SUPPLEMENT NO. 1") between The First National Bank of Boston and Lessee, dated August 23, 1990, herein called the "LEASE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; WITNESSETH: WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the Aircraft, which consists of the following components: (i) Airframe: FAA Registration No. N669US; manufacturer's serial No. 24224; and (ii) Engines: four (4) Pratt & Whitney Model PW4056 engines bearing, respectively, manufacturer's serial nos. P717658, P717662, P717667 and P717669; WHEREAS, Section 17 of the Participation Agreement [NW 1990 A], dated as of August 23, 1990 (the "PARTICIPATION AGREEMENT"), among Lessee, [ ] (the "OWNER PARTICIPANT"), [ ] as Loan Participant (the "ORIGINAL LOAN PARTICIPANT"), The First National Bank of Boston and The Connecticut Bank and Trust Company, National Association, contemplates that the Secured Certificates issued by the Owner Trustee under the Trust Indenture and Security Agreement [NW 1990 A], dated as of August 23, 1990, between Owner Trustee (in its individual capacity as expressly provided therein and as trustee) and the Indenture Trustee may be refinanced under certain circumstances; WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW 1990 A], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State Street Bank and Trust Company, as Pass Through Trustee under each of the Pass Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company of Connecticut, National Association (the "SUBORDINATION AGENT"), the Owner Participant, State Street Bank and Trust Company (the "INDENTURE TRUSTEE") and Northwest Airlines Corporation (the "GUARANTOR"); 2 WHEREAS, Lessor and Lessee desire to recalculate the Basic Rent, Stipulated Loss Value and Termination Value percentages in order to reflect, among other things, the interest rate of the refinanced Secured Certificates; WHEREAS, in connection with the recalculation of the Basic Rent, Stipulated Loss Value and Termination Value percentages, Lessor and Lessee desire to amend the Lease; WHEREAS, a counterpart of the Original Lease, to which were attached and made a part thereof counterparts of Lease Supplement No. 1, the Trust Indenture and Security Agreement [NW 1990 A], dated as of August 23, 1990, and the Trust Agreement and Indenture Supplement [NW 1990 A], dated August 23, 1990, was recorded by the Federal Aviation Administration (the "FAA") on August 23, 1990, and assigned Conveyance No. W11484; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE. (a) The definitions of "Business Day", "Expenses", "Indemnitee", "Lease Period", "Lease Period Date", "Loan Participant", "Net Present Value of Rents", "Operative Documents", "Permitted Sublessee", "Special Purchase Price", "Stipulated Loss Value", "Stipulated Loss Value Date", "Supplemental Rent" and "Termination Value" in Section 1 of the Lease are hereby amended applicable on and after the Closing Date, to read as follows: "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; Salt Lake City, Utah; or Minneapolis, Minnesota. "EXPENSES" has the meaning specified in Section 7(c) of the Participation Agreement. "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, (xiii) the Trust Indenture Estate, (xiv) the successors and permitted assigns of the Persons described in clauses (v), (vi), (vii) and (viii); provided that the Persons described in clauses (v), (vi), (vii), (viii), (x) and (xiii) are Indemnitees only for -2- 3 purposes of Section 7(c) of the Participation Agreement, and provided, further, that the Person described in clause (xiii) shall be an Indemnitee only for purposes of Section 7(b) of the Participation Agreement. "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 Commencement Date. "LEASE PERIOD DATE" means August 23, 1991 and each succeeding February 23 and August 23 to and including February 23, 1996, July 2, 1996 and each succeeding January 2 and July 2 to and including January 2, 2015, February 23, 2015 and each succeeding August 23 and February 23, to and including the last such date in the Term. "LOAN PARTICIPANT" means for any period prior to the Closing the Original Loan Participant and its successors and assigns, and from and after the Closing each Purchaser and its successors and registered assigns, including any Certificate Holder. "NET PRESENT VALUE OF RENTS" means the net present value, as of the Commencement Date, of Basic Rent set forth in Exhibit B hereto, discounted at a rate per Lease Period equal to (a) 10.50% divided by (b) the number of Lease Periods per year. "OPERATIVE DOCUMENTS" means the Participation Agreement, the documents referred to in Section 4(a)(v) of the Participation Agreement (including any amendments, modifications or supplements thereto), the Refunding Agreement, the Trust Indenture Amendment and the Refinancing Secured Certificates, collectively, and "Operative Document" shall mean each of the Operative Documents, individually. "PERMITTED SUBLESSEE" means any entity listed in Exhibit F hereto and such other entities to which Lessor shall consent. "SPECIAL PURCHASE PRICE" shall mean the amount denominated as such in Exhibit B hereto. "STIPULATED LOSS VALUE" with respect to the Aircraft as of any date through and including February 23, 2015, means, but subject always to the provisions of Section 3(d)(v), the amount determined by multiplying Lessor's Cost 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 8 of the Tax Indemnity Agreement). "Stipulated Loss Value" as of any date after February 23, 2015 shall be the amount determined as provided in Section 19(a) hereof. -3- 4 "STIPULATED LOSS VALUE DATE" means, (a) during the Interim Term, during the Basic Term through the Closing Date and during any Renewal Term, the twenty-third calendar day of each calendar month, and (b) during the Basic Term after the Closing Date, the second calendar day of each calendar month. "SUPPLEMENTAL RENT" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Advance Rent and 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). "TERMINATION VALUE" with respect to the Aircraft as of any date through and including February 23, 2015, means, but subject always to the provisions of Section 3(d)(v), the amount determined my multiplying Lessor's Cost 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 8 of the Tax Indemnity Agreement). (b) The following definitions are hereby inserted in Section 1 of the Lease in alphabetical order to be applicable on and after the Closing Date: "BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978, as amended, or any subsequent legislation that amends, supplements or supersedes such provisions. "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. -4- 5 "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. "CLOSING" means the consummation of the refinancing operation contemplated by Section 1 of the Refunding Agreement. "CLOSING DATE" means the date on which the Closing shall occur. "GUARANTEE" means the Guarantee [NW 1990 A], dated as of the Closing Date, made by the Guarantor, as such Guarantee may be amended and supplemented from time to time pursuant to the applicable provisions thereof. "GUARANTOR" means Northwest Airlines Corporation, a Delaware corporation. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Provider and the Subordination Agent. "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 Westdeutsche Landesbank Girozentrale, acting through its New York branch, as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider under the Liquidity Facilities, or any successor thereto. "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. "ORIGINAL LOAN PARTICIPANT" means [________________], a banking institution organized under the laws of the [____________]. "ORIGINAL TRUST INDENTURE" means the Trust Indenture and Security Agreement [NW 1990 A], dated as of August 23, 1990, between the Owner Trustee and The Connecticut Bank and Trust Company, National Association, as amended, modified and supplemented prior to the Closing Date. -5- 6 "PASS THROUGH CERTIFICATES" means the pass through certificates to be issued by the Pass Through Trustee in connection with the Refinancing Transaction. "PASS THROUGH TRUST AGREEMENT" means the pass through trust agreement and each of the four separate pass through trust supplements referred to on Schedule I to the Refunding Agreement to be entered into by and between Lessee and the Pass Through Trustee in connection with the Refinancing Transaction. "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. "PURCHASERS" means the Pass Through Trustees under each Pass Through Trust Agreement. "REFINANCING CERTIFICATE" means a certificate of an authorized representative of the Owner Participant delivered pursuant to Section 17(a)(1) of the Participation Agreement, setting forth, among other things, the Refinancing Date, the principal amount of debt to be issued by the Owner Trustee on the Refinancing Date, and the proposed revised schedules of Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages, and the proposed Amortization Schedules. "REFINANCING DATE" means the proposed date on which the outstanding Secured Certificates will be redeemed and refinanced pursuant to Section 17 of the Participation Agreement. "REFINANCING EXPENSES" means the costs, fees, commissions and other expenses payable by the Owner Participant pursuant to Section 11(a) of the Refunding Agreement. "REFINANCING SECURED CERTIFICATES" means the Secured Certificates to be issued by Lessor to the Purchasers pursuant to the Trust Indenture Amendment and the Refunding Agreement on the Closing Date. "REFINANCING TRANSACTION" means a refinancing transaction pursuant to Section 17 of the Participation Agreement involving, among other things, (i) the redemption of the Secured Certificates issued on August 23, 1990 and the concurrent issuance and sale of the Refinancing Secured Certificates to the Pass Through Trustees (or their designee) and (ii) the issuance and sale of the Pass Through Certificates by the Pass Through Trustees. -6- 7 "REFUNDING AGREEMENT" means that certain Refunding Agreement [NW 1990 A], dated as of June 3, 1996, among Lessor, Lessee, the Guarantor, the Owner Participant, the Loan Participant, the Purchasers, the Indenture Trustee and the Subordination Agent, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "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. "TRUST INDENTURE AMENDMENT" means the Amended and Restated Trust Indenture and Security Agreement [NW 1990 A], dated as of the Closing Date, between Lessor and State Street Bank and Trust Company, as Indenture Trustee. "TRUST INDENTURE ESTATE" has the meaning assigned to that term in the Trust Indenture. (c) The definitions of "Assumed Interest Rate", "Commitment", "Debt Rate", "Interest Period" and "Rent Differential Amount" in Section 1 of the Lease are hereby deleted on and after the Closing Date. SECTION 2. AMENDMENT OF SECTIONS 3(C), 3(D), 3(E), 3(F) AND 3(G) OF THE LEASE. (a) Section 3(c) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (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 applicable Lease Period Date specified in Exhibit B hereto. In addition, Lessee shall pay Basic Rent on the Closing Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for Basic Rent on the Closing Date. (b) Section 3(d)(i) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (i) In the event that (A) the Closing Date occurs other than on June 12, 1996, or (B) Refinancing Expenses paid by Lessor or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement is determined -7- 8 to be other than 1.2994% of Lessor's Cost, then in each case, 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 by the Owner Participant, on or prior to October 1, 1996 using the same methods and assumptions used to calculate original Basic Rent and 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. (c) Section 3(d)(ii) of the Lease is hereby amended by deleting on and after the Closing Date the words "or a refunding" in the first line thereof. (d) Section 3(d)(iii) of the Lease is hereby amended by deleting on and after the Closing Date the second sentence thereof. (e) The second sentence of Section 3(e) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "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 such Section 2.10(b) or Section 2.11." (f) Section 3(f) of the Lease is hereby amended by deleting on and after the Closing Date the first paragraph thereof and substituting therefor the following: (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 of Utah, National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124- 0000-12, Account No 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW 1990 A (or such other office of Lessor in the continental United States or such other account 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, 225 Franklin Street, Boston, -8- 9 Massachusetts, 02110, ABA No. 011-00-0028, Account No. 99003-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1990A (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 10 Business Days prior to the date such payment of Rent is due). 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 to the above-referenced account of the Indenture Trustee or at such other account 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). (g) Section 3(g) of the Lease is hereby deleted in its entirety on and after the Closing Date. SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE. Section 7(b)(x) of the Lease is hereby amended in its entirety on and after the Closing Date to read as follows: (x) so long as the term of any sublease does not extend beyond the Term and so long as the Sublessee is not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date the sublease is entered into, 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, with any Permitted Sublessee, provided, however, that (A) no sublease entered into pursuant to this clause (x) shall extend beyond the date which is six months prior to the expiration of the Basic Term or any Renewal Term then in effect unless the Owner Participant shall have previously approved in writing the maintenance procedures of the Sublessee, or Lessee shall have irrevocably committed to purchase the Aircraft or (if permitted by the terms hereof) extend the Term of this Lease for a period ending at least six months from the end of the proposed sublease and (B) in the event that (x) there has been no downgrade of Lessee's long term senior unsecured debt rating in the twelve month period preceding the date of Lessee's entering into a sublease with a Person described in clause (3) of this subparagraph and on such date such debt is rated BB+ or lower by Standard & Poor's Ratings Services and Ba1 or lower by Moody's Investors Service, Inc. or (y) there has been a downgrade of Lessee's long term senior unsecured debt rating in the twelve month period preceding the date of -9- 10 Lessee's entering into a sublease with a Person described in clause (3) of this subparagraph and on such date such debt is rated BB+ or lower by Standard & Poor's Ratings Services or Ba1 or lower by Moody's Investors Service, Inc., Lessee may not enter into such sublease with such Person unless the country of such Sublessee's domicile imposes aircraft maintenance standards substantially equivalent to those required by the FAA, the Civil Aviation Authority of the United Kingdom, the Direction Generale de l'Aviation Civile of the French Republic or the Luftfahrt Bundesamt of the Federal Republic of Germany, and Lessor and the Owner Participant shall have received a favorable opinion of counsel (which counsel and opinion are reasonably satisfactory to Lessor and the Owner Participant) in the jurisdiction of the Sublessee's domicile (a) that the terms (including, without limitation, the governing law, service of process and jurisdictional-submission provisions thereof) of the Sublease, the Lease and the Trust Indenture are legal, valid, binding and enforceable in such jurisdiction against third parties to substantially the same extent as in the United States, (b) that it is not necessary for the Owner Participant or Lessor to register or qualify to do business in such jurisdiction, (c) that there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being understood that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant and Lessor, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant and Lessor is obtained to cover such risk) and (d) that there exist no possessory rights in favor of such Sublessee under the laws of such jurisdiction which would, upon bankruptcy of Lessee or other default by Lessee or Sublessee, prevent the return of the Aircraft to Lessor in accordance with and where permitted by the terms of Sections 14 and 15 of the Lease upon the exercise by Lessor of its remedies under Section 15 of the Lease and the practical realization by Lessor of its rights and benefits under said Section 15. SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE. (a) Section 9(a)(1) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (1) So long as no Event of Default shall have occurred and be continuing, Lessee shall have the right to elect to terminate this Lease on the Lease Period Date occurring in January, 1997, January, 2000, January, 2003, January, 2006 or January, 2009. Lessee shall exercise this option by purchasing the Aircraft pursuant to paragraph (b) of this Section 9. (b) Section 9(b) of the Lease is hereby amended by deleting on and after the Closing Date the word "premium" therein and substituting therefor the words "Make-Whole Amount" and by deleting on and after the Closing Date the number "2.15" therein and substituting the number "2.13" therefor. -10- 11 (c) Section 9(c) of the Lease is hereby amended by deleting on and after the Closing Date the word "premium" each time it appears therein and substituting therefor the words "Make-Whole Amount". SECTION 5. AMENDMENT OF SECTION 10 OF THE LEASE. Section 10(a) of the Lease is hereby amended by (a) deleting on and after the Closing Date the words "the third Business Day following receipt of insurance proceeds in respect of such occurrence but not earlier than thirty days after such occurrence" in clause (y) of the second sentence thereof and substituting therefor the words "an earlier Business Day irrevocably specified fifteen days in advance by notice from Lessee to Lessor and the Indenture Trustee" and (b) deleting on and after the Closing Date subsections (5) and (6) of the last paragraph thereof in their entirety and substituting therefor the following: (5) furnish Lessor with copies of the documentation required to be provided by Lessee pursuant to Section 5.06 of the Trust Indenture, together with an opinion of counsel (which shall be the General Counsel or an Associate General Counsel of Lessee and, if not, other counsel chosen by Lessee and reasonably acceptable to Lessor) addressed to Lessor and satisfactory to Lessor stating the same legal opinions referred to in Section 5.06(5) of the Trust Indenture, and an opinion of counsel chosen by Lessee and reasonably acceptable to the Owner Participant as to the tax consequences (without any requirement as to the nature of such tax consequences) to Lessor and the Owner Participant of such substitution, 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 that would be Lessor Liens but for the proviso to 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 bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft 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 should be entitled to the benefits of 11 U.S.C. Section 1110 with respect to the substitute airframe, provided that such opinion need not be delivered to the extent that immediately prior to such substitution the benefits of 11 U.S.C. Section 1110 were not, by reason of a change of law or judicial 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 -11- 12 SECTION 6. AMENDMENT OF SECTION 11 OF THE LEASE. (a) Section 11 of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "Delivery Date" in clause (a)(I)(i)(y) thereof and substituting therefor the words "Closing Date", and (ii) deleting on and after the Closing Date the word "owned" in the fifteenth line of clause (a)(I), in the nineteenth line of clause (b)(I) and in the seventh line of clause (b)(II), and substituting therefor the word "operated" in each such clause. (b) Section 11(c) of the Lease is hereby amended by deleting on and after the Closing Date the words and punctuation "Marsh & McLennan, Incorporated" in the first sentence thereof and substituting therefor the words "Rollins Hudig Hall". (c) Section 11(d) of the Lease is hereby amended in its entirety on and after the Closing Date to read as follows: (d) Self-Insurance. Lessee may self-insure by way of deductible, premium adjustment of 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 or liability insurers. (d) Section 11 of the Lease is hereby amended by deleting on and after the Closing Date the words and punctuation "the Loan Participants," each place they appear therein. SECTION 7. AMENDMENT OF SECTION 14(D) OF THE LEASE. Section 14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date the words and punctuation ", the Refunding Agreement" after the words "Participation Agreement" and (ii) adding on and after the Closing Date the words "and except for representations or warranties contained in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in the Refunding Agreement) or any document or instrument furnished pursuant to either thereof" after the word "purpose" at the end of the first parenthetical phrase therein. SECTION 8. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: -12- 13 "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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President - Finance and Treasurer, (Telecopy No. (612) 726-0665), or to such other address, telex number or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department [NW 1990A] (Telecopy No. (801) 246-5053), 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 on the signature pages of the Refunding Agreement." SECTION 9. AMENDMENT OF SECTION 19(D) OF THE LEASE. The first and second sentences of Section 19(d) of the Lease are hereby amended to read in their entirety on and after the Closing Date as follows: On January 2, 2011 (or, if January 2, 2011 is not a Business Day, the Business Day immediately succeeding January 2, 2011), Lessee shall have the option, upon at least 120 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. -13- 14 SECTION 10. AMENDMENT OF SECTION 22(A) OF THE LEASE. The first sentence of Section 22(a) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: 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 Moody's 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 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. SECTION 11. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the Lease is hereby amended by (i) deleting on and after the Closing Date the word "or" between the words "Trust Agreement" and the words "the Trust Indenture" and substituting a comma therefor and (ii) inserting on and after the Closing Date the words "or the Refunding Agreement" after the words "Trust Indenture". SECTION 12. AMENDMENT OF EXHIBITS. (a) Exhibits B, C and D to the Lease attached hereto are applicable on and after the Closing Date. Exhibits B, C and D to the Lease are applicable until the Closing Date. (b) The parties hereto agree that Exhibits B, C and D attached hereto reflect the recalculation of Basic Rent, Stipulated Loss Value and Termination Value percentages to take into account the interest rates borne by the Secured Certificates as of the Closing Date and the actual amount of Transaction Expenses. -14- 15 (c) Exhibit F to the Lease is hereby amended on and after the Closing Date by adding the words "Air China" thereto. SECTION 13. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease set forth in Sections 1 through 12 hereof shall be effective as of the hereof. SECTION 14. RATIFICATION. Except as amended hereby, the Lease as heretofore supplemented continues and shall remain in full force and effect in all respects. SECTION 15. MISCELLANEOUS. Any provision of this Amendment 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 Amendment 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. Nothing contained herein shall be construed as conveying to Lessee any right, title or interest in the Aircraft except as a lessee. The section and paragraph headings in this Amendment 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 Amendment. THIS AMENDMENT 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 Amendment 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. To the extent, if any, that this Amendment 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 Amendment 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 as mortgagee under the Trust Indenture on the signature page thereof. -15- 16 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment to be duly executed on the day and year first above written. FIRST SECURITY BANK OF UTAH, 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: (1) Receipt of this original counterpart of the foregoing Amendment is hereby acknowledged this _____ day of ______________, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: ---------------------------------------- Title: - -------- (1) This language contained in the original counterpart only. EX-4.B6 15 GUARANTEE-1990 A 1 GUARANTEE [NW 1990 A] This GUARANTEE [NW 1990 A], dated as of June 12, 1996 (as amended, modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I hereto (collectively, together with their successors and permitted assigns, the "PARTIES", and, individually, a "PARTY"). WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, has entered into a Lease Agreement [NW 1990 A], dated as of August 23, 1990, between the Lessee, as lessee, and The First National Bank of Boston, not in its individual capacity but solely as Owner Trustee (as defined therein), except as expressly provided therein (the "ORIGINAL OWNER TRUSTEE"), as lessor, and a Lease Supplement No. 1 [NW 1990 A], dated August 23, 1990 (such Lease Agreement, as so supplemented, the "ORIGINAL LEASE"), relating to one (1) Boeing 747-451 aircraft, together with four (4) Pratt & Whitney Model PW4056 engines (such aircraft and engines, and any substitute Airframe and Engines under the Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation Agreement [NW 1990 A], dated as of August 23, 1990 (the "ORIGINAL PARTICIPATION AGREEMENT"), among the Lessee, [ ], as Owner Participant (the "OWNER PARTICIPANT"), and certain other parties; and WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Trustee and The Connecticut Bank and Trust Company, National Association, as indenture trustee (the "ORIGINAL INDENTURE TRUSTEE"), entered into the Trust Indenture and Security Agreement [NW 1990 A], dated as of August 23, 1990, as supplemented by the Trust Agreement and Indenture Supplement [NW 1990 A], dated August 23, 1990 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Original Owner Trustee issued secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES"); and WHEREAS, pursuant to an Instrument of Assignment and Acceptance of Trust Indenture and Security Agreement [NW 1990 A] dated as of July 14, 1991, State Street Bank and Trust Company (the "INDENTURE TRUSTEE") succeeded to the Original Indenture Trustee, as indenture trustee under the Original Indenture; and WHEREAS, pursuant to an Instrument of Transfer, Removal, Appointment, Assumption and Acceptance among the Owner Participant, the Original Owner Trustee and First Security Bank of Utah, National Association (the "OWNER TRUSTEE"), dated May 28, 1996, the Owner Trustee succeeded to all of the estates, properties, rights, powers, duties and trusts of the Original Owner Trustee as trustee under the Original Trust Agreement and the other Operative Documents to which the Original Owner Trustee was a party; and 2 WHEREAS, the Guarantor, the Lessee, the Owner Trustee, the Owner Participant, the Indenture Trustee and certain other parties have entered into a Refunding Agreement [NW 1990 A], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"), providing for a refinancing as contemplated by Section 17 of the Original Participation Agreement; and WHEREAS, it is a condition precedent to the obligations of the parties thereto to consummate the transactions contemplated by the Refunding Agreement that the Guarantor execute and deliver this Guarantee; and WHEREAS, pursuant to the Refunding Agreement, (a) the Original Participation Agreement is being amended (as so amended, the "PARTICIPATION AGREEMENT"), (b) the Original Lease was amended on June 3, 1996 (as so amended, the "LEASE"), (b) the Original Secured Certificates are being redeemed, the Original Indenture is being amended and restated (as so amended and restated, the "TRUST INDENTURE"), and new secured certificates in four series substantially in the form set forth in Section 2.01 of the Trust Indenture (the "SECURED CERTIFICATEs") will be issued, and (c) the Owner Trustee as lessor under the lease (the "LESSOR") will assign by way of collateral security certain of its right, title and interest in and to this Guarantee to the Indenture Trustee pursuant the Trust Indenture, as security for the obligations of the Lessor referred to therein; and WHEREAS, the capitalized terms used herein that are not defined herein are used herein as defined in the Lease; NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and to induce the other Parties referred to above to enter into the Refunding Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. GUARANTEE. (a) The Guarantor does hereby acknowledge that it is fully aware of the terms and conditions of the Lease, the Participation Agreement and the other Operative Documents and the transactions and the other documents contemplated thereby, and does hereby irrevocably and fully and unconditionally guarantee, as primary obligor and not as surety merely, to the Parties, as their respective interests may appear, the payment by the Lessee of all payment obligations when due under the Lease (including, without limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement and the other Operative Documents to which the Lessee is a party (such obligations of the Lessee guaranteed hereby being hereinafter referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative Documents, and the timely performance of all other obligations of the Lessee thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby agree that in the event that the Lessee fails to pay any Financial Obligation when due for any reason (including, without limitation, the liquidation, dissolution, - 2 - 3 receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within five days after the date on which such Financial Obligation became due and payable and the applicable grace period has expired, the Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Financial Obligation was not paid when due and for five days after the applicable grace period has expired, the amount of such Financial Obligation. The Guarantor hereby agrees that in the event the Lessee fails to perform any Nonfinancial Obligation for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within 10 Business Days after the date on which such Nonfinancial Obligation is required to be performed (for avoidance of doubt, to include any applicable grace period), the Guarantor shall cause such Nonfinancial Obligation to be performed within 10 Business Days following the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Nonfinancial Obligation was not performed when so required and that any applicable grace period has expired. (b) The obligations of the Guarantor hereunder shall not be, to the fullest extent permitted by law, affected by: the genuineness, validity, regularity or enforceability (or lack thereof) of any of the Lessee's obligations under the Lease or any other Operative Document to which the Lessee is a party, any amendment, waiver or other modification of the Lease or such other Operative Document (except that any such amendment or other modification shall be given effect in determining the obligations of the Guarantor hereunder), or by any substitution, release or exchange of collateral for or other guaranty of any of the Obligations (except to the extent that such substitution, release or exchange is undertaken in accordance with the terms of the Operative Documents) without the consent of the Guarantor, or by any priority or preference to which any other obligations of the Lessee may be entitled over the Lessee's obligations under the Lease and the other Operative Documents to which the Lessee is a party, or by any other circumstance that might otherwise constitute a legal or equitable defense to or discharge of the obligations of a surety or guarantor including, without limitation, any defense arising out of any laws of the United States of America or any State thereof which would excuse, discharge, exempt, modify or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not, to the fullest extent permitted by law, affect the liability of the Guarantor hereunder: (a) the extension of the time for or waiver of, at any time or from time to time, without notice to the Guarantor, the Lessee's performance of or compliance with any of its obligations under the Operative Documents (except that such extension or waiver shall be - 3 - 4 given effect in determining the obligations of the Guarantor hereunder), (b) any assignment, transfer, sublease or other arrangement by which the Lessee transfers possession or loses control of the use of the Aircraft, (c) any defect in the title, condition, design, operation or fitness for use of, or damage to or loss or destruction of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or with any other Person, or any sale, transfer, lease or disposal of any of its assets or (e) any change in the ownership of any shares of capital stock of the Lessee. (c) This Guarantee is an absolute, present and continuing guaranty of payment and performance and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Lessee any unpaid amounts due or otherwise to enforce performance by the Lessee. The Guarantor specifically agrees, to the fullest extent permitted by law, that it shall not be necessary or required, and that the Guarantor shall not be entitled to require, that any Party (i) file suit or proceed to obtain or assert a claim for personal judgment against the Lessee for the Obligations, or (ii) make any effort at collection of the Obligations from the Lessee, or (iii) foreclose against or seek to realize upon any security now or hereafter existing for the Obligations, including the Trust Estate or the Trust Indenture Estate (as such term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations, or make any effort at collection of the Obligations from any such other Person, or exercise or assert any other right or remedy to which any Party is or may be entitled in connection with the Obligations or any security or other guaranty therefor, or (v) assert or file any claim against the assets of the Lessee or any other guarantor or other Person liable for the Obligations, or any part thereof, before or as a condition of enforcing the liability of the Guarantor under this Guarantee or requiring payment of said Obligations by the Guarantor hereunder, or at any time thereafter. (d) The Guarantor agrees, to the fullest extent permitted by law, that, without limiting the generality of this Guarantee, if an Event of Default shall have occurred and be continuing and the Lessor (or any assignee thereof including, without limitation, the Indenture Trustee) shall be prevented by applicable law from exercising its remedies (or any of them) under Section 15 of the Lease, the Lessor (or any assignee thereof, including, without limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive hereunder from the Guarantor, upon demand therefor the sums that would otherwise have been due from the Lessee under the Lease had such remedies been able to be exercised. The Guarantor hereby unconditionally waives, to the fullest extent permitted by law, any requirement that, as a condition precedent to the enforcement of the obligations of the Guarantor hereunder, the Lessee or all or any one or more of any other guarantors of any of the Obligations be joined as parties to any proceedings for the enforcement of any provision of this Guarantee. 2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be deemed to create any right in any Person except a Party and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person. - 4 - 5 3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives notice of the acceptance of this Guarantee and of the performance or nonperformance by the Lessee, demand for payment from the Lessee or any other Person, notice of nonpayment or failure to perform on the part of the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent permitted by law, all other demands or notices whatsoever, other than the request for payment hereunder and notice provided for in Section 1 hereof. The obligations of the Guarantor shall be absolute and unconditional and shall remain in full force and effect until satisfaction of all Obligations hereunder and, without limiting the generality of the foregoing, to the extent not prohibited by applicable law, shall not be released, discharged or otherwise affected by the existence of any claims, set-off, defense or other rights that the Guarantor may have at any time and from time to time against any Party, whether in connection herewith or any unrelated transactions. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Financial Obligation is rescinded or must otherwise be returned by any Party upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding with respect to the Lessee or otherwise, all as though such payment had not been made. The Guarantor, by virtue of any payment or performance hereunder to a Party, shall be subrogated to such Party's claim against the Lessee or any other Person relating thereto; provided, however, that the Guarantor shall not be entitled to receive payment from the Lessee in respect of any claim against the Lessee arising from a payment by the Guarantor: (a) while an Event of Default shall have occurred and be continuing, in which case no such payment in respect of such a claim by the Guarantor may be made by the Lessee; or (b) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings relating to the Lessee, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Lessee, whether or not involving insolvency or bankruptcy proceedings, in which case the Obligations shall be paid and performed in full before any payment in respect of a claim by the Guarantor shall be made by or on behalf of the Lessee. 4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or waiver or modification of, or consent under, the terms hereof, shall be effective unless evidenced by an instrument in writing signed by the Guarantor and each Party against whom such amendment, supplement, waiver, modification or consent is to be enforced. 5. PAYMENTS. All payments by the Guarantor hereunder in respect of any Obligation shall be made in Dollars and otherwise as provided in the Lease, the Participation Agreement or any other Operative Document in which such Obligation is contained; provided that the Guarantor consents to all the terms of the Trust Indenture and agrees to make all payments hereunder directly to the Indenture Trustee until such time as the Indenture Trustee shall give notice to the Guarantor that the Lien of the Trust Indenture has been fully discharged and thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay directly to the Lessor, in its individual capacity, or to the Owner Participant or another Party, - 5 - 6 as the case may be, any amount owing to such Person as Supplemental Rent for indemnities provided in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or otherwise not constituting part of the Trust Indenture Estate (as such term is defined in the Trust Indenture). 6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust Indenture, the Lessor will assign, and create a security interest in, certain of its rights hereunder to and for the benefit of the Indenture Trustee. From and after the execution and delivery of the Trust Indenture, and until receipt by the Guarantor of a written notice from the Indenture Trustee to the effect that the Trust Indenture has been fully satisfied and discharged, no remedy or election hereunder may be exercised by the Lessor or consent given by the Lessor, except by or with the prior written consent of the Indenture Trustee, and the Guarantor will make payment of all amounts hereunder that are assigned to the Indenture Trustee directly to the Indenture Trustee, and such payments shall discharge the obligations of the Guarantor to the Lessor to the extent of such payments. 7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Parties as follows: (a) It is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware. It has all requisite corporate power and authority to own and operate its properties, to carry on its business as presently conducted and to enter into and perform its obligations under this Guarantee. (b) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with or the taking of any other action in respect of, any Federal, state, municipal or other governmental department, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, is now, or under existing law in the future will be, required or necessary on its behalf to authorize the execution, delivery and performance (other than as contemplated by the Operative Documents in the case of the performance of the Non-Financial Obligations) by it of this Guarantee, or for the legality, validity, binding effect or enforceability hereof. (c) Neither the execution and delivery of this Guarantee, the performance of its obligations hereunder, nor its consummation of the transactions contemplated hereby, will conflict with or result in any breach of, or constitute a default under, or result in any creation or imposition of any Lien upon any of its property or assets under, any applicable laws or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject, or its Articles of Incorporation or by-laws. (d) The execution, delivery and performance by it of this Guarantee have been duly authorized by all necessary corporate action. This Guarantee has been duly executed and delivered by it and constitutes its legal, valid and binding obligation - 6 - 7 enforceable in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 8. JURISDICTIONAL MATTERS. The Guarantor (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 Guarantee brought by any Party, 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 Guarantee may not be enforced in or by such courts. The Guarantor hereby generally consents to service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038-4892, Attention: Managing Attorney, or such office of the Guarantor in New York City as from time to time may be designated by the Guarantor in writing to the Parties. 9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Parties, with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and (c) shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of, and shall be enforceable by, each of the Parties to the fullest extent permitted by applicable laws. The headings in this Guarantee are for purposes of reference only, and shall not limit or otherwise affect the meanings hereof. 10. NOTICES. All requests, notices or other communications hereunder shall be in writing, addressed as follows: If to the Guarantor: Northwest Airlines Corporation for U.S. Mail: 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 for overnight courier: 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President -- Finance and Treasurer Telecopy No.: (612) 726-0665 - 7 - 8 If to a Party: to the address or telecopy number set forth in or pursuant to the Refunding Agreement. All requests, notices or other communications shall be given in the manner, and shall be effective at the times and under the terms, set forth in Section 13(b) of the Participation Agreement. 11. NO WAIVERS. No failure on the part of any Party to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise of such right or remedy or the exercise of any other right or remedy. 12. SURVIVAL. All representations and warranties contained herein or made in writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee regardless of any investigation made by any Party or any other Person. 13. SEVERABILITY. To the fullest extent permitted by applicable law, any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or any provision in any other Operative Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES 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 GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK. 15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by such Party in enforcing, or collecting under, this Guarantee. 16. TERMINATION. Subject to the provisions of Section 3 hereof, this Guarantee shall terminate upon the indefeasible payment and performance in full of all of the Obligations. 17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to the Obligations described in Section 1 and nothing in this Guarantee shall be deemed to constitute a guarantee of payment of any of the Secured Certificates or shall give rise to any inference that the Lessee or the Guarantor has so guaranteed such payment. - 8 - 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed as of the date first hereinabove set forth. NORTHWEST AIRLINES CORPORATION By:______________________________________ Name: Thomas S. Schreier, Jr. Title: Vice President - Finance and Assistant Treasurer Accepted as of the above date: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION in its individual capacity and as Owner Trustee By:____________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY in its individual capacity and as Indenture Trustee By:____________________________ Name: Title: - 9 - 10 SCHEDULE I TO GUARANTEE [NW 1990 A] PARTIES First Security Bank of Utah, National Association, in its individual capacity and as Owner Trustee State Street Bank and Trust Company, as Indenture Trustee [ ], as Owner Participant EX-4.B7 16 PARTICIPATION AGREEMENT-1990 A 1 PARTICIPATION AGREEMENT [NW 1990 A] THIS PARTICIPATION AGREEMENT [NW 1990 A] dated as of August 23, 1990, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of the State of Minnesota (herein called "Lessee"), (ii) the institution listed on Schedule I hereto and identified therein as the "Owner Participant" which executes and delivers a counterpart of this Agreement and of the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date referred to below (herein called the "Owner Participant"), (iii) the institutions listed on Schedule I and identified therein as "Loan Participants", (iv) The First National Bank of Boston, 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"), and (v) The Connecticut Bank and Trust Company, National Association, a national banking association, 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"); WITNESSETH: WHEREAS, pursuant to the Purchase Agreement (as such term is defined in the Lease hereinafter referred to) between Lessee and the Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things, certain Boeing 747-451 aircraft, including the Aircraft which has been delivered by the Manufacturer to Lessee and is the subject of this Agreement; WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Lessee and the Owner Trustee are entering into a Purchase Agreement Assignment [NW 1990 A], dated as of the date hereof (herein called the "Purchase Agreement Assignment"), whereby Lessee assigns to the Owner Trustee certain rights and interests of Lessee under the Purchase Agreement with respect to the Aircraft; and (ii) the Manufacturer has executed the Consent and Agreement [NW 1990 A] (herein called the "Consent and Agreement"), substantially in the form attached to the Purchase Agreement Assignment (herein called the "Consent and Agreement"). WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Participant is entering into a Trust Agreement [NW 1990 A], 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 2 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 1.1 thereof (herein called the "Trust Estate") for the use and benefit of the Owner Participant; WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with the execution and delivery of this Agreement are entering into the Trust Indenture and Security Agreement [NW 1990 A], 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 issues to each of the Loan Participants one or more secured certificates (herein called collectively, the "Secured Certificates", and individually, a "Secured Certificate") as evidence of the Owner Trustee's indebtedness to the Loan Participants arising from the Loan Participants' making secured loans to the Owner Trustee to finance a portion of the Owner Trustee's purchase of the Aircraft, which Secured Certificates are to be secured by the mortgage and security interests created by the Owner Trustee in favor of the Indenture Trustee, and 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; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1990 A], dated as of the date hereof (such Lease Agreement, as the same may be amended or supplemented from time to time to the extent permitted by the terms thereof and this Agreement, herein called the "Lease", such term to include, unless the context otherwise requires, the Lease Supplement referred to below), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the Aircraft on the date (the "Delivery Date") that the Aircraft is sold and delivered by Lessee to the Owner Trustee under the Bill 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; WHEREAS, certain terms are used herein as defined in Section 13(a) hereof; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. Participations in Lessor's Cost of the Aircraft. (a) Participation by Loan Participants. Subject to the terms and conditions of this Agreement, each Loan Participant agrees to finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner Trustee (herein called a "Loan") in the amount set forth on Schedule II opposite the name of such Loan Participant. Each Loan Participant shall make such Loan to the Owner Trustee on a date to be designated pursuant to -2- 3 Section 2 hereof, but in no event later than August 31, 1990, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York (ABA No. 02-100-1033), not later than 10:30 a.m., New York City time on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite the Loan Participant's name in Schedule II hereto. Upon the occurrence of the above transfers by the Loan Participants to the Owner Trustee, to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon, the Owner Trustee, at the direction of the Owner Participant, shall issue Secured Certificates to the Loan Participants under the Trust Indenture to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon. The Owner Trustee agrees to pay the Secured Certificates in installments in the amounts and on the dates provided in the Trust Indenture together with interest thereon and all other amounts payable with respect thereto, all as more fully provided in the Trust Indenture. (b) Participation by Owner Participant. Subject to the terms and conditions of this Agreement, the Owner Participant hereby agrees to participate in the payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft on a date to be designated pursuant to Section 2 hereof, but in no event later than August 31, 1990, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York (ABA No. 02-100-1033), not later than 10:30 a.m., New York City time, on the Delivery Date immediately available funds in Dollars in the amount set forth opposite the Owner Participant's name in Schedule II hereto. (c) General Provisions. The amount of the participation of each of the Loan Participants and the Owner Participant to be made as provided above in the payment of Lessor's Cost for the Aircraft is hereinafter called such party's "Commitment" for the Aircraft. In case any of the Loan Participants or the Owner Participant shall default in its obligation under the provisions of this Section 1, no other such party shall have any obligation to make any portion of such defaulted amount available or to increase the amount of its Commitment and the obligation of such nondefaulting party shall remain subject to the terms and conditions set forth in this Agreement. Upon receipt by the Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant to this Section 1 and the satisfaction of the conditions set forth in Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take title to and accept delivery of the Aircraft. In consideration of the transfer of title to and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall, simultaneously with such transfer of title and delivery, pay to Lessee from the amounts so furnished it by the Participants, the Lessor's Cost of the Aircraft. (d) Determination of Interest Rate. The Debt Rate applicable to the Secured Certificates for each Interest Period and the length of each Interest Period shall be determined by Lessee on behalf of the Owner Trustee in accordance with Section 2.02 of the Trust Indenture. -3- 4 SECTION 2. Lessee's Notice of Delivery Date. Lessee agrees to give each Participant, the Owner Trustee and the Indenture Trustee at least two Business Days' telex, telegraphic 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 and the amount of each Participant's Commitment for such Aircraft. As to each Participant, the making of its Commitment for such Aircraft available in the manner required by Section 1 shall constitute a waiver of such notice. SECTION 3. Instructions to the Owner Trustee. The Owner Participant agrees that its releasing the amount of its Commitment for the Aircraft to the account of the Owner Trustee in accordance with the terms of Section 1 shall constitute, subject to satisfaction or waiver of the conditions set forth in Section 4(a), without further act, authorization and direction by the Owner Participant to the Owner Trustee: (i) to pay to Lessee the Lessor's Cost for the Aircraft; (ii) to the extent not previously accomplished by a prior authorization, to authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees, or an agent or agents, of Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant to the Bill of Sale; (iii) to accept from Lessee the Bill of Sale and the FAA Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9); (iv) to execute an Aircraft Registration Application, the Lease Supplement and the Trust Supplement, in each case covering the Aircraft; (v) to borrow from the Loan Participants to finance a portion of the Lessor's Cost for the Aircraft and to issue to the Loan Participants Secured Certificates in aggregate principal amount equal to the amount borrowed, pursuant hereto and to the Trust Indenture; and (vi) to take such other action as may be required to be taken by the Owner Trustee on the Delivery Date by the terms of any Operative Document. SECTION 4. Conditions. (a) Conditions Precedent to the Participations in the Aircraft. It is agreed that the obligations of each of the Loan Participants and the Owner Participant to participate in the payment of Lessor's Cost and to make available the amount of its respective Commitment are subject to the satisfaction prior to or on the Delivery Date of the following conditions precedent, except that paragraphs (iii), (v)(6), (x) (insofar as it relates to representations and warranties contained in the Tax Indemnity Agreement), (xx), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and (xxvii) shall not be a condition precedent to the obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner Participant), (xiv) and (xvii) shall not be a condition precedent to the obligation of the Owner Participant: -4- 5 (i) The Loan Participants 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, in the opinion of such Loan Participant or the Owner Participant, as the case may be, or their respective counsel, would make it a violation of law or regulations or guidelines for such Loan Participant or the Owner Participant to make its Commitment available in accordance with Section 2 hereof or, in the case of such Loan Participant, to acquire a Secured Certificate or to realize the benefits of the security afforded by the Trust Indenture. (iii) In the case of the Owner Participant, the Loan Participants shall have made available the amount of their Commitments for the Aircraft in accordance with Section 1 hereof. (iv) In the case of the Loan Participants, 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 Loan Participants and the Owner Participant and shall be in full force and effect and executed counterparts shall have been delivered to the Loan Participants and the Owner Participant, or their respective counsel, provided that only each Loan Participant shall receive an executed original of its respective Secured Certificate and provided further that a copy of the Purchase Agreement shall only be delivered to and retained by the Owner Trustee (but the Indenture Trustee shall also retain a copy of the Purchase Agreement which may be inspected and reviewed by the Indenture Trustee if and only if there shall occur and be continuing an Event of Default under the Lease), and the Tax Indemnity Agreement shall only be delivered to Lessee and the Owner Participant and their respective counsel: (1) the Purchase Agreement (insofar as it relates to the Aircraft); (2) the Purchase Agreement Assignment; (3) the Lease; (4) a Lease Supplement covering the Aircraft dated the Delivery Date; (5) the Tax Indemnity Agreement; (6) the Trust Agreement; -5- 6 (7) a Trust Supplement covering the Aircraft dated the Delivery Date; (8) the Bill of Sale; (9) the FAA Bill of Sale; (10) an acceptance certificate covering the Aircraft in the form agreed to by the Loan Participants, 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; (12) the Secured Certificates; and (13) the Consent and Agreement. All of the foregoing documents, together with this Agreement, are sometimes referred to herein, collectively, as the "Operative Documents" and, individually, as an "Operative Document". (vi) A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the Granting Clause of the Trust Indenture that are not covered by the recording system established by the Federal Aviation Act, shall have been executed and delivered by the Owner 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 Owner Participant or the Loan Participants shall have been executed and delivered by Lessee or the Owner Trustee and duly filed. (vii) The Loan Participants and the Owner Participant shall have received the following, in each case in form and substance satisfactory to it: (1) a certified copy of the Certificate of Incorporation and By-Laws of Lessee and a copy of resolutions of the board of directors of Lessee, certified by a Vice President, the Secretary or an Assistant Secretary of Lessee, duly authorizing the sale of the Aircraft and the lease by Lessee of the Aircraft under the Lease and the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the Purchase Agreement Assignment, the Tax Indemnity Agreement and each other document required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof; -6- 7 (2) such other documents and evidence with respect to Lessee, the Manufacturer, the Owner Trustee, the Owner Participant, the Indenture Trustee, and the Loan Participants as the Loan Participants or the Owner Participant, or their respective counsel, may reasonably request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; and (3) a certificate of Lessee as to the person or persons authorized to execute and deliver this Agreement, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft and any other documents to be executed on behalf of Lessee in connection with the transactions contemplated hereby and as to the signatures of such person or persons. (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 following statements shall be true, and the Loan Participants and the Owner Participant shall have received evidence satisfactory to it to the effect that: (1) the Owner Trustee has good and marketable title (subject to filing and recording the FAA Bill of Sale with the Federal Aviation Administration) to the Aircraft on such Delivery Date, free and clear of Liens other than the rights of Lessee under the Lease and Lease Supplement covering the Aircraft, the mortgage and security interests created by the Trust Indenture, the rights of the Owner Participant under the Trust Agreement and the Trust Supplement, and Liens permitted by clause (v) of Section 6 of the Lease; (2) the Aircraft has been duly certified by the Federal Aviation Administration (or there shall have been received adequate assurances from the Federal Aviation Administration that the certification will be issued as soon as the registration of the Aircraft is complete) as to type and airworthiness in accordance with the terms of the Lease; and (3) application for registration of the Aircraft in the name of the Owner Trustee has been duly made with the Federal Aviation Administration. -7- 8 (x) On the Delivery Date, (A) the representations and warranties of Lessee, the Owner Participant and the Owner Trustee contained in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing, or would result from the purchase, sale or lease of the Aircraft, which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default as defined in the Trust Indenture, except that the Aircraft may be operated outside the United States prior to receipt of a flying time wire, if necessary, all steps to obtain the issuance of which will have been, on the Delivery Date, taken or caused to be taken by Lessee. (xi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, and reasonably satisfactory as to scope and substance to the Loan Participants and the Owner Participant, from Messrs. Cadwalader, Wickersham & Taft, special counsel for Lessee, as to New York and certain federal law matters, and Lessee's in-house or other counsel, as to Minnesota and certain federal law matters, to the collective effect that: (1) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota and has the corporate power and authority to carry on its business as now conducted and to enter into and perform its obligations under the Lessee Documents. Lessee is an "air carrier" within the meaning of the Federal Aviation Act holding a certificate issued pursuant to Section 401 thereof; (2) the execution, delivery and performance of the Lessee Documents by Lessee have been duly authorized by all necessary corporate action on the part of Lessee, do not require any approval of stockholders of Lessee or, to the knowledge of such counsel, any approval or consent of any trustee or holders of any indebtedness or obligations of Lessee (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of any thereof by Lessee nor the performance by Lessee of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel, judgment or order applicable to or binding on Lessee or (B) to the knowledge of such counsel, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Permitted Liens) upon any property of Lessee under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter, by-law or permit issued by any Minnesota or United States governmental authority to which Lessee is a party or by which Lessee or its properties may be bound or affected; -8- 9 (3) neither the execution and delivery by Lessee of the Lessee Documents nor the performance by Lessee 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, except for (A) the registration of the Aircraft (including the placement on board of the owner's copy of the application for registration of the Aircraft and, if necessary, a flying time wire), recordations and other actions referred to in paragraph 5 below, (B) the maintenance of an airworthiness certificate with respect to the Aircraft, (C) such other approvals as might be required under then existing law in the event of change of the citizenship of the Owner Trustee, the reregistration or change in registration of the Aircraft or the substitution of another party for the Owner Trustee and (D) periodic or other reporting requirements under 14 CFR Section 47.51 required after the commencement of the Term of the Lease in connection with the foregoing; (4) the Purchase Agreement (insofar as it relates to the Aircraft) has been duly entered into and delivered by Lessee, and each of the other Lessee Documents has been duly entered into and delivered by Lessee and each of such other Lessee Documents constitutes the legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with its respective terms, except as limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally, (C) applicable laws which may affect the remedies provided in the Lease, which laws, however, do not in the opinion of such counsel make the remedies provided in the Lease inadequate for the practical realization of the benefits provided thereby, but no opinion is expressed as to the amount or priority of any recovery under any particular circumstances, in particular, no opinion is expressed as to the effect on such remedies of Section 1-201(37) of the Uniform Commercial Code, as in effect in any jurisdiction, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations; and (5) subject to the registration of the Aircraft with the Federal Aviation Administration in the name of the Owner Trustee, and assuming the due and timely filing for recordation in accordance with the provisions of the Federal Aviation Act, of (A) the FAA Bill of Sale, (B) the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and made a part thereof and (C) the Trust Indenture with the Trust Agreement and the Trust Supplement attached thereto and made a part thereof, with respect to such portion of the Aircraft as is covered by the recording system established by the Federal Aviation Administration pursuant to Section 503(a) of the Federal Aviation Act by virtue of the same constituting an "aircraft" or an "aircraft engine" as defined in the Federal Aviation Act, no further filing or recording of any document (including any financing statement with respect to the Lease under Article 9 of the Uniform Commercial Code of -9- 10 Massachusetts or Minnesota), is necessary in any applicable jurisdiction within the United States in order (x) to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee or any third parties or (y) to create and perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee or any third parties. With respect to such portion of the Aircraft, if any, as may not be deemed to constitute an "aircraft" or "aircraft engine" as defined in the Federal Aviation Act, except for the filing of financing statements in the States of Massachusetts and Minnesota and such other states as may be specified in such counsel's opinion, and for the filings of periodic continuation statements with respect to such filings as and when required, (x) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary under Article 9 of the Uniform Commercial Code in order to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee and any third parties in any applicable jurisdiction within the United States, and (y) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary or advisable under Article 9 of the Uniform Commercial Code in order to create or perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee and any third parties in any applicable jurisdiction within the United States. The opinion contemplated by this paragraph (xi) shall be to such further effect with respect to such other matters as the Loan Participants or the Owner Participant may reasonably request. Such opinion with respect to the matters specified in this paragraph (xi) may rely exclusively (A) upon the opinion of special counsel in Oklahoma City, Oklahoma, referred to in paragraph (xv) of this Section 4(a) with respect to the matters stated therein, and (B) upon the opinion of Messrs. Csaplar & Bok with respect to the opinion in paragraph (5) above insofar as it relates to the laws of the Commonwealth of Massachusetts and (C) upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, with respect to matters of fact, and may state that no opinion is expressed as to laws other than laws of the State of New York (in the case of such special counsel's opinion), the State of Minnesota (in the case of Lessee's in-house or other counsel's opinion), the Commonwealth of Massachusetts (in the case of both of such opinions, and exclusively in reliance as aforesaid) and the Federal laws of the United States. Such counsel may assume that, except for the filings and recordations contemplated herein, there are no filings or recordations with respect to the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement or the Trust Indenture with the Federal Aviation Administration, or of Uniform Commercial Code financing statements naming the Owner Trustee as a debtor in the filing offices of the Secretary of State of Minnesota, the Secretary of the Commonwealth of Massachusetts, or in such other filing offices in such other jurisdictions as shall be identified in such counsel's opinion. -10- 11 (xii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee and reasonably satisfactory as to scope and substance to such parties, from a counsel to the Manufacturer, with respect to the Manufacturer Documents, the Manufacturer's FAA Bills of Sale, the delivery of the Aircraft to Lessee and such other matters as such parties may reasonably request. (xiii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to such parties, from Messrs. Csaplar & Bok, counsel for the Owner Trustee, to the effect that: (1) The First National Bank of Boston is a national banking association duly organized and validly existing in good standing under the laws of the United States of America, is a "citizen of the United States" within the meaning of Section 101(16) of the Federal Aviation Act and has full power, authority and legal right to execute, deliver and carry out in its capacity as Owner Trustee or in its individual capacity, as the case may be, the terms of the Owner Trustee Documents other than the Secured Certificates; (2) each of the Owner Trustee Documents other than the Secured Certificates has been duly authorized, executed and delivered by The First National Bank of Boston, in its individual capacity, as Owner Trustee, or both, as the case may be, and each such agreement constitutes the legal, valid and binding obligation of The First National Bank of Boston, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against The First National Bank of Boston, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations, and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (3) the Secured Certificates have been duly authorized and the Owner Trustee has duly issued, executed and delivered the Secured Certificates being issued and delivered on the Delivery Date pursuant to the terms and provisions of this Agreement; -11- 12 (4) the execution, delivery and performance by the Owner Trustee and by The First National Bank of Boston in its individual capacity, or both, as the case may be, of the Owner Trustee Documents and the consummation of the transactions by the Owner Trustee and by The First National Bank of Boston in its individual capacity contemplated thereby are not in violation of the Charter or By-Laws of The First National Bank of Boston or of any indenture, mortgage, credit agreement, license or other agreement or instrument known to such counsel to which The First National Bank of Boston in its individual capacity or as the Owner Trustee is a party or by which it is bound, or of any Federal or Massachusetts law, governmental rule or regulation governing the banking or trust powers of The First National Bank of Boston in its individual capacity or as the Owner Trustee or any judgment applicable to it and known to such counsel; (5) neither the execution and delivery by the Owner Trustee and, where appropriate, by The First National Bank of Boston in its individual capacity, or both, as the case may be, of the Owner Trustee's Documents nor the consummation of any of the transactions by the Owner Trustee, by The First National Bank of Boston in its individual capacity, or both, as the case may be, contemplated thereby (A) requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing Federal or Massachusetts law governing the banking or trust powers of The First National Bank of Boston in its individual capacity or as the Owner Trustee (except for filings pursuant to the Uniform Commercial Code, and except for compliance with requirements of the Federal Aviation Act as to which such counsel may express no opinion) or (B) contravenes any Federal or Massachusetts law, rule or regulation; (6) assuming compliance with the applicable laws of New York, the Trust Agreement, as supplemented by the Trust Supplement, duly creates for the benefit of the Owner Participant the trust interest in the Trust Estate which the Trust Agreement by its terms purports to create; (7) assuming compliance with the applicable laws of New York, the Trust Indenture duly creates for the benefit of the Indenture Trustee the security interests which the Trust Indenture purports to create; and the Indenture Trustee is entitled to the benefits and security afforded by the Trust Indenture; (8) the Secured Certificates are valid and binding obligations of the Owner Trustee, enforceable as against the Owner Trustee in accordance with their terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); -12- 13 (9) assuming that Massachusetts law were to govern the perfection of the security interests in the Trust Indenture Estate under the Trust Indenture, except for (i) the Indenture Trustee's taking of possession of the original counterparts of the Lease and the Lease Supplement covering the Aircraft (insofar as the Lease and the Lease Supplement covering the Aircraft may constitute chattel paper (as such term is defined in the Uniform Commercial Code as in effect in Massachusetts)) and all monies and securities (including instruments) required to be deposited with the Indenture Trustee, and (ii) the filing of the Uniform Commercial Code financing statements with the Secretary of State of the Commonwealth of Massachusetts and the Boston City Clerk with respect to the security interests created in the Trust Indenture Estate under the Trust Indenture, naming the Owner Trustee as debtor and the Indenture Trustee as secured party, which filing has been duly effected, no other filing or recording or refiling or rerecording is necessary in the Commonwealth of Massachusetts to create, perfect or maintain the perfected status of such security interest (except for the timely filing of continuation statements in respect of such financing statements); (10) based upon applicable Massachusetts statutory and case law, the choice of New York law to govern the Participation Agreement, the Lease, and each other Operative Document to which the Owner Trustee or The First National Bank of Boston in its individual capacity, or both, is a party is, under the laws of the Commonwealth of Massachusetts, a valid choice of law and will be honored by the courts of the Commonwealth of Massachusetts; (11) the Owner Trustee has received from Lessee such title to the Aircraft as Lessee had immediately prior to the conveyance to the Owner Trustee, subject to the rights of the Owner Trustee and Lessee under the Lease and the security interest created pursuant to the Trust Indenture and the Trust Supplement; and (12) no taxes, fees or other charges will be imposed by Massachusetts or any political subdivision or taxing authority thereof on or with respect to the execution, delivery or performance of any of the Operative Documents, except such taxes, fees or other charges which would have been imposed had the Owner Trustee not been located in, and not performed its duties under the Trust Agreement or the Trust Indenture, in Massachusetts, and the trust created pursuant to the Trust Agreement will not be subject to any such taxes, fees or other charges on, based on or measured by the net income of the Trust Estate (as distinguished from the net income of the Owner Participant) solely by reason of the Owner Trustee's location in Massachusetts (assuming for purposes of this opinion that the Owner Participant, the Owner Trustee and the Trust Estate would not be subject to any such tax, fee or other charge if the Owner Trustee performed its duties under the Trust Agreement and the Trust Indenture from an office located outside Massachusetts). -13- 14 Such opinion shall be to such further effect with respect to such other matters incident to the matters covered thereby as the Loan Participants, the Owner Participant, the Indenture Trustee or Lessee may reasonably request. Such opinion may state that (A) no opinion is expressed as to laws other than the laws of the Commonwealth of Massachusetts and the Federal laws of the United States (other than the Federal Aviation Act except as it relates to U.S. citizenship) and (B) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. Such opinion may assume (M) the due authentication of the Secured Certificates by the Indenture Trustee, (N) that the Operative Documents are legal, valid and binding under the laws of the State of New York and (O) the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and of the other Operative Documents by each of the parties thereto other than The First National Bank of Boston in its individual capacity and as the Owner Trustee. (xiv) The Loan Participants shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to such parties, from Messrs. Sidley & Austin, special counsel for the Owner Participant, and from the Owner Participant's in-house or other counsel to the collective effect that: (1) the Owner Participant is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Documents; (2) the Owner Participant Documents have been duly authorized, executed and delivered by the Owner Participant and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitute legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their respective terms; (3) neither the execution and delivery by the Owner Participant of the Owner Participant Documents nor the consummation of any of the transactions by the Owner Participant contemplated thereby (A) requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency of the United States or of the State in which the principal office of the Owner Participant is located (or any governmental subdivision thereof) (except as shall have been duly obtained or given, specifying the same), or (B) violates any law, governmental rule or regulation of the United States or the State in which the principal office of the Owner Participant is located (or any governmental subdivision thereof); -14- 15 (4) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the other parties, if any, thereto (other than the Owner Participant in the case of this Agreement and the Trust Agreement), and the due authentication of the Secured Certificates by the Indenture Trustee, the Trust Agreement, as supplemented by the Trust Supplement, duly creates for the benefit of the Owner Participant the trust interest in the Trust Estate which the Trust Agreement by its terms purports to create, and the Owner Trustee Documents constitute legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their respective terms; and (5) assuming the due authorization, execution and delivery thereof by the Owner Trustee as aforesaid, the Trust Indenture duly creates for the benefit of the Indenture Trustee the security interests which the Trust Indenture purports to create and the Indenture Trustee is entitled to the benefits and security afforded by the Trust Indenture; and to such further effect with respect to such other matters or documents relating to the Owner Participant's obligations in connection with this Agreement as the Loan Participants, the Indenture Trustee, the Owner Trustee or Lessee may reasonably request. Such opinions may rely (A) in the case of the opinion of Messrs. Sidley & Austin, upon the opinion of in-house or other counsel for the Owner Participant with respect to the matters stated therein, provided such opinion of Messrs. Sidley & Austin states that such counsel believe that they, the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee are justified in relying upon such opinion of such other counsel, and (B) upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, as to matters of fact. Such opinions may state that (M) no opinion is expressed as to laws other than the laws of the States of New York and Delaware, and the Federal laws of the United States, (N) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate, (O) the enforceability of the Owner Participant Documents and the Owner Trustee Documents against the Owner Participant and the Owner Trustee, respectively, (i) may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and (ii) may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), (P) in the case of indemnity provisions contained in the Owner Participant Documents and the Owner Trustee Documents, as limited by public policy considerations and (Q) certain rights, remedies and waivers contained in the Owner Participant Documents and the Owner Trustee Documents may be limited or rendered unenforceable by applicable laws and judicial decisions governing such provisions, which laws and decisions, however, do not in the opinion of such counsel make the remedies (taken as a whole) provided in such documents inadequate for the practical realization of the benefits provided thereby, but no opinion is expressed as to the amount or priority of any recovery under any particular circumstances. -15- 16 (xv) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to such parties, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to the effect that: (1) the FAA Bill of Sale, the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and the Trust Indenture, with the Trust Agreement and the Trust Supplement attached thereto are in due form for recording by and have been duly filed for recordation with the Federal Aviation Administration in accordance with the provisions of the Federal Aviation Act; (2) proper application for registration of the Aircraft in the name of the Owner Trustee together with the affidavits of the Owner Trustee and the Owner Participant required by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations and the Trust Agreement have been duly filed with the Federal Aviation Administration in accordance with the Federal Aviation Act, and such counsel is of the opinion that the Federal Aviation Administration will issue a Certificate of Aircraft Registration (AC Form 8050-3) in response to said application; (3) the Owner Trustee is the owner of the legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interests created by the Trust Indenture and such other Liens as are permitted by the Lease or this Agreement; (4) the Trust Indenture as supplemented by the Trust Supplement creates a duly and validly perfected first priority mortgage in the Aircraft and a duly perfected assignment of all the right, title and interest of the Owner Trustee in, to and under the Lease as supplemented by the Lease Supplement (insofar as such assignment affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 503(a) of the Federal Aviation Act), subject only to the Lease and to Liens permitted by the Lease and the Trust Indenture, it being understood that no opinion need be expressed as to the validity or enforceability of such security interest or assignment under local law or as against third parties in respect of the Aircraft when the same is outside the United States; (5) none of the Trust Indenture, the Trust Agreement, the Trust Supplement, the Lease or the Lease Supplement is required to be filed or recorded in any other place within the United States in order to perfect the mortgage of the Aircraft or the assignment of the Lease as supplemented by the Lease Supplement (insofar as such assignment affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to -16- 17 Section 503(a) of the Federal Aviation Act), under the applicable laws of any jurisdiction within the United States; and (6) no authorization, approval, consent, license or order of, or registration with, or giving of notice to, the FAA Aircraft Registry is required for the valid authorization, delivery or performance of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture and the Trust Supplement except for such authorizations, approvals, consents, licenses, orders, registrations, and notices as have been effected. Such opinion may state that no opinion is expressed as to laws other than the Federal laws of the United States, and may assume that the Aircraft is not registered in any other country. Said opinion may also contain a statement to the effect that such opinion is limited to the records maintained by the Federal Aviation Administration Aircraft Registry and does not cover liens that are perfected without the filing of notice thereof with the Federal Aviation Administration, such as Federal tax liens and liens arising under Section 1368(a) of Title 29 of the United States Code and possessory artisans' liens, and is subject to the accuracy of Federal Aviation Administration personnel in the filing, indexing and recording of instruments filed with the Federal Aviation Administration and in the search for encumbrance cross-reference index cards for the Engines. Said opinion may also rely on the opinion obtained by such counsel from the Aeronautical Center Counsel of the Federal Aviation Administration, satisfactory in form and scope to such counsel, and on past practice of the Federal Aviation Administration which is consistent with such Aeronautical Center Counsel opinion. (xvi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to such parties, from Messrs. Day, Berry & Howard, special counsel for the Indenture Trustee, to the effect that: (1) The Connecticut Bank and Trust Company, National Association, is a national banking association, duly organized and validly existing in good standing under the laws of the United States of America and has the corporate power and authority to enter into and perform its obligations under the Indenture Trustee Documents and, in its capacity as Indenture Trustee, to authenticate the Secured Certificates to be delivered on the Delivery Date; (2) the Indenture Trustee Documents, and the authentication of the Secured Certificates to be delivered on the Delivery Date have been duly authorized by all necessary corporate action on the part of The Connecticut Bank and Trust Company, National Association, and neither the execution and delivery thereof nor the performance by The Connecticut Bank and Trust Company, National Association, in its individual capacity or as Indenture -17- 18 Trustee, as the case may be, of any of the terms and provisions thereof will violate any Federal or Connecticut law or regulation relating to the banking or trust powers of The Connecticut Bank and Trust Company, National Association, or contravene or result in any breach of, or constitute any default under, the Charter or By-Laws of The Connecticut Bank and Trust Company, National Association; (3) Neither the execution and delivery by The Connecticut Bank and Trust Company, National Association, in its individual capacity or as Indenture Trustee of the Indenture Trustee Documents, or the certificates of authentication on the Secured Certificates to be delivered on the Delivery Date, nor the performance by The Connecticut Bank and Trust Company, National Association, in its individual capacity or as Indenture Trustee, as the case may be, of any of the transactions contemplated thereby requires or required the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or Connecticut governmental authority or agency governing the banking or trust powers of The Connecticut Bank and Trust Company, National Association; and (4) Each of the Indenture Trustee Documents and the certificate of authentication on the Secured Certificates delivered on the Delivery Date has been duly executed and delivered by The Connecticut Bank and Trust Company, National Association, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of The Connecticut Bank and Trust Company, National Association, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against The Connecticut Bank and Trust Company, National Association, in its individual capacity or as Indenture Trustee in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and to such further effect with respect to such other matters incident to the matters covered thereby as the Loan Participants, the Owner Participant, the Owner Trustee and Lessee may reasonably request. Such opinion may state that no opinion is expressed as to laws other than the laws of the State of Connecticut and the Federal laws of the United States. (xvii) The Loan Participants shall have received from Messrs. White & Case, special counsel for the Loan Participants, a favorable opinion satisfactory in substance and form to the Loan Participants, as to such matters incident to the transactions contemplated hereby as such parties may reasonably request. -18- 19 (xviii) The Loan Participants and the Owner Participant shall have received a certificate signed by the President or any Vice President of Lessee, dated the Delivery Date, addressed to the Loan Participants and the Owner Participant and certifying as to the matters stated in paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this Section 4(a). Copies of the orders, permits, waivers, authorizations, exemptions and approvals referred to in Section 4(a)(viii) shall have been furnished to the Loan Participants and the Owner Participant. (xix) The Owner Participant shall, by making its Commitment available as provided in Section 1(b) of this Agreement, be deemed to have reaffirmed the representations and warranties made by it in Section 8 of this Agreement. (xx) The Owner Participant shall have received an opinion, in form and substance satisfactory to the Owner Participant, from AVMARK, Inc., independent aircraft appraisers, or such other recognized aircraft appraiser agreed upon by the Owner Participant and Lessee, to the effect that (A) the Aircraft will have, at the end of the Basic Term, (i) at least 20% of its original economic life remaining and (ii) a fair market value of at least 20% of Lessor's Cost (without taking into account any increase or decrease for inflation or deflation during the Interim Term and Basic Term or the terms of any purchase option provided in the Lease) and taking into account any costs to the Owner Trustee or the Owner Participant of removal and delivery of the Aircraft to the Owner Trustee at the end of the Basic Term; (B) the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost; (C) it will be commercially feasible for a third party to utilize the Aircraft at the end of the Basic Term; and (D) a reasonable current estimate of the fair market value of the Aircraft at February 23, 2011 taking a reasonable estimate of inflation and deflation into account is not more than 56.0% of Lessor's Cost. (xxi) The Loan Participants and Owner Participant shall have received an independent insurance broker's report, in form and substance satisfactory to the Loan Participants 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. (xxii) On the Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to the Airframe or any Engine has occurred. (xxiii) Lessor's Cost for the Aircraft shall be $127,500,000. (xxiv) 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. -19- 20 (xxv) The representations and warranties of the Indenture Trustee and the Loan Participants contained in Section 8 shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and each Participant shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President of the Indenture Trustee addressed to such Participant and certifying as to the foregoing matters with respect to the Indenture Trustee. (xxvi) The Owner Participant shall have received from Messrs. Sidley & Austin, special counsel to the Owner Participant, 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. (xxvii) In the opinion of the Owner Participant and its special counsel, there shall have been, since the date hereof, 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 hereof, 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 1 of the Tax Indemnity Agreement. Promptly upon the registration of the Aircraft and the recording of the Trust Indenture, the Lease Supplement covering the Aircraft and the Trust Supplement covering the Aircraft pursuant to the Federal Aviation Act, Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to the due and valid registration of the Aircraft in the name of the Owner Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement, such Trust Supplement, the Lease and 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. It is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee, (B) to accept delivery of the Aircraft under the Lease and (C) to enter into its other Operative Documents, are all subject to the fulfillment to the satisfaction of Lessee 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 -2- 21 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 4(a)(ii), 4(a)(iii) and 4(a)(iv) hereof shall have been satisfied. (iii) Those documents described in Section 4(a)(v) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Lessee) in the manner specified in Section 4(a)(v), shall each be satisfactory in form and substance to Lessee, shall be in full force and effect on the Delivery Date, and an executed counterpart of each thereof (other than the Secured Certificates) shall have been delivered to Lessee or its special counsel. (iv) Lessee shall have received a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant, or other evidence of authority satisfactory to Lessee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing or evidencing authority for the execution, delivery and performance by the Owner Participant of all of the Operative Documents to which the Owner Participant is a party, and a copy of the general authorizing resolutions of the boards of directors of the Indenture Trustee and the Owner Trustee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Indenture Trustee and the Owner Trustee, respectively, which authorize the execution, delivery and performance by the Indenture Trustee of the Indenture Trustee Documents and the Secured Certificates and by the Owner Trustee of the Owner Trustee Documents, together with such other documents and evidence with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee as Lessee or its special counsel may reasonably request in order to establish the 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) The representations and warranties of the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, contained in Section 8 hereof shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and Lessee shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President or other authorized representative of the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively, addressed to Lessee and -21- 22 certifying as to the foregoing matters with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively. (vi) Lessee shall have received the opinions set forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case addressed to Lessee and dated the Delivery Date and in each case in scope and substance satisfactory to Lessee and Lessee's special counsel. (vii) 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. (viii) No change shall have occurred after the date of the execution and delivery of this Agreement in applicable law or regulations thereunder or interpretations by appropriate regulatory authorities which would make it a violation of law or regulations for Lessee to enter into any transaction contemplated by the Operative Documents. (ix) 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. (x) Lessee shall have received an opinion from a recognized independent aircraft appraiser selected by Lessee to the effect (A) that the Aircraft will have, at the end of the Basic Term, at least 25% of its economic life remaining, (B) the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost, (C) the fair market value of the Aircraft on the 20th anniversary of the Commencement Date (taking into account a reasonable estimate for inflation during the Interim Term and the Basic Term but without taking into account any purchase or renewal options provided in the Lease) is equal to or less than 56.0% of Lessor's Cost and to such other effect as Lessee shall reasonably require. (xi) Lessee shall have been paid Lessor's Cost for the Aircraft. SECTION 5. Confidentiality of Appraisal and Participation Agreement. The Owner Trustee, the Participants, the Certificate Holders and the Indenture Trustee shall keep the appraisal referred to in Section 4(a)(xx) hereof and this Agreement confidential and shall not disclose, or cause to be disclosed, the same to any Person, except (A) to prospective and permitted transferees of Owner Trustee's, a Loan Participant's, a Certificate Holder's, the -22- 23 Owner Participant's or the Indenture Trustee's interest who agree to hold such information confidential, (B) to the Owner Trustee's, a Loan Participant's, a Certificate Holder's, the Owner Participant's or the Indenture Trustee's counsel or special counsel, independent insurance brokers or other agents who agree to hold such information confidential, (C) as may be required by any statute, court or administrative order or decree or governmental ruling or regulation or to any regulatory authorities having jurisdiction over them or (D) such other Persons as reasonably deemed necessary by Owner Trustee, the Participants, the Certificate Holders or the Indenture Trustee in order to protect the interests of any of such parties or for the purposes of enforcing such documents by the Owner Trustee or the Indenture Trustee; provided, however, that any and all disclosures of all or any part of the appraisal referred to in Section 4(a)(xx) hereof and this Agreement which are permitted by (C) or (D) above shall be made only to the extent necessary to meet the specific requirements or needs of the Persons to whom such disclosures are hereby permitted; and provided further that this Section 5 shall not apply to the Owner Participant with respect to the appraisal referred to in Section 4(a)(xx) hereof. SECTION 6. Extent of Interest of Certificate Holders. No Certificate Holder (as defined in the Trust Indenture) shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Trust Indenture when and if the principal of and interest on all Secured Certificates held by such holder and all other sums payable to such holder hereunder, under the Trust Indenture and under such Secured Certificates shall have been paid in full. Each of the Loan Participants 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 Loan Participants 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. (a) In General. Lessee represents, warrants and covenants to each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and the Owner Participant that as of the Delivery Date: (i) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is an "air carrier" within the meaning of the Federal Aviation Act operating under a certificate of public convenience and necessity issued by the Civil Aeronautics Board; has its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) located at Eagan, Minnesota; and has the corporate power and authority to own or hold under lease its properties wherever located or used and to enter into and perform its obligations under the Lessee's Documents; (ii) the execution, delivery and performance by Lessee of the Lessee Documents will, on the Delivery Date, have been duly authorized by all necessary corporate action on the part of Lessee, do not require any stockholder approval, or -23- 24 approval or consent of any trustee or holders of any indebtedness or obligations of Lessee except such as have been duly obtained or by the Delivery Date will have been duly obtained, and none of such agreements contravenes any law, judgment, government rule, regulation or order binding on Lessee or the certificate of incorporation or by-laws of Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its properties may be bound or affected; (iii) neither the execution and delivery by Lessee of the Lessee Documents nor the performance by Lessee of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, State or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained and are, or will on the Delivery Date 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) and (B) any normal periodic and other reporting requirements under the applicable rules and regulations of the Federal Aviation Administration to the extent required to be given or obtained only after the Delivery Date; (iv) on the Delivery Date the Lessee Documents will each constitute legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof (subject to the qualifications set forth in clause (4) of the form of opinion of special counsel to Lessee in Section 4(a)(xi)); (v) except as may have been disclosed prior to the date of execution and delivery hereof to the Loan Participants and the Owner Participant in writing by a letter delivered to the Loan Participants and the Owner Participant prior to the execution and delivery hereof and making reference to this Agreement, there are no pending or threatened actions or proceedings before any court or administrative agency which might materially adversely affect the financial condition or the ability of Lessee to perform its obligations under the Operative Documents; (vi) except for (A) the registration of the Aircraft pursuant to the Federal Aviation Act, (B) the filing for recording pursuant to said Act of the Trust Agreement, 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 Agreement and the Trust Supplement attached thereto and made a part thereof and the FAA Bill of Sale, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such documents under the Uniform Commercial Code of Minnesota and Massachusetts and such other states as may be specified in the opinion furnished -24- 25 pursuant to Section 4(a)(xi) hereof, and (D) the taking of possession by the Indenture Trustee of the original counterpart of each of the Lease and the Lease Supplement covering the Aircraft, no further action, including any 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 in order to establish and perfect the Owner Trustee's title to and the Indenture Trustee's security interest in the Aircraft as against Lessee and any third parties in any applicable jurisdictions in the United States; (vii) there has not occurred any event which constitutes an Event of Default under the Lease (or any event which with the giving of notice or the passage of time or both would constitute an Event of Default under the Lease) which is presently continuing; (viii) 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; (ix)(a) The consolidated statement of financial position of NWA Inc. ("NWA") and its consolidated subsidiaries as of December 31, 1989 and the related consolidated statements of earnings, cash flow and changes in financial position of NWA for the year then ended, which have been audited by independent certified public accountants, and (b) the consolidated statement of financial position of Wings Holdings, Inc. ("Holdings") and its consolidated subsidiaries as of June 30, 1990 and the related consolidated statements of earnings, cash flow and changes in financial position for the six-month period then ended, copies of which have been furnished to the Owner Participant and each Loan Participant, fairly present the financial condition of NWA and of Lessee (or in the case of the June 30, 1990 statements, Holdings, NWA and Lessee) as at such date and the results of operations and cash flow of NWA and of Lessee (or in the case of the June 30, 1990 statements, Holdings, NWA and Lessee) for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied and since June 30, 1990 there has been no material adverse change to the financial condition, earnings, cash flow or results of operation of Holdings, NWA or Lessee; (x) on the Delivery Date, the Owner Trustee will receive good and marketable title to the Aircraft free and clear of all Liens, except Liens permitted by clause (v) of Section 6 of the Lease, the rights of Lessee under the Lease and the Lease Supplement covering the Aircraft, the Lien of the Trust Indenture and the beneficial interest of the Owner Participant in the Aircraft; -25- 26 (xi) 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; (xii) Lessee is not in default in the performance of any term or condition of the Purchase Agreement which materially adversely impairs the transactions contemplated hereby; (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; and (xiv) Lessee is not in material breach of any agreement to which it is a party, which breach would have a material adverse effect on the financial condition of Lessee or materially adversely affect the ability of Lessee to perform its obligations under the Operative Documents. (b) General Tax Indemnity [Intentionally Omitted]. (c) General Indemnity. [Reserved] -26- 27 (d) Income Tax. For purposes of this Section 7, the term Income Tax means any Tax based on or measured by income or receipts (other than sales or use Taxes) (including, without limitation, capital gains taxes, minimum taxes, income taxes collected by withholding and taxes on tax preference items), and Taxes which are capital, doing business, excess profits or net worth taxes and interest, additions to tax, penalties, or other charges in respect thereof. SECTION 8. Representations, Warranties and Covenants. (a) The Owner Participant represents that it is acquiring its interest in the Trust Estate for investment and not with a present intent as to any resale or distribution thereof (subject nonetheless to any requirement of law that the disposition of its properties shall at all times be and remain within its control) and that neither it nor anyone acting on its behalf has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended. (b) Lessee represents and warrants that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any interest in the Trust Estate for sale to, or solicited any offer to acquire any of the same from, anyone other than the Owner Participant, not more than 10 institutions believed capable of evaluating and bearing the risks of investment in the transaction contemplated hereby and not more than 35 banking and non-bank financial institutions and finance corporations that are not "accredited investors" within the meaning of Regulation D under the Securities Act of 1933, as amended. Lessee represents that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any Secured Certificate or Secured Certificates or any similar security for sale to, or solicited any offer to acquire any of the same from, anyone other than the Loan Participants and not more than 10 institutions believed capable of evaluating and bearing the risks of investment in the transaction contemplated hereby. (c) Each of the Owner Participant and The First National Bank of Boston, 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" as defined in Section 101(16) of the Federal Aviation Act. 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" within the meaning of Section 101(16) of the Federal Aviation -28- 28 Act 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 voting trust or other similar arrangements or take any other action as may be necessary to prevent any deregistration or 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 hereto 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 in the first sentence of this Section 8(c) 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 Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). The First National Bank of Boston, in its individual capacity, agrees that if at any time a responsible officer or responsible employee of the Corporate Trust Department of The First National Bank of Boston shall obtain actual knowledge that The First National Bank of Boston has ceased to be a "citizen of the United States" within the meaning of Section 101(16) of the Federal Aviation Act, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under the Federal Aviation Act as in effect at such time or, if it is not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Loan Participants, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or The First National Bank of Boston, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an event which would constitute an Event of Default but for lapse of time or the giving of notice or both) shall not have occurred and be continuing under the Lease due to non-compliance by Lessee with the registration requirements in the Lease. (d) The First National Bank of Boston 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 Boston, Massachusetts. The First National Bank of Boston in its individual capacity agrees that it will not change the location of such office to a location outside of Boston, Massachusetts without prior written notice to all parties. The First National Bank of Boston 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. The First National Bank of Boston in its -29- 29 individual capacity represents that it has not offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire the same from, anyone, and that no responsible officer or responsible employee of the Corporate Trust Department of The First National Bank of Boston has knowledge of any such offer or solicitation except as described in Section 8(b). (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. (f) The Owner Participant and each of the Loan Participants agree that, if, at any time after the Depreciation Period, (i) Lessee has requested their consent to the registration of the Aircraft, at Lessee's expense, in a country other than the United States in the name of the Owner Trustee (or, if appropriate in the name of Lessee or a Sublessee as a "lessee" or a "sublessee") and (ii) they have not determined, acting reasonably, that such other country would not provide substantially equivalent protection for the rights of owner participants, lessors or lenders in similar transactions as provided under United States law, the Owner Participant and the Loan Participants will not unreasonably withhold their consent to such change of registration (it being agreed that if such country is not the United Kingdom, a member of the European Economic Community or a party to the Convention on the International Recognition of Rights in Aircraft, Geneva, 1948, Lessee's inability to deliver an opinion (reasonably satisfactory in form and substance to the Owner Participant and the Loan Participants) of counsel acceptable to the Owner Participant and the Loan Participants in such proposed country of registry to the effect that the courts of such country would give effect to the title, registry and priority of the lien under the Trust Indenture substantially to the same extent as if such country were a party to said Convention shall constitute reasonable grounds for a determination that such country would not provide such protection), and if said consent is given, the Owner Participant and the Loan Participants will instruct, respectively, the Owner Trustee and the Indenture Trustee to take whatever action is necessary or appropriate to effectuate such change of registration; provided, however, that prior to any such change in the country of registry of the Aircraft, the Owner Participant and the Loan Participants shall have received: (i) assurances reasonably satisfactory to them (A) to the effect that the insurance provisions of the Lease have been complied with after giving effect to such change of registry, (B) of the payment by Lessee of any expenses of the Owner Participant, the Owner Trustee, the Indenture Trustee and the Loan Participants in connection with such change of registry, (C) to the effect that the original indemnities in favor of the Owner Participant, the Owner Trustee, the Indenture Trustee and the Loan Participants, under this Agreement, the Trust Indenture and the Tax Indemnity Agreement afford each such party substantially the same protection as provided prior to such change of registry, (D) as to the continued status of the Trust Indenture as a first priority lien on the Trust Indenture Estate, (E) that such change 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 Loan Participants, the Indenture Trustee, the -30- 30 Owner Trustee (or any successor, assign or affiliate thereof) or the Trust Estate pursuant to Section 7(b) hereof and (F) that such new country of registry imposes aircraft maintenance standards not materially different from those of the FAA; and (ii) a favorable opinion of counsel reasonably satisfactory to the Owner Participant and the Loan Participants in the new jurisdiction of registry (A) that the terms (including, without limitation, the governing-law, service-of-process and jurisdictional-submission provisions thereof) of the Lease and the Trust Indenture are legal, valid, binding and enforceable in such jurisdiction, (B) that it is not necessary for the Owner Participant, the Owner Trustee, the Indenture Trustee, or the Loan Participants to register or qualify to do business in such jurisdiction, (C) that there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being understood 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 available to cover such risk), and (D) to such further effect with respect to such other matters as the Owner Participant or the Loan Participants may reasonably request. (g) The Owner Participant represents and warrants to Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in its capacity as such and in its individual capacity, as follows: (i) the Owner Participant is a corporation duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under the Owner Participant Documents; (ii) the Owner Participant Documents have been duly authorized by all necessary corporate action on the part of the Owner Participant, do not require any approval not already obtained of stockholders of the Owner Participant or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of the Owner Participant, and have been duly executed and delivered by the Owner Participant, and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by the Owner Participant with any of the terms and provisions thereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order 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 financing or the citizenship requirements of the Owner Participant under applicable aviation law) or contravene or result in any breach of or constitute any 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, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales -31- 31 contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Owner Participant is a party or by which it or its properties may be bound or affected; (iii) each of the Owner Participant Documents constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant in accordance with the terms thereof (subject to the qualifications set forth in clause (2) of the opinion of special counsel to the Owner Participant in Section 4(a)(xiv)); (iv) there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which, if determined adversely to the Owner Participant, would materially adversely affect the financial condition of the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; and (v) upon the execution and delivery of the Trust Indenture, the lien of the Trust Indenture on the collateral purported to be created thereby will be free and clear of Lessor Liens attributable to the Owner Participant. (h) Each of The First National Bank of Boston in its individual capacity and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of The First National Bank of Boston in its individual capacity and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of The First National Bank of Boston in its individual capacity and the Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such 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 (as such terms are defined in Section 7 hereof) imposed on the Trust Estate against which Lessee is not required to indemnify the Trust Estate pursuant to Section 7 hereof but excluding Taxes referred to in Section 7(b)(ii)(3) hereof. (i) The Connecticut Bank and Trust Company, National Association, 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 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 constitute gross negligence or willful misconduct, (C) claims against the Indenture Trustee relating to Taxes or Expenses (as such terms are defined in Section 7 hereof) 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 -32- 32 Operative Documents other than a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9 hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of Default is continuing and prior to the time that the Indenture Trustee has received all amounts due pursuant to the Trust Indenture. (j) Each Loan Participant represents, warrants, covenants and agrees as to itself: (i) that this Agreement has been duly authorized, executed and delivered by such Loan Participant and this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of a State in the United States except that Algemene Bank Nederland N.V. represents and warrants that it is a duly organized and validly existing banking institution under the laws of the Netherlands acting through its Cayman Islands branch; and (iii) that such Loan Participant has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. (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 -33- 33 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. It is hereby further agreed by the Indenture Trustee, and by acceptance of the Secured Certificates the Certificate Holders hereby further agree, that if at any time any of such parties shall have a right to any Excess Payment, such right shall be expressly subject to and subordinate to the rights of the Owner Trustee and the Owner Participant to recover the Owner Participant's interest in the Trust Estate. For purposes of this Section 8(l), "Excess Payment" means the amount by which such payment exceeds the amount which would have been received by the holder(s) of the Secured Certificates or the Indenture Trustee if the Owner Trustee (in its individual capacity) or the Owner Participant had not become subject to the recourse liability referred to in (ii) above. Nothing contained in this Section 8(l) shall prevent the holder of a Secured Certificate or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Owner Trustee (in its individual capacity) or the Owner Participant under this Agreement or the Trust Indenture (and any exhibits or annexes thereto). (m) The Indenture Trustee represents, in its individual capacity, to Lessee, the Owner Trustee and each Participant as follows: (i) it is a "citizen of the United States" as defined in Section 101(16) of the Federal Aviation Act, will notify promptly all parties to this Agreement if in its reasonable opinion its status as a "citizen of the United States" is likely to change and that it will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a "citizen of the United States"; (ii) it is a national banking association duly organized and validly existing in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to enter into and perform its obligations under the Trust Indenture and this Agreement and to authenticate the Secured Certificates to be delivered on the Delivery Date; (iii) the Indenture Trustee Documents, and the authentication of the Secured Certificates to be delivered on the Delivery Date have been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or Connecticut law or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its Charter or By-Laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and -34- 34 (iv) each of the Indenture Trustee Documents has been duly executed and delivered by The Connecticut Bank and Trust Company, National Association, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of The Connecticut Bank and Trust Company, National Association, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against The Connecticut Bank and Trust Company, National Association, in its individual capacity or as Indenture Trustee, as the case may be, in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. (n) The Owner Participant will not, directly or indirectly, sell, assign, convey or otherwise transfer any of its right, title or interest in and to this Agreement, the Trust Estate or the Trust Agreement or any proceeds therefrom to any person or entity, unless (i) the proposed transferee is a "Transferee" (as defined below) and (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 the benefits (including, without limitation, recapture of investment tax credit) 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. A "Transferee" shall mean either (A) a bank or other financial institution with a combined capital, surplus and undivided profits of at least $60,000,000 or a corporation whose Net Worth is at least $60,000,000 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 Loan Participants, 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 Loan Participants, 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 Majority in Interest of Certificate Holders; 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" within the meaning of Section 101(16) of the Federal Aviation Act, and has full power and authority to enter into the transactions contemplated hereby, (N) the Transferee has the requisite power and authority to enter into and carry out the transactions contemplated hereby and such Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants an opinion of counsel in form and substance reasonably satisfactory to such persons as to the due authorization, delivery, legal, valid and binding -35- 35 effect and enforceability of the agreement or agreements referred to in the next clause with respect to the Transferee, (O) the Transferee enters into an agreement or agreements, in form and substance reasonably satisfactory to the Owner Trustee, the Majority in Interest of Certificate Holders, 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, FSC Benefits and ACRS Deductions and the risk of any Inclusion Event (each as defined in the Tax Indemnity Agreement) resulting from such transfer, and (R) the transferor Owner Participant pays all of its expenses (including, without limitation, fees and expenses of counsel) incurred by the transferor Owner Participant in connection with such transfer and causes to be paid all of the expenses (including, without limitation, fees and expenses of counsel) incurred by the Transferee in connection with such transfer. 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 25 days' prior written notice thereof to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, specifying the name and address of the proposed Transferee. For purposes of this paragraph, "Net Worth" shall mean the excess of total assets over total liabilities, each to be determined in accordance with generally accepted accounting principles consistently applied. (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 a Termination Date or on the date for purchase of the Aircraft pursuant to Section 19(d) of the Lease if on such Termination Date or such date pursuant to Section 19(d) of the Lease 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) The First National Bank of Boston and The Connecticut Bank and Trust Company, National Association, 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. -36- 36 (q)(A) Each Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Secured Certificate or any interests represented thereby with the assets of any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1) of the Code. Each Loan Participant agrees that it will not transfer any Secured Certificate (or any part thereof) to any entity (except pursuant to Section 2.14 of the Trust Indenture) unless such entity (A) 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 Secured Certificate (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) or (B) at the election of the transferee, provides the Owner Participant and Lessee with such information as is reasonably sufficient to enable the Owner Participant and Lessee to determine that such transfer will not cause the Owner Participant, Lessee or such entity to engage in a prohibited transaction (as so defined). 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 (A) 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) or (B) at the election of the transferee, provides the Loan Participant and Lessee with such information as is reasonably sufficient to enable the Loan Participant and Lessee to determine that such transfer will not cause the Loan Participant, Lessee or such entity to engage in a prohibited transaction (as so defined). (B) Lessee represents and warrants that: none of (i) the execution and delivery of this Agreement, (ii) the initial purchase by the Loan Participant of the Secured Certificates, and (iii) the initial acquisition by the Owner Participant of its beneficial interest in the Trust Estate will involve any prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation being made in reliance upon and subject to the accuracy of the representations contained in subparagraph (A) of this Section 8(q). (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, -37- 37 independent insurance brokers or other agents who agree to hold such information confidential, and (E) in the case of the Owner Trustee, it may disclose so much of the Purchase Agreement as has been assigned to it under the Purchase Agreement Assignment and not specifically reserved to Lessee under Section 1 thereof, to bona fide potential purchasers of the Aircraft. (s) [Intentionally omitted] (t) Each Loan Participant covenants and agrees that it shall not cause or permit to exist a Loan Participant Lien attributable to it with respect to the Aircraft or any other portion of the 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) The Connecticut Bank and Trust Company, National Association, 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. The Connecticut Bank and Trust Company, 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 Indenture Trustee's Liens. The Connecticut Bank and Trust Company, National Association, 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 First National Bank of Boston in its individual capacity represents and warrants that: (i) the Trust Agreement and, assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, each of the other Owner Trustee Documents has 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; (ii) the lien of the Trust Indenture on the collateral purported to be created thereby will be free and clear of Lessor Liens attributable to The First National Bank of Boston in its individual capacity, and there are no Liens affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Trust Indenture Estate resulting from any act or claim against The First National Bank of Boston in its individual capacity arising out of any event or condition not related to the ownership, leasing, use or operation of the Aircraft or to any other transaction contemplated by this Agreement or any of the Operative Documents, including any Lien resulting from the nonpayment by The First National Bank of Boston in its individual capacity of any Taxes (as defined in Section 7(b)(i) hereof) imposed or measured by its net income; -38- 38 (iii) there has not occurred any event which constitutes (or to the best of its knowledge would, with the passage 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 First National Bank of Boston in its individual capacity and which is presently continuing; (iv) it is a banking association duly organized and validly existing in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and authority to enter into and perform its obligations under each of the Owner Trustee Documents; (v) each of the Owner Trustee Documents has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or Massachusetts law or regulation relating to its banking or trust powers or contravene or result in any breach of, or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (vi) each of the Owner Trustee Documents has been duly executed and delivered by it and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, each thereof is the legal, valid and binding obligation of the Owner Trustee, enforceable against the Owner Trustee in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. (w) The Owner Participant covenants and agrees that if (i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to Lessee written notice of Lessor's election to retain title to the Aircraft and (iii) the Owner Trustee has failed to make, on or before the Termination Date, any payment required to be made by the Owner Trustee pursuant to Section 9(c) in connection with its retention of title to the Aircraft, the Owner Participant will indemnify Lessee for any losses, damages, costs or expenses of any kind (including any additional rents paid by Lessee and any fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a consequence of such failure by the Owner Trustee. The Owner Participant further covenants and agrees to pay those costs and expenses specified to be paid by the Owner Participant pursuant to Exhibit E to the Lease. (x) Each of the Owner Participant, the Owner Trustee, the Indenture Trustee, each Loan Participant and Lessee covenants and agrees that if Lessee elects (a) to terminate the Lease pursuant to Section 9(a) of the Lease and to purchase the Aircraft pursuant to Section 9(b) of the Lease, (b) to purchase the Aircraft pursuant to Section 19(b) of the Lease or (c) to terminate the Lease and purchase the Aircraft pursuant to Section 19(d) of the Lease, -39- 39 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. Lessee agrees that if it so elects to purchase the Aircraft pursuant to Section 9(b) of the Lease and assume the obligations of the Owner Trustee pursuant to the Trust Indenture and the Secured Certificates, the Aircraft will not thereafter be the subject of any leveraged-lease or sale and lease-back transaction in which Lessee or any Affiliate of Lessee is the lessee, a sublessee or a guarantor of the obligations of any lessee or sublessee. (y) 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 citizen of the United States as defined in Section 101(16) of the Federal Aviation Act and shall be a United States certificated air carrier under Section 401 of the Federal Aviation Act of 1958, as amended; (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 each Participant an agreement in form and substance reasonably satisfactory to such 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 each Participant a certificate signed by the President or any Vice President and by the Secretary or an Assistant Secretary of Lessee, and an opinion of counsel reasonably satisfactory to the Participants, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (ii) -40- 40 above comply with this 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 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 Section 8(y) from its liability in respect of any Operative Document to which it is a party. (z) Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust Supplement and any financing statements or other instruments as are necessary to maintain, so long as the Trust Indenture or the Lease is in effect, the perfection of the security interests created by the Trust Indenture and any security interest that may be claimed to have been created by the Lease and the interest of the Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the Indenture Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable them to take such action. Lessee will notify the Owner Trustee, the Owner Participant and the Indenture Trustee of any change in the location of its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) promptly after making such change or in any event within the period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. (aa) Section 3 of the Lease contemplates that, under certain circumstances, the Owner Participant will make certain recalculations of Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value, and the Owner Participant hereby agrees to make such recalculations as and when contemplated by the Lease and subject to all the terms and conditions of the Lease and promptly to take such further actions as may be necessary or desirable to give effect to and to cause the Owner Trustee to give effect to the provisions of Section 3 of the Lease. (bb) The Owner Participant hereby agrees with Lessee, and only with Lessee, and not for the benefit of any other party to this Participation Agreement, that it will pay in full to Lessee upon the termination of the Lease the funds required for the payment of that portion, if any, of the Reimbursement Amount for which Lessee has not previously received an offset pursuant to Section 3(g) of the Lease. The Owner Participant shall also have the right to reimburse Lessee at any time for all or any portion of the Reimbursement Amount for which Lessee has not received an offset pursuant to Section 3(g) of the Lease. -41- 41 (cc) The Owner Participant hereby agrees to notify Lessee or cause Lessee to be notified by telex or telegram not later than 10:00 a.m. New York time on the third Business Day prior to the day for which an Excess Amount is indicated stating whether or not the Owner Participant intends to pay such Excess Amount in full by 10:30 A.M. (New York time) on the due date. (dd) The Loan Participants agree to notify each of the Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual interest expected to accrue on the Secured Certificates during each Interest Period promptly after the commencement of such Interest Period and after the occurrence of any event that would cause such actual interest expected to accrue during such Interest Period to change from the amount previously notified. (ee) The Owner Participant hereby agrees with Lessee that it will pay, or cause to be paid, all costs and expenses that are for the account of the Owner Trustee pursuant to Section 5(d) of the Lease. (ff) [Intentionally omitted] (gg) The Bank hereby represents to each party hereto that it is not (i) a citizen or resident of the United States, as defined in Section 7701(a)(9) of the Code, (ii) a corporation, partnership or other entity created or organized under the laws of the United States or any political subdivision thereof or therein or (iii) any estate or trust that is subject to United States federal income taxation regardless of the source of its income. (hh) The Bank and each subsequent 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 Section 8(e), 8(j) (or, alternatively, 8(gg)), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(hh) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture). (ii) Lessee agrees that with respect to each Sublease having a term of longer than three months, Lessee shall provide the Sublessee of such Sublease with a copy of the Lease, and each such Sublease shall contain, in boldface type, the language set forth in Exhibit A attached hereto. SECTION 9. Certain Covenants of Owner Participant, Loan Participants and Owner Trustee Concerning Reoptimization. (a) In the event of an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall, pursuant to this Section 9 and in accordance with the requirements of Section 3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt payment structures. Within forty-five Business Days after the need for an adjustment to Rent has been established pursuant to Section 3 of the Lease, the Owner Participant shall deliver to Lessee a certificate of an authorized -42- 42 representative of the Owner Participant (the "Reoptimization Certificate") setting forth the proposed revised schedules of debt amortization and Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages. Within forty-five days of its receipt of the Reoptimization Certificate, Lessee may demand a verification, pursuant to Exhibit E of the Lease, of the information set forth in the Reoptimization Certificate. Upon the acceptance by Lessee of the accuracy of the information set forth in the Reoptimization Certificate or the determination pursuant to such verification procedures of such information, the Owner Participant will cause the Owner Trustee (M) to execute a Lease Supplement setting forth the reoptimized Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages, and (N) to exchange new Secured Certificates containing reoptimized amortization schedules for the Secured Certificates outstanding immediately prior to such reoptimization. (b) In connection with reoptimization adjustments of Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree to changes in the amortization schedule of the Secured Certificates, and (N) each Loan Participant will exchange the Secured Certificates held by it immediately prior to such reoptimization for new Secured Certificates containing reoptimized amortization schedules; provided, that such changes do not (X) change the final maturity of any Secured Certificates except that such final maturity may be extended up to an additional two years in connection with the first refinancing under Section 17 hereof or (Y) reduce Basic Rent, the Stipulated Loss Value or the Termination Value percentages below the amount necessary (together with the Excess Amount and all other amounts simultaneously payable by Lessee) to permit payment of all amounts payable pursuant to the Secured Certificates or (Z) increase or decrease the weighted average lives of the Secured Certificates as of the Commencement Date by more than 1.5 years; provided, further, that changes in the amortization schedule may be made on two occasions only. SECTION 10. Other Documents. Each of the Owner Participant and the Owner Trustee hereby (A) agrees with Lessee and the Loan Participants to comply with all of the terms of the Trust Agreement (as the same may hereafter be amended or supplemented from time to time in accordance with the terms thereof) applicable to it; and (B) agrees with Lessee, the Loan Participants 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. 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 10.05 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 -43- 43 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 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 Bill 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 Bill of Sale, second, the Lease, with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the Trust Indenture, with the Trust Agreement and the Trust Supplement attached. Lessee agrees to furnish the Owner Participant, the Loan Participants, the Owner Trustee and the Indenture Trustee with copies of certified copies of the foregoing documents as promptly as practicable following the issuance of same by the Federal Aviation Administration. 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 -44- 44 have the meanings attributed thereto in the Lease. The term "Trust Office" shall have the meaning set forth in the Trust Agreement and the term "Trust Indenture Estate" shall have the meaning set forth in the Trust Indenture. Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it may be amended from time to time. (b) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by prepaid Telex, TWX or telegram (with messenger delivery specified in the case of a telegram), 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 Telex, TWX or telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, 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, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of Lessee in New York City as from time to time may be designated by Lessee in writing to the Owner Participant, the Owner Trustee, and the Indenture Trustee. SECTION 14. Change of Situs of Owner Trust. The Owner Participant agrees that if, at any time, the Trust Estate becomes subject to any Taxes (as defined in Section 7(b) hereof) for which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence -45- 45 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 Loan Participants may reasonably request, (B) the rights and obligations under the Operative Documents of the Owner Participant and the Loan Participants 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 Loan Participants shall have received an opinion or opinions of counsel (satisfactory to the Owner Participant and the Loan Participants), in scope, form and substance satisfactory to the Owner Participant and the Loan Participants 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 Loan Participants, 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 FSC Benefits 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), (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 Loan Participants and to the Owner Participant covering the matters described in Section 4(a)(xiii) hereof and (VI) covering such other matters as the Loan Participants and the Owner Participant may reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner Participant and the Loan Participants on a net after-tax basis against any and all reasonable and actual costs and expenses including counsel fees and disbursements, registration fees, recording or filing fees and taxes incurred by the Owner Trustee, the Owner Participant, and the Loan Participants in connection with such change of situs. SECTION 15. Miscellaneous. (a) Each of the Loan Participants and the Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, or the Indenture Trustee under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture Trustee. (b) The representations, warranties, indemnities and agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee and the Owner Participant provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan Participants', the Indenture Trustee's and the Owner Participant's obligations under any and all thereof, shall -46- 46 survive the making available of the respective Commitments by the Loan Participants and 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 its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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. 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 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. SECTION 16. Expenses. (a) Invoices and Payment. Each of the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan Participants shall -47- 47 promptly submit to the Owner Trustee for its prompt approval (which shall not be unreasonably withheld) copies of invoices of the Transaction Expenses for which it is responsible for providing information as they are received (but in no event later than October 15, 1990). The Owner Participant agrees to transfer to the Owner Trustee promptly but in any event no later than November 1, 1990 such amount as shall be necessary in order to enable the Owner Trustee to pay Transaction Expenses. To the extent of funds received by it, the Owner Trustee agrees to pay all invoices of Transaction Expenses that have been approved by it promptly upon receipt thereof. (b) Payment of Other Expenses. Notwithstanding the provisions of Section 16(a), Lessee agrees to pay the fees, expenses and disbursements of Messrs. Cadwalader, Wickersham & Taft, special counsel for Lessee. The fees, expenses and disbursements of Messrs. Cadwalader, Wickersham & Taft shall not constitute Transaction Expenses. SECTION 17. Refinancings (a) Lessee shall have the right to refinance the Secured Certificates no more than four 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 the terms, conditions and other circumstances relating to any such refinancing shall not, in the opinion of the Owner Participant, be such that could have a material adverse effect on the Owner Participant; and provided, further, that no such refinancing shall require an increase in the amount of the Owner Participant's investment in the beneficial ownership of the Aircraft. Upon such agreement: (1) within ten Business Days after the reaching of such agreement, the Owner Participant will deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "Refinancing Certificate") setting forth (i) the proposed date on which the outstanding Secured Certificates will be redeemed, any new debt will be issued and the other aspects of such refinancing will be consummated (such date, the "Refinancing Date") and (ii) the following information calculated pursuant to the provisions of paragraph (6) of this Section 17(a): (A) 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 -48- 48 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 a financing or loan agreement (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; (5) unless otherwise agreed by the Owner Participant, Lessee shall pay all of the expenses of such refinancing (including the fees, expenses and disbursements of counsel); 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 Section Section 4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc. -49- 49 75-28 Section 4.08(1) shall be applied on a prospective basis from the date of such adjustment) 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. -50- 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: ------------------------------------------- Title: Address: Minneapolis/St. Paul International Airport St. Paul, Minnesota 55111 Attn: Chief Financial Officer Telex No. 29-7024 Answerback: NWAIR STP A [_______________________], Owner Participant By: ------------------------------------------- Title: Address: Telecopy No.: THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, Indenture Trustee By: ------------------------------------------- Title: Address: One Constitution Plaza Hartford, CT 06115 Attn: Corporate Trust Department Telex No. 6813218 CBT HFD Telecopy: (203) 244-6999 -Signature Page- 51 THE FIRST NATIONAL BANK OF BOSTON not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: ------------------------------------- Title: Address: Corporate Trust Division Blue Hills Office Park 150 Royall Street Canton, Massachusetts 02021 Attn: Manager - Corporate Trust [__________________________________], Loan Participant By: ------------------------------------- Title: By: ------------------------------------- Title: Address: Telex: Answerback: Telecopy: -Signature Page- 52 SCHEDULE I Names and Addresses Lessee: Northwest Airlines, Inc. Minneapolis/St. Paul International Airport St. Paul, Minnesota 55111 Attn: Chief Financial Officer Telex: 29-7024 Answerback: NWAIR STP A Owner Participant: Indenture Trustee: The Connecticut Bank and Trust Company, National Association One Constitution Plaza Hartford, CT 06115 Attn: Corporate Trust Department Telecopy: (203) 244-6999 53 Owner Trustee: The First National Bank of Boston Corporate Trust Division Blue Hills Office Park 150 Royall Street Canton, Massachusetts 02021 Attn: Manager - Corporate Trust Telex: 499-6527 Answerback: BOSBK BSN Telecopy: (617) 575-2078 Payments made to the Owner Trustee as provided in Section 3(f) of the Lease shall be made to The First National Bank of Boston, Attn: Corporate Trust Division; reference: Northwest Airlines, Inc. Trust 1990 A Loan Participant:
I-2 54 SCHEDULE II Commitments
Percentage of Loan Participant: Lessor's Cost - ---------------- ------------- ------------- Owner Participant: - ----------------- ------------- Total Commitments: 100%
55 EXHIBIT A TO PARTICIPATION AGREEMENT [NW 1990 A] SUBLESSEE HEREBY ACKNOWLEDGES, ACCEPTS AND AGREES: (I) THAT SUBLESSEE HAS RECEIVED AND REVIEWED THE LEASE AGREEMENT [NW 1990 A] DATED AS OF AUGUST 23, 1990 (THE "HEAD LEASE") BETWEEN NORTHWEST AIRLINES, INC., AS LESSEE THEREUNDER ("SUBLESSOR"), AND THE FIRST NATIONAL BANK OF BOSTON, IN ITS CAPACITY AS TRUSTEE, AS LESSOR THEREUNDER ("HEAD LESSOR"), WITH RESPECT TO THE BOEING 747-451 AIRCRAFT BEARING ORIGINAL UNITED STATES REGISTRATION NUMBER N669US (THE "AIRCRAFT") BEING SUBLEASED BY SUBLESSEE HEREUNDER; (II) TO BE BOUND BY THE TERMS OF THE HEAD LEASE; (III) THAT HEAD LESSOR IS THE OWNER OF THE AIRCRAFT; (IV) THAT THE PROVISIONS OF THIS SUBLEASE AND SUBLESSEE'S RIGHTS HEREUNDER (INCLUDING SUBLESSEE'S RIGHT TO QUIET ENJOYMENT OF THE AIRCRAFT) ARE SUBJECT AND SUBORDINATE TO THE TERMS OF THE HEAD LEASE AND HEAD LESSOR'S RIGHTS THEREUNDER; (V) THAT IN THE EVENT THAT THERE IS AN EVENT OF DEFAULT (AS DEFINED IN THE HEAD LEASE) UNDER THE HEAD LEASE, HEAD LESSOR SHALL BE ENTITLED TO EXERCISE ALL OF HEAD LESSOR'S RIGHTS HEREUNDER, UNDER THE HEAD LEASE AND UNDER APPLICABLE LAW WITH RESPECT TO THE AIRCRAFT (INCLUDING REPOSSESSION OF THE AIRCRAFT), WHICH RIGHTS MAY BE EXERCISED NOTWITHSTANDING (X) COMPLIANCE BY SUBLESSEE WITH THE TERMS OF THIS SUBLEASE OR THE HEAD LEASE OR (Y) ANY COVENANT OF QUIET ENJOYMENT FOR THE BENEFIT OF SUBLESSEE CONTAINED IN THIS SUBLEASE OR THE HEAD LEASE; AND (VI) THAT IN THE EVENT THAT SUBLESSEE SUFFERS ANY DAMAGE OR LOSS (INCLUDING CONSEQUENTIAL DAMAGES AND THE LOSS OF THE BENEFIT OF A BARGAIN) IN CONNECTION WITH THE EXERCISE BY HEAD LESSOR OF ANY OF HEAD LESSOR'S RIGHTS SPECIFIED IN THE FOREGOING CLAUSES OR IN THE HEAD LEASE OR UNDER APPLICABLE LAW, SUBLESSEE SHALL HAVE A CLAIM WITH RESPECT TO ANY SUCH DAMAGE OR LOSS SOLELY AGAINST SUBLESSOR AND NOT AGAINST THE AIRCRAFT, HEAD LESSOR, THE OWNER PARTICIPANT (AS DEFINED IN THE HEAD LEASE), THE OWNER TRUSTEE (AS SO DEFINED), THE LOAN PARTICIPANTS (AS SO DEFINED), THE INDENTURE TRUSTEE (AS SO DEFINED) OR ANY AFFILIATE (AS SO DEFINED) OF THE FOREGOING. EX-4.B8 17 FIRST AMENDMENT TO PARTICIPATION AGREEMENT-1990 A 1 FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1990 A] This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1990 A], dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) [ ] (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the four separate Pass Through Trust Agreements (as defined below), (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 (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Indenture (as defined below). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; W I T N E S S E T H: WHEREAS, Lessee, the Owner Participant, The First National Bank of Boston, in its individual capacity and as owner trustee (the "ORIGINAL OWNER TRUSTEE"), [ ], as the loan participant (the "ORIGINAL LOAN PARTICIPANT") and The Connecticut Bank and Trust Company, National Association, in its individual capacity and as indenture trustee (the "ORIGINAL INDENTURE TRUSTEE") entered into the Participation Agreement [NW 1990 A], dated as of August 23, 1990 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 747-451 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Trustee and the Original Indenture Trustee, entered into the Trust Indenture and Security Agreement [NW 1990 A], dated as of August 23, 1990, as supplemented by Trust Agreement and Indenture Supplement [NW 1990 A], dated August 23, 1990 (the "ORIGINAL INDENTURE"), pursuant to which the Original Owner Trustee issued to the Original Loan Participant secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participant in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Trustee and Lessee entered into the Lease 2 Agreement [NW 1990 A] relating to the Aircraft, dated as of August 23, 1990, as supplemented by Lease Supplement No. 1 [NW 1990 A] dated August 23, 1990 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Original Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease from the Original Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Original Owner Trustee entered into the Trust Agreement [NW 1990 A], dated as of August 23, 1990 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Original Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1990 A] relating to the Aircraft, dated as of August 23, 1990 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee; WHEREAS, pursuant to an Instrument of Transfer, Removal, Appointment, Assumption and Acceptance, dated May 28, 1996, the Owner Trustee succeeded to all of the estates, properties, rights, powers, duties and trusts of the Original Owner Trustee under the Trust Agreement and the other Operative Documents to which the Original Owner Trustee was a party; WHEREAS, pursuant to an Instrument of Assignment and Acceptance of Trust Indenture and Security Agreement [NW 1990 A] dated as of July 14, 1991, the Indenture Trustee succeeded to the Original Indenture Trustee, as indenture trustee under the Original Indenture; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee have entered into the Refunding Agreement [NW 1990 A], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1990 A], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue -2- 3 new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES") in four series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1990 A], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Participant and the Owner Trustee have entered into the First Amendment to Trust Agreement [NW 1990 A], dated as of the date hereof (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT"); WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1990 A], dated as of June 3, 1996 (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Guarantor has entered into the Guarantee; WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in Section 1 of the Refunding Agreement), four 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing 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 Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (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 (other than Northwest Airlines 1996-1D 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 -3- 4 Through Trustee, the Liquidity Provider and the Subordination Agent entered into the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Participation Agreement is amended as follows: SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 2. AMENDMENT OF SECTION 5 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 5 of the Original Participation Agreement is hereby amended to delete the phrase "and this Agreement" wherever it appears and to add the following sentence at the end: The identity of the Owner Participant shall not be disclosed in any prospectus, offering memorandum or similar document or supplement or amendment thereto to be used in connection with the public offering of securities representing interests in the Secured Certificates. SECTION 3. AMENDMENT OF SECTION 7(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b) of the Original Participation Agreement is hereby amended by (i) adding the words "or the issuance or transfer of the Pass Through Certificates" after the words "transfer thereof" in clause (i)(E) thereof, (ii) deleting from clause (ii)(3) thereof the words "a Loan Participant or any Certificate Holder", (iii) deleting from clause (ii)(5) thereof the words and punctuation "a Loan Participant, any Certificate Holder,", and (iv) deleting from clause (ii)(9) thereof the words and punctuation ", a Loan Participant or any Certificate Holder" and the words "of either". SECTION 4. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement is hereby amended by (i) deleting the word "and" between the words "expenses" and "Transaction Expenses" in the second parenthetical phrase of the first paragraph thereof and substituting a comma therefor, (ii) inserting after the phrase "to Section 16 hereof" in such second parenthetical phrase the words "and Refinancing Expenses to the extent not required to be paid by the Owner Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement", (iii) inserting the words and punctuation "and, only in the case of the Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words "in respect thereof" in the first clause (A) thereof, and (iv) adding the words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after -4- 5 the words "Operative Documents" in the second clause (A) thereof and in the second clause (B) thereof. SECTION 5. AMENDMENT OF SECTION 8(c) OF THE ORIGINAL PARTICIPATION AGREEMENT. The second, third, fourth, fifth and sixth sentences of Section 8(c) of the Original Participation Agreement are hereby amended in their entirety to read as follows: 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 arrangements 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 hereto 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 in the first sentence of this Section 8(c) 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 Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). First Security Bank of Utah, National Association, in its individual capacity, agrees that if at any time a responsible officer or responsible employee of the Corporate Trust Department of First Security Bank of Utah, National Association, shall obtain actual knowledge that First Security Bank of Utah, National Association, has ceased to be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under the Federal Aviation Act as in effect at such time or, if it is not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Loan Participants, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or First Security Bank of Utah, National Association, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an event which would constitute an Event of Default but for lapse of time or the giving of notice or both) shall not have occurred and be -5- 6 continuing under the Lease due to non-compliance by Lessee with the registration requirements in the Lease. SECTION 6. AMENDMENT OF SECTION 8(d) OF THE ORIGINAL PARTICIPATION AGREEMENT. The second sentence of Section 8(d) of the Original Participation Agreement is hereby amended in its entirety to read as follows: First Security Bank of Utah, National Association in its individual capacity, agrees that it will not change the location of its principal place of business or 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 to a location outside of Salt Lake City, Utah, without prior written notice to all parties. SECTION 7. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby amended to read in its entirety as follows: The Owner Participant and the Indenture Trustee agree that, if, at any time after the Depreciation Period, (i) Lessee has requested their consent to the registration of the Aircraft, at Lessee's expense, in a country other than the United States in the name of the Owner Trustee (or, if appropriate in the name of Lessee or a Sublessee as a "lessee" or a "sublessee") and (ii) the Owner Participant has not determined, acting reasonably, that such other country would not provide substantially equivalent protection for the rights of owner participants or lessors in similar transactions as provided under United States law, the Owner Participant will not unreasonably withhold its consent to such change of registration (it being agreed that if such country is not the United Kingdom, a member of the European Economic Community or a party to the Convention on the International Recognition of Rights in Aircraft, Geneva, 1948, Lessee's inability to deliver an opinion (reasonably satisfactory in form and substance to the Owner Participant) of counsel acceptable to the Owner Participant in such proposed country of registry to the effect that the courts of such country would give effect to the title, registry and priority of the lien under the Trust Indenture substantially to the same extent as if such country were a party to said Convention shall constitute reasonable grounds for a determination that such country would not provide such protection), and if said consent is given, the Owner Participant will instruct the Owner Trustee to, and the Indenture Trustee shall, take whatever action is necessary or appropriate to effectuate such change of registration; provided, however, that prior to any such change in the country of registry of the Aircraft, the Owner Participant and the Indenture Trustee shall have received: (i) assurances reasonably satisfactory to the Owner Participant (A) to the effect that the insurance provisions of the Lease have been complied -6- 7 with after giving effect to such change of registry, (B) of the payment by Lessee of any expenses of the Owner Participant, the Owner Trustee, the Indenture Trustee and the Loan Participants in connection with such change of registry, (C) to the effect that the original indemnities in favor of the Owner Participant, the Owner Trustee, the Indenture Trustee and the Loan Participants, under this Agreement, the Trust Indenture and the Tax Indemnity Agreement afford each such party substantially the same protection as provided prior to such change of registry, (D) as to the continued status of the Trust Indenture as a first priority lien on the Trust Indenture Estate, (E) that such change 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 Loan Participants, the Indenture Trustee, the Owner Trustee (or any successor, assign or affiliate thereof) or the Trust Estate pursuant to Section 7(b) hereof and (F) that such new country of registry imposed aircraft maintenance standards not materially different from those of the FAA; and (ii) a favorable opinion of counsel reasonably satisfactory to the Owner Participant in the new jurisdiction of registry (A) that the terms (including, without limitation, the governing-law, service-of-process and jurisdictional-submission provisions thereof) of the Lease and the Trust Indenture are legal, valid, binding and enforceable in such jurisdiction, (B) that it is not necessary for the Owner Participant, the Owner Trustee or the Indenture Trustee to register or qualify to do business in such jurisdiction, (C) that there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being understood 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 available to cover such risk), and (D) to such further effect with respect to such other matters as the Owner Participant may reasonably request. SECTION 8. AMENDMENT OF SECTION 8(h) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(h) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Each of First Security Bank of Utah, National Association, in its individual capacity and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of First Security Bank of Utah, National Association, in its individual capacity and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of First Security Bank of Utah, National Association, in its individual capacity and the Owner Participant agrees to make restitution to the Trust Estate for any -7- 8 actual diminution of the assets of the Trust Estate resulting from such 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 (as such terms are defined in Section 7 hereof) imposed on the Trust Estate against which Lessee is not required to indemnify the Trust Estate pursuant to Section 7 hereof but excluding Taxes referred to in Section 7(b)(ii)(3) hereof. SECTION 9. AMENDMENT OF SECTION 8(i) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(i) of the Original Participation Agreement is hereby amended by deleting the words and punctuation "The Connecticut Bank and Trust Company, National Association" and replacing them with the words "State Street Bank and Trust Company". SECTION 10. AMENDMENT OF SECTION 8(j) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(j) of the Original Participation Agreement is hereby amended to read in its entirety as follows: (j) Each Loan Participant, by its acceptance of a Secured Certificate, represents and warrants as to itself: (i) that this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of the jurisdiction of its incorporation; and (iii) that such Loan Participant has full power, authority and legal right to carry out the terms of this Agreement. SECTION 11. AMENDMENT OF SECTION 8(k) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(k) of the Original Participation Agreement is hereby amended to read in its entirety as follows: 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 without a view to resale or distribution (it being understood that such Loan Participant may pledge or assign as security its interest in the 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 violate the registration requirements under the Securities Act of 1933, as amended. -8- 9 SECTION 12. AMENDMENT OF SECTION 8(m) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(m)(i) of the Original Participation Agreement is hereby amended to read in its entirety as follows: it is a Citizen of the United States, 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 that it will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a Citizen of the United States without making use of any voting trust, voting powers agreement or similar arrangement; SECTION 13. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby amended by deleting all of the words appearing after the first sentence and substituting therefor the following: A "Transferee" shall mean either (A) a bank or other financial institution with a combined capital surplus and undivided profits of at least $60,000,000 or a corporation whose Net Worth is at least $60,000,000 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, and has full power and authority to enter into the transactions contemplated hereby, (N) the Transferee has the requisite power and authority to enter into and carry out the transactions contemplated hereby and such Transferee shall have delivered to Lessee, the Owner Trustee and the Indenture Trustee an opinion of counsel in form and substance reasonably satisfactory to such persons as to the due authorization, delivery, legal, valid and binding effect and enforceability of the agreement or agreements referred to in the next clause with respect to the Transferee, (O) the Transferee enters into an agreement or agreements, in form and substance reasonably satisfactory to -9- 10 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, FSC Benefits and ACRS Deductions and the risk of any Inclusion Event (each as defined in the Tax Indemnity Agreement) resulting from such transfer, and (R) the transferor Owner Participant pays all of its expenses (including, without limitation, fees and expenses of counsel) incurred by the transferor Owner Participant in connection with such transfer and causes to be paid all of the expenses (including, without limitation, fees and expenses of counsel) incurred by the Transferee in connection with such transfer. 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 and the Refunding Agreement 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 25 days' prior written notice thereof to the Indenture Trustee, the Owner Trustee and the Lessee, specifying the name and address of the proposed Transferee. For purposes of this paragraph, "Net Worth" shall mean the excess of total assets over total liabilities, each to be determined in accordance with generally accepted accounting principles consistently applied. SECTION 14. AMENDMENT OF SECTION 8(p) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(p) of the Original Participation Agreement is hereby amended to read in its entirety as follows: First Security Bank of Utah, 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. -10- 11 SECTION 15. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement is hereby amended to read in its entirety as follows: The Owner Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Secured Certificate or any interests represented thereby with the assets of any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1) of the Code. Each Loan Participant, by its acceptance of a Secured Certificate, 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 of such Secured Certificate (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 Section 406 of ERISA); provided, that no such transfer shall be effective, and the Indenture Trustee shall not register any Secured Certificate until the intended transferee has made, or is deemed to have made, one of the representations referred to above. 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 Section 406 of ERISA); provided, that no such transfer shall be effective and any attempt by the Owner Participant to make such a transfer shall be null and void and of no effect until the intended transferee has made, or is deemed to have made, one of the representations referred to in this sentence. The Pass Through Trustee agrees that it will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of the initial supplement (other than the initial supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust Agreement without the prior written consent of the Owner Participant. SECTION 16. AMENDMENT OF SECTION 8(u) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(u) of the Original Participation Agreement is hereby amended by deleting the words and punctuation "The Connecticut Bank and Trust Company, National Association" each time they appear therein and replacing them with the words "State Street Bank and Trust Company". -11- 12 SECTION 17. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby amended by adding a new second and third paragraph thereto at the end thereof: 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. In the event that Lessee has determined that it intends to exercise a purchase option set forth in Section 9(b) or 19(d) of the Lease and in connection therewith will assume the Secured Certificates, but Lessee determines that the opinion required by subclause (ii) of the preceding paragraph is unavailable, then, in lieu of assuming the obligations of the Owner Trustee in respect of the Secured Certificates, Lessee shall have the option, exercisable by written notice to the Owner Participant, the Owner Trustee and the Indenture Trustee accompanied by an opinion of counsel addressed to the Indenture Trustee to the effect that, after the transfer referred to below (i) the Lien of the Trust Indenture will continue 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 to the same extent as the Indenture Trustee was entitled to such protection prior to such transfer, to require the Owner Participant to transfer, at the sole cost and expense of Lessee, its entire interest in and to this Agreement, the Trust Estate and the Trust Agreement to a company designated by Lessee (which may be an Affiliate of Lessee), otherwise meeting the requirements for a Transferee under Section 8(n) hereof (without regard to the proviso to the second sentence thereof), upon payment to the Owner Participant of all amounts the Owner Participant would have been entitled to receive under the Operative Documents had Lessee exercised and performed such purchase option as to the Aircraft, such amounts to be mutually determined by the Owner Participant and Lessee; provided, that, if such transfer is to an Affiliate of Lessee, Lessee shall also furnish an opinion of counsel addressed to the Indenture Trustee to the effect that no part of the trust created by the Trust Agreement (but only such Affiliate's beneficial interest in such trust) and no right, title or interest under the Trust Indenture Estate shall be included in, or subject to, any declaration or adjudication of, or proceedings with respect to the bankruptcy, insolvency or liquidation of such Affiliate. If Lessee elects to exercise the foregoing option, such transfer shall be fully performed no later than the date upon which the related purchase option would have been required to be performed. The Owner Trustee, the Owner -12- 13 Participant and the Indenture Trustee shall cooperate with Lessee in facilitating performance of the foregoing. In the event that Lessee exercises the option set forth in this paragraph, Lessee shall cause to be delivered on the effective date of the transfer of a confirmation as of such date (after giving effect to such transfer) of the opinion delivered with Lessee's notice and such additional documentation concerning the transfer as the Indenture Trustee or the Owner Trustee shall reasonably request. SECTION 18. AMENDMENT OF SECTION 8(y) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(y) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation "citizen of the United States as defined in Section 101(16) of the Federal Aviation Act and shall be a United States certificated air carrier under Section 401 of the Federal Aviation Act of 1958, as amended" in Section 8(y)(i) and replacing them with the words "Certificated Air Carrier", (ii) deleting the words "each" the first time it appears in Section 8(y)(ii) and replacing it with the words "the Owner", (iii) deleting the words "such" the first time it appears in Section 8(y)(ii) and replacing it with the words "the Indenture Trustee and the Owner", (iv) inserting in Section 8(y)(ii) after the words "Purchase Agreement Assignment", the words and punctuation ", the Refunding Agreement", (v) deleting the word "each" the first time it appears in Section 8(y)(iv) and replacing it with the words "the Owner", and (vi) deleting the word "Participants" the first time it appears in Section 8(y)(iv) and replacing it with the words "the Indenture Trustee and the Owner Participant". SECTION 19. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement is hereby deleted. SECTION 20. AMENDMENT OF SECTION 9 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement is hereby deleted. SECTION 21. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended by deleting the first and second sentences thereof and substituting the following: Each of the Owner Participant and the Owner Trustee hereby agrees with Lessee (A) to comply with all of the terms of the Trust Agreement (as the same may hereafter be amended or supplemented from time to time in accordance with the terms thereof) applicable to it; (B) 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) not to revoke the Trust Agreement without the prior written consent of Lessee and the Indenture Trustee. 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 -13- 14 stated principal amount or interest on the Secured Certificates or (iii) amend or modify the provisions of Section 2.05 of the Trust Indenture. SECTION 22. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby amended by deleting the words "at the foot of this Agreement" in clause (A) of the second sentence thereof and substituting therefor the words "on the signature pages to the Refunding Agreement". SECTION 23. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is hereby amended by deleting the proviso in the first sentence and substituting therefore the following: "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 Loan Participants, 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 FSC Benefits 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), (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 Section 4(a)(xiii) hereof, and (VI) covering 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, the Indenture Trustee and the Loan Participants on a net after-tax basis against any and all reasonable and actual costs and expenses including counsel fees and disbursements, registration -14- 15 fees, recording or filing fees and taxes incurred by the Owner Trustee, the Owner Participant, the Indenture Trustee and the Loan Participants in connection with such change of situs. SECTION 24. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Section 15. Miscellaneous. (a) The Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor. SECTION 25. ASSUMPTION OF OBLIGATIONS BY THE INDENTURE TRUSTEE. The Indenture Trustee, in its individual capacity and as Indenture Trustee, hereby accepts its appointment as Indenture Trustee under the Operative Documents and accepts the estates, properties, rights, powers and obligations of the Indenture Trustee in each of the Operative Documents. The Indenture Trustee hereby makes and agrees to, and incorporates by reference herein, in its individual capacity or as Indenture Trustee, as the case may be, the representations, warranties and covenants made and agreed to by the Original Indenture Trustee in each of the Operative Documents to which at any time the Original Indenture Trustee was a party or by which at any time it was bound, in its individual capacity or as the Indenture Trustee. Such representations, warranties and covenants shall be deemed to be made and agreed by the Indenture Trustee as of the date hereof and for the benefit of the other parties to the Operative Documents as set forth therein, their successors and permitted assigns. SECTION 26. RATIFICATION. Except as hereby modified, the Original Participation Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Participation Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Participation Agreement or any word or phrase referring to a section or provision of the Participation Agreement is deemed for all purposes to be a reference to the Participation Agreement or such section or provision as amended pursuant to this Amendment. SECTION 27. MISCELLANEOUS. (a) Each of the parties hereto agrees that the transactions contemplated hereby shall constitute one of the four refinancing operations permitted in Section 17 of the Participation Agreement. (b) Each party hereto acknowledges and agrees that each of the Pass Through Trustee is a Loan Participant under the Participation Agreement, the Lease and the other Operative Documents, and is entitled to the benefits of the covenants and other provisions therein running in favor of the Loan Participants, and to the security purported to be afforded by the Trust Indenture, but that (i) no Pass Through Trustee has any liability arising out of any actions or inactions of the Original Loan Participant or any prior Certificate -15- 16 Holder or any event or condition which occurred or existed prior to the Closing, (ii) no Pass Through Trustee is making any representations or warranties other than those set forth in the Refunding Agreement and such other representations and warranties in the Operative Documents to the extent such representations and warranties relate to a date after the Closing Date, and (iii) no Pass Through Trustee has any liability or obligation under any covenant in any of such agreements for any period prior to the Closing. (c) This Amendment 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 Amendment shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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. THIS AMENDMENT 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 AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -16- 17 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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: ___________________________________ Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: ___________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ___________________________________ Name: Title: [ ], as Owner Participant By: ___________________________________ Name: Title: -17- 18 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Subordination Agent By: ___________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee By: ___________________________________ Name: Title: -18- 19 SCHEDULE I TO PARTICIPATION AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. 4. 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. 1996-1D, dated as of June 12, 1996. -19- EX-4.B9 18 REFUNDING AGREEMENT-1990 A 1 REFUNDING AGREEMENT [NW 1990 A] This REFUNDING AGREEMENT [NW 1990 A], dated as of June 3, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii) [______________] (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the four separate Pass Through Trust Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Participation Agreement (as defined below) as if the Closing Date had occurred. W I T N E S S E T H: WHEREAS, the Lessee, the Owner Participant, the First National Bank of Boston, in its individual capacity and as owner trustee (the "ORIGINAL OWNER TRUSTEE"), [______________], as the loan participant (the ORIGINAL LOAN PARTICIPANT") and The Connecticut Bank and Trust Company, National Association, in its individual capacity and as indenture trustee (the "ORIGINAL INDENTURE TRUSTEE") entered into the Participation Agreement [NW 1990 A], dated as of August 23, 1990 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 747-451 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Trustee and the Original Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1990 A], dated as of August 23, 1990, as supplemented by Trust Agreement and Indenture Supplement [NW 1990 A], dated August 23, 1990 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Original Owner Trustee issued to the Original Loan Participant secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the 2 loan then being made by the Original Loan Participant in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Original Owner Trustee and the Lessee entered into the Lease Agreement [NW 1990 A] relating to the Aircraft, dated as of August 23, 1990, as supplemented by Lease Supplement No. 1 [NW 1990 A] dated August 23, 1990 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Original Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from the Original Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Original Owner Trustee entered into the Trust Agreement [NW 1990 A], dated as of August 23, 1990 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Original Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1990 A] relating to the Aircraft, dated as of August 23, 1990 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee; WHEREAS, pursuant to an Instrument of Transfer, Removal, Appointment, Assumption and Acceptance among the Owner Participant, the Original Owner Trustee and the Owner Trustee dated May 28, 1996 (the "INSTRUMENT OF TRANSFER"), the Owner Trustee succeeded to all of the estates, properties, rights, powers, duties and trusts of the Original Owner Trustee under the Original Trust Agreement and the other Operative Documents to which the Original Owner Trustee was a party; WHEREAS, pursuant to an Instrument of Assignment and Acceptance of Trust Indenture and Security Agreement [NW 1990 A] dated as of July 14, 1991, the Indenture Trustee succeeded to the Original Indenture Trustee, as indenture trustee under the Original Indenture; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and the Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1990 A], dated as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will issue new secured certificates -2- 3 substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in four series; WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Trustee and the Lessee entered into the First Amendment to Lease Agreement [NW 1990 A], dated as of the date hereof (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"), containing amendments, modifications and additions necessary to give effect to the transactions described herein; WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into the First Amendment to Trust Agreement [NW 1990 A], dated as of the Refinancing Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1990 A], dated as of the Refinancing Date (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent will enter into the First Amendment to Participation Agreement [NW 1990 A], dated as of the Refinancing Date (the "PA AMENDMENT NO. 1"; the Original Participation Agreement, as amended by the PA Amendment No. 1, the "PARTICIPATION AGREEMENT"); WHEREAS, at the Closing, the Guarantor will enter into the Guarantee [NW 1990 A] (the "GUARANTEE"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, four 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing Secured Certificates bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into three revolving credit -3- 4 agreements (each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of Certificates of each Pass Through Trust (other than Northwest Airlines 1996-1D 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 Refinancing Date (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on June 12, 1996 or on such other date agreed to by the parties hereto (the "REFINANCING DATE"): (i) immediately prior to the Closing, the Lessee shall pay to the Owner Trustee, as a payment of Basic Rent under the Lease, an amount equal to the unpaid interest on the Original Secured Certificates accrued up to but not including the Refinancing Date, and as Supplemental Rent any Funding Loss Amount (as defined in the Original Indenture) payable in respect of the Original Secured Certificates; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Refinancing Secured Certificates being issued to such Pass Through Trustee as set forth in clause (vii) below; (iii) the Owner Trustee shall pay to the Indenture Trustee for the benefit of the holders of the Original Secured Certificates an amount equal to the aggregate principal amount of Original Secured Certificates outstanding on the Refinancing Date, together with accrued and unpaid interest on the Original Secured Certificates and Funding Loss Amount, if any, up to but not including the Refinancing Date, and all other amounts payable to such holders under the Original Indenture and the Original Participation Agreement; (iv) pursuant to the Indenture, the Indenture Trustee shall disburse to the holders of the Original Certificates the amounts of principal and interest, Funding Loss Amount, and other amounts, if any, described in clause (iii) above, owing to them on the Refinancing Date with respect to the Original Secured Certificates as a prepayment of the Original Secured Certificates; -4- 5 (v) simultaneously with the disbursement by the Indenture Trustee of amounts described in clause (iv) above to the holders of Original Secured Certificates, the Indenture Trustee shall receive the Original Secured Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture; and (vii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Refinancing Secured Certificates of the maturity and aggregate principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) In case any Pass Through Trustee shall for any reason fail to purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on or prior to June 12, 1996, or such other date as shall be agreed in writing by the parties hereto, the written notice given by the Lessee pursuant to Section 17 of the Original Participation Agreement shall be deemed never to have been given, none of the Owner Participant, the Owner Trustee nor the Lessee shall have any obligation to pay to the holders of the Original Secured Certificates any amount in respect of the prepayment of the Original Secured Certificates, the Original Secured Certificates shall remain outstanding and in full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall not take place. (d) The closing (the "CLOSING") of the transactions described in this Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such other place as the parties hereto may agree. (e) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Refinancing Date. (f) In order to facilitate the transactions contemplated hereby, the Lessee and the Guarantor have entered into the Underwriting Agreement, dated June 3, 1996, among the Lessee, the Guarantor and the several underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to the terms and conditions hereof, the Lessee and the Guarantor will enter into each of the Pass Through Trust Agreements and will undertake to perform certain administrative and ministerial duties under such Pass Through Trust Agreements. -5- 6 SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured Certificates shall be payable as to principal in accordance with the terms of the Indenture, and the Refinancing Secured Certificates shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Refinancing Secured Certificates in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Refinancing Secured Certificates bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Refinancing Secured Certificates shall be dated and authenticated as of the Refinancing Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through Trustee to make the payments described in Section l(a)(ii) and the obligations of the Owner Trustee and the Owner Participant to make the payments and participate in the transactions contemplated by this Agreement on the Refinancing Date are subject to the fulfillment, prior to or on the Refinancing Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraphs (r) and (s) shall not be a condition precedent to the obligations of the Pass Through Trustee hereunder): (a) The Owner Trustee shall have tendered the Refinancing Secured Certificates to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Refinancing Secured Certificates and shall have tendered the Refinancing Secured Certificates to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts or conformed copies of the following documents: (1) this Agreement; (2) the Lease Amendment No. 1; (3) the Indenture; (4) the PA Amendment No. l; (5) the Trust Agreement Amendment No. 1; (6) each of the Pass Through Trust Agreements; -6- 7 (7) the Intercreditor Agreement; (8) the Liquidity Facility for each of the Class A, Class B and Class C Trusts; and (9) the Guarantee. (c) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Lessee and the Guarantor (as the case may be) as to the person or persons authorized to execute and deliver this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the TIA Amendment No. 1, the Pass Through Trust Agreements, the Guarantee and any other documents to be executed on behalf of the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Lessee and the Guarantor or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the 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 the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby; and (3) a copy of the certificate of incorporation of the Lessee and the Guarantor, certified by the Secretary of State of the State of Minnesota in the case of the 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 the Lessee and the Guarantor, certified by the Secretary or Assistant Secretary of the 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 the 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 Refinancing Date, as to the due incorporation and good standing of the Lessee or the Guarantor (as the case may be) in such state. (d) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received a certificate signed by an authorized officer of the Lessee (and, with respect to the matters set forth in clauses (4) and (5) below, of the Guarantor), dated the Refinancing Date, certifying that: -7- 8 (1) the Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Original Lease and has a current, valid certificate of airworthiness; (2) the FAA Bill of Sale, the Original Lease and the Original Indenture have been duly recorded, and the Original Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49, United States Code, relating to aviation (the "FEDERAL AVIATION ACT"); (3) the Aircraft has been registered with the FAA in the name of the Owner Trustee and the Lessee has authority to operate the Aircraft; (4) the representations and warranties contained herein of the Lessee and the Guarantor are correct as though made on and as of the Refinancing Date, except to the extent that such representations and warranties (other than those contained in clause (v) of Section 8(d)) relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (5) there has been no material adverse change in the financial condition of the Guarantor and its subsidiaries, taken as a whole, since December 31, 1995. (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement, the Indenture, the PA Amendment No. 1, 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 and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary or an Assistant Secretary of the Indenture Trustee; and -8- 9 (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Refinancing 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). (f) The Pass Through Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and any other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the 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; (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 Refinancing Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Refinancing 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). (g) The Pass Through Trustee and the Owner Trustee each shall have received a certificate signed by an authorized officer of the Owner Participant, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Refinancing 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). (h) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an independent insurance broker's report as to the due -9- 10 compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (i) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for the Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal department, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee and the Owner Participant each shall have received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form and substance satisfactory to each of them. (l) The Pass Through Trustee and the Owner Trustee each shall have received an opinion addressed to it from Sidley & Austin, special counsel for the Owner Participant, and an opinion addressed to it from corporate counsel to the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee shall have received an opinion of White & Case, special counsel to the Liquidity Provider, and in-house German counsel for the Liquidity Provider, each in form and substance satisfactory to the Pass Through Trustee. (n) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The 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 Refinancing Secured Certificates to be purchased from the Owner Trustee. (p) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustees to make the payments described in Section l(a)(ii) or for the Owner Trustee or the Owner Participant to participate in the transactions contemplated by this Agreement on the Refinancing Date. -10- 11 (q) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee or the Guarantor which are required in connection with the Pass Through Trustee's making of the payments described in Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Refinancing Date shall have been duly obtained. (r) The Owner Participant shall have received such other documents or evidence with respect to the Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Subordination Agent and the Indenture Trustee, as it or its counsel may reasonable request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement, the taking of all necessary corporate action in connection therewith and compliance with the conditions herein set forth. (s) The Lessee and the Owner Trustee shall each have executed and delivered to the other the TIA Amendment No. 1. Promptly following the recording of the Lease Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of the Lease Amendment No. 1 and the Indenture. SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in the transactions contemplated by this Agreement and to execute and deliver each of the Pass Through Trust Agreements, and the PA Amendment No. 1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion referred to in subsections (j) through (n) of Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter from counsel rendering such opinion authorizing the Lessee and the Guarantor to rely on such opinion as if it were addressed to the Lessee and the Guarantor, (ii) each certificate referred to in subsections (e) through (g) of Section 3, (iii) executed counterparts or conformed copies of the Trust Agreement Amendment No. 1, and (iv) such other documents and evidence with respect to each other party hereto as the Lessee, the Guarantor or their counsel 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) The respective obligations of each of the Lessee, the Guarantor, the Pass Through Trustee (solely as to clause (iii)), the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Pass Through Trustee are correct as though made on and as of the Refinancing 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 -11- 12 earlier date), (ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) such other documents and evidence with respect to the Pass Through Trustee it may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Indenture. The Lessee and the Guarantor, by execution and delivery hereof, consent to such execution and delivery of the Indenture. The Indenture shall be effective as of the Refinancing Date. SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, by execution and delivery hereof, consent to the amendment to the Original Lease effected by, and request and instruct the Owner Trustee to execute and deliver, the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1 shall be effective as provided therein. SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the execution and delivery of the PA Amendment No. 1 by each of the parties thereto, the Original Participation Agreement shall be amended as set forth in the PA Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall be a party thereto from and after the Refinancing Date to the extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing Date. SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) each of the 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 on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under (i) in the case of the Lessee, this Agreement, the Lease Amendment No. 1, the PA -12- 13 Amendment No. 1, the TIA Amendment No. 1, 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 Guarantee, 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; (b) the 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; (c) the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Guarantee, the Underwriting Agreement and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, and the performance of the obligations of the Lessee or the Guarantor (as the case may be) under this Agreement, the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Guarantee, the Underwriting Agreement and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, have been duly authorized by all necessary corporate action on the part of the 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 the 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 the Lessee or the Guarantor (as the case may be) or the certificate of incorporation or by-laws of the 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 the Lessee or the Guarantor (as the case may be) under, any indenture, mortgage, contract or other agreement to which the 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; (d) neither the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Guarantee, the -13- 14 Underwriting Agreement or any other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, nor the performance of the obligations of the Lessee or the Guarantor (as the case may be) hereunder or under the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Guarantee, the Underwriting Agreement or the other Operative Documents to which the Lessee or the Guarantor (as the case may be) is a party, nor the consummation by the Lessee or the Guarantor (as the case may be) 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 in respect of, the Department of Transportation, the FAA, or any other federal, state or foreign governmental authority having jurisdiction, other than (i) 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, (ii) 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, (iii) the consents, approvals, notices, registrations and other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement, (iv) the registrations and filings referred to in Section 8(f), and (v) 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; (e) this Agreement constitutes, and each of the Participation Agreement, the Pass Through Trust Agreements, the Tax Indemnity Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment No. 1 and the Lease Amendment No. 1 shall have been executed and delivered by each of the parties thereto, will constitute, the legal, valid and binding obligations of the Lessee or the Guarantor (as the case may be) enforceable against the 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, 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; (f) except for the filings and registrations referred to in Section 7(a)(vi) of the Participation Agreement, such filings and registrations as shall have been made or effected subsequent thereto and the filing for recording -14- 15 pursuant to the Federal Aviation Act of the Indenture and the Lease Amendment No. 1, 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 the 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 other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease and the Lease Amendment No. 1 (to the extent the Lease constitutes chattel paper) and the filing of continuation statements at periodic intervals with respect to the Uniform Commercial Code financing statements in effect on the Refinancing Date covering the security interests created by the Indenture or describing the Lease as a lease; (g) neither the 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; (h) neither the Lessee nor the Guarantor is an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (i) 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; and (j) 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. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the parties below represents, warrants and covenants to each of the other parties to this Agreement and to the Liquidity Provider as follows: (a) The Indenture Trustee in its individual capacity represents, warrants and covenants that: (1) 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 -15- 16 Indenture Trustee as provided in Section 8.02 of the 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 PA Amendment No. 1, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party; (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, the PA Amendment No. 1 and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party 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; (3) this Agreement constitutes, and the Participation Agreement, when the PA Amendment No. 1 has been executed and delivered by the Indenture Trustee, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) 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 (5) there are no Indenture Trustee Liens on the Aircraft or any portion of the Trust Estate. (b) The Owner Trustee, in its individual capacity (except as provided in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7) and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and (11) below) as Owner Trustee, represents and warrants that: -16- 17 (1) 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, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver the Instrument of Transfer and to carry out the terms of the Original Trust Agreement, and has, or had on the respective dates of execution thereof or assumption of rights and obligations thereunder (assuming the authorization, execution and delivery of the Trust Agreement by the Owner Participant), as Owner Trustee, and to the extent expressly provided herein or therein, in its individual capacity, the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Refinancing Secured Certificates, the Lease, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) 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 and (assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant), this Agreement and the Purchase Agreement Assignment constitute, and each of the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Indenture, when the Indenture shall have been entered into, the Lease, when the Lease Amendment No. 1 shall have been entered into, and the Trust Agreement, when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity, or as Owner Trustee, as the case may be, enforceable against it in its individual capacity or as Owner Trustee, as the case may be, in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, the Owner Trustee has duly authorized, and on the Refinancing Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Refinancing Secured Certificates pursuant to the terms and provisions hereof and of the Indenture, and each Refinancing Secured Certificate on the Refinancing Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Refinancing Secured Certificate and the Indenture; (4) neither the execution and delivery by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, -17- 18 the Instrument of Transfer, the PA Amendment No. 1, the Indenture, the Lease Amendment No. 1, the Trust Agreement Amendment No. 1, the Refinancing Secured Certificates or any other Operative Document to which it is a party, 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 hereby or 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 hereof and 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; (5) 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 Indenture, the Lease, the Refinancing 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 8(d); (6) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 Indenture, (D) which the Owner Trustee is diligently contesting by appropriate proceedings and (E) the existence -18- 19 of which does not result in actual interruption in the receipt and distribution by the Indenture Trustee in accordance with the Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (7) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (8) 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 redemption of the Original Secured Certificates or the issuance of the Refinancing 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 (1), (2), (3) and (4) 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 of Utah, 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; (9) 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 (1), (2), (3) and (4) above; (10) 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; -19- 20 (11) the Owner Trustee has not, in its individual capacity or as Owner Trustee, directly or indirectly offered any Refinancing 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, the Original Loan Participant 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 Refinancing 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; and (12) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) it is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof or assumption of rights and obligations thereunder, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Original Participation Agreement, the Original Tax Indemnity Agreement, the Original Trust Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; this Agreement has been duly authorized, executed and delivered by it; and this Agreement constitutes, and the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Tax Indemnity Agreement, when the TIA Amendment No. 1 shall have been entered into, and the Trust Agreement, when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their 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; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1, the Trust Agreement Amendment No. 1 or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or thereof, (x) will contravene any law or order of any court or governmental -20- 21 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, 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; (3) 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 or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1, or the Trust Agreement Amendment No. 1; (4) there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or arbitrator which would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Participation Agreement, the Tax Indemnity Agreement and the Trust Agreement; (5) 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 refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Refinancing 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 was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Refinancing 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 that 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 Indenture, (D) which the Owner Participant is -21- 22 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). (d) The Pass Through Trustee represents, warrants and covenants that: (1) 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, the PA Amendment. No. 1 and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements, the Intercreditor Agreement and the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement , the PA Amendment No. 1 and (upon execution and delivery of the PA Amendment No. 1) the Participation Agreement, will 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; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the performance by the Pass Through Trustee of the Participation Agreement, the purchase by the Pass Through Trustee of the Refinancing 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 -22- 23 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; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby or by the Participation Agreement, 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; (5) 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, the Intercreditor Agreement or the Participation 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 Refinancing 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 as a grantor trust under subpart E, Part I of Subchapter J of the Code, such trusts will not be subject to any Taxes imposed by the Commonwealth of Massachusetts or any political subdivision thereof; (6) 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 Participation Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to -23- 24 acquire any Refinancing Secured Certificates from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) 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, the Lessee or the Guarantor. (e) The Subordination Agent represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement and, when the PA Amendment No. 1 has been executed and delivered by each of the parties thereto, the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent each of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery by the Subordination Agent of the PA Amendment No. 1), the Participation Agreement, will 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; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the Participation Agreement, or the performance by the Subordination Agent of the Participation 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 -24- 25 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; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby or by the Participation Agreement requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement, the PA Amendment No. 1 or the Participation 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 Refinancing 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); (6) 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 PA Amendment No. 1, the Participation Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to -25- 26 solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter, the Lessee or the Guarantor. SECTION 10. NOTICES. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and any such notice shall become effective upon being deposited in the United States mail, with proper postage for first-class registered or certified mail prepaid, or when delivered personally or, if promptly confirmed by mail as provided above, when dispatched by facsimile or other written telecommunication, addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent, or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement. SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Indenture Trustee and the Original Loan Participant in connection with the transactions contemplated by this 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) shall be paid promptly by the Owner Participant, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Refinancing Secured Certificates issued under the Indenture of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for the Underwriters, and (E) special counsel, if any, to the Original Loan Participant; (2) the reasonable fees, expenses and disbursements of Sidley & Austin, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Indenture Trustee, the Owner Trustee, the Liquidity Provider, the Pass Through Trustee and the Subordination Agent; -26- 27 (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider; provided, however, the Owner Participant shall not be obligated to pay expenses under this Section 11(a) in excess of $1,656,719. Any such expenses in excess of such amount shall be paid by the Lessee as Supplemental Rent. (b) In the event that the transactions contemplated by this Section 11 and the agreements referred to herein are not consummated, the Lessee shall bear and pay all costs, expenses and fees referred to in this Section 11; provided that if the transactions fail to be consummated as a result of the failure of the Owner Participant to act in good faith in consummating the transactions, or to otherwise comply with the terms hereof, the Owner Participant shall bear and pay its own fees, costs and expenses (including, without limitation, the fees and expenses of its special counsel) and the Lessee shall pay all other reasonable fees, costs and expenses as aforesaid. SECTION 12. 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. SECTION 13. MISCELLANEOUS. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations, warranties and agreements herein of the Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee, and the Lessee's, the Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the Subordination Agent's and the Pass Through Trustee's obligations under any and all thereof, shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. (b) This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only 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 each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not -27- 28 modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and, subject to the terms of the Participation 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 Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject to the provisions of the Participation Agreement, its successors and permitted assigns. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. No purchaser or holder of any Refinancing Secured Certificates shall be deemed to be a successor or assign of any holder of Original Secured Certificates. SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -28- 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. NORTHWEST AIRLINES, INC., as Lessee By: _________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -29- 30 NORTHWEST AIRLINES CORPORATION, as Guarantor By: _________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -30- 31 [_____________________] as Owner Participant By: Name: Title: Address: Attention: Facsimile: -31- 32 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By: _________________________________________ Name: Title: Address: Two International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Facsimile: (617) 664-5371 -32- 33 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 By: _________________________________________ Name: Title: Address: c/o State Street Bank and Trust Company Two International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Facsimile: (617) 664-5371 -33- 34 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By: _________________________________________ Name: Title: Address: Two International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Facsimile: (617) 664-5371 -34- 35 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as otherwise provided herein, but solely as Owner Trustee By: _________________________________________ Name: Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Department Facsimile: (801) 246-5053 -35- 36 SCHEDULE I TO REFUNDING AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. 4. 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. 1996-1D, dated as of June 12, 1996. 37 SCHEDULE II TO REFUNDING AGREEMENT REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
Interest Rate Purchase Purchaser and Maturity Principal Amount Price --------- ------------ ---------------- ----- Northwest Airlines Pass Through Trust 1996-1A 7.67% Refinancing Secured Certificates due January 2, 2015 $51,475,500 $51,475,500 1996-1B 8.07% Refinancing Secured Certificates due July 2, 2011 $17,158,500 $17,158,500 1996-1C 8.97% Refinancing Secured Certificates due January 2, 2009 $17,158,341 $17,158,341 1996-1D 10.15% Refinancing Secured Certificates due January 2, 2005 $12,657,657 $12,657,657
EX-4.C1 19 TRUST AGREEMENT-1995 A 1 TRUST AGREEMENT [NW 1995 A] This TRUST AGREEMENT [NW 1995 A] dated as of November 15, 1995 between [______________________________________] a [___________] corporation (the "ORIGINAL OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); W I T N E S S E T H: ARTICLE I DEFINITIONS AND TERMS SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall otherwise require and except as contained in this Section 1.01, the capitalized terms used herein shall have the respective meanings assigned thereto in the Lease (as hereinafter defined) for all purposes hereof. All definitions contained in this Section 1.01 shall be equally applicable to both the singular and plural forms of the terms defined. For all purposes of this Trust Agreement the following terms shall have the following meanings: "Excluded Payments" has the meaning ascribed to such term in the Trust Indenture. "Indenture Event of Default" has the meaning which the term "Event of Default" has in the Trust Indenture. "Lease" means that certain Lease Agreement [NW 1995 A], to be dated as of the date hereof, and to be entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of this Trust Agreement, as said Lease Agreement may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Trust Agreement. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Event of Default" has the meaning which the term "Event of Default" has in the Lease. "Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns. 2 "Owner Participant" means the Original Owner Participant and each Subsequent Owner Participant to the extent that the same shall, at the relevant time, have an Ownership Interest. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by this Trust Agreement, which percentage shall be 100%. "Participation Agreement" has the meaning ascribed to such term in the Lease. "Replacement Airframe" has the meaning ascribed to such term in the Trust Indenture. "Replacement Engine" has the meaning ascribed to such term in the Trust Indenture. "Subsequent Owner Participant" means any corporation to which the Original Owner Participant or any transferee from the Original Owner Participant or any Subsequent Owner Participant shall have transferred at any time after the Delivery Date all of the undivided right, title and interest originally held by the Original Owner Participant in this Trust Agreement, the Trust Estate and the Participation Agreement, to the extent permitted by Section 8.01 of this Trust Agreement and Section 8 of the Participation Agreement, provided that any such transfer: (i) shall be effected by a written agreement, in form and substance reasonably satisfactory to the Owner Trustee in its individual capacity, among such transferee, its transferor and the Owner Trustee, which shall provide that such transferee thereby becomes a party to, and beneficiary of, this Trust Agreement and an Owner Participant for all purposes hereof and that such transferee assumes all of the obligations of its transferor under this Trust Agreement; and (ii) so long as the Lease shall be in effect or any Secured Certificates remain unpaid, such transferee and its transferor shall have complied with all of the terms of Section 8(n) of the Participation Agreement. "Trust Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant, the Loan Participants or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its individual capacity, or to the Loan Participants or any other holder of a Secured Certificate, or to any of their respective directors, officers, employees, servants and agents, pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. "Trust Indenture Estate" has the meaning ascribed to such term in the Trust Indenture. -2- 3 "Trust Office" shall mean the principal corporate trust office of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or the principal corporate trust office of any successor Owner Trustee. "Trust Supplement" means a supplement to the Trust Indenture and to this Trust Agreement in substantially the form of Exhibit A to the Trust Indenture which shall particularly describe the Aircraft, and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Trust Agreement. ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS; DECLARATION OF TRUST SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant hereby authorizes and directs the Owner Trustee to execute and deliver the Operative Documents and any other agreements, instruments or documents to which the Owner Trustee is a party in the respective forms thereof in which delivered from time to time by the Owner Participant to the Owner Trustee for execution and delivery and, subject to the terms hereof, to perform its duties and, upon instructions from the Owner Participant, exercise its rights under said Operative Documents in accordance with the terms thereof. SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the Owner Participant, subject, however, to the provisions of and the Lien created by the Trust Indenture and to the provisions of the Lease. ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF SECURED CERTIFICATES SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, on the Delivery Date, subject to due compliance with the terms of Section 3.02 hereof: (a) purchase the Aircraft pursuant to the Participation Agreement and the Bill of Sale; (b) accept from Lessee the delivery of the Bill of Sale and the FAA Bill of Sale; -3- 4 (c) cause the Aircraft to be leased to Lessee under the Lease, and in furtherance thereof execute and deliver a Lease Supplement covering the Aircraft; (d) execute and deliver the Trust Supplement covering the Aircraft; (e) issue to the Loan Participants Secured Certificates in the amounts and otherwise as provided in Section 1(a) of the Participation Agreement; (f) execute and deliver the financing statements referred to in Section 4(a)(vi) of the Participation Agreement, together with all other agreements, documents and instruments referred to in Section 4 of the Participation Agreement to which the Owner Trustee is a party; and (g) effect the registration of the Aircraft in the name of the Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of Sale; (ii) an application for registration of the Aircraft in the name of the Owner Trustee (including without limitation an affidavit from the Owner Trustee in compliance with the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement. SECTION 3.02.CONDITIONS PRECEDENT. The right and obligation of the Owner Trustee to take the action required by Section 3.01 hereof with respect to the Aircraft shall be subject to the following conditions precedent: (a) the Original Owner Participant shall have made the full amount of its Commitment set forth in Schedule I of the Participation Agreement available to the Owner Trustee, in immediately available funds, in accordance with Section 1 of the Participation Agreement; and (b) the terms and conditions of Section 4 of the Participation Agreement, insofar as they relate to the Aircraft, shall have been complied with in a manner satisfactory to the Original Owner Participant and the Owner Trustee. SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, take the actions specified to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in accordance with the provisions of such Section 8(x). SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR REPLACEMENT ENGINES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of a Replacement Airframe and Replacement Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a Replacement Engine being substituted pursuant to -4- 5 Section 10(b) of the Lease, subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease, as the case may be: (a) to the extent not previously accomplished by a prior authorization, authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees of Lessee) to accept delivery of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engines; (b) accept from Lessee or other vendor of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine a bill of sale or bills of sale (if tendered), and the invoice, if any, with respect to the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine being furnished pursuant to Section 10(a) or (b) of the Lease; (c) in the case of a Replacement Airframe, make application to the Federal Aviation Administration for the registration in the name of the Owner Trustee of the Aircraft of which such Replacement Airframe is a part; (d) execute and deliver a Lease Supplement and a Trust Supplement covering (i) the Aircraft of which such Replacement Airframe is part or (ii) such Replacement Engine, as the case may be; (e) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) and to the Airframe and Engines (if any) or the Engine being replaced to Lessee; (f) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Airframe and Engines or engines (if any) or the Engine or engine being replaced from the lien created under the Trust Indenture and release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such replaced Airframe and Engines, if any, or Engine) from the assignment and pledge under the Trust Indenture; and (g) upon instructions from the Owner Participant, take such further action as may be contemplated by clauses (A) and (B) of the third paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of Section 10(b) of the Lease, as the case may be. SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In the event of the substitution of a Replacement Airframe for the Airframe or the substitution of a Replacement Engine for any Engine or engine, all provisions of this Trust Agreement relating to such replaced Airframe or Engine or engine shall be applicable to such Replacement Airframe or Replacement Engine with the same force and effect as if such Replacement Airframe or Replacement Engine were the same airframe or engine as the Airframe or Engine being replaced but for the Event of Loss with respect to such Airframe or Engine. -5- 6 SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of an engine being transferred to the Owner Trustee pursuant to Section 5(b) of the Lease, subject to due compliance with the terms of such Section 5(b): (a) accept from Lessee the bill of sale with respect to such engine contemplated by such Section 5(b) (if tendered); (b) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) and to an Engine to Lessee as contemplated by such Section 5(b); and (c) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Engine being transferred to Lessee pursuant to such Section 5(b) from the lien of the Trust Indenture and to release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such Engine) from the assignment and pledge under the Trust Indenture. ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture Trustee. Until the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with the provisions of Article III of the Trust Indenture. (b) Payments to Owner Trustee; Other Parties. After the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, any payment of the type referred to in Section 4.01(a) hereof (other than Excluded Payments) received by the Owner Trustee, any payments received from the Indenture Trustee other than as specified in Section 4.01(d) hereof and any other amount received as part of the Trust Estate and for the application or distribution of which no provision is made herein, shall be distributed forthwith upon receipt by the Owner Trustee in the following order of priority: first, so much of such payment as shall be required to reimburse the Owner Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof shall be retained by the Owner Trustee; second, so much of the remainder for which provision as to the application thereof is contained in the Lease or any of the other Operative Documents -6- 7 shall be applied and distributed in accordance with the terms of the Lease or such other Operative Document; and third, the balance, if any, shall be paid to the Owner Participant. (c) Certain Distributions to Owner Participant. All amounts from time to time distributable by the Indenture Trustee to the Owner Participant pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be distributed by the Owner Trustee to the Owner Participant in accordance with the provisions of Article III of the Trust Indenture. (d) Excluded Payments. Any Excluded Payments received by the Owner Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded Payments are payable under the provisions of the Participation Agreement, the Tax Indemnity Agreement or the Lease. SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make distributions or cause distributions to be made to the Owner Participant pursuant to this Article IV by transferring by wire transfer the amount to be distributed to such account or accounts of the Owner Participant as the Owner Participant may designate from time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner Trustee will, if so requested by the Owner Participant in writing, pay any or all amounts payable to the Owner Participant pursuant to this Article IV either (i) by crediting such amount or amounts to an account or accounts maintained by the Owner Participant with the Owner Trustee in its individual capacity in immediately available funds, (ii) by payment at the Trust Office of the Owner Trustee, in immediately available funds, or (iii) by mailing an official bank check or checks in such amount or amounts payable to the Owner Participant at such address as the Owner Participant shall have designated in writing to the Owner Trustee. ARTICLE V DUTIES OF THE OWNER TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall have knowledge of a Lease Event of Default or Indenture Event of Default (or an event which with the passage of time or the giving of notice or both would constitute a Lease Event of Default or an Indenture Event of Default) the Owner Trustee shall give to the Owner Participant prompt telephonic or telecopy notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event. Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain from taking such action, not -7- 8 inconsistent with the provisions of the Trust Indenture, with respect to such Lease Event of Default, Indenture Event of Default or other event as the Owner Trustee shall be directed in writing by the Owner Participant. If the Owner Trustee shall not have received instructions as above provided within twenty (20) days after the mailing of such notice to the Owner Participant, the Owner Trustee until instructed otherwise in accordance with the preceding sentence may, but shall be under no duty to, take or refrain from taking such action with respect to such Lease Event of Default, Indenture Event of Default or other event, not inconsistent with the provisions of the Trust Indenture, as it shall deem advisable in the best interests of the Owner Participant. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by an officer of FSBU in the Corporate Trust Department, the Owner Trustee shall not be deemed to have knowledge of a Lease Event of Default, Indenture Event of Default or other event referred to in this Section 5.01 unless notified in writing by the Indenture Trustee, the Owner Participant or Lessee. SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of Sections 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of the Owner Participant, the Owner Trustee will take such of the following actions, not inconsistent with the provisions of the Trust Indenture, as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder or under any of the Operative Documents to which the Owner Trustee is a party or in respect of all or any part of the Trust Estate as shall be specified in such instructions (including entering into agreements referred to in clause (i) of the definition of "Subsequent Owner Participant"); (ii) take such action to preserve or protect the Trust Estate (including the discharge of Liens) as may be specified in such instructions; (iii) approve as satisfactory to it all matters required by the terms of the Lease or the other Operative Documents to be satisfactory to the Owner Trustee, it being understood that without written instructions of the Owner Participant, the Owner Trustee shall not approve any such matter as satisfactory to it (it being understood that the provisions of Sections 3.03, 3.04 and 3.06 hereof do not constitute instructions by the Owner Participant for the Owner Trustee to approve of or consent to the matters to be approved of or consented to by the Owner Trustee in the sections of the Lease referred to in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of Lessee under the Operative Documents, after the expiration or earlier termination of the Lease, deliver the Aircraft to the Owner Participant in accordance with such instructions, convey all of the Owner Trustee's right, title and interest in and to the Aircraft for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or net lease the Aircraft on such terms and to such lessee or lessees as shall be designated in such instructions. SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be required to take any action under Section 5.01 (other than the giving of the notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have been indemnified by the Owner Participant, in manner and form satisfactory to the Owner Trustee, against any liability, cost or expense (including reasonable counsel fees and disbursements) which may be incurred in connection therewith; and, if the Owner Participant shall have directed the Owner Trustee to take any such action or refrain from taking any action, the Owner Participant agrees to furnish -8- 9 such indemnity as shall be required and, in addition, to the extent not otherwise paid pursuant to the provisions of the Lease or of the Participation Agreement, to pay the reasonable compensation of the Owner Trustee for the services performed or to be performed by it pursuant to such direction and any fees and disbursements of counsel or agents employed by the Owner Trustee in connection therewith. The Owner Trustee shall not be required to take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably determine, or shall have been advised by counsel, that such action is contrary to the terms of any of the Operative Documents to which the Owner Trustee is a party, or is otherwise contrary to law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with any of the Operative Documents to which the Owner Trustee is a party, except as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, or (to the extent not inconsistent with the provisions of the Trust Indenture) as expressly provided by the terms hereof or in written instructions from the Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or obligations shall be read into this Trust Agreement against the Owner Trustee. FSBU agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof) promptly take such action as may be necessary to duly discharge and satisfy in full all Lessor Liens which it is required to discharge pursuant to Section 8(h) of the Participation Agreement and otherwise comply with the terms of said Section binding on it. SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to the contrary notwithstanding, the Owner Trustee shall comply with the provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of special counsel for the Owner Trustee, of all the applicable conditions precedent specified in Section 3.02 hereof and in Section 4 of the Participation Agreement. SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to, and the Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate except (i) as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, (ii) as expressly provided by the terms hereof, or (iii) as expressly provided in written instructions from the Owner Participant pursuant to Section 5.01 or 5.02 hereof. -9- 10 ARTICLE VI THE OWNER TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts hereby created and agrees to perform the same but only upon the terms hereof applicable to it. The Owner Trustee also agrees to receive and disburse all monies received by it constituting part of the Trust Estate upon the terms hereof. FSBU shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence, (b) for performance of the terms of the last sentence of Section 5.04 hereof, (c) for its or the Owner Trustee's failure to use ordinary care to disburse funds and (d) for liabilities that may result from the inaccuracy of any representation or warranty of it (or from the failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation Agreement. SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with written instructions furnished pursuant to Section 5.02 hereof and except as provided in, and without limiting the generality of, Section 5.04 hereof and the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU shall have any duty (i) to see to any recording or filing of any Operative Document or of any supplement to any thereof or to see to the maintenance of any such recording or filing or any other filing of reports with the Federal Aviation Administration or other governmental agencies, except that FSBU, in its individual capacity, shall comply with the reporting requirements set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall, to the extent that information for that purpose is supplied by Lessee pursuant to any of the Operative Documents, complete and timely submit (and furnish the Owner Participant with a copy of) any and all reports relating to the Aircraft which may from time to time be required by the Federal Aviation Administration or any government or governmental authority having jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, other than to forward to the Owner Participant copies of all reports and other written information which the Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against any part of the Trust Indenture Estate or the Trust Estate, except as provided in Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and records with respect to the Aircraft at any time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease or any other Operative Document. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, -10- 11 MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity warrants that on the Delivery Date the Owner Trustee shall have received whatever title was conveyed to it by Lessee and that the Aircraft shall during the Term be free of Lessor Liens attributable to it, or (b) any representation or warranty as to the validity, legality or enforceability of this Trust Agreement or any Operative Document to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof except to the extent that any such statement is expressly made herein or therein as a representation by FSBU in its individual capacity or by the Owner Trustee and except that FSBU in its individual capacity hereby represents and warrants that this Trust Agreement has been, and (assuming due authorization, execution and delivery by the Original Owner Participant of this Trust Agreement) the Operative Documents to which it or the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by it or the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of itself or the Owner Trustee, as the case may be. SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as provided in Section 22 of the Lease, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law, and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The Owner Trustee shall incur no liability to anyone in acting in reliance upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Unless other evidence in respect thereof is specifically prescribed herein, any request, direction, order or demand of the Owner Participant or Lessee mentioned herein or in any of the Operative Documents to which the Owner Trustee is a party shall be sufficiently evidenced by written instruments signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director and in the name of the Owner Participant or Lessee, as the case may be. The Owner Trustee may accept a copy of a resolution of the Board of Directors or Executive Committee of Lessee, certified by the secretary or any assistant secretary of Lessee as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or Committee and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Owner Trustee may for all purposes hereof rely on a certificate signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it -11- 12 in good faith in reliance thereon. In the administration of trusts hereunder, the Owner Trustee may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may, at the expense of the Trust Estate, consult with counsel, accountants and other skilled persons to be selected and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such agent, attorney, counsel, accountant or other skilled person appointed by it with due care hereunder. SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder, the Owner Trustee acts solely as trustee and not in its individual capacity except as otherwise expressly provided herein; and, subject to the terms of the Participation Agreement and the Trust Indenture, all persons, other than the Owner Participant, as provided herein, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Trust Estate for payment or satisfaction thereof. SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the Owner Participant or (subject to the provisions of the Trust Indenture) the Trust Estate for any fee as compensation for its services hereunder; provided, however, that the Owner Trustee shall have a lien upon the Trust Estate (subject, however, to the lien of the Trust Indenture) for any such fee not paid by Lessee as contemplated by the last paragraph of Section 7(c) of the Participation Agreement. SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all monies under this Trust Agreement or any agreement contemplated hereby. The Owner Participant shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Owner Participant. The Owner Trustee shall be responsible for causing to be prepared, at the request and expense of the Owner Participant, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. The Owner Participant or the Owner Trustee, as the case may be, upon request, will furnish the Owner Trustee or the Owner Participant, as the case may be, with all such information as may be reasonably required from the Owner Participant or the Owner Trustee, as the case may be, in connection with the preparation of such income tax returns. ARTICLE VII INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner Participant hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and hereby indemnify, protect, save and keep harmless FSBU in its individual capacity and its successors, assigns, legal representatives, -12- 13 agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its individual capacity on or measured by any compensation received by FSBU in its individual capacity for its services hereunder or in connection with the transactions contemplated by the Operative Documents), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and including without limitation any liability of an owner, any strict liability and any liability without fault) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against FSBU in its individual capacity (whether or not also indemnified against by Lessee under the Lease or under the Participation Agreement or also indemnified against by any other person but only to the extent not otherwise paid or reimbursed by Lessee or such other person) in any way relating to or arising out of this Trust Agreement or any of the Operative Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of the Owner Trustee or FSBU in its individual capacity hereunder, except (a) in the case of willful misconduct or gross negligence on the part of the Owner Trustee or FSBU in its individual capacity in the performance or non-performance of its duties hereunder or (b) those resulting from the inaccuracy of any representation or warranty of FSBU in its individual capacity (or from the failure of FSBU in its individual capacity to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture or, with respect to representations or warranties of FSBU in its individual capacity only, in Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the Participation Agreement or in any of the other Operative Documents or (c) as may result from a breach by FSBU in its individual capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in the case of the failure to use ordinary care on the part of the Owner Trustee or FSBU in its individual capacity in the disbursement of funds. The indemnities contained in this Section 7.01 extend to FSBU only in its individual capacity and shall not be construed as indemnities of the Trust Indenture Estate or the Trust Estate (except to the extent, if any, that FSBU in its individual capacity has been reimbursed by the Trust Indenture Estate or the Trust Estate for amounts covered by the indemnities contained in this Section 7.01). The indemnities contained in this Section 7.01 shall survive the termination of this Trust Agreement. In addition, if necessary, FSBU in its individual capacity shall be entitled to indemnification from the Trust Estate, subject to the Lien of the Trust Indenture, for any liability, obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee, the Owner Participant or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same FSBU in its individual capacity shall have a Lien on the Trust Estate, subject to the Lien of the Trust Indenture, which shall be prior to any interest therein of the Owner Participant. The payor of any indemnity under this Article VII shall be subrogated to any right of the person indemnified in respect of the matter as to which such indemnity was paid. -13- 14 ARTICLE VIII TRANSFER OF THE OWNER PARTICIPANT'S INTEREST SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n) of the Participation Agreement shall (with the same force and effect as if set forth in full, mutatis mutandis, in this Section 8.01) be applicable to any assignment, conveyance or other transfer by any Owner Participant of its right, title or interest in and to the Participation Agreement, the Trust Estate or this Trust Agreement. ARTICLE IX SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the Participation Agreement and (ii) may resign at any time without cause by giving at least sixty (60) days' prior written notice to the Owner Participant, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such resignation to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In addition, the Owner Participant may at any time remove the Owner Trustee without cause by a notice in writing delivered to the Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such removal to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or removal of the Owner Trustee, the Owner Participant may appoint a successor Owner Trustee by an instrument signed by the Owner Participant. If a successor Owner Trustee shall not have been appointed within thirty (30) days after such notice of resignation or removal, the Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor shall have been appointed as above provided. Any successor Owner Trustee so appointed by such court shall immediately and without further act be superseded by any successor Owner Trustee appointed as above provided. (b) Execution and Delivery of Documents, etc. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee and the Owner Participant an instrument accepting such appointment, and thereupon such successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts hereunder with like effect as if originally named the Owner Trustee herein; but nevertheless, upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such -14- 15 predecessor Owner Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to such successor Owner Trustee all monies or other property then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will execute such documents as are provided to it by such successor Owner Trustee and will take such further actions as are requested of it by such successor Owner Trustee as are reasonably required to cause registration of the Aircraft included in the Trust Estate to be transferred upon the records of the Federal Aviation Administration, or other governmental authority having jurisdiction, into the name of the successor Owner Trustee. (c) Qualification. Any successor Owner Trustee, however appointed, shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement and shall also be a bank or trust company organized under the laws of the United States or any state thereof having a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. (d) Merger, etc. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee may be transferred, shall, subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without further act. SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee shall have been directed to do so by the Owner Participant, the Owner Trustee and the Owner Participant shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement) approved by the Owner Trustee and the Owner Participant, either to act as co-trustee, jointly with the Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as an "ADDITIONAL TRUSTEE"). In the event an Indenture Event of Default not arising from a Lease Event of Default shall occur and be continuing, the Owner Trustee may act under the foregoing provisions of this Section 9.02 without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 9.02 in such contingency. Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: -15- 16 (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; (E) the Owner Participant, at any time, by an instrument in writing may remove any such additional trustee unless such additional trustee was appointed by the Owner Trustee without the concurrence of the Owner Participant during the occurrence of an Indenture Event of Default not arising from a Lease Event of Default, in which case the Owner Trustee shall have the power to remove any such additional trustee without the concurrence of the Owner Participant, and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact for it in such connection in such contingency; and (F) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, the Trust Indenture or affect the interests of the Indenture Trustee or the holders of the Secured Certificates in the Trust Indenture Estate. ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS SECTION 10.01. SUPPLEMENTS AND AMENDMENTS. (a) Supplements and Amendments. This Trust Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Owner Trustee and the Owner Participant. Subject to Section 10.02 hereof and the first sentence of Section 10 of the Participation Agreement, the Owner Trustee will execute any amendment, supplement or other -16- 17 modification of this Trust Agreement or of any other Operative Document to which the Owner Trustee is a party which it is requested to execute by the Owner Participant, except that the Owner Trustee shall not execute any such amendment, supplement or other modification which, by the express provisions of any of the above documents, requires the consent of any other party unless such consent shall have been obtained. (b) Delivery of Amendments and Supplements to Certain Parties. A signed copy of each amendment or supplement referred to in Section 10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each holder of a Secured Certificate. SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to executing any document required to be executed by it pursuant to the terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its counsel to the effect that the execution of such document is authorized hereunder. If in the opinion of the Owner Trustee any such document adversely affects any right, duty, immunity or indemnity in favor of the Owner Trustee hereunder or under any other Operative Document to which the Owner Trustee is a party, the Owner Trustee may in its discretion decline to execute such document. SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be necessary for any written request furnished pursuant to Section 10.01 hereof to specify the particular form of the proposed documents to be executed pursuant to such Section, but it shall be sufficient if such request shall indicate the substance thereof. SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the execution by the Owner Trustee of any document entered into pursuant to Section 10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof to the Owner Participant, but the failure of the Owner Trustee to mail such conformed copy shall not impair or affect the validity of such document. SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be required to enable the Owner Trustee to enter into the Lease Supplement covering the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and Section 3.01 hereof. ARTICLE XI MISCELLANEOUS SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement and the trusts created hereby shall be of no further force or effect upon the earlier of (a) both the final discharge of the Trust Indenture pursuant to Section 10.01 thereof and the sale or other final disposition by the Owner Trustee of all property constituting part of the Trust Estate and the final distribution by the Owner Trustee of all monies or other property or -17- 18 proceeds constituting part of the Trust Estate in accordance with Article IV hereof, provided that at such time Lessee shall have fully complied with all of the terms of the Lease and the Participation Agreement or (b) twenty-one years less one day after the death of the last survivor of all of the descendants of the grandparents of David Rockefeller living on the date of the earliest execution of this Trust Agreement by any party hereto; otherwise this Trust Agreement and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE. The Owner Participant shall not have legal title to any part of the Trust Estate. No transfer, by operation of law or otherwise, of any right, title and interest of the Owner Participant in and to the Trust Estate hereunder shall operate to terminate this Trust Agreement or the trusts hereunder or entitle any successors or transferees of the Owner Participant to an accounting or to the transfer of legal title to any part of the Trust Estate. SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment, sale, transfer or other conveyance of its interest in the Aircraft by the Owner Trustee made pursuant to the terms hereof or of the Lease or the Participation Agreement shall bind the Owner Participant and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Owner Participant in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY. Except for the terms of Section 8(n) of the Participation Agreement incorporated in Article VIII hereof and except as otherwise provided in Articles IX and X hereof, nothing herein, whether expressed or implied, shall be construed to give any Person other than the Owner Trustee and the Owner Participant any legal or equitable right, remedy or claim under or in respect of this Trust Agreement; but this Trust Agreement shall be held to be for the sole and exclusive benefit of the Owner Trustee and the Owner Participant. SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. (a) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 11.05(a). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.05(a), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the Owner Participant, to the respective addresses set forth below the signatures of such parties on the signature page of the Participation Agreement, or (B) if to a Subsequent Owner Participant, addressed to such -18- 19 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. (b) Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Trust Agreement, the Participation Agreement, 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 the Participation 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. SECTION 11.06. SEVERABILITY. Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.07. WAIVERS, ETC. No term or provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing entered into in compliance with the terms of Article X hereof; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. SECTION 11.08.COUNTERPARTS. This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.09. BINDING EFFECT, ETC. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII hereof, its assigns. Any request, notice, direction, consent, waiver or other instrument or action by the Owner Participant shall bind its successors and assigns. Any Owner Participant which shall cease to have any Ownership Interest shall thereupon cease to be a party hereto or an Owner Participant for any reason and shall have no further obligations hereunder. -19- 20 SECTION 11.10. HEADINGS; REFERENCES. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. -20- 21 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [Owner Participant] BY -------------------------------- Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By -------------------------------- Title: -21- EX-4.C2 20 TRUST INDENTURE-1995 A 1 AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1995 A] AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1995 A], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Owner Trustee under the Trust Agreement referred to below (together with its successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity, except as expressly stated herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE"). W I T N E S S E T H WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and the Owner Trustee have entered into the Trust Agreement whereby, among other things, (i) the Owner Trustee has established a certain trust for the use and benefit of the Owner Participant subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of, and with the priority of payment to, the holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has been authorized and directed to execute and deliver this Trust Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1995 A] dated as of November 15, 1995 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the Trust Agreement and Indenture Supplement [NW 1995 A] (the "SUPPLEMENT") dated November 21, 1995 to the Original Indenture, (iii) the Original Indenture and the Supplement were recorded by the Federal Aviation Administration on November 22, 1995 and were assigned Conveyance No. P04680 and (iv) the Lease Agreement [NW 1995 A] dated as of even date with the Original Indenture between the Owner Trustee and Lessee and the Lease Supplement No. 1 [NW 1995 A] were recorded by the Federal Aviation Administration on November 22, 1995 and were assigned Conveyance No. P04679 and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Loan Participants Secured Certificates (as defined in the Original Indenture); WHEREAS, the parties have agreed that subject to certain conditions, Lessee shall have the right to cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Secured Certificates issued to the Loan Participant pursuant to the Original Indenture shall be redeemed and new Secured Certificates (the "REFINANCING SECURED CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Trust Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Refinancing Secured Certificates and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of all of the Owner Trustee's right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Certificate Holders, subject to Section 2.15 and Article III hereof; 2 WHEREAS, all things have been done to make the Secured Certificates, when executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid, binding and enforceable obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Trust Indenture the valid, binding and legal obligation of the Owner Trustee for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened: -2- 3 GRANTING CLAUSE NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Secured Certificates from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions herein and in the Participation Agreement and the Secured Certificates contained, for the benefit of the Certificate Holders and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Certificate Holders by the Owner Trustee and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Secured Certificates by the holders thereof, and for other good and valuable consideration the receipt and adequacy whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors in trust and assigns, for the security and benefit of the Certificate Holders, a first priority security interest in and mortgage lien on all right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges, other than Excluded Payments (which collectively, excluding Excluded Payments but including all property hereafter specifically subjected to the Lien of this Trust Indenture by the Trust Agreement and Indenture Supplement or any mortgage supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire title as provided herein and in the Lease), all as more particularly described in the Trust Agreement and Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture; (2) the Lease and any Lease Supplement and all Rent thereunder (including, without limitation, all amounts of Interim Rent, Basic Rent, Supplemental Rent and payments of any kind thereunder (excluding any Excluded Payments)), and the Guarantee; (3) the Purchase Agreement (to the extent specified in the Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent and Agreement and the Bill of Sale; (4) all rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the lien of this Indenture; (5) all insurance and requisition proceeds with respect to the Aircraft, including but not limited to the insurance required under Section 11 of the Lease, but excluding insurance proceeds described in clauses (ii) and (iii) of the definition of Excluded Payments; -3- 4 (6) all rights of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under the Participation Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder, but excluding amounts described in clauses (i) and (v) of the definition of Excluded Payments; (7) all monies and securities from time to time deposited or required to be deposited with the Indenture Trustee pursuant to any terms of this Indenture or the Lease or required hereby or by the Lease to be held by the Indenture Trustee hereunder (other than Excluded Payments); and (8) all proceeds of the foregoing. BUT EXCLUDING from the foregoing and from the Trust Indenture Estate all Excluded Payments, and the right to enforce and collect the same, and SUBJECT TO all of the terms and conditions of this Trust Indenture and the rights of the Owner Trustee and the Owner Participant hereunder. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the original executed counterpart of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt is attached), and executed copies of the Participation Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and its successors and assigns, in trust for the benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III hereof without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (8) inclusive above, subject to the terms and provisions set forth in this Trust Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Owner Trustee shall remain liable under each of the Indenture Agreements to which it is a party to perform all of the obligations assumed by it thereunder, except to the extent prohibited or excluded from doing so pursuant to the terms and provisions thereof, and the Indenture Trustee and the Certificate Holders shall have no obligation or liability under the Indenture Agreements, by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to any of the Indenture Agreements to which it is a party, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, and with full power (in the name of the Owner Trustee or otherwise) to ask for, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds but in all cases excluding Excluded Payments) due and to become due under or arising out of the Indenture Agreements, and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Without limiting the generality of the foregoing, but subject to the rights of the Owner Trustee and the Owner Participant hereunder, during the continuance of any Event of Default under this Trust Indenture, the Indenture Trustee shall have the right under such power of attorney to accept any offer in connection with the exercise of remedies as set forth herein of any purchaser to purchase the Airframe and Engines -4- 5 and upon such purchase to execute and deliver in the name of and on behalf of the Owner Trustee an appropriate bill of sale and other instruments of transfer relating to the Airframe and Engines, when purchased by such purchaser, and to perform all other necessary or appropriate acts with respect to any such purchase, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or appropriate to protect and preserve the right, title and interest of the Indenture Trustee in and to such Rents and other sums and the security intended to be afforded hereby; provided, however, that no action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or liabilities of the Owner Trustee to any Person beyond those obligations and liabilities specifically set forth in this Trust Indenture and in the other Operative Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture shall not have been fully discharged, to make all payments of Rent (other than Excluded Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to, or as directed by, the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Trust Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Trust Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem necessary or desirable to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be created hereby or to obtain for the Indenture Trustee the full benefits of the assignment hereunder and of the rights and powers herein granted. The parties hereto acknowledge that neither the Owner Trustee nor the Owner Participant shall have any obligation as to any recording, filing, refiling or re-recording of any documents or instruments in regard to maintaining the perfection of the security interests created hereunder, in the Trust Indenture Estate or any security interest that may be claimed to have been created by the Lease or the ownership interest of the Owner Trustee in the Aircraft. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants and agrees that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee and its predecessor(s) in this transaction, and that it will not, except as otherwise provided in this Trust Indenture and except with respect to Excluded Payments to which it is entitled, (i) accept any payment from Lessee under any Indenture Agreement, (ii) enter into any agreement amending or supplementing any Indenture Agreement, (iii) execute any waiver or modification of, or consent under, the terms of, or exercise any rights, powers or privileges under, any Indenture Agreement, (iv) settle or compromise any claim (other than those relating to an Excluded Payment) arising under any Indenture Agreement or (v) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any Indenture Agreement to arbitration thereunder. The Owner Trustee does hereby further agree that it will not without the written consent of the Indenture Trustee: (a) collect or agree to the receipt or collection of any payment of Rent (other than Excluded Payments), including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease prior to the date for the payment thereof provided for by the Lease or assign, transfer or hypothecate (other than to the Indenture Trustee hereunder) any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease, then due or to accrue in the future under the Lease in respect of the Airframe and Engines; or -5- 6 (b) except as contemplated by the Trust Agreement in connection with the appointment of a successor owner trustee, sell, mortgage, transfer, assign or hypothecate (other than to the Indenture Trustee hereunder) its interest in the Airframe and Engines or any part thereof or in any amount to be received by it from the use or disposition of the Airframe and Engines, other than amounts distributed to it pursuant to Article III hereof. It is hereby further agreed that any and all property described or referred to in the granting clauses hereof which is hereafter acquired by the Owner Trustee shall ipso facto, and without any further conveyance, assignment or act on the part of the Owner Trustee or the Indenture Trustee, become and be subject to the Lien herein granted as fully and completely as though specifically described herein, but nothing contained in this paragraph shall be deemed to modify or change the obligations of the Owner Trustee contained in the foregoing paragraphs. The Owner Trustee does hereby ratify and confirm the Lease and does hereby agree that it will not violate any covenant or agreement made by it therein, herein or in any of the other Owner Trustee Documents. Notwithstanding the Granting Clause or any of the foregoing paragraphs, there is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excluded Payments. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "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. "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 hereof. "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 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. "Cash Equivalents" shall mean the investments specified in Section 22(a) of the Lease. -6- 7 "Certificate Holder" shall mean any holder from time to time of one or more Secured Certificates. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Continuous Stay Period" shall have the meaning specified in Section 4.04(a) hereof. "Corporate Trust Department" or "Trust Office" means the principal corporate trust office of the Owner Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, 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 Two International Place, 4th Floor, Boston, Massachusetts 02110, 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. "Debt" shall mean any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments or for the deferred purchase price of property, goods or services. "Debt 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" means any event or condition that with the giving of notice or the lapse of time or both would become an Event of Default or Lease Event of Default (excluding Lease Events of Default related to Excluded Payments). "Dollars" and "$" shall mean the lawful currency of the United States of America. "Enforcement Date" shall have meaning specified in Section 4.03 hereof. "Event of Default" shall have the meaning specified in Section 4.02 hereof. "Excess Amount" shall have the meaning specified in Section 2.03(b) hereof. "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 hereof, 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. -7- 8 "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 Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Guarantor " shall have the meaning specified in the Lease. "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 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. "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" shall mean that certain Lease Agreement [NW 1995 A], dated as of November 15, 1995, entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of the Original Trust Indenture, as said Lease Agreement has been, or may from time to time be, supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Indenture. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Default" shall mean a "Default" as defined in the Lease. "Lease Event of Default" shall mean an "Event of Default" as defined in the Lease. "Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Lessee Operative Documents" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. "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 hereof (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 -8- 9 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. "Mortgaged Property" shall have the meaning specified in Section 3.03 hereof. "Owner Indemnitee" shall have the meaning specified in the definition of Excluded Payments herein. "Owner Participant" shall mean [ ], so long as such party shall have any interest in the Trust Estate, and transferees thereof as permitted by Section 8 of the Participation Agreement. "PA Amendment No. 1" shall mean the First Amendment to Participation Agreement [NW 1995 A], dated as of the Closing Date, among Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and State Street Bank and Trust Company, in its individual capacity and as Indenture Trustee. "Participants" shall mean and include the Loan Participants and the Owner Participant. "Participation Agreement" shall mean that certain Participation Agreement [NW 1995 A], dated as of November 15, 1995, among the Owner Trustee, the Indenture Trustee, Lessee and the Participants, as amended by the PA Amendment No. 1, as the same may from time to time be supplemented or further amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Past Due Rate" shall mean, with respect to the Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in effect from time to time. "Payment Date" shall mean each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Secured Certificates have been paid in full. "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. "QIB" shall have the meaning specified in Section 2.08 hereof. -9- 10 "Replacement Airframe" shall mean any airframe substituted for the Airframe pursuant to Section 5.06 hereof. "Replacement Engine" shall mean any engine substituted for an Engine pursuant to Section 5.06 hereof. "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. "Section 1110 Period" shall have the meaning specified in Section 4.04(a) hereof. "Secured Certificates" shall mean and include any Secured Certificates issued hereunder, and issued in exchange therefor or replacement thereof. "Secured Obligations" shall have the meaning specified in Section 2.06 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Holder" shall have the meaning specified in Section 2.15(c) hereof. "Series A" or "Series A Secured Certificates" means Secured Certificates issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A." "Series B" or "Series B Secured Certificates" means Secured Certificates issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series B." "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. "Transactions" means the transactions contemplated by the Participation Agreement and the other Operative Documents. "Trust Agreement and Indenture Supplement" shall mean a supplement to the Trust Agreement and to this Indenture, in substantially the form of Exhibit A hereto, 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. "Trust Indenture", "this Trust Indenture", "the Trust Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this Amended and Restated Trust Indenture and Security Agreement [NW 1995 A] as it may from time to time be supplemented or amended as herein provided, including supplementing by the Trust Agreement and Indenture Supplement pursuant hereto. "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 this Trust Indenture, excluding Excluded Payments. SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this Trust Indenture the terms used but not defined herein are used as defined in the Lease. -10- 11 ARTICLE II THE SECURED CERTIFICATES SECTION 2.01. FORM OF SECURED CERTIFICATES The Secured Certificates shall be substantially in the form set forth below: THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [NW 1995 A] DATED AS OF NOVEMBER 15, 1995. SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N535US. No.____ Date:[______,__] $________________ INTEREST RATE MATURITY DATE ------------- ------------- [________] [________,________] FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1995 A], dated as of November 15, 1995, between the Owner Participant named therein and the Owner Trustee (herein as such Trust Agreement may be supplemented or amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Interest Rate indicated above. The Principal Amount of this Secured Certificate shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Secured Certificate set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including _______, _____. Notwithstanding the foregoing, the final payment made on this Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Secured Certificate. Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "TRUST INDENTURE" means the Amended and Restated Trust Indenture and Security Agreement [NW 1995 A], dated as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from -11- 12 time to time. All other capitalized terms used in this Secured Certificate and not defined herein shall have the respective meanings assigned in the Trust Indenture. This Secured Certificate shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Trust Indenture or the Participation Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Trust Indenture and each holder hereof, by its acceptance of this Secured Certificate, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the holder hereof as above provided and that none of the Owner Participant, the Owner Trustee or the Indenture Trustee is personally liable or liable in any manner extending to any assets other than the Trust Indenture Estate to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Trust Indenture or in the Participation Agreement, for any liability under the Trust Indenture or the Participation Agreement; provided, however, that nothing herein contained shall limit, restrict or impair the right of the Indenture Trustee, subject always to the terms and provisions of the Trust Indenture, to accelerate the maturity of this Secured Certificate upon occurrence of an Event of Default under the Trust Indenture in accordance with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment against the Owner Trustee on this Secured Certificate for purposes of realizing upon the Trust Indenture Estate and to exercise all rights and remedies provided under the Trust Indenture or otherwise realize upon the Trust Indenture Estate. There shall be maintained a Secured Certificate Register for the purpose of registering transfers and exchanges of Secured Certificates at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Trust Indenture. The Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Trust Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Secured Certificate, except that in the case of any final payment with respect to this Secured Certificate, the Secured Certificate shall be surrendered promptly thereafter by the Indenture Trustee to the Owner Trustee for cancellation. The holder hereof, by its acceptance of this Secured Certificate, agrees that, except as provided in the Trust Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts hereunder) to the date of such payment, second, to the payment of the Principal Amount of this Secured Certificate then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of Principal Amount of this Secured Certificate remaining unpaid in the inverse order of their normal maturity. This Secured Certificate is one of the Secured Certificates referred to in the Trust Indenture which have been or are to be issued by the Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Secured Certificates. The provisions of this Secured Certificate are subject to the Trust Indenture. Reference is hereby made to the Trust Indenture and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Secured Certificate and the rights and obligations of the holders of, and -12- 13 the nature and extent of the security for, any other Secured Certificates executed and delivered under the Trust Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust Indenture, to all of which terms and conditions in the Trust Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Secured Certificate. As provided in the Trust Indenture and subject to certain limitations therein set forth, this Secured Certificate is exchangeable for a like aggregate Principal Amount of Secured Certificates of different authorized denominations, as requested by the holder surrendering the same. Prior to due presentment for registration of transfer of this Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the person in whose name this Secured Certificate is registered as the owner hereof for all purposes whether or not this Secured Certificate be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Secured Certificate is subject to redemption as provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This Secured Certificate is also subject to assumption by Lessee as provided in Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.14 of the Trust Indenture but not otherwise. [The indebtedness evidenced by this Secured Certificate is, to the extent and in the manner provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Trust Indenture) in respect of Series A Secured Certificates, and this Secured Certificate is issued subject to such provisions. The Certificate Holder of this Secured Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.](1) Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Secured Certificate shall not be entitled to any benefit under the Trust Indenture or be valid or obligatory for any purpose. THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. * * * - --------------- (1) To be inserted in the case of a Series B Secured Certificate. -13- 14 IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Certificate to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By______________________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Secured Certificates referred to in the within-mentioned Trust Indenture. STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By______________________________________ Name: Title: -14- 15 SCHEDULE I SECURED CERTIFICATES AMORTIZATION Percentage of Principal Amount Payment Date to be Paid ------------ ---------------- [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES. The Secured Certificates shall be dated the date of issuance thereof, shall be issued in two separate series consisting of Series A and Series B and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Agreements as set forth in Schedule II hereto in connection therewith and (ii) the Secured Certificates issued under the Original Indenture shall be concurrently redeemed. The Secured Certificates shall be issued in registered form only. The Secured Certificates shall be issued in denominations of $1,000 and integral multiples thereof, except that one Secured Certificate of each Series may be in an amount that is not an integral multiple of $1,000. Each Secured Certificate shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Secured Certificate shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Secured Certificates. Notwithstanding the foregoing, the final payment made under each Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Secured Certificate. Each Secured Certificate shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Certificate Holders, (iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass Through Trustees, in each case pursuant to Section 7 of the Participation Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Advances (as -15- 16 defined in the Liquidity Facilities) under any Liquidity Facility except to the extent included in Net Interest and Related Charges, and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used in this Section, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes, plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Secured Certificate a fraction, the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes issued under Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any Series D Secured Certificates or Series D Equipment Notes. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to the Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount which would be payable if such drawings bore interest at the Designated Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding Liquidity Facility) which result from any Interest Drawing, Final Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities). As used in this Section "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) except with respect to that portion of any Final Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section, a Payment Default when used in connection with a Secured Certificate or Equipment Note means a default in the payment of principal thereof or interest thereon other than a default in the payment of principal or interest on a Series D Equipment Note which has not been cured other than solely because of acceleration. The following terms are used in this Section as defined in the Intercreditor Agreement without regard to any amendment, modification or supplement thereto after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and Series D Equipment Notes. The Secured Certificates shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Secured Certificates bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Secured Certificates or did not hold such offices at the respective dates of such Secured Certificates. The Owner Trustee may from time to time execute and deliver Secured Certificates with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Secured Certificates shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Secured Certificates to be authenticated hereunder on original issue with respect to the Aircraft. No Secured Certificate shall be secured by or entitled to any benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears on such Secured Certificate a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Secured Certificates shall be conclusive evidence, and the only evidence, that such Secured Certificate has been duly authenticated and delivered hereunder. -16- 17 SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY. (a) Without impairing any of the other rights, powers, remedies, privileges, liens or security interests of the Certificate Holders under this Trust Indenture, each Certificate Holder, by its acceptance of a Secured Certificate, agrees that as between it and the Owner Trustee, except as expressly provided in this Trust Indenture, the Participation Agreement or any other Operative Document, (i) the obligation to make all payments of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Secured Certificates, and the performance by the Owner Trustee of every obligation or covenant contained in this Trust Indenture and in the Participation Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Trust Indenture and any agreement referred to herein other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Trust Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Owner Trustee is responsible for, or is making, in its individual capacity, for which there would be personal liability of the Owner Trustee), no recourse shall be had with respect to this Trust Indenture 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, and (ii) none of the Owner Trustee, in its individual capacity, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Participation Agreement or any of the other Operative Documents or under the Secured Certificates except as expressly provided herein or in the Participation Agreement; provided, however, that nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Trust Indenture or such other agreements of rights and remedies against the Trust Estate. These provisions are not intended as any release or discharge of the indebtedness represented by the Secured Certificates and the Trust Indenture, but are intended only as a covenant not to sue the Owner Participant, the Owner Trustee or the Indenture Trustee in their individual capacities, except as expressly provided herein or in the Participation Agreement, for a deficiency with respect to such indebtedness, the indebtedness represented by this Trust Indenture and the Secured Certificates to remain in full force and effect as fully as though these provisions were not contained in this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders have expressly reserved all their rights and remedies against the Trust Indenture Estate, including the right, in the event of a default in the payment of all or part of the Principal Amount of, interest on, Make-Whole Amount, if any, or any other amount due with respect to any Secured Certificate within the periods provided for in Section 4.02(b) hereof, or upon the occurrence and continuation of any other Event of Default under this Trust Indenture, to foreclose upon this Trust Indenture, and/or to receive the proceeds from the Trust Indenture Estate and otherwise to enforce any other right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner Participant from personal liability, or constitute a covenant not to sue the Owner Participant, for any breach by it of any of its covenants, representations or warranties contained in the Participation Agreement or for any of the payments it has agreed to make pursuant to the Participation Agreement or (y) release the Owner Trustee or constitute a covenant not to sue the Owner Trustee for any breach by it of any representations, warranties or covenants of the Owner Trustee contained in the Operative Documents or (z) release the Owner Trustee in its individual capacity from personal liability, or constitute a covenant not to sue the Owner Trustee in its individual capacity for any breach by it of any representations, warranties or covenants of the Owner Trustee made in its individual capacity in the Operative Documents. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, 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 any Certificate Holder or the Indenture Trustee, -17- 18 directly or indirectly (other than the recourse liability of the Owner Trustee (in its individual capacity), to make payment on account of any amount payable as principal, Make-Whole Amount, if any, interest or other amounts on the Secured Certificates or under this Indenture and (iii) any Certificate Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Owner Trustee (in its individual capacity) or the Owner Participant on account of clause (ii) above, then such Certificate Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Trustee (in its individual capacity) or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a Certificate Holder 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 clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Certificate Holder 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 the Participation Agreement or this Trust Indenture (and any exhibits or annexes hereto or thereto) or by separate agreement or from retaining any amount paid by Owner Participant under Section 2.14 or 4.03 hereof. SECTION 2.04. METHOD OF PAYMENT. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Secured Certificate or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Certificate Holders in the manner provided herein. The Owner Trustee shall not have any responsibility for the distribution of such payment to any Certificate Holder. Notwithstanding the foregoing or any provision in any Secured Certificate to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such holder's Secured Certificate or Secured Certificates to such holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such holder with a bank located in the continental United States the amount to be distributed to such holder, for credit to the account of such holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate such holders for loss of use of funds at the Debt Rate until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Secured Certificate, except that, in the case of the final payment in respect of any Secured Certificate, such Secured Certificate shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Secured Certificate is registered on the Secured Certificate Register as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable with respect to such Secured Certificate and for all other purposes, and none of the Owner Trustee or the Indenture Trustee shall be affected by any notice to the contrary. So long as any signatory to the Participation Agreement or nominee thereof shall be a registered Certificate Holder, all payments to it shall be made to the account of such Certificate Holder specified in Schedule I thereto and otherwise in the manner provided in or pursuant to the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. -18- 19 (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Secured Certificate (and such exclusion and withholding shall constitute payment in respect of such Secured Certificate) any and all United States withholding taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Secured Certificates, to withhold such amounts (and such withholding shall constitute payment in respect of such Secured Certificate) and timely pay the same to the appropriate authority in the name of and on behalf of the Certificate Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Certificate Holder (with a copy to the Owner Trustee and Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Certificate Holder may reasonably request from time to time. If a Certificate Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Secured Certificate(s) held by such holder is made (but prior to the making of such payment), or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by Law (after taking into account any applicable exemptions claimed by the Certificate Holder) to be withheld from payments hereunder or under the Secured Certificates held by such holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Secured Certificates held by such holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Certificate Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Secured Certificates held by such holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Certificate Holder withholding taxes at the appropriate rate under Law and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. SECTION 2.05. APPLICATION OF PAYMENTS. In the case of each Secured Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; -19- 20 Second: to the payment of the Principal Amount of such Secured Certificate (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Secured Certificate; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Secured Certificate remaining unpaid (provided that such Secured Certificate shall not be subject to redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Secured Certificate in the inverse order of their normal maturity. SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE. A Certificate Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Secured Certificates held by such Certificate Holder and all other sums then payable to such Certificate Holder hereunder and under the other Operative Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall have been paid in full. SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED CERTIFICATES. The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the registration of Secured Certificates and the registration of transfers of Secured Certificates. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Secured Certificate Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the purpose of registering Secured Certificates and transfers of Secured Certificates as herein provided. A holder of any Secured Certificate intending to exchange such Secured Certificate shall surrender such Secured Certificate to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Secured Certificate, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Secured Certificate, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Secured Certificates of a like aggregate Principal Amount and of the same series. At the option of the Certificate Holder, Secured Certificates may be exchanged for other Secured Certificates of any authorized denominations of a like aggregate Principal Amount, upon surrender of the Secured Certificates to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Secured Certificates are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Secured Certificates which the Certificate Holder making the exchange is entitled to receive. All Secured Certificates issued upon any registration of transfer or exchange of Secured Certificates (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Trust Indenture, as the Secured Certificates surrendered upon such registration of transfer or exchange. Every Secured Certificate presented or surrendered for registration of transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Certificate Holder or such holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of any applicable state. The Indenture Trustee shall make a notation on each new Secured Certificate of the amount of all payments of Principal Amount previously made on the old Secured Certificate or Secured Certificates with respect to which such new Secured Certificate is issued and the date to which interest on such old Secured Certificate or Secured Certificates has been paid. Interest shall be deemed to have been paid on such new Secured Certificate to the date on which interest shall have been paid on such old Secured Certificate, and all payments of the Principal Amount marked on such new Secured Certificate, as provided above, shall be deemed to have been -20- 21 made thereon. The Owner Trustee shall not be required to exchange any surrendered Secured Certificates as provided above during the ten-day period preceding the due date of any payment on such Secured Certificate. The Owner Trustee shall in all cases deem the Person in whose name any Secured Certificate shall have been issued and registered as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable by the Owner Trustee with respect to such Secured Certificate and for all purposes until a notice stating otherwise is received from the Indenture Trustee and such change is reflected on the Secured Certificate Register. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of a Secured Certificate. Any such transferee of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to the provisions of the Participation Agreement applicable to Certificate Holders, including Sections 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(ff), 10, 13(b), 13(c), 15(b) and 15(c), and shall be deemed to have represented and warranted (except as provided above), and covenanted, to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by the original Loan Participant in the Participation Agreement. Subject to compliance by the Certificate Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates upon transfer or exchange within 10 Business Days of the date a Secured Certificate is surrendered for transfer or exchange. SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED CERTIFICATES. If any Secured Certificate shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the holder of such Secured Certificate, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Secured Certificate, payable in the same Principal Amount dated the same date and captioned as issued in connection with the Aircraft. If the Secured Certificate being replaced has become mutilated, such Secured Certificate shall be surrendered to the Indenture Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the Secured Certificate being replaced has been destroyed, lost or stolen, the holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be required by them to save the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Secured Certificate and of the ownership thereof. If a "qualified institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen Secured Certificate, then the written indemnity of such QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Secured Certificate. Subject to compliance by the Certificate Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates within 10 Business Days of the date of the written request therefor from the Certificate Holder. SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION. (a) No service charge shall be made to a Certificate Holder for any registration of transfer or exchange of Secured Certificates, but the Indenture Trustee, as Secured Certificate Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Secured Certificates; provided, however, that neither the Owner Trustee nor the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Secured Certificates surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Secured Certificates. -21- 22 SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES. (a) On the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders but without Make-Whole Amount. (b) If the Lease is terminated with respect to the Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the Lease is so terminated all the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES. Any or all of the Secured Certificates may be redeemed by the Owner Trustee in connection with a transaction described in, and subject to the terms and conditions of, Section 17 of the Participation Agreement upon at least 30 days' revocable prior written notice to the Indenture Trustee and the Certificate Holders, and the Secured Certificates shall, as provided in Section 17 of the Participation Agreement, be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION. (a) Neither any redemption of any Secured Certificate nor any purchase by the Owner Trustee of any Secured Certificate may be made except to the extent and in the manner expressly permitted by this Trust Indenture. No purchase of any Secured Certificate may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Secured Certificates shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Certificate Holder of such Secured Certificates to be redeemed or purchased, at such Certificate Holder's address appearing in the Secured Certificate Register; provided that, in the case of a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be deemed revoked in the event that the Lease does not in fact terminate on the specified termination date or if notice of such redemption shall have been given in connection with a refinancing of Secured Certificates and the Indenture Trustee receives written notice of such revocation from Lessee or the Owner Trustee not later than three days prior to the redemption date. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Secured Certificate, and that, if any such Secured Certificates are then outstanding, interest on such Secured Certificates shall cease to accrue on and after such redemption date, and (4) the place or places where such Secured Certificates are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Secured Certificates to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption date in immediately available funds the redemption price of the Secured Certificates to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid (and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee or at -22- 23 any office or agency maintained for such purposes pursuant to Section 2.07, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Secured Certificates then outstanding shall cease to bear interest. Upon surrender of any such Secured Certificate for redemption or purchase in accordance with said notice, such Secured Certificate shall be redeemed at the redemption price. If any Secured Certificate called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Secured Certificate as of such redemption date. SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE. If, in accordance with Section 8(x) of the Participation Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a full recourse basis) all of the obligations of the Owner Trustee hereunder, under the Secured Certificates and all other Operative Documents by supplemental indenture satisfactory to the Indenture Trustee (which shall contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease and (ii) other provisions necessary or advisable to effectuate such assumption), then upon delivery of such supplemental indenture, payment by Lessee of all expenses (including reasonable fees and expenses of counsel) for the Owner Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of the Secured Certificates and other amounts owing to the Certificate Holders substantially in the form of the Guarantee, and delivery of an opinion of counsel for Lessee that such assumption has been duly and validly effected, the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Secured Certificates and all other Operative Documents and the Owner Participant shall be released and discharged from any further obligations under the Participation Agreement and any other Operative Document to which it is a party, except with respect to any such obligations that accrued prior thereto. SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.14, purchase all but not less than all of the Secured Certificates outstanding hereunder, and each Certificate Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Secured Certificates and except against Liens on such Secured Certificates arising by, through or under such holder), all of the right, title and interest of such Certificate Holder in and to the Trust Indenture Estate, this Trust Indenture and the Secured Certificates held by it, and such purchaser or its nominee shall assume all of such holder's obligations under the Participation Agreement and hereunder. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Participation Agreement to the holder thereof. Such option to purchase the Secured Certificates may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default, the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Secured Certificates shall -23- 24 become irrevocable upon the sixteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Certificate Holders will comply with all the provisions of Section 2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes, charges and expenses required pursuant to Section 2.09 in connection with the issuance of such new Secured Certificate shall be borne by the Owner Participant. SECTION 2.15. SUBORDINATION. (a) The Owner Trustee and, by acceptance of its Secured Certificates of any Series, each Certificate Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g) hereof, except as expressly provided in Article III hereof. (b) By the acceptance of its Secured Certificates of any Series (other than Series A), each Certificate Holder of such Series agrees that in the event that such Certificate Holder, in its capacity as a Certificate Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.15 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article III hereof. (c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured Obligations in respect of Series A Secured Certificates have been paid in full and (ii) after the Secured Obligations in respect of Series A Secured Certificates have been paid in full, the Certificate Holders of Series B until the Secured Obligations in respect of Series B Secured Certificates have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. BASIC RENT DISTRIBUTION. Except as otherwise provided in Section 3.03 hereof, each installment of Basic Rent or Interim Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly distributed in the following order of priority: FIRST, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Secured Certificates shall be distributed to the Certificate Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Secured Certificate bears to the aggregate amount of the payments then due under all Series A Secured Certificates; and -24- 25 (ii) after giving effect to paragraph (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Secured Certificates shall be distributed to the Certificate Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Secured Certificate bears to the aggregate amount of the payments then due under all Series B Secured Certificates; and SECOND, the balance, if any, of such installment remaining thereafter shall be distributed to the Owner Trustee; provided, however, that if an Event of Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "Second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 5.09 hereof until whichever of the following shall first occur: (i) all Events of Default shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "Second" without reference to this proviso, (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of such Section 3.03, or (iii) the 120th day after the receipt of such payment in which case such payment shall be distributed as provided in this clause "Second" without reference to this proviso. SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION; REFINANCING. Except as otherwise provided in Section 3.03 hereof, any payments received by the Indenture Trustee (i) with respect to the Aircraft as the result of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a refinancing of the Secured Certificates pursuant to Section 17 of the Participation Agreement shall be applied to redemption of the Secured Certificates and to all other amounts payable hereunder or to the Indenture Trustee or any Certificate Holder under the Participation Agreement by applying such funds in the following order of priority: FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for any reasonable costs or expenses incurred in connection with such redemption for which they are entitled to reimbursement, or indemnity by Lessee, under the Operative Documents and then (b) to pay any other amounts then due to the Indenture Trustee and the Certificate Holders under this Trust Indenture, the Participation Agreement or the Secured Certificates; SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series A Secured Certificates; and (ii) after giving effect to paragraph (i) above, to pay the amounts specified in paragraph (ii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series B Secured Certificates; and THIRD, as provided in clause "Fourth" of Section 3.03 hereof; provided, however, that if a Replacement Airframe or Replacement Engine shall be substituted for the Airframe or Engine subject to such Event of Loss as provided in Section 10 of the Lease and in accordance with Section 5.06 hereof, any insurance, condemnation or similar proceeds which result from such Event of Loss and are paid over to the Indenture Trustee shall be held by the Indenture Trustee as permitted by Section 6.04 hereof (provided that such -25- 26 moneys shall be invested as provided in Section 5.09 hereof) as additional security for the obligations of Lessee under the Lessee Operative Documents and, unless otherwise applied pursuant to the Lease, such proceeds (and such investment earnings) shall be released to Lessee at Lessee's written request upon the release of such damaged Airframe or Engine and the replacement thereof as provided in the Lease. SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT. Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Section 15 of the Lease or Article IV hereof) after both an Event of Default shall have occurred and be continuing and the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, as well as all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly distributed by the Indenture Trustee in the following order of priority: FIRST, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate (all such property being herein called the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) incurred by the Indenture Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Certificate Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or any Certificate Holder, liquidated or otherwise, upon such Event of Default shall be applied by the Indenture Trustee as between itself and the Certificate Holders in reimbursement of such expenses and any other expenses for which the Indenture Trustee or the Certificate Holders are entitled to reimbursement under any Operative Document and in the case the aggregate amount to be so distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as shall be required to reimburse the then existing or prior Certificate Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to such then existing or prior Certificate Holders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Certificate Holder pursuant to said Section 5.03 hereof; THIRD, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of -26- 27 all Series B Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and FOURTH, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee. No Make-Whole Amount shall be due and payable on the Secured Certificates as a consequence of the acceleration of the Secured Certificates. SECTION 3.04. CERTAIN PAYMENTS. (a) Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in this Trust Indenture and for which such provision is made in the Lease, the Participation Agreement or any other Operative Document shall be applied forthwith to the purpose for which such payment was made in accordance with the terms of the Lease, the Participation Agreement or such other Operative Document, as the case may be. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of the Participation Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the third paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the third paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) [Intentionally Omitted] (d) Notwithstanding anything to the contrary contained in this Article III, any amounts received by the Indenture Trustee which constitute Excluded Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. (e) Notwithstanding any provision of this Trust Indenture to the contrary, any amounts held by the Indenture Trustee that would, but for the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall, notwithstanding the provisions of said Section, be distributed to Lessee unless and until a Lease Event of Default shall have occurred and be continuing. SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any other Operative Document shall be distributed by the Indenture Trustee to the extent received or realized at any time (i) prior to the payment in full of all Secured Obligations due the Certificate Holders, in the order of priority specified -27- 28 in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in full of all Secured Obligations due the Certificate Holders, in the following order of priority: FIRST, to the extent payments or amounts described in clause "First" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "First" of Section 3.03 hereof, and SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof. Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04 hereof, all payments received and amounts realized by the Indenture Trustee under the Lease or otherwise with respect to the Aircraft (including, without limitation, all amounts realized upon the sale or release of the Aircraft after the termination of the Lease with respect thereto), to the extent received or realized at any time after payment in full of all Secured Obligations due the Certificate Holders, shall be distributed by the Indenture Trustee in the order of priority specified in clause (ii) of the immediately preceding sentence of this Section 3.05. SECTION 3.06. PAYMENTS TO OWNER TRUSTEE. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account (within the time limits contemplated by Section 2.04(a)) specified in Schedule I to the Participation Agreement. SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE. All payments received by the Indenture Trustee pursuant to the Guarantee shall be distributed forthwith by the Indenture Trustee in the same order of priority, and in the same manner, as it would have distributed the payment in respect of which such payment under the Guarantee was received. ARTICLE IV COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. COVENANTS OF OWNER TRUSTEE. The Owner Trustee hereby covenants and agrees (the covenants and agreements only in clause (b) below being made by the Owner Trustee in its individual capacity) as follows: (a) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Secured Certificates and hereunder in accordance with the terms of the Secured Certificates and this Trust Indenture and all amounts, if any, payable by it to the Certificate Holders under the Participation Agreement; -28- 29 (b) the Owner Trustee in its individual capacity covenants and agrees that it shall not, directly or indirectly, cause or permit to exist a Lessor Lien attributable to it in its individual capacity with respect to the Aircraft or any other portion of the Trust Estate; that it will promptly, at its own expense, take such action as may be necessary to duly discharge such Lessor Lien attributable to it in its individual capacity; and that it will make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Lessor Liens attributable to it in its individual capacity; (c) in the event the Owner Trustee shall have Actual Knowledge of an Event of Default, a Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Event of Default, Default or Event of Loss to the Indenture Trustee, each Certificate Holder, Lessee and the Owner Participant; (d) the Owner Trustee will furnish to the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of any Termination Notice and a copy of each report or notice received pursuant to Section 9(a) and 11(c) of the Lease to the extent that the same shall not have been furnished to the Indenture Trustee pursuant to the Lease; (e) except pursuant to the Operative Documents or with the consent of the Indenture Trustee (acting pursuant to instructions given in accordance with Section 9.01 hereof), the Owner Trustee will not contract for, create, incur, assume or suffer to exist any Debt, and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the Debt of any other person; and (f) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. EVENT OF DEFAULT. "EVENT OF DEFAULT" means any of the following events (whatever the reason for such Event of Default and whether 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): (a) any Lease Event of Default (provided that any such Lease Event of Default caused solely by a failure of Lessee to pay to the Owner Trustee or the Owner Participant when due any amount that is included in the definition of Excluded Payments shall not constitute an Event of Default unless notice is given by the Owner Trustee to the Indenture Trustee that such failure shall constitute an Event of Default); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due and payable under any Secured Certificate or hereunder (other than any such failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof or as a result of a Lease Event of Default or a Lease Default) and such failure shall have continued unremedied for ten Business Days in the case of any payment of Principal Amount or interest or Make-Whole Amount, if any, thereon and, in the case of any other amount, for ten Business Days after the Owner Trustee or the Owner Participant receives written demand from the Indenture Trustee or any Certificate Holder; or -29- 30 (c) any Lien required to be discharged by the Owner Trustee, in its individual capacity pursuant to Section 4.01(b) hereof or in its individual or trust capacity pursuant to Section 8(h) of the Participation Agreement, or by the Owner Participant pursuant to Section 8(h) of the Participation Agreement shall remain undischarged for a period of 30 days after the Owner Trustee and the Owner Participant shall have received written notice from the Indenture Trustee or any Certificate Holder of such Lien; or (d) any representation or warranty made by the Owner Participant or the Owner Trustee herein, in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in any certificate furnished by the Owner Participant or the Owner Trustee to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents shall prove to have been false or incorrect when made in any material respect and continues to be material; and if such misrepresentation is capable of being corrected and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 60 days (or, without affecting Section 4.02(f) hereof, in the case of the representations made in Section 8(c) of the Participation Agreement as to the citizenship of the Owner Trustee in its individual capacity or of the Owner Participant, respectively, as soon as is reasonably practicable but in any event within 60 days) following notice thereof from the Indenture Trustee or any Certificate Holder to the Owner Trustee or the Owner Participant, as the case may be; or (e) other than as provided in (c) above or (f) below, any failure by the Owner Trustee or Owner Participant to observe or perform any other covenant or obligation of the Owner Trustee or Owner Participant, as the case may be, for the benefit of the Indenture Trustee or the Certificate Holders contained in the Participation Agreement, Section 4.01(a) of the Trust Agreement, the Secured Certificates or this Trust Indenture which is not remedied within a period of 60 days after notice thereof has been given to the Owner Trustee and the Owner Participant; or (f) if at any time when the Aircraft is registered under the laws of the United States, the Owner Participant shall not be a Citizen of the United States, and as the result thereof the registration of the Aircraft under the Federal Aviation Act, and regulations then applicable thereunder, shall cease to be effective; provided that no Event of Default shall be deemed to have occurred under this paragraph (f) unless such circumstances continue unremedied for more than 60 days after the Owner Participant has Actual Knowledge of the state of facts that resulted in such ineffectiveness and of such loss of citizenship; or (g) at any time either (i) the commencement of an involuntary case or other proceeding in respect of the Owner Participant, the Owner Trustee or the Trust Estate 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 seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii) the commencement by the Owner Participant, the Owner Trustee or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee or the Trust Estate to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or the making by the Owner Participant, the Owner Trustee or the Trust Estate of any assignment for the benefit of creditors or the Owner Participant or the Owner Trustee shall take any action to authorize any of the foregoing; provided, however, that an event referred to in this Section 4.02(g) with respect to the Owner Participant shall not constitute an Event of Default if within 30 days of the commencement of the case or proceeding a final non-appealable order, judgment or decree shall be entered in such case or proceeding by a court or a trustee, custodian, -30- 31 receiver or liquidator, to the effect that, no part of the Trust Estate (except for the Owner Participant's beneficial interest therein) and no right, title or interest under the Trust Indenture Estate shall be included in, or be subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 4.02(g). SECTION 4.03. CERTAIN RIGHTS. The Indenture Trustee shall give the Certificate Holders, the Owner Trustee and the Owner Participant prompt written notice of any Event of Default of which the Indenture Trustee has Actual Knowledge and, if any such Event of Default results from a Lease Event of Default, shall give the Certificate Holders, the Owner Trustee and the Owner Participant not less than ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence and consummate the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the provisions of Section 15 of the Lease. If an Event of Default shall have occurred and be continuing, the Owner Trustee shall have the following rights hereunder, any of which may be exercised directly by the Owner Participant. If as a result of the occurrence of an Event of Default in respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease, the Indenture Trustee shall have insufficient funds to make any payment of Principal Amount and interest on any Secured Certificate on the day it becomes due and payable, the Owner Trustee or the Owner Participant may, but shall not be obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the manner provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an amount equal to the portion of the Principal Amount and interest (including interest, if any, on any overdue payments of such portion of Principal Amount and interest) then due and payable on the Secured Certificates, and, unless the Owner Trustee has cured Events of Default in respect of payments of Basic Rent on each of the three immediately preceding Basic Rent payment dates, or on the Commencement Date and each of the two immediately succeeding Basic Rent payment dates in respect of payment of Interim Rent, or the Owner Trustee has cured six previous Events of Default in respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any Event of Default which would otherwise have arisen on account of the nonpayment by Lessee of such installment of Interim Rent or Basic Rent (but not any other Default or Event of Default which shall have occurred and be continuing). If any Event of Default (other than in respect of the nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured has occurred, the Owner Trustee or the Owner Participant may, but shall not be obligated to, cure such Event of Default prior to the Enforcement Date as is necessary to accomplish the observance or performance of the defaulted covenant, condition or agreement. Except as hereinafter in this Section 4.03 provided, the Owner Trustee shall not, as a result of exercising the right to cure any such Event of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable under the Lease for or on account of costs or expenses incurred in connection with the exercise of such right, nor shall any claim of the Owner Trustee against Lessee or any other party for the repayment of such costs or expenses impair the prior right and security interest of the Indenture Trustee in and to the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner Participant pursuant to the first or second preceding paragraphs of this Section 4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be subrogated to the rights of the Indenture Trustee and the Certificate Holders in respect of the Interim Rent or Basic Rent which was overdue at the time of such payment and interest payable by Lessee on account of its being overdue and any Supplemental Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant to the immediately preceding paragraph (but in either case shall have no rights as a secured party hereunder), and thereafter, the Owner Trustee or the Owner Participant, as the case may be, shall be entitled to receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt thereof by the Indenture Trustee (and shall be entitled to bring an action against Lessee to enforce such payment); provided, however, that (i) if the Principal Amount and interest on the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to all Secured Certificates shall have been paid in full, be subordinate to the -31- 32 rights of the Indenture Trustee and the Certificate Holders in respect of such payment of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and (ii) the Owner Trustee shall not be entitled to seek to recover any such payment (or any payment in lieu thereof) except pursuant to the foregoing right of subrogation by demand or suit for damages. SECTION 4.04. REMEDIES. (a) Subject to the provisions of Section 2.14 hereof, if an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, then and in every such case the Indenture Trustee may, subject to the second paragraph of this Section 4.04(a), on and after the Enforcement Date if such Event of Default results from a Lease Event of Default, exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article IV and shall have and may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and, in the event such Event of Default is also a Lease Event of Default, any and all of the remedies pursuant to Section 15 of the Lease and may take possession of all or any part of the properties covered or intended to be covered by the Lien created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee and Lessee and all persons claiming under any of them wholly or partly therefrom, provided, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Trust Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder as a result of an Event of Default which arises solely by reason of one or more events or circumstances which constitute a Lease Event of Default unless the Indenture Trustee as security assignee of the Owner Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 15 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person. In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any rights or remedy of the Indenture Trustee hereunder) to participate in such proceedings. It is expressly understood and agreed that, subject only to the immediately preceding paragraph, the inability, described in such paragraphs, of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising any or all of its rights, powers and remedies under this Trust Indenture, including, without limitation, this Article IV. (b) If an Event of Default shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery of written notice or notices to the -32- 33 Owner Trustee and the Owner Participant, declare all the Secured Certificates to be due and payable, whereupon the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued but unpaid interest thereon (without Make-Whole Amount) and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. This Section 4.04(b), however, is subject to the condition that, if at any time after the Principal Amount of the Secured Certificates shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Secured Certificates and all other amounts payable under the Secured Certificates (except the Principal Amount of the Secured Certificates which by such declaration shall have become payable) shall have been duly paid, and every other Default and Event of Default with respect to any covenant or provision of this Trust Indenture shall have been cured, then and in every such case a Majority in Interest of Certificate Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. (c) Any Certificate Holder shall be entitled, at any sale pursuant to Section 15 of the Lease or this Section 4.04, to credit against any purchase price bid at such sale by such holder all or any part of the unpaid obligations owing to such Certificate Holder and secured by the Lien of this Trust Indenture (but only to the extent that such purchase price would have been paid to such Certificate Holder pursuant to Article III hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c) were not given effect). (d) In the event of any sale of the Trust Indenture Estate, or any part thereof, pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Trust Indenture, the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued interest thereon, and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any Mortgaged Property or take any action with respect to any Mortgaged Property so acquired by it if such acquisition or action would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. RETURN OF AIRCRAFT, ETC. (a) If an Event of Default shall have occurred and be continuing, subject to Sections 4.03 and 4.04 hereof, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Mortgaged Property included in the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents to the fullest extent permitted by applicable law, and (ii) pursue all or part of such Mortgaged Property wherever it may be found and, in the event that a Lease Event of Default has occurred and is continuing, may enter any of the premises of Lessee wherever such Mortgaged Property may be or be supposed to be and search for such Mortgaged Property and take possession of and remove such Mortgaged Property. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Trust Indenture. -33- 34 (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Mortgaged Property, make all such expenditures for maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modifications or alterations to and of the Mortgaged Property, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the Mortgaged Property and to carry on the business and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Mortgaged Property, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modification or alteration of the Mortgaged Property or any part thereof as the Indenture Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Mortgaged Property and every part thereof, except Excluded Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Trust Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, improvement, modification or alteration of the Mortgaged Property and of conducting the business thereof, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Mortgaged Property or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Trust Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee with respect hereto. SECTION 4.06. REMEDIES CUMULATIVE. Each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or Lessee or to be an acquiescence therein. SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS. In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Trust Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Owner Trustee, the Indenture Trustee and Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Mortgaged Property, and all rights, remedies and powers of the Owner Trustee, the Indenture Trustee or Lessee shall continue as if no such proceedings had been instituted. SECTION 4.08. WAIVER OF PAST DEFAULTS. Upon written instruction from a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Default hereunder and its consequences and upon any such waiver such Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon; provided, that in the absence of written instructions from all the Certificate Holders, the Indenture Trustee shall not waive any Default (i) in the payment of the Principal Amount, Make-Whole Amount, if any, and interest and other amounts due under any Secured Certificate then outstanding, or (ii) in respect of a covenant or provision -34- 35 hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Certificate Holder. SECTION 4.09. APPOINTMENT OF RECEIVER. The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee thereof) for all or any part of the Mortgaged Property, whether such receivership be incidental to a proposed sale of the Mortgaged Property or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Mortgaged Property shall be entitled to exercise all the rights and powers of the Indenture Trustee with respect to the Mortgaged Property. SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC. The Owner Trustee irrevocably appoints the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture, whether pursuant to foreclosure or power of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Owner Trustee hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Trust Indenture, the right of any Certificate Holder to receive payment of principal of, and premium, if any, and interest on a Secured Certificate on or after the respective due dates expressed in such Secured Certificate, or to bring suit for the enforcement of any such payment on or after such respective dates in accordance with the terms hereof, shall not be impaired or affected without the consent of such Certificate Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default arising from a failure to pay Rent, the Indenture Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms of Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default or Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture Trustee shall not have received instructions as above provided within 20 days after mailing notice of such Event of Default to the Certificate Holders, the Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default or Default as it shall determine advisable in the best interests of the Certificate Holders. If the Indenture Trustee shall at any time declare the Lease to be in default pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall forthwith notify the Owner Participant, the Certificate Holders, the Owner Trustee and Lessee. For all purposes of this Trust -35- 36 Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall not be deemed to have knowledge of a Default or an Event of Default (except, in the case of the Indenture Trustee, the failure of Lessee to pay any installment of Interim Rent or Basic Rent within one Business Day after the same shall become due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee, the Owner Participant or one or more Certificate Holders. SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, subject to the terms of this Section 5.02, take such of the following actions as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder as shall be specified in such instructions; (ii) give such notice or direction or exercise such right, remedy or power under the Lease, the Participation Agreement, the Purchase Agreement, or any other part of the Trust Indenture Estate as shall be specified in such instructions; and (iii) after the occurrence and during the continuance of an Event of Default, approve as satisfactory to the Indenture Trustee all matters required by the terms of the Lease to be satisfactory to the Owner Trustee, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall not approve any such matter as satisfactory to the Indenture Trustee; provided, that anything contained in this Trust Indenture, the Lease or the other Operative Documents to the contrary notwithstanding: (1) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excluded Payments from Lessee or the Guarantor, exercise any election or option or make any decision or determination or to give or receive any notice, consent, waiver or approval in respect of any Excluded Payment and seek legal or equitable remedies to require Lessee or the Guarantor to maintain the insurance coverage referred to in Section 11 of the Lease; provided, that the rights referred to in this clause (1) shall not be deemed to include the exercise of any remedies provided for in Section 15 of the Lease other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by Lessee or the Guarantor of such amounts included in Excluded Payments or performance by Lessee or the Guarantor of such insurance covenant, or to recover damages for the breach thereof or for specific performance of any covenant of Lessee or the Guarantor; (2) unless an Event of Default and an Indenture Trustee Event shall have occurred and be continuing and except as provided in clause (4) below, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Event of Default shall have occurred and be continuing, no amendment, modification, waiver or consent in respect of the Lease shall affect the amount or timing of, or the right to enforce payment of, any Excluded Payment; (3) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which any thereof is permitted or required to give or furnish to the Owner Trustee or Lessor pursuant to any Operative Document (including pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 11(e) of the Lease -36- 37 specifically confers on Lessor or the Owner Participant, (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of Lessor under Section 21 of the Lease and (v) to give notices of default under Section 14 of the Lease; (4) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee shall have the right to the exclusion of the Indenture Trustee to adjust Rent, Stipulated Loss Values and Termination Values as provided in Section 3(d) of the Lease and to select counsel with respect to any opinion relating to tax matters to be delivered solely to the Owner Participant; (5) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee may, without the consent of the Indenture Trustee, (i) solicit and make bids with respect to the Aircraft under Section 9 of the Lease in respect of a termination of the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales value" and "fair market rental value" under Section 19 of the Lease for all purposes except following an Event of Default pursuant to Section 15 of the Lease, and (iii) make an election pursuant to and in accordance with the provisions of Section 9(c) of the Lease; and (6) so long as no Event of Default shall have occurred and be continuing, except as provided in clauses (2) and (3) above, all rights of the "Lessor" under the Lease shall be exercised by the Owner Trustee to the exclusion of the Indenture Trustee including, without limitation, the right to (i) exercise all rights with respect to Lessee's use and operation, modification or maintenance of the Aircraft and any Engine which the Lease specifically confers on Lessor, and (ii) consent to and approve any assignment pursuant to Section 13 of the Lease; provided that the foregoing shall not limit (A) any rights separately granted to the Indenture Trustee under the Operative Documents or (B) the right of the Indenture Trustee to receive any funds to be delivered to the "Lessor" under the Lease (except with respect to Excluded Payments) and under the Purchase Agreement. Notwithstanding anything to the contrary contained herein, the Indenture Trustee shall have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) declare the Lease to be in default under Section 15 thereof and (B) subject only to the provisions of Sections 4.03, 4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15 (other than in connection with Excluded Payments) at any time that a Lease Event of Default shall have occurred and be continuing. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as specified by Lessee pursuant to Section 8(e) of the Participation Agreement or as may be specified from time to time in written instructions of a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee will furnish to each Certificate Holder (and, during the continuation of an Indenture Trustee Event, to the Owner Trustee and Owner Participant), promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder, including, without limitation, a copy of any Termination Notice (as defined in the Lease) and a copy of each report or notice received pursuant to Sections 9(a) and 11(c) of the Lease, respectively, to the extent that the same shall not have been furnished to such Certificate Holder pursuant hereto or to the Lease. (b) If any Lease Event of Default shall have occurred and be continuing and the Owner Trustee shall not have cured fully such Lease Event of Default under and in accordance with Section 4.03 hereof, on request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall declare the Lease to be in default pursuant to Section 15 thereof and exercise those remedies specified by such Certificate Holders. The Indenture Trustee agrees to provide to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with such declaration by the Indenture Trustee, notice of such declaration by the Indenture Trustee. -37- 38 SECTION 5.03. INDEMNIFICATION. The Indenture Trustee shall not be under any obligation to take any action under this Trust Indenture and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds or otherwise incur the risk of any financial liability in the performance of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (the written indemnity of any Certificate Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Indenture Trustee shall be accepted as reasonable assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture or any other Operative Document be deemed to impose a duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or of the Lease or is otherwise contrary to Law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR INSTRUCTIONS. The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Trust Indenture or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Trust Indenture or as expressly provided in written instructions from Certificate Holders as provided in this Trust Indenture; and no implied duties or obligations shall be read into this Trust Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof), promptly take such action as may be necessary duly to discharge all liens and encumbrances on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the ownership of the Aircraft or the administration of the Trust Indenture Estate or any other transaction pursuant to this Trust Indenture or any document included in the Trust Indenture Estate. SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR INSTRUCTIONS. The Owner Trustee and the Indenture Trustee agree that they will not use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate except (i) as required by the terms of the Lease or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Trust Indenture and in accordance with the express terms hereof. SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES. At any time an Airframe or Engine is to be replaced under or pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of Default is continuing, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid, but only upon compliance by Lessee with the applicable provisions of Section 10 of the Lease and upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee, requesting such release specifically describing the Airframe and/or Engine(s) so to be released. (2) A certificate signed by a duly authorized officer of Lessee stating the following: -38- 39 A. With respect to the Replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe to be received (including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number) as consideration for the Airframe to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of such Replacement Airframe free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Airframe will on such date be in good working order and condition, and that such Replacement Airframe has been or, substantially concurrently with such withdrawal, will be duly registered in the name of the Owner Trustee under the Federal Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and that Lessee will have the full right and authority to use such Replacement Airframe; (iv) the existence of the insurance required by Section 11 of the Lease with respect to such Replacement Airframe and the payment of all premiums then due thereon; (v) that the Replacement Airframe is of the same or an improved model as the Airframe requested to be released from this Indenture; (vi) the fair market value of the Replacement Airframe as of the date of such certificate (which in the judgment of Lessee shall be not less than the then fair market value of the Airframe requested to be released (assuming such Airframe was in the condition and repair required to be maintained under the Lease)); (vii) the fair market value of the Airframe immediately prior to the date the Airframe suffered an Event of Loss (assuming such Airframe was in the condition and repair required to be maintained under the Lease); -39- 40 (viii) that no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default, has occurred which has not been remedied or waived, and that Lessee will not be in default, by the making and granting of the request for release and the addition of a Replacement Airframe, in the performance of any of the terms and covenants of the Lease; and (ix) that the release of the Airframe so to be released will not be in contravention of any of the provisions of this Indenture; or B. with respect to the replacement of any Engine: (i) a description of the Engine which shall be identified by manufacturer's serial number; (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) as consideration for the Engine to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Engine will on such date be in good working order and condition and that such Replacement Engine is substantially the same as the Engine to be released (or as improved model); (iv) the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then fair market value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease)); (v) the fair market value of the Engine to be released (immediately prior to any Event of Loss suffered by such Engine and assuming that such Engine was in the condition and repair required to be maintained under the Lease); (vi) that each of the conditions specified in Section 10(b) of the Lease with respect to such Replacement Engine have been satisfied and that Lessee will not be in default, by the making and granting of the request for release and the addition of the Replacement Engine, in the performance of any of the terms and covenants of the Lease; -40- 41 (vii) that, with respect to the replacement of an Engine pursuant to Section 9(d) of the Lease, no Lease Event of Default and no Lease Default has occurred which has not been remedied or waived; and (viii) that the release of the Engine so to be released will not be in contravention of any of the provisions of this Indenture. (3) (a) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting such Replacement Airframe or Replacement Engine and any related warranty rights to the lien of this Indenture. (b) With respect to the replacement of any Engine, such Uniform Commercial Code financing statements covering the lien created by this Indenture as deemed necessary or desirable by counsel for the Indenture Trustee to protect the lien under the Indenture in the Replacement Engine. (4) A certificate from either an aircraft engineer (who may be an employee of Lessee) or a firm of independent aircraft appraisers selected by Lessee confirming the accuracy of the information set forth in clause (2)A(vi) of this Section 5.06. (5) The opinion of in-house counsel to Lessee, or other counsel satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Trust Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be lawfully released from the lien of this Trust Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Trust Indenture, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate -41- 42 and interest of the Owner Trustee to and the lien of this Trust Indenture on such Replacement Aircraft or Replacement Engine. SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS. If a Replacement Airframe or Replacement Engine is being substituted as contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Certificate Holders and Lessee, subject to fulfillment of the conditions precedent and compliance by Lessee with its obligations set forth in Section 10 of the Lease and the requirements of Section 5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to execute and deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease. SECTION 5.08. EFFECT OF REPLACEMENT. In the event of the substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced, and (b) the provisions of this Trust Indenture shall no longer be applicable to the Airframe or Engine or Engines being replaced, which shall be released from the Lien of this Indenture. SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of the Lease shall be held in accordance with the terms of such Section and the Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of the Owner Trustee under such Section. Any amounts held by the Indenture Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee may acquire the same using its best efforts. Unless otherwise expressly provided in this Trust Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Trust Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever such sale is necessary to make a distribution required by this Trust Indenture. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse all monies constituting part of the Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its individual -42- 43 capacity, and the Indenture Trustee, in its individual capacity, shall not be answerable or accountable under any circumstances, except (i) for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be willful misconduct or negligence), (ii) in the case of the Indenture Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii) for liabilities that may result, in the case of the Owner Trustee, from the inaccuracy of any representation or warranty of the Owner Trustee expressly made in its individual capacity in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents) or, in the case of the Indenture Trustee (in its individual capacity), from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable for any action or inaction of the other or of the Owner Participant. SECTION 6.02. ABSENCE OF DUTIES. In the case of the Indenture Trustee, except in accordance with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the Lease or of this Trust Indenture or any other document, or to see to the maintenance of any such registration, recording or filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Lessee's covenants under the Lease with respect to the Aircraft. The Owner Participant shall not have any duty or responsibility hereunder, including, without limitation, any of the duties mentioned in clauses (i) through (v) above; provided, that nothing contained in this sentence shall limit any obligations of the Owner Participant under the Participation Agreement or relieve the Owner Participant from any restriction under Section 4.03 hereof. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR DOCUMENTS. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its individual capacity warrants that (i) the Owner Trustee has received on the Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Trustee in its individual capacity. Neither the Owner Trustee, in its individual capacity or as Owner Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual or trust capacities, makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Trust Indenture, the Trust Agreement, the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Owner Trustee made in its individual capacity and the representations and warranties of the Indenture Trustee, in -43- 44 each case expressly made in this Trust Indenture or in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement). The Loan Participants, the Certificate Holders and the Owner Participant make no representation or warranty hereunder whatsoever. SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the Certificate Holders, Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by Law or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under such general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for any interest thereon (except that the Indenture Trustee shall invest all monies held as directed by Lessee so long as no Lease Event of Default or Lease Default has occurred and is continuing (or in the absence of such direction, by the Majority In Interest of Certificate Holders) in Cash Equivalents; provided, however, that any payments received, or applied hereunder, by the Indenture Trustee shall be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL. Neither the Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors (or, in the case of the Owner Participant which originally executed the Participation Agreement, evidence of the approval by the Executive Committee thereof) of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Secured Certificates outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to Lessee the manner of ascertainment of which is not specifically described herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee and the Indenture Trustee for any action taken or omitted to be taken by them in good faith in reliance thereon. The Indenture Trustee shall assume, and shall be fully protected in assuming, that the Owner Trustee is authorized by the Trust Agreement to enter into this Trust Indenture and to take all action to be taken by it pursuant to the provisions hereof, and shall not inquire into the authorization of the Owner Trustee with respect thereto. In the administration of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled persons. SECTION 6.06. CAPACITY IN WHICH ACTING. The Owner Trustee acts hereunder solely as trustee as herein and in the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein, in the Trust Agreement and in the Participation Agreement. SECTION 6.07. COMPENSATION. The Indenture Trustee shall be entitled to reasonable compensation, including expenses and disbursements (including the reasonable fees and expenses of counsel), for all services rendered hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on the Trust Indenture Estate for -44- 45 the payment of such compensation, to the extent that such compensation shall not be paid by Lessee, and shall have the right, on and subsequent to an Event of Default hereunder, to use or apply any monies held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against the Loan Participants, the Certificate Holders, the Owner Trustee or the Owner Participant for any fee as compensation for its services as trustee under this Trust Indenture. SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS. In the administration of the trusts created hereunder, the Indenture Trustee shall have the right to seek instructions from a Majority in Interest of Certificate Holders should any provision of this Trust Indenture appear to conflict with any other provision herein or should the Indenture Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no liability in refraining from acting until it receives such instructions. The Indenture Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.08. ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. SCOPE OF INDEMNIFICATION. The Owner Trustee, not in its individual capacity, but solely as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its individual and trust capacities), and its successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Trust Indenture), claims, actions, suits, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever, which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also indemnified against by any other Person under any other document) in any way relating to or arising out of this Trust Indenture or any other Operative Document to which it is a party or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, to the extent not reimbursed by Lessee. Without limiting the foregoing, the Indenture Trustee agrees that, prior to seeking indemnification from the Trust Indenture Estate, it will demand, and take such action as it may in its discretion determine to be reasonable to pursue, indemnification available to the Indenture Trustee under the Lease or the Participation Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be entitled to any indemnification for any Expenses to the extent relating to or arising from the willful misconduct or gross negligence (or negligence in the case of handling funds) of the Indenture Trustee in the performance of its duties hereunder or resulting from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) referred to in Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities under such Sections. In addition, if necessary, the Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. -45- 46 ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement including upon any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee, Lessee and the Certificate Holders. SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Certificate Holders may at any time (but only with the consent of Lessee, which consent shall not be unreasonably withheld, except that such consent shall not be necessary if a Lease Event of Default is continuing) remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Certificate Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so long as no Lease Event of Default shall have occurred and be continuing, shall be subject to Lessee's reasonable approval. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as above provided. (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee an instrument accepting such appointment and assuming the obligations of the Indenture Trustee under the Participation Agreement arising from and after the time of such appointment, and thereupon such successor Indenture Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee herein; but nevertheless upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all monies or other property then held by such predecessor Indenture Trustee hereunder. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having its principal place of business in the Borough of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations under the Operative Documents are guaranteed by an affiliated entity having) a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. (d) Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation to which substantially all the corporate trust business of -46- 47 the Indenture Trustee may be transferred, shall, subject to the terms of paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the Indenture Trustee under this Trust Indenture without further act. SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Trust Indenture Estate shall be situated or to make any claim or bring any suit with respect to or in connection with the Trust Indenture Estate, this Trust Indenture, any other Indenture Agreement, the Secured Certificates or any of the transactions contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interests of the Certificate Holders (and the Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture Trustee shall have been requested to do so by a Majority in Interest of Certificate Holders, then in any such case, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and such other instruments as may from time to time be necessary or advisable either (1) to constitute one or more bank or trust companies or one or more persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as additional trustee or trustees of all or any part of the Trust Indenture Estate, or to act as separate trustee or trustees of all or any part of the Trust Indenture Estate, in each case with such rights, powers, duties and obligations consistent with this Trust Indenture as may be provided in such supplemental indenture or other instruments as the Indenture Trustee or a Majority in Interest of Certificate Holders may deem necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional and separate trustee, subject in each case to the remaining provisions of this Section 8.03. If the Owner Trustee shall not have taken any action requested of it under this Section 8.03(a) that is permitted or required by its terms within 15 days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing provisions of this Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and perform any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee. In case any additional or separate trustee appointed under this Section 8.03(a) shall die, become incapable of acting, resign or be removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to the Indenture Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.03(a). (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Trust Indenture Estate or otherwise payable under any Operative Document to the Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights, powers, duties and obligations conferred or imposed upon any additional or separate trustee shall be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly except to the extent that applicable Law of any jurisdiction in which any particular act is to be performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of the Indenture Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Indenture Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.03 shall be subject to, and shall have the benefit of Articles IV through VIII and Article X hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. -47- 48 (c) If at any time the Indenture Trustee shall deem it no longer necessary or desirable in order to conform to any such law or take any such action or shall be advised by such counsel that it is no longer so necessary or desirable in the interest of the Certificate Holders, or in the event that the Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Certificate Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when and to the extent it could so act under Section 8.03(a) hereof. ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS. (a) Except as provided in Section 5.02 hereof, and except with respect to Excluded Payments, the Owner Trustee agrees it shall not enter into any amendment of or supplement to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee and a Majority in Interest of Certificate Holders. Anything to the contrary contained herein notwithstanding, without the necessity of the consent of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter into amendments of or additions to the Lease to modify Section 5 (except to the extent that such amendment would affect the rights or exercise of remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such amendments, modifications and changes do not and would not affect the time of, or reduce the amount of, Rent payments until after the payment in full of all Secured Obligations or otherwise adversely affect the Certificate Holders. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with the Certificate Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Certificate Holders, or does not adversely effect the Certificate Holders, but upon the written request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each holder of an affected Secured Certificate then outstanding, no such amendment of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an Event of Default) of the Lease, the definitions of "Event of Default", "Default", "Lease Event of Default", "Lease Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Secured Certificate, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Certificate Holders, the Owner Trustee and Lessee, (iii) -48- 49 reduce, modify or amend any indemnities in favor of the Certificate Holders, (iv) consent to any change in the Trust Indenture or the Lease which would permit redemption of Secured Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as permitted by Section 2.14 hereof, (v) modify any of the provisions of Section 3(d)(v) of the Lease, or modify, amend or supplement the Lease or consent to any assignment of the Lease, in either case releasing Lessee from its obligations in respect of the payment of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. So long as no Lease Event of Default has occurred and is continuing, without the consent of Lessee no amendment or supplement to this Trust Indenture or waiver or modification of the terms hereof shall adversely affect Lessee. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Certificate Holder for any of the following purposes: (i) (a) to cure any defect or inconsistency herein or in the Secured Certificates, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Certificate Holders in its capacity solely as Certificate Holder; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Trust Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Certificate Holders, or to surrender any rights or power herein conferred upon the Owner Trustee, the Owner Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and (vii) to include on the Secured Certificates any legend as may be required by law. SECTION 9.02. TRUSTEES PROTECTED. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of Section 9.01 hereof adversely affects any right, duty, immunity or indemnity with respect to such institution under this Trust Indenture or the Lease, such institution may in its discretion decline to execute such document. SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to Section 9.01 hereof, the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each Certificate Holder at its address last set forth in the Secured Certificate Register, but the failure of the Indenture Trustee to mail such copies shall not impair or affect the validity of such document. SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST AGREEMENT AND INDENTURE SUPPLEMENT. No written request or consent of the Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof shall be required to enable the Owner Trustee to enter into any Lease Supplement specifically required by the terms of the Lease or to execute and deliver a Trust Agreement and Indenture Supplement specifically required by the terms hereof. -49- 50 ARTICLE X MISCELLANEOUS SECTION 10.01. TERMINATION OF TRUST INDENTURE. Upon (or at any time after) payment in full of the Principal Amount of, Make-Whole Amount, if any, and interest on and all other amounts due under all Secured Certificates and provided that there shall then be no other Secured Obligations due to the Certificate Holders and the Indenture Trustee hereunder or under the Participation Agreement, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft and the Engines from the Lien of this Trust Indenture and releasing the Lease, the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto from the assignment and pledge thereof hereunder and the Indenture Trustee shall execute and deliver such instrument as aforesaid and give written notice thereof to Lessee; provided, however, that this Trust Indenture and the trusts created hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property constituting part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all monies or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE HOLDERS. No holder of a Secured Certificate shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Secured Certificate or other right, title and interest of any Certificate Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Trust Indenture or entitle such holder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Trust Indenture Estate. SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING. Any sale or other conveyance of the Trust Indenture Estate, or any part thereof (including any part thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind the Certificate Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders in and to such Trust Indenture Estate or part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS. Nothing in this Trust Indenture, whether express or implied, shall be construed to give any person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or equitable right, remedy or claim under or in respect of this Trust Indenture. SECTION 10.05. NOTICES. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), with a copy to the Owner Participant addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee, -50- 51 addressed to it at its office at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to any Participant, Lessee or any Certificate Holder, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party (if any) set forth on the signature pages to the Refunding Agreement or in the Secured Certificate Register. Whenever any notice in writing is required to be given by the Owner Trustee, any Participant or the Indenture Trustee or any Certificate Holder or Lessee to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after being mailed, addressed as provided above. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Trust Indenture. SECTION 10.06. SEVERABILITY. Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS. No term or provision of this Trust Indenture or the Secured Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Owner Trustee and the Indenture Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any Secured Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 10.08. SUCCESSORS AND ASSIGNS. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the permitted successors and assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificate Holder shall bind the successors and assigns of such holder. This Trust Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby, thereby and by the Participation Agreement. Each Certificate Holder by its acceptance of a Secured Certificate agrees to be bound by this Trust Indenture and all provisions of the Participation Agreement applicable to a Loan Participant or a Certificate Holder. SECTION 10.09. HEADINGS. The headings of the various Articles and sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.10. NORMAL COMMERCIAL RELATIONS. Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or any bank or other Affiliate of such Participant may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Lessee, fully to the same extent as if this Trust Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. -51- 52 SECTION 10.11. GOVERNING LAW; COUNTERPART FORM. THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the parties hereto in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.12. VOTING BY CERTIFICATE HOLDERS. All votes of the Certificate Holders shall be governed by a vote of a Majority in Interest of Certificate Holders, except as otherwise provided herein. SECTION 10.13. BANKRUPTCY. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee hereunder), shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any of the provisions of this Trust Indenture or the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner Trustee will take any action contrary to Lessee's rights under the Lease, including the right to possession and use of, and the quiet enjoyment of, the Aircraft, except in accordance with provisions of the Lease. -52- 53 IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to be duly executed by their respective officers thereof duly authorized as of the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, as Owner Trustee By:__________________________ Name:________________________ Title: STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By:__________________________ Name:________________________ Title: -53- 54 EXHIBIT A TO TRUST INDENTURE AND MORTGAGE TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1995 A] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1995 A], dated ______ _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1995 A] dated as of November 15, 1995 (the "TRUST AGREEMENT"), between the Owner Trustee and the Owner Participant named therein. W I T N E S S E T H: WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1995 A], dated as of June 12, 1996 (as amended and supplemented to the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft, and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for recordation on the date hereof with the FAA as one document; NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust Indenture Estate covers all of Owner Trustee's right, title and interest in and to the following described property: 55 AIRFRAME One airframe identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number ------------ ----- ------ ------------- together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Two aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows: Manufacturer Manufacturer's Model Serial Number ------------ -------------------- ------------- together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to any of such engines. Together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts). As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Loan Participants and of the Certificate Holders, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under the Lease Supplement [of even date herewith] covering the property described above. Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III of the Trust Indenture without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity EXHIBIT A-2 56 thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Trust Indenture Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. EXHIBIT A-3 57 IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as By:_____________________________________ Name: Title: 58 SCHEDULE I
PRINCIPAL AMOUNT INTEREST RATE ---------------- ------------- Series A . . . . . . $22,859,853 7.67% Series B . . . . . . $ 7,140,147 8.07%
59 SECURED CERTIFICATES AMORTIZATION SERIES A AIRCRAFT: N535US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 0.00000000% Jul 2, 1999 0.00000000% Jan 2, 2000 0.00000000% Jul 2, 2000 1.93840704% Jan 2, 2001 0.00000000% Jul 2, 2001 2.17914350% Jan 2, 2002 0.00000000% Jul 2, 2002 2.17914350% Jan 2, 2003 0.00000000% Jul 2, 2003 2.17914350% Jan 2, 2004 0.00000000% Jul 2, 2004 2.17914787% Jan 2, 2005 0.00000000% Jul 2, 2005 2.17914350% Jan 2, 2006 0.00000000% Jul 2, 2006 1.95700734% Jan 2, 2007 0.22213616% Jul 2, 2007 1.42103276% Jan 2, 2008 0.75811074% Jul 2, 2008 8.12804002% Jan 2, 2009 1.32368305% Jul 2, 2009 14.28626859% Jan 2, 2010 1.92232645% Jul 2, 2010 14.90786927% Jan 2, 2011 2.56776367% Jul 2, 2011 4.99680379% Jan 2, 2012 2.85786615% Jul 2, 2012 15.87926659% Jan 2, 2013 3.57643595% Jul 2, 2013 12.36126059%
60 SERIES B AIRCRAFT: N535US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 0.00000000% Jul 2, 1999 0.00000000% Jan 2, 2000 0.00000000% Jul 2, 2000 0.00000000% Jan 2, 2001 0.00000000% Jul 2, 2001 0.00000000% Jan 2, 2002 0.00000000% Jul 2, 2002 0.00000000% Jan 2, 2003 0.00000000% Jul 2, 2003 2.32558237% Jan 2, 2004 0.00000000% Jul 2, 2004 2.32556837% Jan 2, 2005 0.00000000% Jul 2, 2005 2.32558237% Jan 2, 2006 0.00000000% Jul 2, 2006 22.83569232% Jan 2, 2007 0.00000000% Jul 2, 2007 37.52730861% Jan 2, 2008 0.00000000% Jul 2, 2008 17.83596332% Jan 2, 2009 0.00000000% Jul 2, 2009 0.00000000% Jan 2, 2010 0.00000000% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 13.40714694% Jul 2, 2014 1.41715570%
61 SCHEDULE II 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. EX-4.C3 21 LEASE AGREEMENT-1995 A 1 LEASE AGREEMENT [NW 1995 A] This LEASE AGREEMENT [NW 1995 A], dated as of November 15, 1995, between FIRST SECURITY BANK OF UTAH, 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 1995 A] and shall be equally applicable to both the singular and the plural forms of the terms herein defined: "Administrative Agent" means [____________], [___________] banking corporation, as administrative agent pursuant to the Participation Agreement, and any successor acting as administrative agent. "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 two 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 Boeing 757-251 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 2 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. "Assumed Interest Rate" has the meaning set forth in Section 3(c) hereof. "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 Commencement Date and ending on July 2, 2016, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. "Bill of Sale" means a full warranty bill 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 Bill of Sale shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good title to the Airframe and each Engine described in such Bill 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 New York, New York; Boston, Massachusetts; Salt Lake City, Utah; Phoenix, Arizona or Minneapolis, Minnesota and, in connection with any payment of Rent and so long as any Secured Certificate is a Eurodollar Loan (as defined in the Trust Indenture), such day is also a day for trading by and between banks in the interbank Eurodollar market. - 2 - 3 "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. "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. "Code" means the Internal Revenue Code of 1986, as amended. "Commencement Date" means July 2, 1996. "Commitment" means the commitment of a Loan Participant 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 1995 A], 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. "Credit Agreement" means the Credit Agreement, dated as of November 2, 1995, among Lessee, the banks, financial institutions and other institutional lenders listed on the signature pages thereof, [____________], as documentation agent, [______________], as administrative agent, and [_____________], as syndication agent, as the same may be amended, supplemented or otherwise modified from time to time. "Debt Rate" has the meaning set forth in the Trust Indenture. "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 Lease Supplement for the Aircraft, which date shall be the date the Aircraft is leased by Lessor to Lessee and accepted by Lessee hereunder. - 3 - 4 "Depreciation Period" means the period commencing on the Delivery Date and ending on December 31, 2002, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. "Documentation Agent" means [____________], a bank organized under the laws of [_______________], as documentation agent pursuant to the Participation Agreement, and any successor acting as documentation agent. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of the two Pratt & Whitney Model PW2037 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 two 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 hereunder. The term "Engines" means, as of any date of determination, all Engines then leased hereunder. "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 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 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 - 4 - 5 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, 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, 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 Lessee's entire U.S. registered fleet of Boeing Model 757-200 aircraft and Lessee, 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, 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 the Interim 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 the Transition Date means an amount equal to the amount determined by multiplying Lessor's Cost by the percentage set forth in Exhibit B hereto opposite the Transition Date; provided, however, that, to the extent that the aggregate amount of interest due and payable on the Transition Date on the Secured Certificates relating to the period from and including the Delivery Date to but excluding the Transition Date is less than the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Transition Date if such Secured Certificates had borne interest at the Assumed Interest Rate for such period, the corresponding percentage set forth in Exhibit B shall be decreased by the amount which when multiplied by Lessor's Cost will equal such differential. "Expenses" has the meaning specified in Section 7(c) of the Participation Agreement. - 5 - 6 "FAA Bill of Sale" means a bill 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). "Funding Loss Amount" has the meaning assigned to that term in the Trust Indenture. "Guarantee" means the Guarantee [NW 1995 A], dated as of the date hereof, made by the Guarantor in favor of the Parties, 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 the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Administrative Agent, the Documentation Agent, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents. - 6 - 7 "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 constitute gross negligence or willful misconduct, (C) claims against the Indenture Trustee relating to Taxes or Expenses (as such terms are defined in Section 7 of the Participation Agreement) which are excluded from the indemnification provided by said 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, 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. "Interest Period" means Interest Period as defined in the Trust Indenture. "Interim Rent" means the rent payable for the Aircraft for the Interim Term pursuant to Section 3(b) hereof. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions hereof. "Lease Agreement", "this Lease Agreement", "this Lease", "this Agreement", "herein", "hereof", "hereunder", "hereby" or other like words mean this Lease Agreement [NW 1995 A] 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 semi-annual periods throughout the Basic Term and any Renewal Term ending on a Lease Period - 7 - 8 Date, the first such period commencing on and including the Commencement Date. "Lease Period Date" means January 2, 1997 and each succeeding July 2 and January 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 Bill of Sale, the Bill 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, - 8 - 9 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 of Utah, 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. "Loan Participant" means each institution executing the Participation Agreement as a Loan Participant, and its respective successors and assigns, and any Certificate Holder; at any time when there is only one Certificate Holder, "each Loan Participant" shall mean such 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. "Manufacturer" means The Boeing Company, a Delaware corporation. "Manufacturer Documents" means the Purchase Agreement and the Consent and Agreement. "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 7.70 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 Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Guarantee, the Purchase Agreement Assignment and the Consent and Agreement. "Overall Transaction" means all the transactions contemplated by the Operative Documents. - 9 - 10 "Owner Participant" means the corporation executing the Participation Agreement as the Owner Participant and 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 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 1995 A], dated as of the date hereof, among Lessee, the Loan Participants, the Indenture Trustee, the 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. "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 - 10 - 11 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. "Prepaid Rent" has the meaning assigned in Section 3(g) hereof. "Purchase Agreement" means the Purchase Agreement No. 1631, dated December 1, 1989, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1995 A], 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. "Reimbursement Amount" has the meaning set forth in Section 3(g) hereof. "Renewal Term" means any Fixed Renewal Term or Fair Market Renewal Term as those terms are defined in Section 19 hereof. "Rent" means Interim Rent, Basic Rent and Supplemental Rent, collectively. "Rent Differential Amount" has the meaning set forth in Section 3(c) hereof. "Secured Certificates" has the meaning assigned to that term in the Trust Indenture. "Special Purchase Price" shall mean the amount denominated as such in Exhibit B to the Lease. - 11 - 12 "Stipulated Loss Value" with respect to the Aircraft as of any date through and including July 2, 2016, 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 8 of the Tax Indemnity Agreement). To the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Interim Term or the Lease Period in which such Stipulated Loss Value Date occurs up to and including such Stipulated Loss Value Date is greater or less than the amount included in calculating the percentage set forth in Exhibit C with respect to such Stipulated Loss Value Date on account of such interest, the corresponding percentage set forth in Exhibit C shall be adjusted appropriately to compensate for such differential. "Stipulated Loss Value" as of any date after July 2, 2016 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 Interim Term, 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. "Supplemental Rent" means all amounts, liabilities and obligations (other than Interim Rent and Basic Rent) which Lessee assumes or agrees to pay to Lessor or others hereunder, under the Participation Agreement, under the Tax Indemnity Agreement or under any of the other Operative Documents. The parties acknowledge that Supplemental Rent is a general category and, accordingly, agree that any provision of any Operative Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment. "Tax Indemnitee" means the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors and permitted assigns. "Tax Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1995 A], dated as of the date hereof, between the Owner - 12 - 13 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 Interim Term, 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 July 2, 2016, 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 8 of the Tax Indemnity Agreement). In the event that the Termination Date with respect to which Termination Value is determined is a date on which Basic Rent is payable in advance as indicated on Exhibit B, to the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Lease Period ending on such Termination Date is greater or less than the amount included in calculating the corresponding percentage set forth in Exhibit D with respect to such Termination Date on account of such interest, the corresponding percentage set forth in Exhibit D shall be adjusted appropriately to compensate for such differential. "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Bingham, Dana & Gould, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker, special counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Shearman & Sterling, special counsel to the Loan Participants, such information to be furnished by the Documentation Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee and Guarantor, such information to be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the - 13 - 14 Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust Indenture, such information to be furnished by the Indenture Trustee, (v) the fee of BK Associates, Inc. with respect to the appraisal of the Aircraft pursuant to Section 4(a)(xix) of the Participation Agreement, such information to be furnished by Lessee, (vi) the reasonable and actual fees, expenses and disbursements of Feltman, Karesh, Major & Farbman, special counsel to the Owner Participant, such fees not to exceed the amount previously agreed to by the Owner Participant and Lessee, and the reasonable and actual fees, expenses and disbursements of David, Hagner, Kuney & Krupin, P.C., special tax counsel to the Owner Participant, such fees not to exceed the amount previously agreed to by the Owner Participant and Lessee, such information to be furnished by the Owner Participant, (vii) the equity placement fee and reasonable disbursements of Babcock and Brown Financial Corporation, such information to be furnished by Lessee, and (viii) the fee payable to the Loan Participants on the Delivery Date. "Transition Date" means the date designated as such in Exhibit B to the Lease. "Trust Agreement" means that certain Trust Agreement [NW 1995 A], dated as of the date hereof, between the Owner Participant and First Security Bank of Utah, 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 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 1995 A], dated as of the date hereof, between Lessor and the Indenture Trustee, as originally executed or as modified, amended or supplemented in accordance with the provisions thereof. "Trust Supplement" means a supplement to the Trust Agreement and the Trust Indenture, substantially in the form of Exhibit A to the Trust Indenture. "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. - 14 - 15 "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. SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to satisfaction of the conditions set forth in Section 4(a) of the Participation Agreement) to accept the transfer of title to and simultaneously to lease to Lessee hereunder, and Lessee hereby agrees (subject to satisfaction of the conditions set forth in Section 4(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) Interim Term and Basic Term. The Interim Term shall commence on the Delivery Date and end on and include the day immediately preceding the Commencement Date unless earlier terminated pursuant to the provisions hereof. The Basic Term shall commence on the Commencement Date and end on July 2, 2016, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. (b) Interim Rent. Lessee shall pay Interim Rent on the Commencement Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for Interim Rent on the Commencement Date. Although the Interim Rent percentage set forth in Exhibit B hereto has been computed on the assumption that the rate of interest on the Secured Certificates will be the Assumed Interest Rate, Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, the Interim Rent payable on the Commencement Date shall be increased or decreased (but not below zero) by the difference between (i) the aggregate amount of interest due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to but excluding the Commencement Date and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to the Commencement - 15 - 16 Date if such Secured Certificates had borne interest at the Assumed Interest Rate. If the amount determined in accordance with clause (i) of the preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be increased by such difference. If the amount determined in accordance with clause (i) of the preceding sentence shall be less than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be decreased (but not below zero) by such difference. (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 40 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 applicable Lease Period Date specified in Exhibit B hereto. Although the Basic Rent percentages set forth in Exhibit B hereto have been computed on the assumption that the rate of interest on the Secured Certificates throughout the Term will be 7.70% per annum, computed on the basis of a 360-day year of twelve 30-day months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, each installment of Basic Rent shall be increased or decreased (but not below zero), as the case may be, by the Rent Differential Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with respect to the Basic Term, the difference between (i) the aggregate amount of interest due and payable on such Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on such Lease Period Date if such Secured Certificates had borne interest at the Assumed Interest Rate, in each case for the period from and including the Lease Period Date (or the Commencement Date in the case of the first Lease Period) next preceding such Lease Period Date to but excluding such Lease Period Date. If, as of any Lease Period Date, the amount determined in accordance with clause (i) of the immediately preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Basic Rent payable on such Lease Period Date shall be increased by the Rent Differential Amount. If, as of any Lease Period Date, the amount determined in accordance with such clause (ii) shall exceed the amount determined in accordance with such clause (i), the amount of Basic Rent due on such Lease Period Date shall be decreased (but not below zero) by the Rent Differential Amount. (d) Adjustments to Basic Rent. (i) In the event that (A) the Delivery Date occurs other than on November 21, 1995, or (B) Transaction Expenses paid by Lessor pursuant to Section 16(a) of the Participation Agreement are determined to be other than - 16 - 17 1.5% 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 March 15, 1996 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. (ii) (A) In the event of a refinancing or a refunding 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 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 Amount set forth in column 3 of Exhibit B in a manner consistent with such recalculation. In addition, (X) any recalculation of Basic Rent, Stipulated Loss Value or Termination Value percentages made pursuant to this Section 3(d) shall take into account any decrease in the Excess Amount with respect to the Transition Date required by the proviso to the definition of "Excess Amount", (Y) after September 30, 1996 but prior to January 2, 1997, the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C and the Termination Value percentages set forth in Exhibit D shall be recalculated to take into account any decrease in Excess Amount with respect to the Transition Date that has not therefore been taken into account in accordance with clause (X) of this sentence, and (Z) at the time of any payment of Stipulated Loss Value or Termination Value, the Stipulated Loss Value - 17 - 18 percentage set forth in Exhibit C or the Termination Value percentage set forth in Exhibit D, by reference to which the amount of such payment is determined shall be recalculated to take into account any decrease in the Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) or clause (Y) of this sentence. (iv) Any recalculation of Basic Rent, Excess Amount 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 Amount 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 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), 4.07 and 4.08(1) of Rev. Proc. 75-28 and with Section 467 of the Internal Revenue Code of 1986, as amended, as each is in effect on the Delivery Date (provided that the test of Rev. Proc. 75-28 Section 4.08(1) and Section 467 shall be applied on a prospective basis from the date of such adjustment if and to the extent permitted by applicable law, as then in effect) and (B) subject to verification pursuant to Exhibit E. - 18 - 19 (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 when due any amount of premium payable when due under the Trust Indenture and shall pay amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when the same shall become due and payable. 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 of Utah, National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW 1995 A (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 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, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1995 A (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 10 Business Days prior to the date such payment of Rent is due). 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). - 19 - 20 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 the Transition Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall on the Transition Date, prepay on the Transition 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 shall, under all circumstances and whether or not an Event of Default shall be continuing on the Transition Date, pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount equal to the excess, if any, of the interest on the Secured Certificates relating to the period from and including the Delivery Date to but excluding the Transition Date over the Excess Amount payable on the Transition Date; provided, further, that Lessee will also pay to the Indenture Trustee, on demand, as Supplemental Rent, to the extent permitted by applicable law, interest at the Applicable 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 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 - 20 - 21 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 of Utah, 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 that 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 so long as this Lease shall not have been declared in default pursuant to Section 15 hereof, (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, 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. - 21 - 22 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 Pratt & Whitney Model PW2037 engines or two 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 both 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, 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 Exhibit G. 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 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) bill 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 - 22 - 23 such full warranty bill 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, Loan Participant Liens and Indenture Trustee Liens), against receipt from Lessor of a bill 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 that 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 that 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 Sublessee) either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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, the Sublessee's) business (including those arising under maintenance agreements entered into in the ordinary - 23 - 24 course of business) securing obligations that are not overdue for a period of more than forty-five (45) days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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 temporary periods of storage in accordance with applicable regulations or during maintenance or modification permitted hereunder) under the Federal Aviation Act, except when all Boeing 757-200 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 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 - 24 - 25 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), 14(e) or 14(f) 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 Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee may, without the prior written consent of Lessor: - 25 - 26 (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 any 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; - 26 - 27 (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 the Owner Participant and the Indenture Trustee, which approval shall not be unreasonably withheld or (3) after the Depreciation Period, any Permitted Sublessee if (A) in any such case, - 27 - 28 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 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 mane 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 - 28 - 29 7(b) shall expressly prevent 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 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 of Utah, 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 - 29 - 30 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 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 - 30 - 31 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) 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 $400,000. 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 - 31 - 32 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]. (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) whether or not 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 its best 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) - 32 - 33 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 that 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 selling price realized at such sale to be 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 sale 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 premium and Funding Loss 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 that 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 premium and Funding Loss 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 premium and Funding Loss 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 premium, Funding Loss Amount or Termination Value) due on - 33 - 34 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, 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 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 Interim Rent or 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) the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence) (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 - 34 - 35 the Aircraft corresponding to the Stipulated Loss Value Date occurring on or immediately following the Loss Payment Date; provided, however, that if the Commencement Date or 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 the Commencement Date or such Lease Period Date an amount equal to the Interim Rent or Basic Rent that would have been due on the Commencement Date or 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. At such time as Lessor shall have received the sum of the amounts specified in clauses (A) and (B) of 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 that 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 bill 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 - 35 - 36 any such substitution, Lessee (or any Sublessee), at its own expense, will (1) furnish Lessor with a full warranty bill of sale and a Federal Aviation Administration bill 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 that 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 bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft 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 should 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 Interim Rent or 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 Pratt & Whitney Model PW2037 engine (or engine of the same or another manufacturer of the same, an equivalent or an improved model and suitable for installation and - 36 - 37 use on the Airframe without impairing the value, utility or remaining useful life of the Aircraft; provided that both 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) bill 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 that 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 bill 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 Interim Rent or 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 - 37 - 38 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 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 (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) bill 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 bill 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 - 38 - 39 Liens that 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 bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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. (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 any Sublessee) with respect to the 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 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 and (ii) cargo liability insurance, in the case of both clause (i) and clause (ii), (A) of the type and - 39 - 40 covering the same risks as from time to time applicable to aircraft operated by Lessee 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 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 - 40 - 41 Lessee 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 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, any 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 by Lessee 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 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 - 41 - 42 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 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 - 42 - 43 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). (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 by Lessee 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, 1996, a report, signed by Marsh & McLennan, Incorporated 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 - 43 - 44 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. (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 - 44 - 45 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, Lessor, the Owner Participant or the Indenture Trustee or their respective authorized representatives may (not more than once every calendar year (unless an 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; - 45 - 46 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 Interim Rent, Basic Rent or Stipulated Loss Value within ten (10) 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 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 and in clauses (i)(B) and (ii) of the first sentence of second paragraph of Exhibit G) 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 - 46 - 47 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 one hundred eighty (180) 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 the representations and warranties in, or in connection with, the Credit Agreement) 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 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, - 47 - 48 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 Section 14(c) or (d) hereof, 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 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; - 48 - 49 (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 the 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 Interim Rent or Basic Rent for the Aircraft due for the Commencement Date, Lease Periods commencing on or after the Commencement Date or the Lease Period Date specified as the payment date in such notice), any unpaid Interim Rent or Basic Rent due on the Commencement Date and 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 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 Interim Rent or Basic Rent for the Aircraft due on or after such date), any unpaid Interim Rent or 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 - 49 - 50 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 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 - 50 - 51 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 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 - 51 - 52 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 1996, 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 telecopy 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President-Finance and Treasurer (Telecopy No. (612) 726-0665), or to such other address, telex number or telecopy number as Lessee shall from time to time designate in writing to Lessor, - 52 - 53 (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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 OPTION; PURCHASE OPTIONS; VALUATION. (a) Renewal Option. (1) Fixed Renewal Term. Lessee shall have the right to renew this Lease for up to three consecutive one year renewal terms the first of which shall commence only upon the - 53 - 54 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 three 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), 14(e) or 14(f) 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 - 54 - 55 Aircraft as of the last day of such Renewal 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 50% 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 that 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 - 55 - 56 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, 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 July 2, 2011 (or, if July 2, 2011 is not a Business Day, the Business Day immediately preceding July 2, 2011), 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 2.15 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 that 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. - 56 - 57 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 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 - 57 - 58 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 Moody's 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 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 - 58 - 59 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. 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 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. - 59 - 60 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 OF UTAH, 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 November, 1995. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee BY: ---------------------------------- Title: - SIGNATURE PAGE - 61 EXHIBIT A TO LEASE AGREEMENT [NW 1995 A] LEASE SUPPLEMENT No. [NW 1995 A] Lease Supplement No. __, dated _________, 19___, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement [NW 1995 A], dated as of November 15, 1995, 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 1995 A], dated as of November 15, 1995, relating to one Boeing 757-251 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 Boeing 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the date hereof consists of the following components: - ------------------------- (1) This language for Lease Supplement No. 1. (2) This language for other Lease Supplements. 62 (i) Airframe: FAA Registration No. ______; manufacturer's serial no. _____; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P______ and P______ (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 July 2, 2016. 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 The Boeing Company, or any subcontractor or supplier of The Boeing Company, 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 63 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 OF UTAH, 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 64 EXHIBIT B TO LEASE AGREEMENT [NW 1995 A] INTERIM RENT, 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. Interim Rent, Basic Rent and Excess Amount: Excess Amount Transition (Percentage of Date Lessor's Cost) ----------------------------- ---------------------------------- Interim Rent Commencement (Percentage of Date Lessor's Cost) ----------------------------- ---------------------------------- Basic Rent (Percentage of Lease Period Date Lessor's Cost) ----------------------------- ---------------------------------- * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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. 65 INTERIM RENT, 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 (Percentage of Lease Period Date Lessor's Cost) ----------------------------- ---------------------------------- * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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 66 INTERIM RENT, BASIC RENT, EXCESS AMOUNT, LESSOR'S COST AND SPECIAL PURCHASE PRICE SCHEDULE Lessor's Cost for the Aircraft: Special Purchase Price: Transition Date: EXHIBIT B - PAGE 3 67 EXHIBIT C TO LEASE AGREEMENT [NW 1995 A] 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 ----------------------------- ---------------------------------- 68 EXHIBIT D TO LEASE AGREEMENT [NW 1995 A] 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 ----------------------------- ---------------------------------- 69 EXHIBIT E TO LEASE AGREEMENT [NW 1995 A] 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. EX-4.C4 22 FIRST AMENDMENT TO LEASE AGREEMENT-1995 A 1 FIRST AMENDMENT TO LEASE AGREEMENT [NW 1995 A] This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1995 A], dated as of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee under the Trust Agreement [NW 1995 A], dated as of November 15, 1995 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a certain Lease Agreement [NW 1995 A], dated as of November 15, 1995 (the "ORIGINAL LEASE"), between Lessee and Lessor (the Original Lease, as supplemented by Lease Supplement No. 1 [NW 1995 A] ("LEASE SUPPLEMENT NO. 1") between Lessor and Lessee, dated November 21, 1995, herein called the "LEASE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; WITNESSETH: WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the Aircraft, which consists of the following components: (i) Airframe: FAA Registration No. N535US; manufacturer's serial No. 26482; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P727158 and P727159; WHEREAS, Section 17 of the Participation Agreement [NW 1995 A], dated as of November 15, 1995 (the "PARTICIPATION AGREEMENT"), among Lessee, [ ] (the "OWNER PARTICIPANT"), the loan participants named therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured Certificates issued by the Owner Trustee under the Trust Indenture and Security Agreement [NW 1995 A], dated as of November 15, 1995, between Lessor (in its individual capacity as expressly provided therein and as trustee) and the Indenture Trustee may be refinanced under certain circumstances; WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW 1995 A], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State Street Bank and Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines Corporation (the "GUARANTOR"); WHEREAS, Lessor and Lessee desire to recalculate the Basic Rent, Stipulated Loss Value and Termination Value percentages in order to reflect, among other things, the interest rate of the refinanced Secured Certificates; 2 WHEREAS, in connection with the recalculation of the Basic Rent, Stipulated Loss Value and Termination Value percentages, Lessor and Lessee desire to amend the Lease; WHEREAS, a counterpart of the Original Lease, to which were attached and made a part thereof counterparts of Lease Supplement No. 1, the Trust Indenture and Security Agreement [NW 1995 A], dated as of November 15, 1995, and the Trust Agreement and Indenture Supplement [NW 1995 A], dated November 21, 1995, was recorded by the Federal Aviation Administration (the "FAA") on November 22, 1995, and assigned Conveyance No. P04679; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE. (a) The definitions of "Business Day", "Certificated Air Carrier", "Delivery Date", "Indemnitee", "Indenture Trustee's Liens", "Loan Participant", "Net Present Value of Rents", "Operative Documents", "Stipulated Loss Value", "Supplemental Rent", "Tax Indemnitee", "Termination Value" and "Transaction Expenses" in Section 1 of the Lease are hereby amended applicable on and after the Closing Date to read as follows: "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. "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. "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. "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 -2- 3 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'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. "LOAN PARTICIPANT" means for any period prior to the Closing, the Original Loan Participants and their successors and assigns, and from and after the Closing, the Purchasers and their successors and registered assigns, including any Certificate Holder. "NET PRESENT VALUE OF RENTS" means the net present value, as of the Commencement Date, of Basic Rent set forth in Exhibit B hereto, discounted at an annual interest rate of 7.70% on a semi-annual basis. "OPERATIVE DOCUMENTS" means each of the Participation Agreement, the documents referred to in Section 4(a)(v) of the Participation Agreement (including any amendments, modifications or supplements thereto), the Refunding Agreement, the Trust Indenture Amendment and the Refinancing Secured Certificates, collectively, and "Operative Document" shall mean each of the Operative Documents, individually. "STIPULATED LOSS VALUE" with respect to the Aircraft as of any date through and including July 2, 2016, means, but subject always to the provisions of Section 3(d)(v) hereof, the amount determined by multiplying Lessor's Cost 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 -3- 4 date after July 2, 2016 shall be the amount determined as provided in Section 19(a) hereof. "SUPPLEMENTAL RENT" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Interim Rent or 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 the Other 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. "TERMINATION VALUE" with respect to the Aircraft as of any date through and including July 2, 2016, means, but subject always to the provisions of Section 3(d)(v), the amount determined by multiplying Lessor's Cost 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: (i) the reasonable and actual fees, expenses and disbursements of (1) Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker, special counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Shearman & Sterling, special counsel to the Loan Participants, such information to be furnished by the Documentation Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee and Guarantor, such information to be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished -4- 5 by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust Indenture, such information to be furnished by the Indenture Trustee, (v) the fee of BK Associates, Inc. with respect to the appraisal of the Aircraft pursuant to Section 4(a)(xxix) of the Participation Agreement, such information to be furnished by Lessee, (vi) the reasonable and actual fees, expenses and disbursements of Feltman, Karesh, Major & Farbman, special counsel to the Owner Participant, such fees not to exceed the amount previously agreed to by the Owner Participant and Lessee, and the reasonable and actual fees, expenses and disbursements of David, Hagner, Kuney & Krupin, P.C., special tax counsel to the Owner Participant, such fees not to exceed the amount previously agreed to by the Owner Participant and Lessee, such information to be furnished by the Owner Participant, (vii) the equity placement fee and reasonable disbursements of Babcock and Brown Financial Corporation, such information to be furnished by Lessee, and (viii) the fee payable to the Loan Participants on the Delivery Date. (b) The following definitions are hereby inserted in Section 1 of the Lease in alphabetical order to be applicable on and after the Closing Date: "BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978, as amended, or any subsequent legislation that amends, supplements or supersedes such provisions. "CLOSING" means the consummation of the refinancing operation contemplated by Section 1 of the Refunding Agreement. "CLOSING DATE" means the date on which the Closing shall occur. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Provider and the Subordination Agent. "LIQUIDITY FACILITIES" means the two 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 Westdeutsche Landesbank Girozentrale, acting through its New York branch, as Class A Liquidity Provider and Class B Liquidity Provider under the Liquidity Facilities, or any successor thereto. -5- 6 "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. "ORIGINAL LOAN PARTICIPANTS" means each institution executing the Participation Agreement as a Loan Participant. "ORIGINAL TRUST INDENTURE" means the Trust Indenture and Security Agreement [NW 1995 A], dated as of November 15, 1995, between the Owner Trustee and State Street Bank and Trust Company, as amended, modified and supplemented prior to the Closing Date. "OTHER PASS THROUGH TRUST AGREEMENTS" means the pass through trust agreement and supplements pursuant to which each of the Class C and Class D pass through certificates are issued. "PASS THROUGH CERTIFICATES" means the pass through certificates to be issued by the Pass Through Trustee in connection with the Refinancing Transaction. "PASS THROUGH TRUST AGREEMENT" means the pass through trust agreement and each of the two separate pass through trust supplements referred to on Schedule I to the Refunding Agreement to be entered into by and between Lessee and the Pass Through Trustee in connection with the Refinancing Transaction. "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. "PURCHASERS" means the Pass Through Trustees under each Pass Through Trust Agreement. "REFINANCING CERTIFICATE" means a certificate of an authorized representative of the Owner Participant delivered pursuant to Section 17(a)(1) of the Participation Agreement, setting forth, among other things, the Refinancing Date, the principal amount of debt to be issued by the Owner Trustee on the Refinancing Date, and the proposed revised schedules of Excess Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages, and the proposed Amortization Schedules. -6- 7 "REFINANCING DATE" means the proposed date on which the outstanding Secured Certificates will be redeemed and refinanced pursuant to Section 17 of the Participation Agreement. "REFINANCING EXPENSES" means the costs, fees, commissions and other expenses payable by the Owner Participant pursuant to Section 11(a) of the Refunding Agreement. "REFINANCING SECURED CERTIFICATES" means the Secured Certificates to be issued by Lessor to the Purchasers pursuant to the Trust Indenture Amendment and the Refunding Agreement on the Closing Date. "REFINANCING TRANSACTION" means a refinancing transaction pursuant to Section 17 of the Participation Agreement involving, among other things, (i) the redemption of the Secured Certificates issued on November 21, 1995 and the concurrent issuance and sale of the Refinancing Secured Certificates to the Pass Through Trustees (or their designee) and (ii) the issuance and sale of the Pass Through Certificates by the Pass Through Trustees. "REFUNDING AGREEMENT" means that certain Refunding Agreement [NW 1995 A], dated as of June 3, 1996, among Lessor, Lessee, the Owner Participant, the Purchasers, the Indenture Trustee, the Subordination Agent, and the Guarantor, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "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. "TRUST INDENTURE AMENDMENT" means the Amended and Restated Trust Indenture and Security Agreement [NW 1995 A], dated as of the Closing Date, between Lessor and State Street Bank and Trust Company, as Indenture Trustee. "TRUST INDENTURE ESTATE" has the meaning assigned to that term in the Trust Indenture. (c) The definitions of "Administrative Agent", "Assumed Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in Section 1 of the Lease are hereby deleted on and after the Closing Date. -7- 8 SECTION 2. AMENDMENT OF SECTION 2 OF THE LEASE. Section 2 of the Lease is hereby amended by deleting on and after the Closing Date the word "to" following the word "title" in the first sentence thereof and replacing it with the word "from". SECTION 3. AMENDMENT OF SECTIONS 3(B), 3(C), 3(D), 3(E), 3(F) AND 3(G) OF THE LEASE. (a) Section 3(b) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (b) Interim Rent. Lessee shall pay Interim Rent on the Closing Date and on the Commencement Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for Interim Rent on the Closing Date or the Commencement Date, as the case may be. (b) Section 3(c) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (c) Section 3(d)(i) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (i) In the event that (A) the Closing Date occurs other than on June 12, 1996, or (B) Refinancing Expenses paid by Lessor or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement are determined to be other than 1.0270% of Lessor's Cost, then in each case, 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 by the Owner Participant, on or prior to October 1, 1996 using the same methods and assumptions used to calculate original Basic Rent and 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. (d) Section 3(d)(ii) of the Lease is hereby amended by deleting on and after the Closing Date the words "or a refunding" in the first line thereof. (e) Section 3(d)(iii) of the Lease is hereby amended by deleting on and after the Closing Date the words "column 3 of" in the first sentence thereof and deleting the second sentence thereof. (f) The second sentence of Section 3(e) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: -8- 9 "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 such Section 2.10(b) or Section 2.11." (g) Section 3(f) of the Lease is hereby amended by (i) deleting on and after the Closing Date the numbers and punctuation "124-000-12" in the first sentence thereof and substituting therefor the numbers and punctuation "124-0000-12", (ii) adding on and after the Closing Date the word "irrevocably" after the word "hereby" in the proviso in the first sentence thereof and (iii) deleting on and after the Closing Date the word "All" at the beginning of the second sentence thereof and substituting the words "Lessor hereby directs and Lessee agrees that all" therefor. (h) Section 3(g) of the Lease is hereby amended by deleting it in its entirety on and after the Closing Date. SECTION 4. AMENDMENT OF SECTIONS 5(A) AND 5(B) OF THE LEASE. Section 5(a) and Section 5(b) of the Lease are hereby amended by inserting on and after the Closing Date the words and punctuation "(including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens)" after the words "Lessor Liens" in both the parenthetical in clause (ii) of the last sentence of the first paragraph of Section 5(a) and the second parenthetical in Section 5(b). SECTION 5. AMENDMENT OF SECTION 7 OF THE LEASE. (a) Section 7(b)(iii)(B) of the Lease is hereby amended by deleting on and after the Closing Date the punctuation "," following the word "Indenture". (b) Section 7(b)(x)(2) of the Lease is hereby amended by deleting on and after the Closing Date the words "the Owner Participant and the Indenture Trustee" and substituting therefor the word "Lessor". (c) Section 7(b)(x)(IV) of the Lease is hereby amended by deleting on and after the Closing Date the word "mane" and substituting the word "name" therefor. (d) The third sentence of the last paragraph of Section 7(b) of the Lease is hereby amended by deleting on and after the Closing Date the word "prevent" and substituting the word "prohibit" therefor. SECTION 6. AMENDMENT OF SECTION 9 OF THE LEASE. (a) Section 9(a)(3)(ii) of the Lease is hereby amended by deleting on and after the Closing Date the words "whether or not" and replacing them with the word "that". -9- 10 (b) Section 9(c) of the Lease is hereby amended by deleting on and after the Closing Date the word "premium" each time it appears therein and substituting therefor the words "Make-Whole Amount" and by deleting on and after the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount" each time such words and such words and punctuation appear. SECTION 7. AMENDMENT OF SECTION 10 OF THE LEASE. (a) Section 10(a) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence)" in clause (i)(y) thereof and substituting therefor the words "an earlier Business Day irrevocably specified fifteen days in advance by notice from Lessee to Lessor and the Indenture Trustee", and (ii) deleting on and after the Closing Date the words "the sum of" and "clauses (A) and (B) of" from the first sentence of the penultimate paragraph thereof, and by deleting the word "should" and replacing it with the word "will" in Section (6) in the last paragraph thereof. (b) Section 10(d) of the Lease is hereby amended by deleting on and after the Closing Date the words and punctuation "(but not under any other Section)" following the word and number "Section 5" and replacing them with the words and punctuation "(including Exhibit G) but not under any other Section". SECTION 8. AMENDMENT OF SECTION 11 OF THE LEASE. Section 11(a)(I)(i) of the Lease is hereby amended by deleting on and after the Closing Date the word "the" immediately preceding the word "aircraft" and replacing it with the word "other". SECTION 9. AMENDMENT OF SECTION 14(D) OF THE LEASE. Section 14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date the words and punctuation ", the Refunding Agreement" after the words "Participation Agreement" and (ii) adding on and after the Closing Date the words "and except for representations or warranties contained in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in the Refunding Agreement) or any document or instrument furnished pursuant to either thereof" after the word "Agreement" at the end of the first parenthetical phrase therein. SECTION 10. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "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: -10- 11 (i) if to Lessee, for U.S. Mail at 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President - Finance and Treasurer, (Telecopy No. (612) 726-0665), or to such other address, telex number or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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 on the signature pages of the Refunding Agreement." SECTION 11. AMENDMENT OF SECTION 19(D) OF THE LEASE. The first and second sentences of Section 19(d) of the Lease are hereby amended to read in their entirety on and after the Closing Date as follows: On July 2, 2011 (or, if July 2, 2011 is not a Business Day, the Business Day immediately succeeding July 2, 2011), 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. SECTION 12. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the Lease is hereby amended by (i) deleting on and after the Closing Date the word "or" between the words "Trust Agreement" and the words "the Trust Indenture" and substituting a comma therefor and (ii) inserting on and after the Closing Date the words "or the Refunding Agreement" after the words "Trust Indenture". -11- 12 SECTION 13. AMENDMENT OF EXHIBITS. (a) Exhibits B, C and D to the Lease attached hereto are applicable on and after the Closing Date. Exhibits B, C and D to the Lease are applicable until the Closing Date. (b) The parties hereto agree that Exhibits B, C and D attached hereto reflect the recalculation of Basic Rent, Stipulated Loss Value and Termination Value percentages to take into account the interest rates borne by the Secured Certificates as of the Closing Date, the actual amount of Transaction Expenses and the actual amount of the Excess Amount. SECTION 14. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease set forth in Sections 1 through 13 hereof shall be effective as of the date hereof. SECTION 15. RATIFICATION. Except as amended hereby, the Lease as heretofore supplemented continues and shall remain in full force and effect in all respects. SECTION 16. MISCELLANEOUS. Any provision of this Amendment 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 Amendment 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. Nothing contained herein shall be construed as conveying to Lessee any right, title or interest in the Aircraft except as a lessee. The section and paragraph headings in this Amendment 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 Amendment. THIS AMENDMENT 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 Amendment 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. To the extent, if any, that this Amendment 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 Amendment 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 as mortgagee under the Trust Indenture on the signature page thereof. -12- 13 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment to be duly executed on the day and year first above written. FIRST SECURITY BANK OF UTAH, 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: (1)Receipt of this original counterpart of the foregoing Amendment is hereby acknowledged this _____ day of __________________, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: --------------------------------------- Title: - ---------------------------- (1) This language contained in the original counterpart only. EX-4.C5 23 GUARANTEE-1995 A 1 GUARANTEE [NW 1995 A] This GUARANTEE [NW 1995 A], dated as of November 15, 1995 (as amended, modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I hereto (collectively, together with their successors and permitted assigns, the "PARTIES", and, individually, a "PARTY"). WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to enter into a Lease Agreement [NW 1995 A], dated as of the date hereof (as amended, modified or supplemented from time to time, the "LEASE"), between the Lessee and First Security Bank of Utah, National Association, not in its individual capacity but solely as Owner Trustee (as defined therein), except as expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing 757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines (such aircraft and engines, and any substitute Airframe and Engines under the Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation Agreement [NW 1995 A], dated as of the date hereof (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), among the Lessee and the Parties; and WHEREAS, it is a condition precedent to the obligations of the Parties to consummate the transactions contemplated by the Participation Agreement that the Guarantor execute and deliver this Guarantee; and WHEREAS, the Lessor will assign by way of collateral security certain of its right, title and interest in and to this Guarantee to the Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and Security Agreement [NW 1995 A], dated as of the date hereof, between the Lessor and the Indenture Trustee (as amended, modified or supplemented from time to time, the "TRUST INDENTURE"), as security for the obligations of the Lessor referred to therein; and WHEREAS, the capitalized terms used herein that are not defined herein are used herein as defined in the Lease; NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and to induce the other Parties referred to above to enter into the Participation Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 2 1. GUARANTEE. (a) The Guarantor does hereby acknowledge that it is fully aware of the terms and conditions of the Lease, the Participation Agreement and the other Operative Documents and the transactions and the other documents contemplated thereby, and does hereby irrevocably and fully and unconditionally guarantee, as primary obligor and not as surety merely, to the Parties, as their respective interests may appear, the payment by the Lessee of all payment obligations when due under the Lease (including, without limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement and the other Operative Documents to which the Lessee is a party (such obligations of the Lessee guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative Documents, and the timely performance of all other obligations of the Lessee thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby agree that in the event that the Lessee fails to pay any Financial Obligation when due for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within five days after the date on which such Financial Obligation became due and payable and the applicable grace period has expired, the Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Financial Obligation was not paid when due and for five days after the applicable grace period has expired, the amount of such Financial Obligation. The Guarantor hereby agrees that in the event the Lessee fails to perform any Nonfinancial Obligation for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within 10 Business Days after the date on which such Nonfinancial Obligation is required to be performed (for avoidance of doubt, to include any applicable grace period), the Guarantor shall cause such Nonfinancial Obligation to be performed within 10 Business Days following the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Nonfinancial Obligation was not performed when so required and that any applicable grace period has expired. (b) The obligations of the Guarantor hereunder shall not be, to the fullest extent permitted by law, affected by: the genuineness, validity, regularity or enforceability (or lack thereof) of any of the Lessee's obligations under the Lease or any other Operative Document to which the Lessee is a party, any amendment, waiver or other modification of the -2- 3 Lease or such other Operative Document (except that any such amendment or other modification shall be given effect in determining the obligations of the Guarantor hereunder), or by any substitution, release or exchange of collateral for or other guaranty of any of the Obligations (except to the extent that such substitution, release or exchange is undertaken in accordance with the terms of said Obligations) without the consent of the Guarantor, or by any priority or preference to which any other obligations of the Lessee may be entitled over the Lessee's obligations under the Lease and the other Operative Documents to which the Lessee is a party, or by any other circumstance that might otherwise constitute a legal or equitable defense to or discharge of the obligations of a surety or guarantor including, without limitation, any defense arising out of any laws of the United States of America or any State thereof which would excuse, discharge, exempt, modify or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not, to the fullest extent permitted by law, affect the liability of the Guarantor hereunder: (a) the extension of the time for or waiver of, at any time or from time to time, without notice to the Guarantor, the Lessee's performance of or compliance with any of its obligations under the Operative Documents (except that such extension or waiver shall be given effect in determining the obligations of the Guarantor hereunder)), (b) any assignment, transfer, sublease or other arrangement by which the Lessee transfers possession or loses control of the use of the Aircraft, (c) any defect in the title, condition, design, operation or fitness for use of, or damage to or loss or destruction of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or with any other Person, or any sale, transfer, lease or disposal of any of its assets or (e) any change in the ownership of any shares of capital stock of the Lessee. (c) This Guarantee is an absolute, present and continuing guaranty of payment and performance and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Lessee any unpaid amounts due or otherwise to enforce performance by the Lessee. The Guarantor specifically agrees, to the fullest extent permitted by law, that it shall not be necessary or required, and that the Guarantor shall not be entitled to require, that any Party (i) file suit or proceed to obtain or assert a claim for personal judgment against the Lessee for the Obligations, or (ii) make any effort at collection of the Obligations from the Lessee, or (iii) foreclose against or seek to realize upon any security now or hereafter existing for the Obligations, including the Trust Estate or the Trust Indenture Estate (as such term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations, or make any effort at collection of the Obligations from any such other Person, or exercise or assert any other right or remedy to which any Party is or may be entitled in connection with the Obligations or any security or other guaranty therefor, or (v) assert or file any claim against the assets of the Lessee or any other guarantor or other Person liable for the Obligations, or any part thereof, before or as a condition of enforcing the liability of the Guarantor under this Guarantee or requiring payment of said Obligations by the guarantor hereunder, or at any time thereafter. -3- 4 (d) The Guarantor agrees, to the fullest extent permitted by law, that, without limiting the generality of this Guarantee, if an Event of Default shall have occurred and be continuing and the Lessor (or any assignee thereof including, without limitation, the Indenture Trustee) shall be prevented by applicable law from exercising its remedies (or any of them) under Section 15 of the Lease, the Lessor (or any assignee thereof, including, without limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive hereunder from the Guarantor, upon demand therefor the sums that would otherwise have been due from the Lessee under the Lease had such remedies been able to be exercised. The Guarantor hereby unconditionally waives, to the fullest extent permitted by law, any requirement that, as a condition precedent to the enforcement of the obligations of the Guarantor hereunder, the Lessee or all or any one or more of any other guarantors of any of the Obligations be joined as parties to any proceedings for the enforcement of any provision of this Guarantee. 2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be deemed to create any right in any Person except a party and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person. 3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives notice of the acceptance of this Guarantee and of the performance or nonperformance by the Lessee, demand for payment from the Lessee or any other Person, notice of nonpayment or failure to perform on the part of the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent permitted by law, all other demands or notices whatsoever, other than the request for payment hereunder and notice provided for in Section 1 hereof. The obligations of the Guarantor shall be absolute and unconditional and shall remain in full force and effect until satisfaction of all Obligations hereunder and, without limiting the generality of the foregoing, to the extent not prohibited by applicable law, shall not be released, discharged or otherwise affected by the existence of any claims, set-off, defense or other rights that the Guarantor may have at any time and from time to time against any Party, whether in connection herewith or any unrelated transactions. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Financial Obligation is rescinded or must otherwise be returned by any party upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding with respect to the Lessee or otherwise, all as though such payment had not been made. The Guarantor, by virtue of any payment or performance hereunder to a Party, shall be subrogated to such Party's claim against the Lessee or any other Person relating thereto; provided, however, that the Guarantor shall not be entitled to receive payment from the Lessee in respect of any claim against the Lessee arising from a payment by the Guarantor: (a) while an Event of Default shall have occurred and be continuing, in which case no such payment in respect of such a claim by the Guarantor may be made by the Lessee; or (b) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings relating to the Lessee, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Lessee, whether or not -4- 5 involving insolvency or bankruptcy proceedings, in which case the Obligations shall be paid and performed in full before any payment in respect of a claim by the Guarantor shall be made by or on behalf of the Lessee. 4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or waiver or modification of, or consent under, the terms hereof, shall be effective unless evidenced by an instrument in writing signed by the Guarantor and each Party against whom such amendment, supplement, waiver, modification or consent is to be enforced. 5. PAYMENTS. All payments by the Guarantor hereunder in respect of any Obligation shall be made in Dollars and otherwise as provided in the Lease, the Participation Agreement or any other Operative Document in which such Obligation is contained; provided that the Guarantor consents to all the terms of the Trust Indenture and agrees to make all payment hereunder directly to the Indenture Trustee until such time as the Indenture Trustee shall give notice to the Guarantor that the Lien of the Trust Indenture has been fully discharged and thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay directly to the Lessor, in its individual capacity, or to the Owner Participant or another Party, as the case may be, any amount owing to such Person as Supplemental Rent for indemnities provided in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or otherwise not constituting part of the Trust Indenture Estate (as such term is defined in the Trust Indenture). 6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust Indenture, the Lessor will assign, and create a security interest in, certain of its rights hereunder to and for the benefit of the Indenture Trustee. From and after the execution and delivery of the Trust Indenture, and until receipt by the Guarantor of a written notice from the Indenture Trustee to the effect that the Trust Indenture has been fully satisfied and discharged, no remedy or election hereunder may be exercised by the Lessor or consent given by the Lessor, except by or with the prior written consent of the Indenture Trustee, and the Guarantor will make payment of all amounts hereunder that are assigned to the Indenture Trustee directly to the Indenture Trustee, and such payments shall discharge the obligations of the Guarantor to the Lessor to the extent of such payments. 7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Parties as follows: (a) It is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware. It has all requisite corporate power and authority to own and operate its properties, to carry on its business as presently conducted and to enter into and perform its obligations under this Guarantee. (b) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with or the taking of any other action in respect of, any Federal, state, municipal or other governmental department, bureau, agency or instrumentality, and no filing, recording, publication or registration in any -5- 6 public office or any other place, is now, or under existing law in the future will be, required or necessary on its behalf to authorize the execution, delivery and performance (other than as contemplated by the Operative Documents in the case of the performance of the Non-Financial Obligations) by it of this Guarantee, or for the legality, validity, binding effect or enforceability hereof. (c) Neither the execution and delivery of this Guarantee, the performance of its obligations hereunder, nor its consummation of the transactions contemplated hereby, will conflict with or result in any breach of, or constitute a default under, or result in any creation or imposition of any Lien upon any of its property or assets under, any applicable laws or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject, or its Articles of Incorporation or by-laws. (d) The execution, delivery and performance by it of this Guarantee have been duly authorized by all necessary corporation action. This guarantee has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 8. JURISDICTIONAL MATTERS. The Guarantor (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 Guarantee brought by any party, 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 Guarantee may not be enforced in or by such courts. The Guarantor hereby generally consents to service of process at Cadwalader, Wickersham & Tate, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of the Guarantor in New York City as from time to time may be designated by the Guarantor in writing to the Parties. 9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Parties, with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, by all of which together shall constitute one and the same instrument, and (c) shall be binding upon the successors and assigns of the Guarantor shall inure to the benefit of, and shall be enforceable by, each of the Parties to the fullest extent permitted by applicable laws. The headings in this Guarantee are for purposes of reference only, and shall not limit or otherwise affect the meanings hereof. -6- 7 10. NOTICES. All requests, notices or other communications hereunder shall be in writing, addressed as follows: If to the Guarantor: Northwest Airlines Corporation for U.S. Mail: 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 for Overnight courier: 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President -- Finance and Treasurer Telecopy No.: (612) 726-0665 If to a Party: to the address or telecopy number set forth in the Participation Agreement All requests, notices or other communications shall be given in the manner, and shall be effective at the times and under the terms, set forth in Section 13(b) of the Participation Agreement. 11. NO WAIVERS. No failure on the part of any Party to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise of such right or remedy or the exercise of any other right or remedy. 12. SURVIVAL. All representations and warranties contained herein or made in writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee regardless of any investigation made by any Party or any other Person. 13. SEVERABILITY. To the fullest extent permitted by applicable law, any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or any provision in any other Operative Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING -7- 8 ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK. 15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by such Party in enforcing, or collecting under, this Guarantee. 16. TERMINATION. Subject to the provisions of Section 3 hereof, this Guarantee shall terminate upon the indefeasible payment and performance in full of all of the Obligations. 17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to the Obligations described in Section 1 and nothing in this Guarantee shall be deemed to constitute a guarantee of payment of any of the Secured Certificates or shall give rise to any inference that the Lessee or the Guarantor has so guaranteed such payment. -8- 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed as of the date first hereinabove set forth. NORTHWEST AIRLINES CORPORATION By: ----------------------------------- Name: Title: Accepted as of the above date: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION in its individual capacity and as Owner Trustee By: ------------------------------ Name: Title: STATE STREET BANK AND TRUST COMPANY in its individual capacity and as Indenture Trustee By: ------------------------------ Name: Title: -9- 10 SCHEDULE I TO GUARANTEE [NW 1995 A] PARTIES First Security Bank of Utah, National Association, in its individual capacity and as Owner Trustee State Street Bank and Trust Company, as Indenture Trustee [Owner Participant] [Bridge Lenders] EX-4.C6 24 PARTICIPATION AGREEMENT-1995 A 1 PARTICIPATION AGREEMENT [NW 1995 A] THIS PARTICIPATION AGREEMENT [NW 1995 A] dated as of November 15, 1995, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of the State of Minnesota (herein called "LESSEE"), (ii) the institution listed on Schedule I hereto and identified therein as the "OWNER PARTICIPANT" which executes and delivers a counterpart of this Agreement and of the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date referred to below, (iii) the institutions listed on Schedule I and identified therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, 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"), and (v) State Street Bank and Trust Company, a Massachusetts trust company, in its individual capacity and as Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein, in such latter capacity together with any successor indenture trustee, called the "INDENTURE TRUSTEE"); W I T N E S S E T H: WHEREAS, pursuant to the Purchase Agreement (as such term is defined in the Lease hereinafter referred to) between Lessee and the Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things, certain Boeing 757-251 aircraft, including the Aircraft which has been delivered by the Manufacturer to Lessee and is the subject of this Agreement; WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Lessee and the Owner Trustee are entering into a Purchase Agreement Assignment [NW 1995 A], dated as of the date hereof (herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to the Owner Trustee certain rights and interests of Lessee under the Purchase Agreement with respect to the Aircraft; and (ii) the Manufacturer has executed the Consent and Agreement [NW 1995 A] (herein called the "CONSENT AND AGREEMENT"), substantially in the form attached to the Purchase Agreement Assignment (herein called the "CONSENT AND AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Participant is entering into a Trust Agreement [NW 1995 A], 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 2 Trust Estate defined in Section 1.1 thereof (herein called the "TRUST ESTATE") for the use and benefit of the Owner Participant; WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with the execution and delivery of this Agreement are entering into the Trust Indenture and Security Agreement [NW 1995 A], 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 issues to each of the Loan Participants one or more secured certificates (herein called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan Participants arising from the Loan Participants' making secured loans to the Owner Trustee to finance a portion of the Owner Trustee's purchase of the Aircraft, which Secured Certificates are to be secured by the mortgage and security interests created by the Owner Trustee in favor of the Indenture Trustee, and 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; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1995 A], dated as of the date hereof (such Lease Agreement, as the same may be amended or supplemented from time to time to the extent permitted by the terms thereof and this Agreement, herein called the "LEASE", such term to include, unless the context otherwise requires, the Lease Supplement referred to below), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft is sold and delivered by Lessee to the Owner Trustee under the Bill 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; WHEREAS, certain terms are used herein as defined in Section 13(a) hereof; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and conditions of this Agreement, each Loan Participant agrees to finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule II opposite the name of such Loan Participant. Each Loan Participant shall make such Loan to the Owner Trustee on a date to be designated pursuant to Section 2 hereof, but in no event later than November 30, 1995, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. - 2 - 3 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite such Loan Participant's name in Schedule II hereto. Upon the occurrence of the above transfers by the Loan Participants to the Owner Trustee, to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon, the Owner Trustee shall issue and the Indenture Trustee shall authenticate Secured Certificates which shall be delivered simultaneously to the Loan Participants under the Trust Indenture to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon. The Owner Trustee agrees to pay the Secured Certificates in installments in the amounts and on the dates provided in the Trust Indenture together with interest thereon and all other amounts payable with respect thereto, all as more fully provided in the Trust Indenture. (b) Participation by Owner Participant. Subject to the terms and conditions of this Agreement, the Owner Participant hereby agrees to participate in the payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft on a date to be designated pursuant to Section 2 hereof, but in no event later than November 30, 1995, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite the Owner Participant's name in Schedule II hereto. (c) General Provisions. The amount of the participation of each of the Loan Participants and the Owner Participant to be made as provided above in the payment of Lessor's Cost for the Aircraft is hereinafter called such party's "COMMITMENT" for the Aircraft. In case any of the Loan Participants or the Owner Participant shall default in its obligation under the provisions of this Section 1, no other such party shall have any obligation to make any portion of such defaulted amount available or to increase the amount of its Commitment and the obligation of such nondefaulting party shall remain subject to the terms and conditions set forth in this Agreement. Upon receipt by the Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant to this Section 1 and the satisfaction of the conditions set forth in Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take title to and accept delivery of the Aircraft. In consideration of the transfer of title to and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall, simultaneously with such transfer of title and delivery, pay to Lessee from the amounts so furnished it by the Participants, the Lessor's Cost of the Aircraft. (d) Determination of Interest Period. The length of each Interest Period shall be determined by Lessee on behalf of the Owner Trustee in accordance with Section 2.02 of the Trust Indenture. SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each Participant, the Owner Trustee and the Indenture Trustee at least two Business Days' telecopy - 3 - 4 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 and the amount of each Participant's Commitment for the Aircraft. As to each Participant, the making of its Commitment for the Aircraft available in the manner required by Section 1 shall constitute a waiver of such notice. SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant agrees that its releasing the amount of its Commitment for the Aircraft to the account of the Owner Trustee in accordance with the terms of Section 1 shall constitute, subject to satisfaction or waiver of the conditions set forth in Section 4(a), without further act, authorization and direction by the Owner Participant to the Owner Trustee: (i) to pay to Lessee the Lessor's Cost for the Aircraft; (ii) to the extent not previously accomplished by a prior authorization, to authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees, or an agent or agents, of Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant to the Acceptance Certificate; (iii) to accept from Lessee the Bill of Sale and the FAA Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9); (iv) to execute an Aircraft Registration Application, the Lease Supplement and the Trust Supplement, in each case covering the Aircraft; (v) to borrow from the Loan Participants to finance a portion of the Lessor's Cost for the Aircraft and to issue to the Loan Participants Secured Certificates in aggregate principal amount equal to the amount borrowed, pursuant hereto and to the Trust Indenture; and (vi) to take such other action as may be required to be taken by the Owner Trustee on the Delivery Date by the terms of any Operative Document. SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations in the Aircraft. It is agreed that the obligations of each of the Loan Participants and the Owner Participant to participate in the payment of Lessor's Cost and to make available the amount of its respective Commitment are subject to the satisfaction prior to or on the Delivery Date of the following conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it relates to representations and warranties only contained in the Tax Indemnity Agreement), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and (xxvii) shall not be a condition precedent to the obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a condition precedent to the obligation of the Owner Participant: - 4 - 5 (i) The Loan Participants 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 applicable law or regulations or guidelines or interpretations thereof by appropriate regulatory authorities shall be in effect which, in the opinion of such Loan Participant or the Owner Participant, as the case may be, or their respective counsel, would make it a violation of law or regulations or guidelines for such Loan Participant or the Owner Participant to make its Commitment available in accordance with Section 2 hereof or, in the case of such Loan Participant, to acquire a Secured Certificate or to realize the benefits of the security afforded by the Trust Indenture. (iii) In the case of the Owner Participant, the Loan Participants shall have made available the amount of their Commitments for the Aircraft in accordance with Section 1 hereof. (iv) In the case of the Loan Participants, 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 Documentation Agent and the Owner Participant and shall be in full force and effect and executed counterparts shall have been delivered to the Loan Participants and the Owner Participant, or their respective counsel, provided that only each Loan Participant shall receive an executed original of its respective Secured Certificate and provided, further, 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 the Documentation Agent and their respective counsel before the Delivery Date and subsequent to the Delivery Date may be inspected and reviewed by the Indenture Trustee, any Loan Participant or their respective counsel if and only if there shall occur and be continuing an Event of Default), 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 shall only be delivered to Lessee and the Owner Participant and their respective counsel: (1) an excerpted copy of the Purchase Agreement (insofar as it relates to the Aircraft); (2) the Purchase Agreement Assignment; (3) the Lease; - 5 - 6 (4) a Lease Supplement covering the Aircraft dated the Delivery Date; (5) the Tax Indemnity Agreement; (6) the Trust Agreement; (7) a Trust Supplement covering the Aircraft dated the Delivery Date; (8) the Bill of Sale; (9) the FAA Bill of Sale; (10) an acceptance certificate covering the Aircraft in the form agreed to by the Documentation Agent, 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; (12) the Secured Certificates; (13) the Consent and Agreement; and (14) the Guarantee. All of the foregoing documents, together with this Agreement, are sometimes referred to herein, collectively, as the "OPERATIVE DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT". (vi) A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the Granting Clause of the Trust Indenture that are not covered by the recording system established by the Federal Aviation Act, shall have been executed and delivered by the Owner 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 Owner Participant or the Documentation Agent shall have been executed and delivered by Lessee or the Owner Trustee and duly filed. (vii) The Loan Participants and the Owner Participant shall have received the following, in each case in form and substance satisfactory to the Documentation Agent and the Owner Participant: (1) a certified copy of the Certificate of Incorporation and By-Laws of Lessee and a copy of resolutions of the board of directors of Lessee, certified - 6 - 7 by a Vice President, the Secretary or an Assistant Secretary of Lessee, duly authorizing the sale of the Aircraft and the lease by Lessee of the Aircraft under the Lease and the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the Purchase Agreement Assignment, the Tax Indemnity Agreement and each other document required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof, and a certified copy of the Certificate of Incorporation and By-Laws of the Guarantor and a copy of resolutions of the Board of Directors of the Guarantor, certified by a Vice President, the Secretary or an Assistant Secretary of the Guarantor, duly authorizing the execution, delivery and performance by the Guarantor of the Guarantee; (2) such other documents and evidence with respect to Lessee, the Guarantor, the Manufacturer, the Owner Trustee, the Owner Participant, the Indenture Trustee, and the Loan Participants as the Documentation Agent or the Owner Participant, or the respective counsel for the Loan Participants or the Owner Participant, may reasonably request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; and (3) a certificate of Lessee as to the person or persons authorized to execute and deliver this Agreement, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft and any other documents to be executed on behalf of Lessee in connection with the transactions contemplated hereby and as to the signatures of such person or persons, and a certificate of the Guarantor as to the person or persons authorized to execute and deliver the Guarantee and as to the signatures of such person or persons. (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 following statements shall be true, and the Documentation Agent and the Owner Participant shall have received evidence satisfactory to it to the effect that: (1) the Owner Trustee has good title (subject to filing and recording the FAA Bill of Sale with the Federal Aviation Administration) to the Aircraft - 7 - 8 on such Delivery Date, free and clear of Liens other than the rights of Lessee under the Lease and Lease Supplement covering the Aircraft, the mortgage and security interests created by the Trust Indenture, the rights of the Owner Participant under the Trust Agreement and the Trust Supplement, and Liens permitted by clause (v) of Section 6 of the Lease; (2) the Aircraft has been duly certified by the Federal Aviation Administration (or there shall have been received adequate assurances from the Federal Aviation Administration that the certification will be issued as soon as the registration of the Aircraft is complete) as to type and airworthiness in accordance with the terms of the Lease; (3) the FAA Bill of Sale, the Lease, the Lease Supplement, the Trust Indenture and the Trust Supplement covering the Aircraft shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the Federal Aviation Administration, and the Trust Agreement shall have been filed (or shall be in the process of being so filed) with the Federal Aviation Administration; and (4) application for registration of the Aircraft in the name of the Owner Trustee has been duly made with the Federal Aviation Administration. (x) On the Delivery Date, (A) the representations and warranties of Lessee, the Owner Participant and the Owner Trustee contained in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing, or would result from the purchase, sale, lease or mortgage of the Aircraft, which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default. (xi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for Lessee and the Guarantor, as to New York and certain federal law matters, and Lessee's and the Guarantor's in-house or other counsel, as to Minnesota and certain federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota and has the corporate power and authority to carry on its business as now conducted and to enter into and perform its obligations under the Lessee Documents. Lessee is a Certificated Air Carrier. The Guarantor is a corporation duly organized and validly existing - 8 - 9 pursuant to the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under the Guarantee; (2) the execution, delivery and performance of the Lessee Documents by Lessee and of the Guarantee by the Guarantor have been duly authorized by all necessary corporate action on the part of Lessee and the Guarantor, as the case may be, do not require any approval of stockholders of Lessee or the Guarantor, as the case may be, or, to the knowledge of such counsel, any approval or consent of any trustee or holders of any indebtedness or obligations of Lessee or the Guarantor, as the case may be (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of any thereof by Lessee or the Guarantor, as the case may be, nor the performance by Lessee or the Guarantor, as the case may be, of its respective obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel, judgment or order applicable to or binding on Lessee or the Guarantor, as the case may be, or (B) to the knowledge of such counsel, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Permitted Liens) upon any property of Lessee or the Guarantor, as the case may be, under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter, by-law or permit issued by any Minnesota or United States governmental authority to which Lessee or the Guarantor, as the case may be, is a party or by which Lessee or the Guarantor, as the case may be, or its properties may be bound or affected; (3) neither the execution and delivery by Lessee of the Lessee Documents or by the Guarantor of the Guarantee nor the performance by Lessee or the Guarantor of their respective 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, except for (A) the registration of the Aircraft (including the placement on board of the owner's copy of the application for registration of the Aircraft and, if necessary, a flying time wire), recordations and other actions referred to in paragraph 5 below and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents or the Guarantee after the Delivery Date; (4) the Guarantee has been duly entered into and delivered by the Guarantor, the Purchase Agreement (insofar as it relates to the Aircraft) has been duly entered into and delivered by Lessee, and each of the other Lessee Documents has been duly entered into and delivered by Lessee and each of such other Lessee Documents and the Guarantee constitutes 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 its - 9 - 10 respective terms, except as limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally, (C) applicable laws which may affect the remedies provided in the Lease, which laws, however, do not in the opinion of such counsel make the remedies provided in the Lease inadequate for the practical realization of the benefits provided thereby, but no opinion is expressed as to the amount or priority of any recovery under any particular circumstances and, in particular, no opinion is expressed as to the effect on such remedies of Section 1-201(37) of the Uniform Commercial Code, as in effect in any jurisdiction, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations; (5) subject to the registration of the Aircraft with the Federal Aviation Administration in the name of the Owner Trustee, and assuming the due and timely filing for recordation in accordance with the provisions of the Federal Aviation Act, of (A) the FAA Bill of Sale, (B) the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and made a part thereof and (C) the Trust Indenture with the Trust Agreement and the Trust Supplement attached thereto and made a part thereof, with respect to such portion of the Aircraft as is covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code by virtue of the same constituting an "aircraft" or an "aircraft engine" as defined in the Federal Aviation Act, no further filing or recording of any document (including any financing statement with respect to the Lease under Article 9 of the Uniform Commercial Code of Minnesota or Utah), is necessary in any applicable jurisdiction within the United States in order (x) to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee or any third parties or (y) to create and perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee or any third parties. With respect to such portion of the Aircraft, if any, as may not be deemed to constitute an "aircraft" or "aircraft engine" as defined in the Federal Aviation Act, except for the filing of financing statements in appropriate filing offices in the States of Minnesota and Utah and such other states as may be specified in such counsel's opinion, and for the filings of periodic continuation statements with respect to such filings as and when required, (x) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary under Article 9 of the Uniform Commercial Code in order to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee and any third parties in any applicable jurisdiction within the United States, and (y) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary or advisable under Article 9 of the Uniform Commercial Code in order to create or - 10 - 11 perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee and any third parties in any applicable jurisdiction within the United States; and (6) to the best knowledge of such in-house counsel, there are no legal or governmental proceedings pending or threatened to which Lessee or any of its subsidiaries is a party or to which any of the properties of Lessee or any of its subsidiaries is subject other than those proceedings summarized in the Guarantor's publicly filed annual, quarterly and other reports filed with the Securities and Exchange Commission, and proceedings which such in-house counsel believes would not reasonably be expected to have a material adverse effect on Lessee and its subsidiaries, taken as a whole, or on the power or ability of Lessee to perform its obligations under the Lessee Documents. The opinion contemplated by this paragraph (xi) shall be to such further effect with respect to such other matters as the Documentation Agent or the Owner Participant may reasonably request. Such opinion with respect to the matters specified in this paragraph (xi) may rely exclusively (A) upon the opinion of special counsel in Oklahoma City, Oklahoma, referred to in paragraph (xv) of this Section 4(a) with respect to the matters stated therein, and (B) upon the opinion of Ray, Quinney & Nebeker with respect to the opinion in paragraph (5) above insofar as it relates to the laws of the State of Utah and (C) upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, with respect to matters of fact, and may state that no opinion is expressed as to laws other than laws of the State of New York (in the case of such special counsel's opinion), the State of Minnesota and the Delaware General Corporation Law (in the case of Lessee's in-house or other counsel's opinion) and the Federal laws of the United States. Such counsel may assume that, except for the filings and recordations contemplated herein, there are no filings or recordations with respect to the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement or the Trust Indenture with the Federal Aviation Administration, or of Uniform Commercial Code financing statements naming the Owner Trustee as a debtor in the filing offices of the Secretary of State of Minnesota, the Secretary of State of Utah or in any other filing office in the States of Minnesota or Utah, or in such other filing offices in such other jurisdictions as shall be identified in such counsel's opinion. (xii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from a counsel to the Manufacturer, with respect to the Manufacturer Documents and such other matters as such parties may reasonably request. - 11 - 12 (xiii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, to the effect that: (1) First Security Bank of Utah, National Association is a national banking association duly organized, validly existing and in good standing under the laws of the United States, is a Citizen of the United States and has under the laws of the State of Utah and federal banking law the power, authority and legal right to execute, deliver and carry out in its capacity as Owner Trustee or in its individual capacity, as the case may be, the terms of the Owner Trustee Documents, including the Secured Certificates; (2) each of the Owner Trustee Documents has been duly authorized, executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, and each of the Owner Trustee Documents constitutes the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations, and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (3) the execution, delivery and performance by the Owner Trustee and by First Security Bank of Utah, National Association, in its individual capacity, or both, as the case may be, of the Owner Trustee Documents and the consummation of the transactions by the Owner Trustee and by First Security Bank of Utah, National Association in its individual capacity contemplated thereby are not and will not be in violation of the articles of association or By-Laws of First Security Bank of Utah, National Association or of any indenture, mortgage, credit agreement, license or other agreement or instrument known to such counsel after due inquiry to which First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee is a party or by which it is bound, or of any Federal or Utah law, governmental rule or - 12 - 13 regulation applicable to First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee or any judgment or order applicable to it and known to such counsel after due inquiry; (4) neither the execution and delivery by the Owner Trustee and, where appropriate, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, of the Owner Trustee's Documents nor the consummation of any of the transactions by the Owner Trustee, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing Federal laws governing the banking and trust powers of First Security Bank of Utah, National Association, or Utah law (except for filings pursuant to the Uniform Commercial Code, and except for compliance with requirements of the Federal Aviation Act as to which such counsel may express no opinion); (5) the Trust Agreement, as supplemented by the Trust Supplement, duly creates for the benefit of the Owner Participant the trust interest in the Trust Estate which the Trust Agreement by its terms purports to create; (6) assuming that Utah law were to govern the perfection of the security interests in the Trust Indenture Estate under the Trust Indenture, except for (i) the Indenture Trustee's taking of possession of the original counterparts of the Lease and the Lease Supplement covering the Aircraft (insofar as the Lease and the Lease Supplement covering the Aircraft may constitute chattel paper (as such term is defined in the Uniform Commercial Code as in effect in Utah)) and all monies and securities (including instruments) required to be deposited with the Indenture Trustee, and (ii) the filing of Uniform Commercial Code financing statements with the office of the Division of Corporations and Commercial Code of the State of Utah with respect to the security interests created in the Trust Indenture Estate under the Trust Indenture, naming the Owner Trustee as debtor and the Indenture Trustee as secured party, which filing has been duly effected, no other filing or recording or refiling or rerecording is necessary in the State of Utah to create, perfect or maintain the perfected status of such security interest (except for the timely filing of continuation statements in respect of such financing statements); (7) assuming that the Operative Documents were negotiated in substantial part in the State of New York, and that the closing of a substantial portion of the transactions contemplated by the Operative Documents occurred in the State of New York, the choice of New York law to govern the Participation Agreement, the Lease, and each other Operative Document (other than the Trust Agreement) to which the Owner Trustee or First Security Bank - 13 - 14 of Utah, National Association in its individual capacity, or both, is a party is, under the laws of the State of Utah, a valid choice of law and should, in a properly presented case, be honored by the courts of the State of Utah; (8) the Owner Trustee has received from Lessee such title to the Aircraft as Lessee had immediately prior to the conveyance to the Owner Trustee, subject to the rights of the Owner Trustee and Lessee under the Lease and the security interest created pursuant to the Trust Indenture and the Trust Supplement; (9) no taxes, fees or other charges, except taxes imposed on fees payable to the Owner Trustee, will be imposed by Salt Lake City or the State of Utah or any political subdivision or taxing authority thereof on or with respect to the execution, delivery or performance of any of the Operative Documents and the trust created pursuant to the Trust Agreement will not be subject to any such taxes, fees or other charges on, based on or measured by the net income of the Trust Estate (as distinguished from the net income of the Owner Participant) solely by reason of the Owner Trustee's location in Salt Lake City or the State of Utah (assuming for purposes of this opinion that the Owner Participant, the Owner Trustee and the Trust Estate would not be subject to any such tax, fee or other charge if the Owner Trustee performed its duties under the Trust Agreement and the Trust Indenture from an office located outside Utah); and (10) to the knowledge of such counsel, there are no pending or threatened proceedings against or affecting the Owner Trustee before any court or administrative agency, individually or in the aggregate, which, if determined adversely to it, would materially adversely affect the power or ability of the Owner Trustee to perform its obligations under the Owner Trustee Documents. Such opinion shall be to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Indenture Trustee or Lessee may reasonably request. Such opinion may state that (A) no opinion is expressed as to laws other than the laws of the State of Utah, the Federal laws of the United States governing the banking and trust powers of First Security Bank of Utah, National Association, and the Federal Aviation Act as it relates to paragraph (1) and (B) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. Such opinion may assume (M) the due authentication of the Secured Certificates by the Indenture Trustee, (N) that the Operative Documents (other than the Trust Agreement) are legal, valid and binding under the laws of the State of New York and (O) the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and of the other Operative Documents by each of the parties thereto other than First Security Bank of Utah, National Association in its individual capacity and as the Owner Trustee. - 14 - 15 (xiv) The Loan Participants shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Trustee and Lessee, from Feltman, Karesh, Major & Farbman, special counsel for the Owner Participant, as to New York and certain Federal law matters, and the Owner Participant's in-house counsel, as to New York and certain Federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) the Owner Participant is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Documents; (2) the Owner Participant Documents have been duly authorized, executed and delivered by the Owner Participant and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitute legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations; (3) neither the execution and delivery by the Owner Participant of the Owner Participant Documents nor the consummation of any of the transactions by the Owner Participant contemplated thereby (A) requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency of the United States or of the State in which the principal office of the Owner Participant is located (or any governmental subdivision thereof) (except as shall have been duly obtained or given, specifying the same), or (B) violates any law, governmental rule or regulation of the United States or the State in which the principal office of the Owner Participant is located (or any governmental subdivision thereof); (4) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the other parties, if any, thereto (other than the Owner Participant in the case of this Agreement), and the due authentication of the Secured Certificates by the Indenture Trustee, the Owner Trustee Documents (other than the Trust Agreement) constitute legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their respective terms, except as limited by general equitable principles - 15 - 16 (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; (5) assuming the due authorization, execution and delivery thereof by the Owner Trustee as aforesaid and the Indenture Trustee, the Trust Indenture duly creates for the benefit of the Indenture Trustee the security interests which the Trust Indenture purports to create and the Indenture Trustee is entitled to the benefits and security afforded by the Trust Indenture; (6) assuming the due authorization, execution and delivery by the Owner Trustee of the Secured Certificates being issued and delivered on the Delivery Date, and the due authentication thereof by the Indenture Trustee, such Secured Certificates are legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; (7) the execution, delivery and performance of the Owner Participant Documents by the Owner Participant does not require any approval of stockholders of the Owner Participant, or, to the knowledge of such counsel, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Documents by the Owner Participant, nor the performance by the Owner Participant of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel, judgment or order applicable to or binding on the Owner Participant or (B) to the knowledge of such counsel, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any Delaware or United States governmental authority to which the Owner Participant is a party or by which it or its properties may be bound or affected; and (8) to the knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting the Owner Participant before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant, would have a material - 16 - 17 adverse effect on the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; and to such further effect with respect to such other matters or documents relating to the Owner Participant's obligations in connection with this Agreement as the Documentation Agent, the Indenture Trustee, the Owner Trustee or Lessee may reasonably request. Such opinion may rely upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, as to matters of fact. Such opinion may state that (M) no opinion is expressed as to laws other than the laws of the State of New York (in the case of such special counsel's opinion), the laws of the State of New York and the General Corporation Law of the State of Delaware (in the case of the Owner Participant's in-house or other counsel), and the Federal laws of the United States, and (N) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. (xv) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to the effect that: (1) the FAA Bill of Sale, the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and the Trust Indenture, with the Trust Supplement attached thereto are in due form for recording by and have been duly filed for recordation with the Federal Aviation Administration in accordance with the provisions of Section 44107 of Title 49 of the United States Code; (2) proper application for registration of the Aircraft in the name of the Owner Trustee together with the affidavits of the Owner Trustee and the Owner Participant required by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations and the Trust Agreement have been duly filed with the Federal Aviation Administration in accordance with the Federal Aviation Act, and such counsel is of the opinion that the Federal Aviation Administration will issue a Certificate of Aircraft Registration (AC Form 8050-3) in response to said application; (3) the Owner Trustee is the owner of the legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interests created by the Trust Indenture and such other Liens as are permitted by the Lease or this Agreement; (4) the Aircraft is eligible for registration in the name of the Owner Trustee and will be duly registered in due course in the name of the Owner - 17 - 18 Trustee pursuant to and in accordance with the provisions of Sections 44102 and 44103 of Title 49 of the United States Code; (5) the Trust Indenture as supplemented by the Trust Supplement creates a duly and validly perfected first priority security interest in the Aircraft and a duly perfected assignment of all the right, title and interest of the Owner Trustee in, to and under the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), subject only to the Lease and to Liens permitted by the Lease and the Trust Indenture, it being understood that no opinion need be expressed as to the validity or enforceability of such security interest under local law or as against third parties in respect of the Aircraft when the same is outside the United States; (6) none of the Trust Indenture, the Trust Agreement, the Trust Supplement, the Lease or the Lease Supplement is required to be filed or recorded in any other place within the United States in order to perfect the security interest in the Aircraft and the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), under the applicable laws of any jurisdiction within the United States; and (7) no authorization, approval, consent, license or order of, or registration with, or giving of notice to, the FAA Aircraft Registry is required for the valid authorization, delivery or performance of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture and the Trust Supplement except for such authorizations, approvals, consents, licenses, orders, registrations, and notices as have been effected. Such opinion may state that no opinion is expressed as to laws other than the Federal laws of the United States, and may assume that the Aircraft is not registered in any other country. Said opinion may also contain a statement to the effect that such opinion is limited to the records maintained by the Federal Aviation Administration Aircraft Registry and does not cover liens that are perfected without the filing of notice thereof with the Federal Aviation Administration, such as Federal tax liens, liens arising under Section 1368(a) of Title 29 of the United States Code and possessory artisans' liens, and is subject to the accuracy of FAA personnel in the filing, indexing and recording of instruments filed with the FAA and in the search for encumbrance cross-reference index cards for the Engines. Said opinion may also rely on the opinion obtained by such counsel from counsel for the Aeronautical Center of the FAA, satisfactory in form and scope to such counsel, and on past practice of the FAA which is consistent with such Aeronautical Center counsel's opinion. - 18 - 19 (xvi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana & Gould, special counsel for the Indenture Trustee, to the effect that: (1) State Street Bank and Trust Company is a Massachusetts trust company, duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the full corporate power, authority and legal right to enter into and perform its obligations under the Indenture Trustee Documents and, in its capacity as Indenture Trustee, to authenticate the Secured Certificates to be delivered on the Delivery Date; (2) the execution, delivery and performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the Indenture Trustee Documents and the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby and compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with the terms thereof including, without limitation, the authentication of the Secured Certificates to be delivered on the Delivery Date, have been duly authorized by all necessary corporate action on the part of State Street Bank and Trust Company, and neither the execution and delivery thereof nor the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby nor compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with any of the terms and provisions thereof (i) does or will contravene any law or governmental rule or regulation of the United States governing the banking or trust powers of State Street Bank and Trust Company or the Commonwealth of Massachusetts or any order or judgment known to such counsel and applicable to or binding on State Street Bank and Trust Company, or (ii) does or will contravene or result in any breach of, or constitute any default under, the charter documents or by-laws of State Street Bank and Trust Company or the provisions of any indenture, mortgage, contract or other agreement, in each case known to such counsel, to which State Street Bank and Trust Company is a party or by which it or any of its properties is or may be bound or affected; (3) neither the execution and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, of the Indenture Trustee Documents or the certificates of authentication on the Secured Certificates to be delivered on the Delivery Date, nor the performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the transactions contemplated thereby - 19 - 20 requires or required the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or Massachusetts governmental authority or agency governing the banking or trust powers of State Street Bank and Trust Company or under any Massachusetts law; (4) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; (5) the Secured Certificates to be issued and dated the Delivery Date have been duly authenticated and delivered by the Indenture Trustee pursuant to the terms of the Indenture Trustee Documents; (6) to the knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting State Street Bank and Trust Company before any court or administrative agency or arbitration bound or tribunal which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of State Street Bank and Trust Company to perform its obligations under the Indenture Trustee Documents; and (7) there are no taxes, fees or other governmental charges ("TAXES") payable under the laws of the Commonwealth of Massachusetts with respect to the execution of and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the Indenture Trustee Documents (except for taxes on any fees payable to State Street Bank and Trust Company in its - 20 - 21 individual capacity) which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts. Neither State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, the Owner Participant, the Owner Trustee, nor the trust created by the Trust Agreement will, as a result of the transactions contemplated thereby, be subject to any taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would have not been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts, and there are no taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) upon or with respect to the Aircraft or any Engine or any part of any interest therein, or the purchase, ownership, delivery, lease, sublease, possession, presence, use, operation, condition, storage, maintenance, modification, alteration, repair, sale, return, transfer or other disposition of the Aircraft or any Engine which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts; and to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee may reasonably request. Such opinion may state that no opinion is expressed as to laws other than the internal substantive laws of the Commonwealth of Massachusetts and the Federal laws of the United States. Such opinion may further state that with respect to paragraph (4) in connection with the opinion relating to legality, validity and binding effect of the documents there referred to, such counsel has assumed that the laws of the jurisdictions whose laws govern such documents are not materially different from the internal substantive laws of the Commonwealth of Massachusetts. (xvii) The Loan Participants shall have received from Shearman & Sterling, special counsel for the Loan Participants, a favorable opinion satisfactory in substance and form to the Documentation Agent, as to such matters incident to the transactions contemplated hereby as the Documentation Agent may reasonably request. (xviii) The Loan Participants and the Owner Participant shall have received a certificate signed by the President, any Executive Vice President, any Senior Vice President or any Vice President of Lessee, dated the Delivery Date, addressed to the Loan Participants and the Owner Participant and certifying as to the matters stated in paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this Section 4(a). Copies of the orders, permits, waivers, authorizations, exemptions and approvals referred to in Section 4(a)(viii) shall have been furnished to the Loan Participants and the Owner Participant. (xix) The Owner Participant shall, by making its Commitment available as provided in Section 1(b) of this Agreement, be deemed to have reaffirmed the representations and warranties made by it in Section 8 of this Agreement. (xx) [Intentionally omitted.] - 21 - 22 (xxi) The Loan Participants and Owner Participant shall have received an independent insurance broker's report, in form and substance satisfactory to the Documentation Agent 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. (xxii) On the Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to the Airframe or any Engine has occurred. (xxiii) Lessor's Cost for the Aircraft shall be $50,000,000. (xxiv) 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. (xxv) The representations and warranties of the Indenture Trustee and the Loan Participants contained in Section 8 shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and each Participant shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President of the Indenture Trustee addressed to such Participant and certifying as to the foregoing matters with respect to the Indenture Trustee. (xxvi) The Owner Participant shall have received from David, Hagner, Kuney & Krupin, P.C., special tax counsel to the Owner Participant, 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. (xxvii) In the opinion of the Owner Participant and its special counsel, there shall have been, since the date hereof, 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 hereof, 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 1 of the Tax Indemnity Agreement. - 22 - 23 (xxviii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants and the Owner Participant, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, 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. (xxix) The Loan Participants shall have received an opinion, in form and substance reasonably satisfactory to the Documentation Agent, from B.K. Associates, Inc., independent aircraft appraisers, to the effect that the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost. 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 Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to the due and valid registration of the Aircraft in the name of the Owner Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement, such Trust Supplement, the Lease and 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. It is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are all subject to the fulfillment to the satisfaction of Lessee 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 4(a)(ii), 4(a)(iii) and 4(a)(iv) hereof shall have been satisfied. (iii) Those documents described in Section 4(a)(v) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than - 23 - 24 Lessee) in the manner specified in Section 4(a)(v), shall each be satisfactory in form and substance to Lessee, shall be in full force and effect on the Delivery Date, and an executed counterpart of each thereof (other than the Secured Certificates) shall have been delivered to Lessee or its special counsel. (iv) Lessee shall have received evidence of the approval by the Executive Committee of the Board of Directors of the Owner Participant, or other evidence of authority satisfactory to Lessee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing or evidencing authority for the execution, delivery and performance by the Owner Participant of all of the Owner Participant Documents, and a copy of the general authorizing resolutions of the boards of directors of the Indenture Trustee and the Owner Trustee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Indenture Trustee and the Owner Trustee, respectively, which authorize the execution, delivery and performance by the Indenture Trustee of the Indenture Trustee Documents and the Secured Certificates and by the Owner Trustee of the Owner Trustee Documents, together with such other documents and evidence with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee as Lessee or its special counsel may reasonably request in order to establish the 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) The representations and warranties of the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, contained in Section 8 hereof shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and Lessee shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President or other authorized representative of the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively, addressed to Lessee and certifying as to the foregoing matters with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively. (vi) Lessee shall have received the opinions set forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case addressed to Lessee and dated the Delivery Date and in each case in scope and substance reasonably satisfactory to Lessee and Lessee's special counsel. (vii) 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. - 24 - 25 (viii) No change shall have occurred after the date of the execution and delivery of this Agreement in applicable law or regulations thereunder or interpretations by appropriate regulatory authorities which would make it a violation of law or regulations for Lessee to enter into any transaction contemplated by the Operative Documents. (ix) 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. (x) Lessee shall have been paid Lessor's Cost for the Aircraft. SECTION 5. CONFIDENTIALITY OF PARTICIPATION AGREEMENT, LEASE AND GUARANTEE. The Owner Trustee, the Participants, the Administrative Agent, the Documentation Agent, the Certificate Holders and the Indenture Trustee shall keep this Agreement, the Lease and the Guarantee confidential and shall not disclose, or cause to be disclosed, the same to any Person, except (A) to prospective and permitted transferees of Owner Trustee's, a Loan Participant's, a Certificate Holder's, the Owner Participant's or the Indenture Trustee's interest who agree to hold such information confidential, (B) to the Owner Trustee's, a Loan Participant's, a Certificate Holder's, the Owner Participant's or the Indenture Trustee's counsel or special counsel, independent insurance brokers or other agents who agree to hold such information confidential, (C) as may be required by any statute, court or administrative order or decree or governmental ruling or regulation or to any regulatory authorities having jurisdiction over them or (D) such other Persons as reasonably deemed necessary by Owner Trustee, the Participants, the Certificate Holders or the Indenture Trustee in order to protect the interests of any of such parties or for the purposes of enforcing such documents by the Owner Trustee or the Indenture Trustee; provided, however, that any and all disclosures of all or any part of this Agreement, the Lease and the Guarantee which are permitted by (C) or (D) above shall be made only to the extent necessary to meet the specific requirements or needs of the Persons to whom such disclosures are hereby permitted, and provided further, that the Owner Participant may publish a tombstone or other advertisement disclosing information relating to this transaction with the prior approval of Lessee. SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate Holder (as defined in the Trust Indenture) shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Trust Indenture when and if the principal of and interest on all Secured Certificates held by such holder and all other sums payable to such holder hereunder, under the Trust Indenture and under such Secured Certificates shall have been paid in full. Each of the Loan Participants and, by its acceptance of a Secured Certificate, each Certificate Holder agrees that it will look solely to the income - 25 - 26 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 Loan Participants 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. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and the Owner Participant that as of the Delivery Date: (i) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires, other than failures to qualify which would not have a material adverse effect on the consolidated business, assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents; is a Certificated Air Carrier; has its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) located at Eagan, Minnesota; holds all licenses, certificates, permits and franchises from the appropriate agencies of the United States and/or all other governmental authorities having jurisdiction necessary to authorize Lessee to engage in air transport and to carry on scheduled passenger service as presently conducted (other than those licenses, certificates, permits and franchises which, if not obtained, would not have a material adverse effect on the consolidated business assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents); and has the corporate power and authority to own or hold under lease its properties wherever located or used and to enter into and perform its obligations under the Lessee Documents; (ii) the execution, delivery and performance by Lessee of the Lessee Documents will, on the Delivery Date, have been duly authorized by all necessary corporate action on the part of Lessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Lessee except such as have been duly obtained or by the Delivery Date will have been duly obtained, and none of such agreements contravenes any law, judgment, government rule, regulation or order binding on Lessee or the certificate of incorporation or by-laws of Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its properties may be bound or affected; (iii) neither the execution and delivery by Lessee of the Lessee Documents nor the performance by Lessee of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other - 26 - 27 action in respect of, any Federal, State or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee 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 will on the Delivery Date 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), (B) the registration of the Aircraft referred to in Section 4(a)(ix)(3) and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Delivery Date; (iv) on the Delivery Date the Lessee Documents will each constitute legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof (subject to the qualifications set forth in clause (4) of the form of opinion of special counsel to Lessee in Section 4(a)(xi)); (v) there are no pending or, to the best of Lessee's knowledge, threatened actions, suits or proceedings before any court or administrative agency which might materially adversely affect the business, condition (financial or otherwise), operations or properties of Lessee and its subsidiaries taken as a whole or Lessee's ability to perform its obligations under the Operative Documents; (vi) except for (A) the registration of the Aircraft pursuant to the Federal Aviation Act, (B) the filing for recording pursuant to said Act of the Trust Agreement, 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 Agreement and the Trust Supplement attached thereto and made a part thereof and the FAA Bill of Sale, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such documents under the Uniform Commercial Code of Minnesota and Utah and such other states as may be specified in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the taking of possession by the Indenture Trustee of the original counterpart of each of the Lease and the Lease Supplement covering the Aircraft, no further action, including any 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 in order to establish and perfect the Owner Trustee's title to and the Indenture Trustee's security interest in the Aircraft as against Lessee and any third parties in any applicable jurisdictions in the United States; (vii) there has not occurred any event which constitutes an Event of Default under the Lease (or any event which with the giving of notice or the passage of time or both would constitute an Event of Default under the Lease) which is presently continuing; - 27 - 28 (viii) 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; (ix)(a) The consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of December 31, 1994 and the related consolidated statements of operations, cash flows and common stockholders' equity of the Guarantor and its consolidated subsidiaries for the year then ended, which have been audited by independent certified public accountants, and (b) the consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of June 30, 1995 and the related consolidated statements of operations, cash flows and common stockholders' equity for the six-month period then ended, copies of which have been furnished to the Owner Participant and each Loan Participant, fairly present the consolidated financial condition of the Guarantor and its consolidated subsidiaries as at such date and the results of operations and cash flow of the Guarantor and its consolidated subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied and since June 30, 1995 there has been no material adverse change in the consolidated financial condition, cash flow or results of operations of the Guarantor and its consolidated subsidiaries; (x) on the Delivery Date, the Owner Trustee will receive good title to the Aircraft free and clear of all Liens, except Liens permitted by clause (v) of Section 6 of the Lease, the rights of Lessee under the Lease and the Lease Supplement covering the Aircraft, the Lien of the Trust Indenture and the beneficial interest of the Owner Participant in the Aircraft; (xi) 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 or U of the Board of Governors of the Federal Reserve System; (xii) Lessee is not in default in the performance of any term or condition of the Purchase Agreement which materially adversely impairs the transactions contemplated hereby; (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; and - 28 - 29 (xiv) On the Delivery Date, the Aircraft will be duly certified by the FAA as to type and airworthiness, will be insured by Lessee in accordance with the terms of the Lease and will be in the condition and state of repair required under the terms of the Lease. (b) General Tax Indemnity. [Reserved] - 29 - 30 (c) General Indemnity. [Reserved] - 30 - 31 (d) Income Tax. For purposes of this Section 7, the term "INCOME TAX" means any Tax based on or measured by gross or net income or receipts (other than sales, use, license or property Taxes or Taxes in the nature thereof) (including, without limitation, capital gains taxes, minimum taxes, income taxes collected by withholding and taxes on tax - 31 - 32 preference items), and Taxes which are capital, doing business, excess profits or net worth taxes and interest, additions to tax, penalties, or other charges in respect thereof. SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner Participant represents that it is acquiring its interest in the Trust Estate for investment and not with a present intent as to any resale or distribution thereof (subject nonetheless to any requirement of law that the disposition of its properties shall at all times be and remain within its control) and that neither it nor anyone acting on its behalf has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended. (b) Lessee represents and warrants that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended. (c) Each of the Owner Participant and First Security Bank of Utah, National Association, in its individual capacity, represents and warrants to the other parties to this Agreement that it is, and on the Delivery Date will be, a Citizen of the United States without making use of any voting trust, voting powers agreement or similar arrangement. The Owner Participant agrees, solely for the benefit of Lessee and the Loan Participants, that if (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 hereto 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 in the first sentence of this Section 8(c) 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 Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). First Security Bank of Utah, 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 of Utah, National Association, shall obtain actual knowledge that First Security Bank of Utah, 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 - 32 - 33 as in effect at such time or, if it is not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Loan Participants, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or First Security Bank of Utah, National Association, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an event which would constitute an Event of Default but for lapse of time or the giving of notice or both) shall not have occurred and be continuing under the Lease due to non-compliance by Lessee with the registration requirements in the Lease. (d) First Security Bank of Utah, 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 of Utah, 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 of Utah, 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 of Utah, National Association, in its individual capacity, represents that it has not offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire the same from, anyone, and that no officer or responsible employee of the Corporate Trust Department of First Security Bank of Utah, National Association, has knowledge of any such offer or solicitation except 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 each of the Loan Participants 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 - 33 - 34 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 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 - 34 - 35 reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. (g) The Owner Participant represents and warrants to Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in its capacity as such and in its individual capacity, as follows: (i) the Owner Participant is a corporation duly organized and validly existing in good standing under the laws of its jurisdiction of organization, has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under the Owner Participant Documents, and has a tangible net worth (exclusive of goodwill) greater than $75,000,000; (ii) the Owner Participant Documents have been duly authorized by all necessary corporate action on the part of the Owner Participant, do not require any approval not already obtained of stockholders of the Owner Participant or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of the Owner Participant, and have been duly executed and delivered by the Owner Participant, and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by the Owner Participant with any of the terms and provisions thereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order 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 financing or the citizenship requirements of the Owner Participant under applicable aviation law) or contravene or result in any breach of or constitute any 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, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Owner Participant is a party or by which it or its properties may be bound or affected; (iii) each of the Owner Participant Documents constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant in accordance with the terms thereof (subject to the qualifications set forth in clause (2) of the opinion of special counsel to the Owner Participant in Section 4(a)(xiv)); (iv) there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which, if determined adversely to the Owner Participant, would materially adversely affect the financial condition of the Owner Participant or the - 35 - 36 ability of the Owner Participant to perform its obligations under the Owner Participant Documents; (v) upon the execution and delivery of the Trust Indenture, the Trust Indenture Estate will be free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Participant; and (vi) neither the execution and delivery of the Owner Participant Documents nor the performance by the Owner Participant of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, state or foreign government authority or agency except for those exceptions referred to in Section 7(a)(iii) applicable to the Owner Participant and the Owner Participant Documents. (h) Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from Lessor Liens (including for this purpose Liens that 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 (as such terms are defined in Section 7 hereof) imposed on the Trust Estate against which Lessee is not required to indemnify the Trust Estate pursuant to Section 7 hereof. (i) State Street Bank and Trust Company, in its individual capacity, covenants and agrees that it shall not cause or permit to exist any Lien, arising as a result of (A) claims against the Indenture Trustee not related to its interest in the Aircraft or the administration of the Trust Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not permitted by, or failure of the Indenture Trustee to take any action required by, the Operative Documents to the extent such acts arise or such failure arises from or constitute gross negligence or willful misconduct, (C) claims against the Indenture Trustee relating to Taxes or Expenses (as such terms are defined in Section 7 hereof) 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 - 36 - 37 Default is continuing and prior to the time that the Indenture Trustee has received all amounts due pursuant to the Trust Indenture. (j) Each Loan Participant represents, warrants, covenants and agrees as to itself: (i) that this Agreement has been duly authorized, executed and delivered by such Loan Participant and this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of its jurisdiction of organization; and (iii) that such Loan Participant has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. (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, and which is consistent with the applicable provisions of the Credit Agreement. (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 - 37 - 38 to the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Payment. For purposes of this Section 8(l), "EXCESS PAYMENT" means the amount by which such payment exceeds the amount which would have been received by the holder(s) of the Secured Certificates or the Indenture Trustee if the Owner Trustee (in its individual capacity) or the Owner Participant had not become subject to the recourse liability referred to in (ii) above. Nothing contained in this Section 8(l) shall prevent the holder of a Secured Certificate or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Owner Trustee (in its individual capacity) or the Owner Participant under this Agreement or the Trust Indenture (and any exhibits or annexes thereto). (m) State Street Bank and Trust Company represents and warrants, in its individual capacity, to Lessee, the Owner Trustee and each Participant as follows: (i) it is a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other 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 trust agreement or other similar arrangement, is likely to change and that it will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other similar arrangement; (ii) it is a Massachusetts trust company duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the requisite corporate power and authority to enter into and perform its obligations under the Trust Indenture and this Agreement and to authenticate the Secured Certificates to be delivered on the Delivery Date; (iii) the Indenture Trustee Documents and the authentication of the Secured Certificates to be delivered on the Delivery Date have been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or state law or governmental rule or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its charter or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (iv) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, in accordance with its terms except as limited by bankruptcy, insolvency, - 38 - 39 reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. (n) The Owner Participant will not, directly or indirectly, sell, assign, convey or otherwise transfer any of its right, title or interest in and to this Agreement, the Trust Estate or the Trust Agreement or any proceeds therefrom to any person or entity, unless (i) the proposed transferee is a "Transferee" (as defined below), (ii) Lessee shall have (1) received an opinion (in form and substance reasonably satisfactory to Lessee) of counsel to the Owner Participant (who shall be reasonably satisfactory to Lessee) to the effect that such transfer will not result in any 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 Loan Participants, 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 Loan Participants, 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 Majority in Interest of Certificate Holders; provided, however, that any Transferee shall not be an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or other similar person or a corporation or other entity controlling, controlled by or under common control with such an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or other similar person. Each such transfer to a Transferee shall be subject to the conditions that (M) upon giving effect to such transfer, the Transferee is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or other similar arrangement unless approved by Lessee), and has full power and authority to enter into the transactions contemplated hereby, (N) the Transferee has the requisite power and authority to enter into and carry out the transactions contemplated hereby and such Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants 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, the Majority in Interest of Certificate Holders, 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 - 39 - 40 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 Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, specifying the name and address of the proposed Transferee. (o) Notwithstanding the provisions of Section 8(x) hereof, unless waived by the Loan Participants, Lessee shall not be entitled to assume the Secured Certificates on the date for purchase of the Aircraft pursuant to Section 19(d) of the Lease if on such date an Event of Default shall have occurred and be continuing or any condition or event shall exist which, with the passage of time or giving of notice or both, would become such an Event of Default. (p) First Security Bank of Utah, 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)(A) Each Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Secured Certificate or any interests represented thereby with the assets of any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1) of the Code. Each Loan Participant agrees that it will not transfer any Secured Certificate (or any part thereof) to any entity (except pursuant to Section 2.14 of the Trust Indenture) unless such entity makes (or is deemed to have made) a representation and warranty as of the date of transfer that either no part of the funds to be used by it for the purchase of such Secured Certificate (or any part thereof) constitutes assets of any "employee benefit plan" or that such transfer will not result in a non-exempt prohibited transaction (as defined in Section 4975 of the Code and ERISA). The Owner Participant agrees that it will not transfer any of its right, title or interest in and to this Agreement, the Trust Estate or the Trust Agreement or any proceeds therefrom to any entity unless such entity makes (or is deemed to have made) a - 40 - 41 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) Lessee represents and warrants that: none of (i) the execution and delivery of this Agreement, (ii) the initial purchase by the Loan Participants of the Secured Certificates, and (iii) the initial acquisition by the Owner Participant of its beneficial interest in the Trust Estate will involve any prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation being made in reliance upon and subject to the accuracy of the representations contained in subparagraph (A) of this Section 8(q)). (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, and (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 and not specifically reserved to Lessee under Section 1 thereof, 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 Loan Participants 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 - 41 - 42 meaning of Regulation X of the Board of Governors of the Federal Reserve System, assuming that the proceeds were and are applied as contemplated by the provisions of this Agreement. (t) Each Loan Participant covenants and agrees that it shall not cause or permit to exist a Loan Participant Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each Loan Participant agrees that it will promptly, at its own expense, take such other action as may be necessary duly to discharge such Loan Participant Lien attributable to it. Each Loan Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Loan Participant Lien attributable to it. Each Loan Participant agrees that Lessee may, on behalf of the Owner Trustee and upon notice to the affected Certificate Holder, arrange for another institution (which may be a Certificate Holder) to purchase the Secured Certificate of the affected Certificate Holder by paying the affected Certificate Holder an amount equal to the unpaid principal amount of the Secured Certificates held by the affected Certificate Holder plus accrued but unpaid interest thereon to the date of payment of such principal amount. For purposes of this Section 8(t), "affected Certificate Holder" shall mean a Certificate Holder which has asserted claims against the Owner Trustee or Lessee under or sought rights or remedies provided by Section 7(b) hereof or Sections 11.01 or 11.02 of the Trust Indenture. (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) First Security Bank of Utah, National Association, in its individual capacity, represents and warrants that: (i) the Trust Agreement and, assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, each of the other Owner Trustee Documents has been duly executed and delivered by one of its officers who is duly authorized to execute and deliver such instruments on behalf of First Security Bank of Utah, National Association or the Owner Trustee, as the case may be; (ii) the Trust Estate is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to First Security Bank of Utah, National Association, in its individual capacity, and there are no Liens affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Trust Indenture Estate resulting from any act or claim against First Security Bank of Utah, National Association, in its individual capacity, arising out of any event or condition not related to the ownership, leasing, use or operation of the Aircraft or to any other transaction contemplated by - 42 - 43 this Agreement or any of the Operative Documents, including any such Lien resulting from the nonpayment by First Security Bank of Utah, National Association, in its individual capacity, of any Taxes (as defined in Section 7(b)(i) hereof) imposed or measured by its net income; (iii) there has not occurred any event which constitutes (or to the best of its knowledge would, with the passage 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 First Security Bank of Utah, National Association, in its individual capacity, and which is presently continuing; (iv) it is a national banking association duly organized, validly existing and in good standing under the laws of the United States and has the full corporate power, authority and legal right to enter into and perform its obligations under each of the Owner Trustee Documents; (v) each of the Owner Trustee Documents has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal law governing the banking and trust powers of First Security Bank of Utah, National Association, or Utah law or regulation or contravene or result in any breach of the provisions of its articles of association or By-Laws or any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (vi) each of the Owner Trustee Documents has been duly executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, each thereof is the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with their respective terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (vii) there are no Taxes payable by it (either in its individual capacity or as Owner Trustee), the Trust Estate, the Owner Participant, Lessee, the Indenture Trustee or the Loan Participants to the State of Utah in connection with the execution, delivery and performance of the Operative Documents solely because First Security Bank of Utah, National Association is a national banking association with its principal office in the State of Utah and will perform its obligations under the Operative Documents in the State of Utah, other than franchise or other taxes based on or measured by any fees or compensation received or accrued by First Security Bank of Utah, National Association - 43 - 44 for services rendered in connection with the transactions contemplated by the Operative Documents. (w) The Owner Participant covenants and agrees that if (i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to Lessee written notice of Lessor's election to retain title to the Aircraft and (iii) the Owner Trustee has failed to make, on or before the Termination Date, any payment required to be made by the Owner Trustee pursuant to Section 9(c) in connection with its retention of title to the Aircraft, the Owner Participant will indemnify Lessee for any losses, damages, costs or expenses of any kind (including any additional rents paid by Lessee and any fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a consequence of such failure by the Owner Trustee. The Owner Participant further covenants and agrees to pay those costs and expenses specified to be paid by the Owner Participant pursuant to Exhibit E to the Lease. (x) Each of the Owner Participant, the Owner Trustee, the Indenture Trustee, each Loan Participant 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. (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 each Participant an agreement in form and substance - 44 - 45 reasonably satisfactory to such 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 each 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 Participants, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (ii) above comply with this subparagraph (A) of Section 8(y) and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any such consolidation or merger or any such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety in accordance with this subparagraph (A) of Section 8(y), the successor corporation or Person formed by such consolidation or into which Lessee is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, Lessee under this Agreement with the same effect as if such successor corporation or Person had been named as Lessee herein. No such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety shall have the effect of releasing Lessee or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this subparagraph (A) of Section 8(y) from its liability in respect of any Operative Document to which it is a party. (B) Lessee shall at all times maintain its corporate existence except as permitted by subparagraph (A) of this Section 8(y). (z) Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust Supplement and any financing statements or other instruments as are necessary to maintain, so long as the Trust Indenture or the Lease is in effect, the perfection of the security interests created by the Trust Indenture and any security interest that may be claimed to have been created by the Lease and the interest of the Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the Indenture Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable them to take such action. Lessee will notify the Owner Trustee, the Owner Participant and the Indenture Trustee of any change in the location of its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) promptly after making such change or in any event within the - 45 - 46 period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. (aa) Section 3 of the Lease contemplates that, under certain circumstances, the Owner Participant will make certain recalculations of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the Owner Participant hereby agrees to make such recalculations as and when contemplated by the Lease and subject to all the terms and conditions of the Lease and promptly to take such further actions as may be necessary or desirable to give effect to and to cause the Owner Trustee to give effect to the provisions of Section 3 of the Lease. (bb) The Owner Participant hereby agrees with Lessee, and only with Lessee, and not for the benefit of any other party to this Participation Agreement, that it will promptly pay in full to the Owner Trustee any funds necessary to enable the Owner Trustee promptly to pay to Lessee the full amount of any Reimbursement Amount owed to Lessee. (cc) The Owner Participant hereby agrees to notify Lessee or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York time on the third Business Day prior to the day for which an Excess Amount is indicated stating whether or not the Owner Participant intends to pay such Excess Amount in full by 10:30 A.M. (New York time) on the due date. (dd) Bankers Trust Company agrees to act as Administrative Agent hereunder. The Administrative Agent agrees to notify each of the Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual interest expected to accrue on the Secured Certificates during each Interest Period promptly after the commencement of such Interest Period and after the occurrence of any event that would cause such actual interest expected to accrue during such Interest Period to change from the amount previously notified. The Administrative Agent further agrees to perform all of the functions that are required to be performed by the Administrative Agent pursuant to the terms of the Trust Indenture. (ee) The Owner Participant hereby agrees with Lessee that it will pay, or cause to be paid, all costs and expenses that are for the account of the Owner Trustee pursuant to Section 5(d) of the Lease. (ff) 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(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture). - 46 - 47 (gg) [ ] agrees to act as Documentation Agent hereunder and to perform all of the functions that are required to be performed by the Documentation Agent hereunder. (hh) [ ], [ ] and [ ] each agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate (as defined in the Trust Indenture). SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall, pursuant to this Section 9 and in accordance with the requirements of Section 3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt payment structures. Within forty-five Business Days after the need for an adjustment to Rent has been established pursuant to Section 3 of the Lease, the Owner Participant shall deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of debt amortization and Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages. Within forty-five days of its receipt of the Reoptimization Certificate, Lessee may demand a verification, pursuant to Exhibit E of the Lease, of the information set forth in the Reoptimization Certificate. Upon the acceptance by Lessee of the accuracy of the information set forth in the Reoptimization Certificate or the determination pursuant to such verification procedures of such information, the Owner Participant will cause the Owner Trustee (M) to execute a Lease Supplement setting forth the reoptimized Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages, and (N) to exchange new Secured Certificates containing reoptimized amortization schedules for the Secured Certificates outstanding immediately prior to such reoptimization. (b) In connection with reoptimization adjustments of Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree to changes in the amortization schedule of the Secured Certificates, and (N) each Loan Participant will exchange the Secured Certificates held by it immediately prior to such reoptimization for new Secured Certificates containing reoptimized amortization schedules; provided that such changes do not (X) change the final maturity of any Secured Certificates to beyond twenty years from the Delivery Date or (Y) reduce Basic Rent, the Stipulated Loss Value or the Termination Value percentages below the amount necessary (together with the Excess Amount and all other amounts simultaneously payable by Lessee) to permit payment of all amounts payable pursuant to the Secured Certificates or (Z) increase the weighted average lives of the Secured Certificates as of the Delivery Date to more than 15 years. SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the Owner Trustee hereby (A) agrees with Lessee and the Loan Participants to comply with all of the terms of the Trust Agreement (as the same may hereafter be amended or supplemented from time to time in accordance with the terms thereof) applicable to it; (B) agrees with - 47 - 48 Lessee, the Loan Participants 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 Loan Participants. 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 10.05 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 Bill 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 Bill of Sale, second, the Lease, with the Lease Supplement covering the Aircraft, the Trust Indenture and - 48 - 49 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 attributed thereto in the Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set forth in the Trust Indenture. Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it may be amended from time to time. (b) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto or to the Guarantor shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 13(b). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 13(b), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the Administrative Agent, the Documentation 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, or (D) if to the Guarantor, addressed to the Guarantor at such address as the Guarantor shall have furnished by notice to the parties hereto. (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 - 49 - 50 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, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of Lessee in New York City as from time to time may be designated by Lessee in writing to the Owner Participant, the Owner Trustee and the Indenture Trustee. SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant agrees that if, at any time, the Trust Estate becomes subject to any Taxes (as defined in Section 7(b) hereof) 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 Loan Participants may reasonably request, (B) the rights and obligations under the Operative Documents of the Owner Participant and the Loan Participants 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 Loan Participants shall have received an opinion or opinions of counsel (satisfactory to the Owner Participant and the Loan Participants), in scope, form and substance satisfactory to the Owner Participant and the Loan Participants 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 Loan Participants, 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 Loan Participants and to the Owner Participant covering the matters described in Section 4(a)(xiii) hereof and such other matters as the Loan Participants and the Owner Participant may reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner Participant, the Indenture Trustee and the Loan Participants 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 - 50 - 51 by the Owner Trustee, the Owner Participant, the Indenture Trustee and the Loan Participants in connection with such change of situs. SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, or the Indenture Trustee under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture Trustee. (b) The representations, warranties, indemnities and agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee, the Administrative Agent, the Documentation Agent and the Owner Participant provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan Participants', the Indenture Trustee's, the Administrative Agent's, the Documentation Agent's and the Owner Participant's obligations under any and all thereof, shall survive the making available of the respective Commitments by the Loan Participants and 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 its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and assigns, each Certificate Holder and its successors and registered assigns, the Indenture Trustee and its successors as Indenture Trustee under the Trust Indenture, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, the Administrative Agent and the Documentation Agent. 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 - 51 - 52 Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate. Therefore, anything contained in this Agreement or such other agreements to the contrary notwithstanding (except for any express provisions that the Owner Trustee is responsible for in its individual capacity), no recourse shall be had with respect to this Agreement or such other agreements against the Owner Trustee in its individual capacity or against any institution or person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling person or persons of any of them; provided, however, that this Section 15(d) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable; and provided, further, that nothing contained in this Section 15(d) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 15(d) shall survive the termination of this Agreement and the other Operative Documents. (e) It is the intention of the parties hereto that the Owner Trustee, as Lessor under the Lease, and the Indenture Trustee, as assignee of such Owner Trustee's rights under the Lease pursuant to the Trust Indenture, will be entitled to the benefits of 11 U.S.C. Section 1110 in the event of any reorganization of Lessee under such Section. SECTION 16. EXPENSES. (a) Invoices and Payment. Each of the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan Participants shall promptly submit to the Owner Trustee and Lessee for their prompt approval (which shall not be unreasonably withheld) copies of invoices in reasonable detail of the Transaction Expenses for which it is responsible for providing information as they are received (but in no event later than January 15, 1996). The Owner Participant agrees to transfer to the Owner Trustee promptly but in any event no later than January 31, 1996 such amount as shall be necessary in order to enable the Owner Trustee to pay Transaction Expenses. To the extent of funds received by it, the Owner Trustee agrees to pay all invoices of Transaction Expenses that have been approved by it and Lessee promptly upon receipt thereof. Notwithstanding the foregoing, to the extent that Transaction Expenses exceed 1.5% of Lessor's Cost, Lessee at its sole option shall have the right to pay directly any or all Transaction Expenses which are in excess of 1.5% of Lessor's Cost. (b) Payment of Other Expenses. In the event that the transaction contemplated by this Participation Agreement fails to close as a result of the Owner Participant's failure to negotiate in good faith or to comply with the terms and conditions upon which its participation in the transaction was predicated, the Owner Participant will be responsible for all of its fees and expenses, including but not limited to the fees, expenses and disbursements of its special counsel. 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 - 52 - 53 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. The Owner Participant understands and agrees that the debt to be issued in connection with such refinancing may be issued in several classes, each of which may have a different interest rate, final maturity date and priority of payment. The Owner Participant further understands and agrees that one or more of such classes may be entitled to the benefit of a liquidity facility, which will entitle the Indenture Trustee (or a collateral agent therefor) to make drawings thereunder to pay interest on a current basis on the enhanced classes of debt for up to three semi-annual interest payments following a payment default with respect to such enhanced classes. In such a structure the Owner Participant agrees that drawings of the entire amount available under the liquidity facility for any class (and the deposit of the proceeds thereof into a cash collateral account) will be required in the event of a ratings decline with respect to the related liquidity provider or in the event that the liquidity facility is not extended or replaced prior to its scheduled expiration. Amounts owed to the liquidity facility provider for both drawings and interest thereon will generally be senior to all Loan Participant claims. The Owner Participant understands and agrees that in any refinancing operation it will agree to these and any other conditions which do not impair the customary rights of an owner participant in a leveraged lease transaction. Upon such agreement: (1) within ten Business Days after the reaching of such agreement, the Owner Participant will deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REFINANCING CERTIFICATE") setting forth (i) the proposed date on which the outstanding Secured Certificates will be redeemed, any new debt will be issued and the other aspects of such refinancing will be consummated (such date, the "REFINANCING DATE") and (ii) the following information calculated pursuant to the provisions of paragraph (6) of this Section 17(a): (A) 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 - 53 - 54 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; (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), 4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc. - 54 - 55 75-28 Section 4.08(1) shall be applied on a prospective basis from the date of such adjustment) 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. AGENTS. (a) Each Loan Participant hereby appoints and authorizes each of the Administrative Agent and the Documentation Agent (each, an "AGENT") to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the Trust Indenture as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. Each Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the Trust Indenture. As to any matters not expressly provided for hereby or by the Trust Indenture, each Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority in Interest of Certificate Holders (as defined in the Trust Indenture), and such instructions shall be binding upon all Loan Participants and all Certificate Holders; provided,however, that such Agent shall not be required to take any action that exposes such Agent to personal liability or that is contrary to this Agreement, the Trust Indenture or applicable law. Each Agent agrees to give to each Loan Participant prompt notice of each notice given to it by the Owner Trustee pursuant to the terms of this Agreement or the Trust Indenture. (b) No Agent nor such Agent's directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the Trust Indenture, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Loan Participant and shall not be responsible to any Loan Participant for any statements, warranties or representations (whether written or oral) made in or in connection with the Operative Documents; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Operative Documents on the part of any party thereto or to inspect the property (including the books and records) of any such party; (iv) shall not be responsible to any Loan Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Operative Documents or any other instrument or document furnished pursuant thereto; and (v) shall incur no liability under or in respect of the Operative Documents by acting upon any notice, consent, certificate or other instrument or writing - 55 - 56 (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. (c) With respect to their Loans and any Secured Certificates issued to them, [______________] and [______________] shall have the same rights and powers under the Operative Documents as any other Loan Participant and may exercise the same as though they were not Agents and the term "Loan Participant" or "Certificate Holder" shall, unless otherwise expressly indicated, include [______] and [______] in their individual capacity. [______] and its Affiliates and [______] and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Owner Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any Person who may do business with or own securities of any of such Persons, all as if [______] and [______] were not Agents and without any duty to account therefor to the Loan Participants. (d) Each Loan Participant acknowledges that it has, independently and without reliance upon the Agents or any other Loan Participant and based on the financial statements referred to in Section 7(a)(ix) of this Agreement and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Loan Participant also acknowledges that it will, independently and without reliance upon the Agents or any other Loan Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. (e) Subject to the appointment and acceptance of a successor agent as provided below, any Agent may resign at any time by giving written notice thereof to the Loan Participants, the Owner Trustee and Lessee and may be removed at any time with or without cause by the Majority in Interest of Certificate Holders (as defined in the Trust Indenture). Upon any such resignation or removal, the Majority in Interest of Certificate Holders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority in Interest of Certificate Holders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or removal of the retiring Agent by the Majority in Interest of Certificate Holders, then the retiring Agent may, on behalf of the Loan Participants, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the Trust Indenture. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section 18 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the Trust Indenture. Notwithstanding anything contrary herein, the Administrative Agent and the Documentation Agent hereunder and under the Trust Indenture - 56 - 57 shall be the same institution, respectively, as the Administrative Agent and the Documentation Agent under (and as defined in) the Credit Agreement. - 57 - 58 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: --------------------------------------- Title: Address: U.S. Mail --------- 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier ----------------- 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 [_______________________________], Owner Participant By: --------------------------------------- Title: Address: Attn: Telecopy No.: - Signature Page - 59 STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: --------------------------------------- Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: --------------------------------------- Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 - Signature Page - 60 [INSERT BRIDGE LENDERS] - Signature Page - 61 SCHEDULE I NAMES AND ADDRESSES Lessee: Northwest Airlines, Inc. U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 Wire Transfer First Bank, N.A., Minneapolis ABA No. 091000022 Acct. No. 150250099440 62 Indenture Trustee: State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 Wire Transfer State Street Bank and Trust Company ABA No. 011-00-0028 for credit to State Street Bank and Trust Company Acct. No. 9903-943-0 Attn: Corporate Trust Department Reference: Northwest/NW 1995 A Owner Trustee: First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 Payments made to the Owner Trustee as provided in Section 3(f) of the Lease shall be made to: First Security Bank of Utah, National Association ABA No. 124-0000-12 Acct. No. 051-0922115 Attn: Corporate Trust Department Credit: Northwest/NW 1995 A SCHEDULE I - PAGE 2 63 SCHEDULE II COMMITMENTS
Percentage of Loan Participants: Lessor's Cost - ----------------- -------------
64
Owner Participant: - ----------------- ------------- Total Commitments: 100%
SCHEDULE II - PAGE 2 65 EXHIBIT A TO PARTICIPATION AGREEMENT [NW 1995 A] 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 EX-4.C7 25 FIRST AMENDMENT TO PARTICIPATION AGREEMENT-1995 A 1 FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1995 A] This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1995 A], dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) [_________________________], a Delaware corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the two separate Pass Through Trust Agreements (as defined below), (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 (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; W I T N E S S E T H: WHEREAS, Lessee, the Owner Participant, the Owner Trustee, [____________________________________________________________________________], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1995 A], dated as of November 15, 1995 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1995 A], dated as of November 15, 1995, as supplemented by Trust Agreement and Indenture Supplement [NW 1995 A], dated November 2 21, 1995 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1995 A] relating to the Aircraft, dated as of November 15, 1995, as supplemented by Lease Supplement No. 1 [NW 1995 A] dated November 21, 1995 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1995 A], dated as of November 15, 1995 (the "TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1995 A] relating to the Aircraft, dated as of November 15, 1995 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1995 A] dated as of November 15, 1995 (the "GUARANTEE"), pursuant to which the Guarantor guaranteed certain obligations of Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and Lessee has given its written notice to the Owner Participant and Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent have entered into the Refunding Agreement [NW 1995 A], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1995 A], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue -2- 3 new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES") in two series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1995 A], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1995 A] dated as of June 3, 1996 (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in Section 1 of the Refunding Agreement), two 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing 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 Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") entered into two revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of Certificates of each Pass Through Trust, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent entered into the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Participation Agreement is amended as follows: -3- 4 SECTION 1. AMENDMENT OF THIRD WHEREAS CLAUSE OF THE ORIGINAL PARTICIPATION AGREEMENT. The Third "Whereas" Clause of the Original Participation Agreement is hereby amended by deleting "1.1" therefrom and inserting "1.01" in lieu thereof. SECTION 2. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 3. AMENDMENT OF SECTION 5 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 5 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 4. AMENDMENT OF SECTION 7(a)(iii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(a)(iii) of the Original Participation Agreement is hereby amended by deleting "4(a)(ix)(3)" therefrom and substituting therefor "4(a)(ix)(4)". SECTION 5. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation Agreement is hereby amended by (i) deleting the words "other than a Loan Participant" from clauses (1), (3) and (10) thereof, (ii) deleting clauses (2) and (4) thereof in their entirety and substituting therefor "Intentionally Omitted", (iii) deleting the words "any Loan Participant or any Certificate Holder" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (iv) deleting clause (11)(B) thereof in its entirety, (v) deleting "(C)" from clause (11) thereof and substituting therefor "(B)", and (vi) deleting the parenthetical clause and the last proviso from clause (13) thereof. SECTION 6. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation Agreement is hereby amended by deleting the second sentence of the last paragraph thereof. SECTION 7. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement is hereby amended by (i) deleting the second and third sentences thereof and (ii) deleting the words "other than a Loan Participant" in the first sentence thereof. SECTION 8. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement is hereby amended by (i) deleting the word "and" between the words "expenses" and "Transaction Expenses" in the second parenthetical phrase of the first paragraph thereof and substituting a comma therefor, (ii) inserting after the phrase "to Section 16 hereof" in such second parenthetical phrase the words "and Refinancing Expenses to the extent not required to be paid by the Owner Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement", (iii) adding the words and punctuation "and, only in the case of an Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words "in respect -4- 5 thereof" in the first clause (A) thereof, (iv) adding the words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after the words "Operative Documents" in the second clause (A) thereof and in the second clause (B) thereof, and (v) deleting the words and punctuation "(as defined in Section 7(b) hereof)" from the second clause (E) thereof. SECTION 9. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby amended by deleting the words "each of the Loan Participants" and substituting therefor the words "the Indenture Trustee" in the first line thereof. SECTION 10. AMENDMENT OF SECTION 8(h) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(h) of the Original Participation Agreement is hereby amended by deleting the words and punctuation "(as such terms are defined in Section 7 hereof)" from the fourth sentence thereof. SECTION 11. AMENDMENT OF SECTION 8(i) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(i) of the Original Participation Agreement is hereby amended by deleting the words and punctuation "(as such terms are defined in Section 7 hereof)" from clause (C) thereof. SECTION 12. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation "the Loan Participants," each time they appear in the second sentence thereof, (ii) deleting the words "the Majority in Interest of the Certificate Holders" from the first proviso of the second sentence thereof and substituting therefor the words "Indenture Trustee"; (iii) deleting the "," between the words "Owner Trustee" and "the Indenture Trustee" in clause (N) of the third sentence thereof and substituting therefor "and", (iv) deleting the words "and the Loan Participants" each time they appear in the third sentence thereof other than in clause (R) thereof, (v) deleting the words and punctuation "the Majority in Interest of the Certificate Holders," from clause (O) of the third sentence thereof, and (vi) deleting the words and punctuation "to the Loan Participants," from the fifth sentence thereof. SECTION 13. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement is hereby amended by (i) deleting the word "Each" in the first sentence thereof and substituting therefor the words "The Owner" and (ii) adding a new sentence to the end thereof to read as follows: "The Pass Through Trustee agrees that it will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of the initial supplement (other than the initial supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust Agreement without the prior written consent of the Owner Participant.". SECTION 14. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is hereby amended by deleting the fourth and fifth sentences thereof. -5- 6 SECTION 15. AMENDMENT OF SECTION 8(v)(ii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(v)(ii) of the Original Participation Agreement is hereby amended by deleting the words and punctuation "(as defined in Section 7(b)(i) hereof)" therefrom. SECTION 16. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby amended by (i) deleting the words "each Loan Participant" therefrom and (ii) adding a new second paragraph thereto at the end thereof: 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. SECTION 17. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement is hereby amended by (i) deleting the words "each" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii) deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Indenture Trustee and the Owner", (iii) inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement Assignment", the words and punctuation ", the Refunding Agreement", (iv) deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and substituting therefor the words "the Owner", and (v) deleting the word "Participants" from Section 8(y)(A)(iv) and substituting therefor the words "the Indenture Trustee and the Owner Participant". SECTION 18. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 19. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 20. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 21. AMENDMENT OF SECTION 9 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. -6- 7 SECTION 22. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", the Loan Participants" from clause (B) thereof, (ii) deleting the words "Loan Participants" the second time they appear in clause (C) thereof and substituting therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05" from clause (iii) of the second sentence thereof. SECTION 23. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby amended by deleting the words "at the foot of this Agreement" in clause (A) of the second sentence thereof and substituting therefor the words "on the signature pages to the Refunding Agreement". SECTION 24. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation "(as defined in Section 7(b) hereof)" from the first clause thereof, (ii) deleting the words "Loan Participants" each time they appear in clauses (A), (B), and (D) thereof and substituting therefor the words "Indenture Trustee", (iii) deleting the "," both times it appears between the words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and substituting therefor "and", and (iv) deleting the words "and the Loan Participants" both times they appear in clause (E) thereof. SECTION 25. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Section 15. Miscellaneous. (a) The Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor. SECTION 26. AMENDMENT OF SECTION 18 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 27. RATIFICATION. Except as hereby modified, the Original Participation Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Participation Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Participation Agreement or any word or phrase referring to a section or provision of the Participation Agreement is deemed for all purposes to be a reference to the Participation Agreement or such section or provision as amended pursuant to this Amendment. -7- 8 SECTION 28. MISCELLANEOUS. (a) Each of the parties hereto agrees that the transactions contemplated hereby shall constitute one of the three refinancing operations permitted in Section 17 of the Participation Agreement. (b) Each party hereto acknowledges and agrees that the Purchaser is a Loan Participant under the Participation Agreement, the Lease and the other Operative Documents, and is entitled to the benefits of the covenants and other provisions therein running in favor of the Loan Participants, and to the security purported to be afforded by the Trust Indenture, but that (i) the Purchaser has no liability arising out of any actions or inactions of the Original Loan Participants or any prior Certificate Holder or any event or condition which occurred or existed prior to the Closing, (ii) the Purchaser is making no representations or warranties other than those set forth in the Refunding Agreement, and (iii) the Purchaser has no liability or obligation under any covenant in any of such agreements for any period prior to the Closing. (c) This Amendment 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 Amendment 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 Amendment shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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. THIS AMENDMENT 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 AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -8- 9 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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: ____________________ Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: ____________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ____________________ Name: Title: [_________________________], as Owner Participant By: ____________________ Name: Title: -9- 10 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Subordination Agent By: _______________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee By: _______________________________ Name: Title: -10- 11 SCHEDULE I TO PARTICIPATION AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. EX-4.C8 26 REFUNDING AGREEMENT-1995 A 1 REFUNDING AGREEMENT [NW 1995 A] This REFUNDING AGREEMENT [NW 1995 A], dated as of June 3, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii) [__________], a [__________] corporation (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the two separate Pass Through Trust Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Participation Agreement (as defined below) as if the Closing Date had occurred. W I T N E S S E T H: WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, [Bridge Lenders], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1995 A], dated as of November 15, 1995 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust 2 Indenture and Security Agreement [NW 1995 A], dated as of November 15, 1995, as supplemented by Trust Agreement and Indenture Supplement [NW 1995 A], dated November 21, 1995 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Lessee entered into the Lease Agreement [NW 1995 A] relating to the Aircraft, dated as of November 15, 1995, as supplemented by Lease Supplement No. 1 [NW 1995 A] dated November 21, 1995 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1995 A], dated as of November 15, 1995 (the "TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1995 A] relating to the Aircraft, dated as of November 15, 1995 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1995 A] dated as of November 15, 1995 (the "GUARANTEE") pursuant to which the Guarantor guaranteed certain obligations of the Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and the Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1995 A], dated as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in two series; -3- 3 WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Trustee and the Lessee entered into the First Amendment to Lease Agreement [NW 1995 A], dated as of the date hereof (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"), containing amendments, modifications and additions necessary to give effect to the transactions described herein; WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent will enter into the First Amendment to Participation Agreement [NW 1995 A], dated as of the Refinancing Date (the "PA AMENDMENT NO. 1"; the Original Participation Agreement, as amended by the PA Amendment No. 1, the "PARTICIPATION AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1995 A] dated as of the date hereof (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, two 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 the Pass Through Trustee 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing Secured Certificates bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into two 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 Refinancing Date (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; -4- 4 NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on June 12, 1996 or on such other date agreed to by the parties hereto (the "REFINANCING DATE"): (i) immediately prior to the Closing, the Lessee shall pay to the Owner Trustee, as a payment of Interim Rent under the Lease, an amount equal to the unpaid interest on the Original Secured Certificates accrued up to but not including the Refinancing Date; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Refinancing Secured Certificates being issued to such Pass Through Trustee as set forth in clause (vii) below; (iii) the Owner Trustee shall pay to the Indenture Trustee for the benefit of the holders of the Original Secured Certificates an amount equal to the aggregate principal amount of Original Secured Certificates outstanding on the Refinancing Date, together with accrued and unpaid interest on the Original Secured Certificates up to but not including the Refinancing Date, and all other amounts payable to such holders under the Original Indenture and the Original Participation Agreement; (iv) pursuant to the Indenture, the Indenture Trustee shall disburse to the holders of the Original Secured Certificates the amounts of principal and interest, and other amounts, if any, described in clause (iii) above, owing to them on the Refinancing Date with respect to the Original Secured Certificates as a prepayment of the Original Secured Certificates; (v) simultaneously with the disbursement by the Indenture Trustee of amounts described in clause (iv) above to the holders of the Original Secured Certificates, the Indenture Trustee shall receive the Original Secured Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture; and (vii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Refinancing 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. -5- 5 (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) In case any Pass Through Trustee shall for any reason fail to purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on or prior to June 12, 1996 or such other date as shall be agreed in writing by the parties hereto, the written notice given by the Lessee pursuant to Section 17 of the Original Participation Agreement shall be deemed never to have been given, none of the Owner Participant, the Owner Trustee nor the Lessee shall have any obligation to pay to the holders of the Original Secured Certificates any amount in respect of the prepayment of the Original Secured Certificates, the Original Secured Certificates shall remain outstanding and in full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall not take place. (d) The closing (the "CLOSING") of the transactions described in this Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such other place as the parties hereto may agree. (e) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Refinancing Date. (f) In order to facilitate the transactions contemplated hereby, the Lessee and the Guarantor have entered into the Underwriting Agreement, dated as of the date hereof, among the Lessee, the Guarantor and the several underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to the terms and conditions hereof, the Lessee and the Guarantor will enter into each of the Pass Through Trust Agreements and will undertake to perform certain administrative and ministerial duties under such Pass Through Trust Agreements. SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured Certificates shall be payable as to principal in accordance with the terms of the Indenture, and the Refinancing Secured Certificates shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Refinancing Secured Certificates in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Refinancing Secured Certificates bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Refinancing Secured Certificates shall be dated and authenticated as of the Refinancing Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. -6- 6 SECTION 3. CONDITIONS PRECEDENT. The obligation of the Pass Through Trustee to make the payment described in Section l(a)(ii) and the obligations of the Owner Trustee and the Owner Participant to make the payments and participate in the transactions contemplated by this Agreement on the Refinancing Date are subject to the fulfillment, prior to or on the Refinancing Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder and paragraph (r) shall not be a condition precedent to the obligations of the Pass Through Trustee hereunder): (a) The Owner Trustee shall have tendered the Refinancing Secured Certificates to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Refinancing Secured Certificates and shall have tendered the Refinancing Secured Certificates to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts or conformed copies of the following documents: (1) this Agreement; (2) the Lease Amendment No. 1; (3) the Indenture; (4) the PA Amendment No. 1; (5) the Trust Agreement Amendment No. 1; (6) each of the Pass Through Trust Agreements; (7) the Intercreditor Agreement; and (8) the Liquidity Facility for each of the Class A and Class B Trusts. (c) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Lessee and the Guarantor (as the case may be) as to the person or persons authorized to execute and deliver this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the TIA Amendment No. 1 and any other documents to be executed on behalf of the Lessee or the Guarantor (as the case may be) in connection with the -7- 7 transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Lessee and the Guarantor or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the 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 the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby; and (3) a copy of the certificate of incorporation of the Lessee and the Guarantor, certified by the Secretary of State of the State of Minnesota in the case of the 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 the Lessee and the Guarantor, certified by the Secretary or Assistant Secretary of the 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 the 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 Refinancing Date, as to the due incorporation and good standing of the Lessee or the Guarantor (as the case may be) in such state. (d) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received a certificate signed by an authorized officer of the Lessee (and, with respect to the matters set forth in clauses (4) and (5) below, of the Guarantor), dated the Refinancing Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Original Lease and has a current, valid certificate of airworthiness; (2) the FAA Bill of Sale, the Original Lease and the Original Indenture have been duly recorded, and the Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49, United States Code, relating to aviation (the "FEDERAL AVIATION ACT"); (3) the Aircraft has been registered with the FAA in the name of the Owner Trustee and the Lessee has authority to operate the Aircraft; (4) the representations and warranties contained herein of the Lessee and the Guarantor are correct as though made on and as of the Refinancing Date, except to the extent that such representations and -8- 8 warranties (other than those contained in clause (v) of Section 8(d)) relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (5) there has been no material adverse change in the financial condition of the Guarantor and its subsidiaries, taken as a whole, since December 31, 1995. (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement, the Indenture, the PA Amendment No. 1, 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 and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary or an Assistant Secretary of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Refinancing 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). (f) The Pass Through Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement, the PA Amendment No. 1 and any other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons; -9- 9 (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; (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 Refinancing Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Refinancing 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). (g) The Pass Through Trustee and the Owner Trustee each shall have received a certificate signed by an authorized officer of the Owner Participant, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Refinancing 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). (h) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an independent insurance broker's report as to the due compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (i) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for the Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal department, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee and the Owner Participant each shall have received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form and substance satisfactory to each of them. -10- 10 (l) The Pass Through Trustee and the Owner Trustee each shall have received an opinion addressed to it from Feltman, Karesh, Major & Farbman, special counsel for the Owner Participant, and an opinion addressed to it from corporate counsel to the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee shall have received an opinion of White & Case, special counsel to the Liquidity Provider, and in house German counsel to the Liquidity Provider, each in form and substance satisfactory to the Pass Through Trustee. (n) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The 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 Refinancing Secured Certificates to be purchased from the Owner Trustee. (p) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustees to make the payments described in Section l(a)(ii) or for the Owner Trustee or the Owner Participant to participate in the transactions contemplated by this Agreement on the Refinancing Date. (q) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee or the Guarantor which are required in connection with the Pass Through Trustee's making of the payments described in Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Refinancing Date shall have been duly obtained. (r) The Lessee and the Owner Participant shall each have executed and delivered to the other the TIA Amendment No. 1. Promptly following the recording of the Lease Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of the Lease Amendment No. 1 and the Indenture. SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in the transactions contemplated by this Agreement and to execute and deliver each of the Pass Through Trust Agreements and -11- 11 the PA Amendment No. 1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion referred to in subsections (j) through (n) of Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter from counsel rendering such opinion authorizing the Lessee and the Guarantor to rely on such opinion as if it were addressed to the Lessee and the Guarantor, (ii) each certificate referred to in subsections (e) through (g) of Section 3, (iii) executed counterparts or conformed copies of the TIA Amendment No. 1, and (iv) such other documents and evidence with respect to each other party hereto as the Lessee, the Guarantor or their counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. (b) The respective obligations of each of the Lessee, the Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Pass Through Trustee are correct as though made on and as of the Refinancing 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), (ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) 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. SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee and the Indenture Trustee to execute and deliver the Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Indenture. The Lessee and the Guarantor, by execution and delivery hereof, consent to such execution and delivery of the Indenture. The Indenture shall be effective as of the Refinancing Date. SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, by execution and delivery hereof, consent to the amendment to the Original Lease effected by, and request and instruct the Owner Trustee to execute and deliver the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1 shall be effective as provided therein. SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner -12- 12 Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee and the Indenture Trustee to execute and deliver the PA Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the execution and delivery of the PA Amendment No. 1 by each of the parties thereto, the Original Participation Agreement shall be amended as set forth in the PA Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall be a party thereto from and after the Refinancing Date to the extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing Date. SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) each of the 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 on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under (i) in the case of the Lessee, this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 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; (b) the 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; (c) the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, and the performance of the obligations of the Lessee or the Guarantor (as the case may be) under this Agreement, the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, have been duly authorized by all -13- 13 necessary corporate action on the part of the 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 the 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 the Lessee or the Guarantor (as the case may be) or the certificate of incorporation or by-laws of the 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 the Lessee or the Guarantor (as the case may be) under, any indenture, mortgage, contract or other agreement to which the 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; (d) neither the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 or any other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, nor the performance of the obligations of the Lessee or the Guarantor (as the case may be) hereunder or under the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement or the other Operative Documents to which the Lessee or the Guarantor (as the case may be) is a party, nor the consummation by the Lessee or the Guarantor (as the case may be) 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 in respect of, the Department of Transportation, the FAA, or any other federal, state or foreign governmental authority having jurisdiction, other than (i) 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, (ii) 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, (iii) the consents, approvals, notices, registrations and other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement, (iv) the registrations and filings referred to in Section 8(f), and (v) 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; -14- 14 (e) this Agreement constitutes, and each of the Participation Agreement, the Pass Through Trust Agreements, the Tax Indemnity Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment No. 1 and the Lease Amendment No. 1 shall have been executed and delivered by each of the parties thereto, will constitute, the legal, valid and binding obligations of the Lessee or the Guarantor (as the case may be) enforceable against the 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, 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; (f) except for the filings and registrations referred to in Section 7(a)(vi) of the Participation Agreement, such filings and registrations as shall have been made or effected subsequent thereto and the filing for recording pursuant to the Federal Aviation Act of the Indenture and the Lease Amendment No. 1, 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 the 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 other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease and the Lease Amendment No. 1 (to the extent the Lease constitutes chattel paper), and the filing of continuation statements at periodic intervals with respect to the Uniform Commercial Code financing statements in effect on the Refinancing Date covering the security interests created by the Original Indenture or describing the Lease as a lease; (g) neither the 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; (h) neither the Lessee nor the Guarantor is an "investment company" within the meaning of the Investment Company Act of 1940, as amended; -15- 15 (i) 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; and (j) 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. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the parties below represents, warrants and covenants to each of the other parties to this Agreement and to the Liquidity Provider as follows: (a) The Indenture Trustee in its individual capacity represents, warrants and covenants that: (1) 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 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 PA Amendment No. 1, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party; (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, the PA Amendment No. 1 and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party 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; (3) this Agreement constitutes, and the Participation Agreement, when the PA Amendment No. 1 has been executed and delivered by the Indenture Trustee, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the -16- 16 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; (4) 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 (5) there are no Indenture Trustee Liens on the Aircraft or any portion of the Trust Estate. (b) The Owner Trustee, in its individual capacity (except as provided in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7) and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and (11) below) as Owner Trustee, represents and warrants that: (1) 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, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver the Trust Agreement, has the corporate power and authority to carry out the terms of the Trust Agreement, and has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of the Trust Agreement by the Owner Participant), as Owner Trustee, and to the extent expressly provided herein or therein, in its individual capacity, the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Refinancing Secured Certificates, the Lease, the PA Amendment No. 1 and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) 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 and (assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant) this Agreement constitutes, and each of the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Indenture, when entered into, and the Lease, when the Lease Amendment No. 1 shall have been entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, -17- 17 in its individual capacity or as Owner Trustee, as the case may be, enforceable against it in its individual capacity or as Owner Trustee, as the case may be, in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, the Owner Trustee has duly authorized, and on the Refinancing Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Refinancing Secured Certificates pursuant to the terms and provisions hereof and of the Indenture, and each Refinancing Secured Certificate on the Refinancing Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Refinancing Secured Certificate and the Indenture; (4) neither the execution and delivery by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, the Original Participation Agreement, the PA Amendment No. 1, the Trust Agreement, the Original Indenture, the Indenture, the Original Lease, the Lease Amendment No. 1, the Refinancing Secured Certificates or any other Operative Document to which it is a party, 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 hereby or 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 hereof and 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; (5) 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, -18- 18 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 Indenture, the Lease, the Refinancing 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 8(d); (6) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (7) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (8) 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 redemption of the Original Secured Certificates or the issuance of the Refinancing 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 (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were -19- 19 not located in the State of Utah and First Security Bank of Utah, 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; (9) 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 (1), (2), (3) and (4) above; (10) 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; (11) the Owner Trustee has not, in its individual capacity or as Owner Trustee, directly or indirectly offered any Refinancing 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, the Original Loan Participants 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 Refinancing 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; and (12) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) 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, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Original Participation Agreement, the Tax Indemnity Agreement, the Trust Agreement, the PA Amendment No. 1, and the TIA Amendment No. 1; this Agreement has been duly authorized, executed and delivered by it; and this Agreement constitutes, and the -20- 20 Participation Agreement when the PA Amendment No. 1 shall have been entered into, and the Tax Indemnity Agreement when the TIA Amendment No. 1 shall have been entered into, will constitute, the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their 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; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or 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, 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; (3) 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 or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the PA Amendment No. 1 and the TIA Amendment No. 1; (4) there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or arbitrator which would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Participation Agreement, the Tax Indemnity Agreement and the Trust Agreement; (5) 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 refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Refinancing 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 -21- 21 the Trust Estate and the Trust Agreement was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Refinancing 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 that 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 Indenture, (D) which the Owner Participant 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). (d) The Pass Through Trustee represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements, the Intercreditor Agreement and the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1, and (upon execution and delivery of the PA Amendment No. 1), the Participation Agreement, will 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 -22- 22 affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the performance by the Pass Through Trustee of the Participation Agreement, the purchase by the Pass Through Trustee of the Refinancing 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; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby or by the Participation Agreement, 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; (5) 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, the Intercreditor Agreement or the Participation 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 Refinancing 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 as a grantor trust under -23- 23 subpart E, Part I of Subchapter J of the Code, such trusts will not be subject to any Taxes imposed by the Commonwealth of Massachusetts or any political subdivision thereof; (6) 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 Participation Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) 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, the Lessee or the Guarantor. (e) The Subordination Agent represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement and, when the PA Amendment No. 1 has been executed and delivered by each of the parties thereto, the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent each of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery by the Subordination Agent of the PA Amendment No. 1), the Participation Agreement will constitute, the legal, valid and binding -24- 24 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; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the Participation Agreement, or the performance by the Subordination Agent of the Participation 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; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby or by the Participation Agreement requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement, the PA Amendment No. 1 or the Participation 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 Refinancing 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); -25- 25 (6) 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 PA Amendment No. 1, the Participation Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter, the Lessee or the Guarantor. SECTION 10. NOTICES. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and any such notice shall become effective upon being deposited in the United States mail, with proper postage for first-class registered or certified mail prepaid, or when delivered personally or, if promptly confirmed by mail as provided above, when dispatched by facsimile or other written telecommunication, addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement. SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Indenture Trustee and the Original Loan Participants in connection with the transactions contemplated by this 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) shall be paid promptly by the Owner Participant, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Refinancing Secured Certificates issued under the Indenture of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for the Underwriters, and -26- 26 (E) Vedder, Price, Kaufman & Kammholz, special counsel for the Original Loan Participants; (2) the reasonable fees, expenses and disbursements of Feltman, Karesh, Major & Farbman, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft, special counsel for the Lessee; (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 costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 11 and the agreements referred to herein are not consummated, the Lessee shall bear and pay all costs, expenses and fees referred to in this Section 11; provided that if the transactions fail to be consummated as a result of the failure of the Owner Participant to act in good faith in consummating the transactions, or to otherwise comply with the terms hereof, the Owner Participant shall bear and pay its own fees, costs and expenses (including, without limitation, the fees and expenses of its special counsel) and the Lessee shall pay all other reasonable fees, costs and expenses as aforesaid. SECTION 12. 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. SECTION 13. MISCELLANEOUS. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations, warranties and agreements herein of the Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee, and the Lessee's, the Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the Subordination Agent's and the Pass Through Trustee's obligations under any and all thereof, shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. (b) This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each -27- 27 counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only 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 each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and, subject to the terms of the Participation 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 Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject to the provisions of the Participation Agreement, its successors and permitted assigns. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. No purchaser or holder of any Refinancing Secured Certificates shall be deemed to be a successor or assign of any holder of the Original Secured Certificates. SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -28- 28 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. NORTHWEST AIRLINES, INC., Lessee By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -29- 29 NORTHWEST AIRLINES CORPORATION, Guarantor By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -30- 30 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: __________________________________ Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Facsimile: (801) 246-5053 -31- 31 [__________], Owner Participant By: ____________________________________ Name: Title: Address: Attention: Facsimile: -32- 32 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Pass Through Trustee By: _____________________________________________ Title: Address: Two International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Facsimile: (617) 664-5371 -33- 33 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 By: _____________________________________________ Title: Address: c/o State Street Bank and Trust Company Two International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Facsimile: (617) 664-5371 -34- 34 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee By:_____________________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -35- 35 SCHEDULE I TO REFUNDING AGREEMENT PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1A dated as of the Closing Date. 2. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1B dated as of the Closing Date. 36 SCHEDULE II TO REFUNDING AGREEMENT REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
Interest Rate Purchaser and Maturity --------- ------------ Northwest Airlines Principal Purchase Pass Through Trust Amount Price --------- -------- 1996-1A [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1B [ _ ]% Refinancing Secured Certificates due [ ] $[ ]
EX-4.D1 27 TRUST AGREEMENT -1995 B 1 TRUST AGREEMENT [NW 1995 B] This TRUST AGREEMENT [NW 1995 B] dated as of December 13, 1995 between [_____________________], a [___________] corporation (the "ORIGINAL OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association in its individual capacity (in such individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); W I T N E S S E T H: ARTICLE I DEFINITIONS AND TERMS SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall otherwise require and except as contained in this Section 1.01, the capitalized terms used herein shall have the respective meanings assigned thereto in the Lease (as hereinafter defined) for all purposes hereof. All definitions contained in this Section 1.01 shall be equally applicable to both the singular and plural forms of the terms defined. For all purposes of this Trust Agreement the following terms shall have the following meanings: "Excluded Payments" has the meaning ascribed to such term in the Trust Indenture. "Indenture Event of Default" has the meaning which the term "Event of Default" has in the Trust Indenture. "Lease" means that certain Lease Agreement [NW 1995 B], to be dated as of the date hereof, and to be entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of this Trust Agreement, as said Lease Agreement may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Trust Agreement. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Event of Default" has the meaning which the term "Event of Default" has in the Lease. "Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns. 2 "Owner Participant" means the Original Owner Participant and each Subsequent Owner Participant to the extent that the same shall, at the relevant time, have an Ownership Interest. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by this Trust Agreement, which percentage shall be 100%. "Participation Agreement" has the meaning ascribed to such term in the Lease. "Replacement Airframe" has the meaning ascribed to such term in the Trust Indenture. "Replacement Engine" has the meaning ascribed to such term in the Trust Indenture. "Subsequent Owner Participant" means any corporation to which the Original Owner Participant or any transferee from the Original Owner Participant or any Subsequent Owner Participant shall have transferred at any time after the Delivery Date all of the undivided right, title and interest originally held by the Original Owner Participant in this Trust Agreement, the Trust Estate and the Participation Agreement, to the extent permitted by Section 8.01 of this Trust Agreement and Section 8 of the Participation Agreement, provided that any such transfer: (i) shall be effected by a written agreement, in form and substance reasonably satisfactory to the Owner Trustee in its individual capacity, among such transferee, its transferor and the Owner Trustee, which shall provide that such transferee thereby becomes a party to, and beneficiary of, this Trust Agreement and an Owner Participant for all purposes hereof and that such transferee assumes all of the obligations of its transferor under this Trust Agreement; and (ii) so long as the Lease shall be in effect or any Secured Certificates remain unpaid, such transferee and its transferor shall have complied with all of the terms of Section 8(n) of the Participation Agreement. "Trust Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant, the Loan Participants or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its individual capacity, or to the Loan Participants or any other holder of a Secured Certificate, or to any of their respective directors, officers, employees, servants and agents, pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. "Trust Indenture Estate" has the meaning ascribed to such term in the Trust Indenture. -2- 3 "Trust Office" shall mean the principal corporate trust office of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or the principal corporate trust office of any successor Owner Trustee. "Trust Supplement" means a supplement to the Trust Indenture and to this Trust Agreement in substantially the form of Exhibit A to the Trust Indenture which shall particularly describe the Aircraft, and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Trust Agreement. ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS; DECLARATION OF TRUST SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant hereby authorizes and directs the Owner Trustee to execute and deliver the Operative Documents and any other agreements, instruments or documents to which the Owner Trustee is a party in the respective forms thereof in which delivered from time to time by the Owner Participant to the Owner Trustee for execution and delivery and, subject to the terms hereof, to perform its duties and, upon instructions from the Owner Participant, exercise its rights under said Operative Documents in accordance with the terms thereof. SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the Owner Participant, subject, however, to the provisions of and the Lien created by the Trust Indenture and to the provisions of the Lease. ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF SECURED CERTIFICATES SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, on the Delivery Date, subject to due compliance with the terms of Section 3.02 hereof: (a) purchase the Aircraft pursuant to the Participation Agreement and the Bill of Sale; (b) accept from Lessee the delivery of the Bill of Sale and the FAA Bill of Sale; -3- 4 (c) cause the Aircraft to be leased to Lessee under the Lease, and in furtherance thereof execute and deliver a Lease Supplement covering the Aircraft; (d) execute and deliver the Trust Supplement covering the Aircraft; (e) issue to the Loan Participants Secured Certificates in the amounts and otherwise as provided in Section 1(a) of the Participation Agreement; (f) execute and deliver the financing statements referred to in Section 4(a)(vi) of the Participation Agreement, together with all other agreements, documents and instruments referred to in Section 4 of the Participation Agreement to which the Owner Trustee is a party; and (g) effect the registration of the Aircraft in the name of the Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of Sale; (ii) an application for registration of the Aircraft in the name of the Owner Trustee (including without limitation an affidavit from the Owner Trustee in compliance with the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement. SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation of the Owner Trustee to take the action required by Section 3.01 hereof with respect to the Aircraft shall be subject to the following conditions precedent: (a) the Original Owner Participant shall have made the full amount of its Commitment set forth in Schedule II of the Participation Agreement available to the Owner Trustee, in immediately available funds, in accordance with Section 1 of the Participation Agreement; and (b) the terms and conditions of Section 4 of the Participation Agreement, insofar as they relate to the Aircraft, shall have been complied with in a manner satisfactory to the Original Owner Participant and the Owner Trustee. SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, take the actions specified to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in accordance with the provisions of such Section 8(x). SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR REPLACEMENT ENGINES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of a Replacement Airframe and Replacement Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a Replacement Engine being substituted pursuant to -4- 5 Section 10(b) of the Lease, subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease, as the case may be: (a) to the extent not previously accomplished by a prior authorization, authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees of Lessee) to accept delivery of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engines; (b) accept from Lessee or other vendor of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine a bill of sale or bills of sale (if tendered), and the invoice, if any, with respect to the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine being furnished pursuant to Section 10(a) or (b) of the Lease; (c) in the case of a Replacement Airframe, make application to the Federal Aviation Administration for the registration in the name of the Owner Trustee of the Aircraft of which such Replacement Airframe is a part; (d) execute and deliver a Lease Supplement and a Trust Supplement covering (i) the Aircraft of which such Replacement Airframe is part or (ii) such Replacement Engine, as the case may be; (e) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) and to the Airframe and Engines (if any) or the Engine being replaced to Lessee; (f) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Airframe and Engines or engines (if any) or the Engine or engine being replaced from the lien created under the Trust Indenture and release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such replaced Airframe and Engines, if any, or Engine) from the assignment and pledge under the Trust Indenture; and (g) upon instructions from the Owner Participant, take such further action as may be contemplated by clauses (A) and (B) of the third paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of Section 10(b) of the Lease, as the case may be. SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In the event of the substitution of a Replacement Airframe for the Airframe or the substitution of a Replacement Engine for any Engine or engine, all provisions of this Trust Agreement relating to such replaced Airframe or Engine or engine shall be applicable to such Replacement Airframe or Replacement Engine with the same force and effect as if such Replacement Airframe or Replacement Engine were the same airframe or engine as the Airframe or Engine being replaced but for the Event of Loss with respect to such Airframe or Engine. -5- 6 SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of an engine being transferred to the Owner Trustee pursuant to Section 5(b) of the Lease, subject to due compliance with the terms of such Section 5(b): (a) accept from Lessee the bill of sale with respect to such engine contemplated by such Section 5(b) (if tendered); (b) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) and to an Engine to Lessee as contemplated by such Section 5(b); and (c) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Engine being transferred to Lessee pursuant to such Section 5(b) from the lien of the Trust Indenture and to release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such Engine) from the assignment and pledge under the Trust Indenture. ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture Trustee. Until the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with the provisions of Article III of the Trust Indenture. (b) Payments to Owner Trustee; Other Parties. After the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, any payment of the type referred to in Section 4.01(a) hereof (other than Excluded Payments) received by the Owner Trustee, any payments received from the Indenture Trustee other than as specified in Section 4.01(d) hereof and any other amount received as part of the Trust Estate and for the application or distribution of which no provision is made herein, shall be distributed forthwith upon receipt by the Owner Trustee in the following order of priority: first, so much of such payment as shall be required to reimburse the Owner Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof shall be retained by the Owner Trustee; second, so much of the remainder for which provision as to the application thereof is contained in the Lease or any of the other Operative Documents -6- 7 shall be applied and distributed in accordance with the terms of the Lease or such other Operative Document; and third, the balance, if any, shall be paid to the Owner Participant. (c) Certain Distributions to Owner Participant. All amounts from time to time distributable by the Indenture Trustee to the Owner Participant pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be distributed by the Owner Trustee to the Owner Participant in accordance with the provisions of Article III of the Trust Indenture. (d) Excluded Payments. Any Excluded Payments received by the Owner Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded Payments are payable under the provisions of the Participation Agreement, the Tax Indemnity Agreement or the Lease. SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make distributions or cause distributions to be made to the Owner Participant pursuant to this Article IV by transferring by wire transfer the amount to be distributed to such account or accounts of the Owner Participant as the Owner Participant may designate from time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner Trustee will, if so requested by the Owner Participant in writing, pay any or all amounts payable to the Owner Participant pursuant to this Article IV either (i) by crediting such amount or amounts to an account or accounts maintained by the Owner Participant with the Owner Trustee in its individual capacity in immediately available funds, (ii) by payment at the Trust Office of the Owner Trustee, in immediately available funds, or (iii) by mailing an official bank check or checks in such amount or amounts payable to the Owner Participant at such address as the Owner Participant shall have designated in writing to the Owner Trustee. ARTICLE V DUTIES OF THE OWNER TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall have knowledge of a Lease Event of Default or Indenture Event of Default (or an event which with the passage of time or the giving of notice or both would constitute a Lease Event of Default or an Indenture Event of Default) the Owner Trustee shall give to the Owner Participant prompt telephonic or telecopy notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event. Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain from taking such action, not -7- 8 inconsistent with the provisions of the Trust Indenture, with respect to such Lease Event of Default, Indenture Event of Default or other event as the Owner Trustee shall be directed in writing by the Owner Participant. If the Owner Trustee shall not have received instructions as above provided within twenty (20) days after the mailing of such notice to the Owner Participant, the Owner Trustee until instructed otherwise in accordance with the preceding sentence may, but shall be under no duty to, take or refrain from taking such action with respect to such Lease Event of Default, Indenture Event of Default or other event, not inconsistent with the provisions of the Trust Indenture, as it shall deem advisable in the best interests of the Owner Participant. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by an officer of FSBU in the Corporate Trust Department, the Owner Trustee shall not be deemed to have knowledge of a Lease Event of Default, Indenture Event of Default or other event referred to in this Section 5.01 unless notified in writing by the Indenture Trustee, the Owner Participant or Lessee. SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of Sections 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of the Owner Participant, the Owner Trustee will take such of the following actions, not inconsistent with the provisions of the Trust Indenture, as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder or under any of the Operative Documents to which the Owner Trustee is a party or in respect of all or any part of the Trust Estate as shall be specified in such instructions (including entering into agreements referred to in clause (i) of the definition of "Subsequent Owner Participant"); (ii) take such action to preserve or protect the Trust Estate (including the discharge of Liens) as may be specified in such instructions; (iii) approve as satisfactory to it all matters required by the terms of the Lease or the other Operative Documents to be satisfactory to the Owner Trustee, it being understood that without written instructions of the Owner Participant, the Owner Trustee shall not approve any such matter as satisfactory to it (it being understood that the provisions of Sections 3.03, 3.04 and 3.06 hereof do not constitute instructions by the Owner Participant for the Owner Trustee to approve of or consent to the matters to be approved of or consented to by the Owner Trustee in the sections of the Lease referred to in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of Lessee under the Operative Documents, after the expiration or earlier termination of the Lease, deliver the Aircraft to the Owner Participant in accordance with such instructions, convey all of the Owner Trustee's right, title and interest in and to the Aircraft for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or net lease the Aircraft on such terms and to such lessee or lessees as shall be designated in such instructions. SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be required to take any action under Section 5.01 (other than the giving of the notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have been indemnified by the Owner Participant, in manner and form satisfactory to the Owner Trustee, against any liability, cost or expense (including reasonable counsel fees and disbursements) which may be incurred in connection therewith; and, if the Owner Participant shall have directed the Owner Trustee to take any such action or refrain from taking any action, the Owner Participant agrees to furnish -8- 9 such indemnity as shall be required and, in addition, to the extent not otherwise paid pursuant to the provisions of the Lease or of the Participation Agreement, to pay the reasonable compensation of the Owner Trustee for the services performed or to be performed by it pursuant to such direction and any fees and disbursements of counsel or agents employed by the Owner Trustee in connection therewith. The Owner Trustee shall not be required to take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably determine, or shall have been advised by counsel, that such action is contrary to the terms of any of the Operative Documents to which the Owner Trustee is a party, or is otherwise contrary to law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with any of the Operative Documents to which the Owner Trustee is a party, except as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, or (to the extent not inconsistent with the provisions of the Trust Indenture) as expressly provided by the terms hereof or in written instructions from the Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or obligations shall be read into this Trust Agreement against the Owner Trustee. FSBU agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof) promptly take such action as may be necessary to duly discharge and satisfy in full all Lessor Liens which it is required to discharge pursuant to Section 8(h) of the Participation Agreement and otherwise comply with the terms of said Section binding on it. SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to the contrary notwithstanding, the Owner Trustee shall comply with the provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of special counsel for the Owner Trustee, of all the applicable conditions precedent specified in Section 3.02 hereof and in Section 4 of the Participation Agreement. SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to, and the Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate except (i) as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, (ii) as expressly provided by the terms hereof, or (iii) as expressly provided in written instructions from the Owner Participant pursuant to Section 5.01 or 5.02 hereof. -9- 10 ARTICLE VI THE OWNER TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts hereby created and agrees to perform the same but only upon the terms hereof applicable to it. The Owner Trustee also agrees to receive and disburse all monies received by it constituting part of the Trust Estate upon the terms hereof. FSBU shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence, (b) for performance of the terms of the last sentence of Section 5.04 hereof, (c) for its or the Owner Trustee's failure to use ordinary care to disburse funds and (d) for liabilities that may result from the inaccuracy of any representation or warranty of it (or from the failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation Agreement. SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with written instructions furnished pursuant to Section 5.02 hereof and except as provided in, and without limiting the generality of, Section 5.04 hereof and the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU shall have any duty (i) to see to any recording or filing of any Operative Document or of any supplement to any thereof or to see to the maintenance of any such recording or filing or any other filing of reports with the Federal Aviation Administration or other governmental agencies, except that FSBU, in its individual capacity, shall comply with the reporting requirements set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall, to the extent that information for that purpose is supplied by Lessee pursuant to any of the Operative Documents, complete and timely submit (and furnish the Owner Participant with a copy of) any and all reports relating to the Aircraft which may from time to time be required by the Federal Aviation Administration or any government or governmental authority having jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, other than to forward to the Owner Participant copies of all reports and other written information which the Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against any part of the Trust Indenture Estate or the Trust Estate, except as provided in Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and records with respect to the Aircraft at any time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease or any other Operative Document. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, -10- 11 MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity warrants that on the Delivery Date the Owner Trustee shall have received whatever title was conveyed to it by Lessee and that the Aircraft shall during the Term be free of Lessor Liens attributable to it, or (b) any representation or warranty as to the validity, legality or enforceability of this Trust Agreement or any Operative Document to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof except to the extent that any such statement is expressly made herein or therein as a representation by FSBU in its individual capacity or by the Owner Trustee and except that FSBU in its individual capacity hereby represents and warrants that this Trust Agreement has been, and (assuming due authorization, execution and delivery by the Original Owner Participant of this Trust Agreement) the Operative Documents to which it or the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by it or the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of itself or the Owner Trustee, as the case may be. SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as provided in Section 22 of the Lease, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law, and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The Owner Trustee shall incur no liability to anyone in acting in reliance upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Unless other evidence in respect thereof is specifically prescribed herein, any request, direction, order or demand of the Owner Participant or Lessee mentioned herein or in any of the Operative Documents to which the Owner Trustee is a party shall be sufficiently evidenced by written instruments signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director and in the name of the Owner Participant or Lessee, as the case may be. The Owner Trustee may accept a copy of a resolution of the Board of Directors or Executive Committee of Lessee, certified by the secretary or any assistant secretary of Lessee as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or Committee and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Owner Trustee may for all purposes hereof rely on a certificate signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it -11- 12 in good faith in reliance thereon. In the administration of trusts hereunder, the Owner Trustee may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may, at the expense of the Trust Estate, consult with counsel, accountants and other skilled persons to be selected and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such agent, attorney, counsel, accountant or other skilled person appointed by it with due care hereunder. SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder, the Owner Trustee acts solely as trustee and not in its individual capacity except as otherwise expressly provided herein; and, subject to the terms of the Participation Agreement and the Trust Indenture, all persons, other than the Owner Participant, as provided herein, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Trust Estate for payment or satisfaction thereof. SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the Owner Participant or (subject to the provisions of the Trust Indenture) the Trust Estate for any fee as compensation for its services hereunder; provided, however, that the Owner Trustee shall have a lien upon the Trust Estate (subject, however, to the lien of the Trust Indenture) for any such fee not paid by Lessee as contemplated by the last paragraph of Section 7(c) of the Participation Agreement. SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all monies under this Trust Agreement or any agreement contemplated hereby. The Owner Participant shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Owner Participant. The Owner Trustee shall be responsible for causing to be prepared, at the request and expense of the Owner Participant, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. The Owner Participant or the Owner Trustee, as the case may be, upon request, will furnish the Owner Trustee or the Owner Participant, as the case may be, with all such information as may be reasonably required from the Owner Participant or the Owner Trustee, as the case may be, in connection with the preparation of such income tax returns. ARTICLE VII INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner Participant hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and hereby indemnify, protect, save and keep harmless FSBU in its individual capacity and its successors, assigns, legal representatives, -12- 13 agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its individual capacity on or measured by any compensation received by FSBU in its individual capacity for its services hereunder or in connection with the transactions contemplated by the Operative Documents), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and including without limitation any liability of an owner, any strict liability and any liability without fault) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against FSBU in its individual capacity (whether or not also indemnified against by Lessee under the Lease or under the Participation Agreement or also indemnified against by any other person but only to the extent not otherwise paid or reimbursed by Lessee or such other person) in any way relating to or arising out of this Trust Agreement or any of the Operative Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of the Owner Trustee or FSBU in its individual capacity hereunder, except (a) in the case of willful misconduct or gross negligence on the part of the Owner Trustee or FSBU in its individual capacity in the performance or non-performance of its duties hereunder or (b) those resulting from the inaccuracy of any representation or warranty of FSBU in its individual capacity (or from the failure of FSBU in its individual capacity to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture or, with respect to representations or warranties of FSBU in its individual capacity only, in Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the Participation Agreement or in any of the other Operative Documents or (c) as may result from a breach by FSBU in its individual capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in the case of the failure to use ordinary care on the part of the Owner Trustee or FSBU in its individual capacity in the disbursement of funds. The indemnities contained in this Section 7.01 extend to FSBU only in its individual capacity and shall not be construed as indemnities of the Trust Indenture Estate or the Trust Estate (except to the extent, if any, that FSBU in its individual capacity has been reimbursed by the Trust Indenture Estate or the Trust Estate for amounts covered by the indemnities contained in this Section 7.01). The indemnities contained in this Section 7.01 shall survive the termination of this Trust Agreement. In addition, if necessary, FSBU in its individual capacity shall be entitled to indemnification from the Trust Estate, subject to the Lien of the Trust Indenture, for any liability, obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee, the Owner Participant or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same FSBU in its individual capacity shall have a Lien on the Trust Estate, subject to the Lien of the Trust Indenture, which shall be prior to any interest therein of the Owner Participant. The payor of any indemnity under this Article VII shall be subrogated to any right of the person indemnified in respect of the matter as to which such indemnity was paid. -13- 14 ARTICLE VIII TRANSFER OF THE OWNER PARTICIPANT'S INTEREST SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n) of the Participation Agreement shall (with the same force and effect as if set forth in full, mutatis mutandis, in this Section 8.01) be applicable to any assignment, conveyance or other transfer by any Owner Participant of its right, title or interest in and to the Participation Agreement, the Trust Estate or this Trust Agreement. ARTICLE IX SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the Participation Agreement and (ii) may resign at any time without cause by giving at least sixty (60) days' prior written notice to the Owner Participant, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such resignation to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In addition, the Owner Participant may at any time remove the Owner Trustee without cause by a notice in writing delivered to the Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such removal to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or removal of the Owner Trustee, the Owner Participant may appoint a successor Owner Trustee by an instrument signed by the Owner Participant. If a successor Owner Trustee shall not have been appointed within thirty (30) days after such notice of resignation or removal, the Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor shall have been appointed as above provided. Any successor Owner Trustee so appointed by such court shall immediately and without further act be superseded by any successor Owner Trustee appointed as above provided. (b) Execution and Delivery of Documents, etc. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee and the Owner Participant an instrument accepting such appointment, and thereupon such successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts hereunder with like effect as if originally named the Owner Trustee herein; but nevertheless, upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such -14- 15 predecessor Owner Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to such successor Owner Trustee all monies or other property then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will execute such documents as are provided to it by such successor Owner Trustee and will take such further actions as are requested of it by such successor Owner Trustee as are reasonably required to cause registration of the Aircraft included in the Trust Estate to be transferred upon the records of the Federal Aviation Administration, or other governmental authority having jurisdiction, into the name of the successor Owner Trustee. (c) Qualification. Any successor Owner Trustee, however appointed, shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement and shall also be a bank or trust company organized under the laws of the United States or any state thereof having a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. (d) Merger, etc. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee may be transferred, shall, subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without further act. SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee shall have been directed to do so by the Owner Participant, the Owner Trustee and the Owner Participant shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement) approved by the Owner Trustee and the Owner Participant, either to act as co-trustee, jointly with the Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as an "ADDITIONAL TRUSTEE"). In the event an Indenture Event of Default not arising from a Lease Event of Default shall occur and be continuing, the Owner Trustee may act under the foregoing provisions of this Section 9.02 without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 9.02 in such contingency. Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: -15- 16 (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; (E) the Owner Participant, at any time, by an instrument in writing may remove any such additional trustee unless such additional trustee was appointed by the Owner Trustee without the concurrence of the Owner Participant during the occurrence of an Indenture Event of Default not arising from a Lease Event of Default, in which case the Owner Trustee shall have the power to remove any such additional trustee without the concurrence of the Owner Participant, and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact for it in such connection in such contingency; and (F) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, the Trust Indenture or affect the interests of the Indenture Trustee or the holders of the Secured Certificates in the Trust Indenture Estate. ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS SECTION 10.01. SUPPLEMENTS AND AMENDMENTS. (a) Supplements and Amendments. This Trust Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Owner Trustee and the Owner Participant. Subject to Section 10.02 hereof and the first sentence of Section 10 of the Participation Agreement, the Owner Trustee will execute any amendment, supplement or other -16- 17 modification of this Trust Agreement or of any other Operative Document to which the Owner Trustee is a party which it is requested to execute by the Owner Participant, except that the Owner Trustee shall not execute any such amendment, supplement or other modification which, by the express provisions of any of the above documents, requires the consent of any other party unless such consent shall have been obtained. (b) Delivery of Amendments and Supplements to Certain Parties. A signed copy of each amendment or supplement referred to in Section 10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each holder of a Secured Certificate. SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to executing any document required to be executed by it pursuant to the terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its counsel to the effect that the execution of such document is authorized hereunder. If in the opinion of the Owner Trustee any such document adversely affects any right, duty, immunity or indemnity in favor of the Owner Trustee hereunder or under any other Operative Document to which the Owner Trustee is a party, the Owner Trustee may in its discretion decline to execute such document. SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be necessary for any written request furnished pursuant to Section 10.01 hereof to specify the particular form of the proposed documents to be executed pursuant to such Section, but it shall be sufficient if such request shall indicate the substance thereof. SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the execution by the Owner Trustee of any document entered into pursuant to Section 10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof to the Owner Participant, but the failure of the Owner Trustee to mail such conformed copy shall not impair or affect the validity of such document. SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be required to enable the Owner Trustee to enter into the Lease Supplement covering the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and Section 3.01 hereof. ARTICLE XI MISCELLANEOUS SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement and the trusts created hereby shall be of no further force or effect upon the earlier of (a) both the final discharge of the Trust Indenture pursuant to Section 10.01 thereof and the sale or other final disposition by the Owner Trustee of all property constituting part of the Trust Estate and the final distribution by the Owner Trustee of all monies or other property or -17- 18 proceeds constituting part of the Trust Estate in accordance with Article IV hereof, provided that at such time Lessee shall have fully complied with all of the terms of the Lease and the Participation Agreement or (b) twenty-one years less one day after the death of the last survivor of all of the descendants of the grandparents of David Rockefeller living on the date of the earliest execution of this Trust Agreement by any party hereto; otherwise this Trust Agreement and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE. The Owner Participant shall not have legal title to any part of the Trust Estate. No transfer, by operation of law or otherwise, of any right, title and interest of the Owner Participant in and to the Trust Estate hereunder shall operate to terminate this Trust Agreement or the trusts hereunder or entitle any successors or transferees of the Owner Participant to an accounting or to the transfer of legal title to any part of the Trust Estate. SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment, sale, transfer or other conveyance of its interest in the Aircraft by the Owner Trustee made pursuant to the terms hereof or of the Lease or the Participation Agreement shall bind the Owner Participant and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Owner Participant in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY. Except for the terms of Section 8(n) of the Participation Agreement incorporated in Article VIII hereof and except as otherwise provided in Articles IX and X hereof, nothing herein, whether expressed or implied, shall be construed to give any Person other than the Owner Trustee and the Owner Participant any legal or equitable right, remedy or claim under or in respect of this Trust Agreement; but this Trust Agreement shall be held to be for the sole and exclusive benefit of the Owner Trustee and the Owner Participant. SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. (a) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 11.05(a). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.05(a), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the Owner Participant, to the respective addresses set forth below the signatures of such parties on the signature page of the Participation Agreement, or (B) if to a Subsequent Owner Participant, addressed to such -18- 19 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. (b) Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Trust Agreement, the Participation Agreement, 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 the Participation 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. SECTION 11.06. SEVERABILITY. Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.07. WAIVERS, ETC. No term or provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing entered into in compliance with the terms of Article X hereof; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. SECTION 11.08. COUNTERPARTS. This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.09. BINDING EFFECT, ETC. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII hereof, its assigns. Any request, notice, direction, consent, waiver or other instrument or action by the Owner Participant shall bind its successors and assigns. Any Owner Participant which shall cease to have any Ownership Interest shall thereupon cease to be a party hereto or an Owner Participant for any reason and shall have no further obligations hereunder. -19- 20 SECTION 11.10. HEADINGS; REFERENCES. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. -20- 21 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [OWNER PARTICIPANT] By ______________________________________ Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By _____________________________________ Title: -21- EX-4.D2 28 TRUST INDENTURE-1995 B 1 AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1995 B] AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1995 B], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Owner Trustee under the Trust Agreement referred to below (together with its successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity, except as expressly stated herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE"). W I T N E S S E T H WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and the Owner Trustee have entered into the Trust Agreement whereby, among other things, (i) the Owner Trustee has established a certain trust for the use and benefit of the Owner Participant subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of, and with the priority of payment to, the holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has been authorized and directed to execute and deliver this Trust Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1995 B] dated as of December 13, 1995 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the Trust Agreement and Indenture Supplement [NW 1995 B] (the "SUPPLEMENT") dated December 21, 1995 to the Original Indenture, (iii) the Original Indenture and the Supplement were recorded by the Federal Aviation Administration on December 26, 1995 and were assigned Conveyance No. P05091 and (iv) the Lease Agreement [NW 1995 B] dated as of even date with the Original Indenture between the Owner Trustee and Lessee and the Lease Supplement No. 1 [NW 1995 B] were recorded by the Federal Aviation Administration on December 26, 1995 and were assigned Conveyance No. P05092 and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Loan Participants Secured Certificates (as defined in the Original Indenture); WHEREAS, the parties have agreed that subject to certain conditions, Lessee shall have the right to cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Secured Certificates issued to the Loan Participant pursuant to the Original Indenture shall be redeemed and new Secured Certificates (the "REFINANCING SECURED CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Trust Indenture, among other things, (i) to amend and 2 restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Refinancing Secured Certificates and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of all of the Owner Trustee's right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Certificate Holders, subject to Section 2.15 and Article III hereof; WHEREAS, all things have been done to make the Secured Certificates, when executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid, binding and enforceable obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Trust Indenture the valid, binding and legal obligation of the Owner Trustee for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened: -2- 3 GRANTING CLAUSE NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Secured Certificates from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions herein and in the Participation Agreement and the Secured Certificates contained, for the benefit of the Certificate Holders and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Certificate Holders by the Owner Trustee and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Secured Certificates by the holders thereof, and for other good and valuable consideration the receipt and adequacy whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors in trust and assigns, for the security and benefit of the Certificate Holders, a first priority security interest in and mortgage lien on all right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges, other than Excluded Payments (which collectively, excluding Excluded Payments but including all property hereafter specifically subjected to the Lien of this Trust Indenture by the Trust Agreement and Indenture Supplement or any mortgage supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire title as provided herein and in the Lease), all as more particularly described in the Trust Agreement and Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture; (2) the Lease and any Lease Supplement and all Rent thereunder (including, without limitation, all amounts of Interim Rent, Basic Rent, Supplemental Rent and payments of any kind thereunder (excluding any Excluded Payments)), and the Guarantee (excluding any Excluded Payments); (3) the Purchase Agreement (to the extent specified in the Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent and Agreement and the Bill of Sale; (4) all rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the lien of this Indenture; (5) all insurance and requisition proceeds with respect to the Aircraft, including but not limited to the insurance required under Section 11 of the Lease, but -3- 4 excluding insurance proceeds described in clauses (ii) and (iii) of the definition of Excluded Payments; (6) all rights of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under the Participation Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder, but excluding amounts described in clauses (i) and (v) of the definition of Excluded Payments; (7) all monies and securities from time to time deposited or required to be deposited with the Indenture Trustee pursuant to any terms of this Indenture or the Lease or required hereby or by the Lease to be held by the Indenture Trustee hereunder (other than Excluded Payments); and (8) all proceeds of the foregoing. BUT EXCLUDING from the foregoing and from the Trust Indenture Estate all Excluded Payments, and the right to enforce and collect the same, and SUBJECT TO all of the terms and conditions of this Trust Indenture and the rights of the Owner Trustee and the Owner Participant hereunder. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the original executed counterpart of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt is attached), and executed copies of the Participation Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and its successors and assigns, in trust for the benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III hereof without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (8) inclusive above, subject to the terms and provisions set forth in this Trust Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Owner Trustee shall remain liable under each of the Indenture Agreements to which it is a party to perform all of the obligations assumed by it thereunder, except to the extent prohibited or excluded from doing so pursuant to the terms and provisions thereof, and the Indenture Trustee and the Certificate Holders shall have no obligation or liability under the Indenture Agreements, by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to any of the Indenture Agreements to which it is a party, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce -4- 5 the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, and with full power (in the name of the Owner Trustee or otherwise) to ask for, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds but in all cases excluding Excluded Payments) due and to become due under or arising out of the Indenture Agreements, and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Without limiting the generality of the foregoing, but subject to the rights of the Owner Trustee and the Owner Participant hereunder, during the continuance of any Event of Default under this Trust Indenture, the Indenture Trustee shall have the right under such power of attorney to accept any offer in connection with the exercise of remedies as set forth herein of any purchaser to purchase the Airframe and Engines and upon such purchase to execute and deliver in the name of and on behalf of the Owner Trustee an appropriate bill of sale and other instruments of transfer relating to the Airframe and Engines, when purchased by such purchaser, and to perform all other necessary or appropriate acts with respect to any such purchase, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or appropriate to protect and preserve the right, title and interest of the Indenture Trustee in and to such Rents and other sums and the security intended to be afforded hereby; provided, however, that no action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or liabilities of the Owner Trustee to any Person beyond those obligations and liabilities specifically set forth in this Trust Indenture and in the other Operative Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture shall not have been fully discharged, to make all payments of Rent (other than Excluded Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to, or as directed by, the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Trust Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Trust Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem necessary or desirable to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be -5- 6 created hereby or to obtain for the Indenture Trustee the full benefits of the assignment hereunder and of the rights and powers herein granted. The parties hereto acknowledge that neither the Owner Trustee nor the Owner Participant shall have any obligation as to any recording, filing, refiling or re-recording of any documents or instruments in regard to maintaining the perfection of the security interests created hereunder, in the Trust Indenture Estate or any security interest that may be claimed to have been created by the Lease or the ownership interest of the Owner Trustee in the Aircraft. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants and agrees that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee and its predecessor(s) in this transaction, and that it will not, except as otherwise provided in this Trust Indenture and except with respect to Excluded Payments to which it is entitled, (i) accept any payment from Lessee under any Indenture Agreement, (ii) enter into any agreement amending or supplementing any Indenture Agreement, (iii) execute any waiver or modification of, or consent under, the terms of, or exercise any rights, powers or privileges under, any Indenture Agreement, (iv) settle or compromise any claim (other than those relating to an Excluded Payment) arising under any Indenture Agreement or (v) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any Indenture Agreement to arbitration thereunder. The Owner Trustee does hereby further agree that it will not without the written consent of the Indenture Trustee: (a) collect or agree to the receipt or collection of any payment of Rent (other than Excluded Payments), including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease prior to the date for the payment thereof provided for by the Lease or assign, transfer or hypothecate (other than to the Indenture Trustee hereunder) any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease, then due or to accrue in the future under the Lease in respect of the Airframe and Engines; or (b) except as contemplated by the Trust Agreement in connection with the appointment of a successor owner trustee, sell, mortgage, transfer, assign or hypothecate (other than to the Indenture Trustee hereunder) its interest in the Airframe and Engines or any part thereof or in any amount to be received by it from the use or disposition of the Airframe and Engines, other than amounts distributed to it pursuant to Article III hereof. -6- 7 It is hereby further agreed that any and all property described or referred to in the granting clauses hereof which is hereafter acquired by the Owner Trustee shall ipso facto, and without any further conveyance, assignment or act on the part of the Owner Trustee or the Indenture Trustee, become and be subject to the Lien herein granted as fully and completely as though specifically described herein, but nothing contained in this paragraph shall be deemed to modify or change the obligations of the Owner Trustee contained in the foregoing paragraphs. The Owner Trustee does hereby ratify and confirm the Lease and does hereby agree that it will not violate any covenant or agreement made by it therein, herein or in any of the other Owner Trustee Documents. Notwithstanding the Granting Clause or any of the foregoing paragraphs, (1) there is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excluded Payments, and (2) it is understood and agreed that the Owner Trustee and the Owner Participant shall have the rights set forth in the proviso of Section 5.02(a) hereof. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "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 an officer of the Owner Participant having direct day-to-day responsibility or any other higher officer having direct responsibility for the transactions contemplated by the Operative Documents. "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 hereof. "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 -7- 8 the number of days equal to the quotient obtained by dividing (a) the sum 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. "Cash Equivalents" shall mean the investments specified in Section 22(a) of the Lease. "Certificate Holder" shall mean any holder from time to time of one or more Secured Certificates. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Continuous Stay Period" shall have the meaning specified in Section 4.04(a) hereof. "Corporate Trust Department" or "Trust Office" means the principal corporate trust office of the Owner Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, 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 Two International Place, 4th Floor, Boston, Massachusetts 02110, 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. "Debt" shall mean any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments or for the deferred purchase price of property, goods or services. "Debt 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" means any event or condition that with the giving of notice or the lapse of time or both would become an Event of Default or Lease Event of Default (excluding Lease Events of Default related to Excluded Payments). "Dollars" and "$" shall mean the lawful currency of the United States of America. -8- 9 "Enforcement Date" shall have meaning specified in Section 4.03 hereof. "Event of Default" shall have the meaning specified in Section 4.02 hereof. "Excess Amount" shall have the meaning specified in Section 2.03 hereof. "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 hereof, 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. "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 Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Guarantor" shall have the meaning specified in the Lease. "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 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 -9- 10 foreclose the Lien of the Trust Indenture or otherwise commence the exercise of any significant remedy under the Trust Indenture or the Lease. "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" shall mean that certain Lease Agreement [NW 1995 B], dated as of December 13, 1995, entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of the Original Trust Indenture, as said Lease Agreement has been, or may from time to time be, supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Indenture. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Default" shall mean a "Default" as defined in the Lease. "Lease Event of Default" shall mean an "Event of Default" as defined in the Lease. "Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Lessee Operative Documents" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. "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 hereof (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) -10- 11 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. "Mortgaged Property" shall have the meaning specified in Section 3.03 hereof. "Owner Indemnitee" shall have the meaning specified in the definition of Excluded Payments herein. "Owner Participant" shall mean [ ], a [ ] corporation, so long as such party shall have any interest in the Trust Estate, and transferees thereof as permitted by Section 8 of the Participation Agreement. "PA Amendment No. 1" shall mean the First Amendment to Participation Agreement [1995 B], dated as of the Closing Date, among Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and State Street Bank and Trust Company, in its individual capacity and as Indenture Trustee. "Participants" shall mean and include the Loan Participants and the Owner Participant. "Participation Agreement" shall mean that certain Participation Agreement [NW 1995 B], dated as of December 13, 1995, among the Owner Trustee, the Indenture Trustee, Lessee and the Participants, as amended by the PA Amendment No. 1, as the same may from time to time be supplemented or further amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Past Due Rate" shall mean, with respect to the Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in effect from time to time. "Payment Date" shall mean each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Secured Certificates have been paid in full. -11- 12 "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. "QIB" shall have the meaning specified in Section 2.08 hereof. "Replacement Airframe" shall mean any airframe substituted for the Airframe pursuant to Section 5.06 hereof. "Replacement Engine" shall mean any engine substituted for an Engine pursuant to Section 5.06 hereof. "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. "Section 1110 Period" shall have the meaning specified in Section 4.04(a) hereof. "Secured Certificates" shall mean and include any Secured Certificates issued hereunder, and issued in exchange therefor or replacement thereof. "Secured Obligations" shall have the meaning specified in Section 2.06 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Holder" shall have the meaning specified in Section 2.15(c) hereof. "Series A" or "Series A Secured Certificates" means Secured Certificates issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A." "Series B" or "Series B Secured Certificates" means Secured Certificates issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series B." "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. "Transactions" means the transactions contemplated by the Participation Agreement and the other Operative Documents. -12- 13 "Trust Agreement and Indenture Supplement" shall mean a supplement to the Trust Agreement and to this Indenture, in substantially the form of Exhibit A hereto, 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. "Trust Indenture", "this Trust Indenture", "the Trust Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this Amended and Restated Trust Indenture and Security Agreement [NW 1995 B] as it may from time to time be supplemented or amended as herein provided, including supplementing by the Trust Agreement and Indenture Supplement pursuant hereto. "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 this Trust Indenture, excluding Excluded Payments. SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this Trust Indenture the terms used but not defined herein are used as defined in the Lease. ARTICLE II THE SECURED CERTIFICATES SECTION 2.01. FORM OF SECURED CERTIFICATES. The Secured Certificates shall be substantially in the form set forth below: THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [NW 1995 B] DATED AS OF DECEMBER 13, 1995. SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N536US. -13- 14 No.____ Date: [______,__] $__________________ INTEREST RATE MATURITY DATE [________] [________,_______] FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1995 B], dated as of December 13, 1995, between the Owner Participant named therein and the Owner Trustee (herein as such Trust Agreement may be supplemented or amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Interest Rate indicated above. The Principal Amount of this Secured Certificate shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Secured Certificate set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including _______, _____. Notwithstanding the foregoing, the final payment made on this Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Secured Certificate. Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "TRUST INDENTURE" means the Amended and Restated Trust Indenture and Security Agreement [NW 1995 B], dated as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Secured Certificate and not defined herein shall have the respective meanings assigned in the Trust Indenture. This Secured Certificate shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). -14- 15 All payments of Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Trust Indenture or the Participation Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Trust Indenture and each holder hereof, by its acceptance of this Secured Certificate, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the holder hereof as above provided and that none of the Owner Participant, the Owner Trustee or the Indenture Trustee is personally liable or liable in any manner extending to any assets other than the Trust Indenture Estate to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Trust Indenture or in the Participation Agreement, for any liability under the Trust Indenture or the Participation Agreement; provided, however, that nothing herein contained shall limit, restrict or impair the right of the Indenture Trustee, subject always to the terms and provisions of the Trust Indenture, to accelerate the maturity of this Secured Certificate upon occurrence of an Event of Default under the Trust Indenture in accordance with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment against the Owner Trustee on this Secured Certificate for purposes of realizing upon the Trust Indenture Estate and to exercise all rights and remedies provided under the Trust Indenture or otherwise realize upon the Trust Indenture Estate. There shall be maintained a Secured Certificate Register for the purpose of registering transfers and exchanges of Secured Certificates at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Trust Indenture. The Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Trust Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Secured Certificate, except that in the case of any final payment with respect to this Secured Certificate, the Secured Certificate shall be surrendered promptly thereafter by the Indenture Trustee to the Owner Trustee for cancellation. The holder hereof, by its acceptance of this Secured Certificate, agrees that, except as provided in the Trust Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts hereunder) to the date of such payment, second, to the payment of the Principal Amount of this Secured Certificate then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Trust Indenture, and fourth, the balance, if any, remaining thereafter, -15- 16 to the payment of Principal Amount of this Secured Certificate remaining unpaid in the inverse order of their normal maturity. This Secured Certificate is one of the Secured Certificates referred to in the Trust Indenture which have been or are to be issued by the Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Secured Certificates. The provisions of this Secured Certificate are subject to the Trust Indenture. Reference is hereby made to the Trust Indenture and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Secured Certificate and the rights and obligations of the holders of, and the nature and extent of the security for, any other Secured Certificates executed and delivered under the Trust Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust Indenture, to all of which terms and conditions in the Trust Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Secured Certificate. As provided in the Trust Indenture and subject to certain limitations therein set forth, this Secured Certificate is exchangeable for a like aggregate Principal Amount of Secured Certificates of different authorized denominations, as requested by the holder surrendering the same. Prior to due presentment for registration of transfer of this Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the person in whose name this Secured Certificate is registered as the owner hereof for all purposes whether or not this Secured Certificate be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Secured Certificate is subject to redemption as provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This Secured Certificate is also subject to assumption by Lessee as provided in Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.14 of the Trust Indenture but not otherwise. [The indebtedness evidenced by this Secured Certificate is, to the extent and in the manner provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Trust Indenture) in respect of Series A Secured Certificates, and this Secured Certificate is issued subject to such provisions. The Certificate Holder of this Secured Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.] (1) __________________________ (1) To be inserted in the case of a Series B Secured Certificate. -16- 17 Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Secured Certificate shall not be entitled to any benefit under the Trust Indenture or be valid or obligatory for any purpose. THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. * * * -17- 18 IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Certificate to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By ______________________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Secured Certificates referred to in the within-mentioned Trust Indenture. STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By ______________________________________ Name: Title: -18- 19 SCHEDULE I SECURED CERTIFICATES AMORTIZATION Percentage of Principal Amount Payment Date to be Paid [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES. The Secured Certificates shall be dated the date of issuance thereof, shall be issued in two separate series consisting of Series A and Series B and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Agreements as set forth in Schedule II hereto in connection therewith and (ii) the Secured Certificates issued under the Original Indenture shall be concurrently redeemed. The Secured Certificates shall be issued in registered form only. The Secured Certificates shall be issued in denominations of $1,000 and integral multiples thereof, except that one Secured Certificate of each Series may be in an amount that is not an integral multiple of $1,000. Each Secured Certificate shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Secured Certificate shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Secured Certificates. Notwithstanding the foregoing, the final payment made under each Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Secured Certificate. Each Secured Certificate shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Secured Certificate becomes due and payable is not a -19- 20 Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Certificate Holders, (iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass Through Trustees, in each case pursuant to Section 7 of the Participation Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Advances (as defined in the Liquidity Facilities) under any Liquidity Facility except to the extent included in Net Interest and Related Charges, and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used in this Section, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes, plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Secured Certificate a fraction, the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes issued under Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any Series D Secured Certificates or Series D Equipment Notes. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to the Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount which would be payable if such drawings bore interest at the Designated Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding Liquidity Facility) which result from any Interest Drawing, Final Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities). As used in this Section "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) except with respect to that portion of any Final Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section, a Payment Default when used in connection with a Secured Certificate or -20- 21 Equipment Note means a default in the payment of principal thereof or interest thereon other than a default in the payment of principal or interest on a Series D Equipment Note which has not been cured other than solely because of acceleration. The following terms are used in this Section as defined in the Intercreditor Agreement without regard to any amendment, modification or supplement thereto after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and Series D Equipment Notes. The Secured Certificates shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Secured Certificates bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Secured Certificates or did not hold such offices at the respective dates of such Secured Certificates. The Owner Trustee may from time to time execute and deliver Secured Certificates with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Secured Certificates shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Secured Certificates to be authenticated hereunder on original issue with respect to the Aircraft. No Secured Certificate shall be secured by or entitled to any benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears on such Secured Certificate a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Secured Certificates shall be conclusive evidence, and the only evidence, that such Secured Certificate has been duly authenticated and delivered hereunder. SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY. Without impairing any of the other rights, powers, remedies, privileges, liens or security interests of the Certificate Holders under this Trust Indenture, each Certificate Holder, by its acceptance of a Secured Certificate, agrees that as between it and the Owner Trustee, except as expressly provided in this Trust Indenture, the Participation Agreement or any other Operative Document, (i) the obligation to make all payments of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Secured Certificates, and the performance by the Owner Trustee of every obligation or covenant contained in this Trust Indenture and in the Participation Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained -21- 22 in this Trust Indenture and any agreement referred to herein other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Trust Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Owner Trustee is responsible for, or is making, in its individual capacity, for which there would be personal liability of the Owner Trustee), no recourse shall be had with respect to this Trust Indenture 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, and (ii) none of the Owner Trustee, in its individual capacity, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Participation Agreement or any of the other Operative Documents or under the Secured Certificates except as expressly provided herein or in the Participation Agreement; provided, however, that nothing contained in this Section 2.03 shall be construed to limit the exercise and enforcement in accordance with the terms of this Trust Indenture or such other agreements of rights and remedies against the Trust Estate. These provisions are not intended as any release or discharge of the indebtedness represented by the Secured Certificates and the Trust Indenture, but are intended only as a covenant not to sue the Owner Participant, the Owner Trustee or the Indenture Trustee in their individual capacities, except as expressly provided herein or in the Participation Agreement, for a deficiency with respect to such indebtedness, the indebtedness represented by this Trust Indenture and the Secured Certificates to remain in full force and effect as fully as though these provisions were not contained in this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders have expressly reserved all their rights and remedies against the Trust Indenture Estate, including the right, in the event of a default in the payment of all or part of the Principal Amount of, interest on, Make-Whole Amount, if any, or any other amount due with respect to any Secured Certificate within the periods provided for in Section 4.02(b) hereof, or upon the occurrence and continuation of any other Event of Default under this Trust Indenture, to foreclose upon this Trust Indenture, and/or to receive the proceeds from the Trust Indenture Estate and otherwise to enforce any other right under this Trust Indenture. Nothing in this Section 2.03 shall (x) release the Owner Participant from personal liability, or constitute a covenant not to sue the Owner Participant, for any breach by it of any of its covenants, representations or warranties contained in the Participation Agreement or for any of the payments it has agreed to make pursuant to the Participation Agreement or (y) release the Owner Trustee or constitute a covenant not to sue the Owner Trustee for any breach by it of any representations, warranties or covenants of the Owner Trustee contained in the Operative Documents or (z) release the Owner Trustee in its individual capacity from personal liability, or constitute a covenant not to sue the Owner Trustee in its individual capacity for any breach by it of any representations, warranties or covenants of the Owner Trustee made in its individual capacity in the Operative Documents. -22- 23 For purposes of this Section 2.03, "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a Certificate Holder 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 clause (ii) above. Nothing contained in this Section 2.03 shall prevent a Certificate Holder 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 the Participation Agreement or this Trust Indenture (and any exhibits or annexes hereto or thereto) or by separate agreement or from retaining any amount paid by Owner Participant under Section 2.14 or 4.03 hereof. SECTION 2.04. METHOD OF PAYMENT. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Secured Certificate or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Certificate Holders in the manner provided herein. The Owner Trustee shall not have any responsibility for the distribution of such payment to any Certificate Holder. Notwithstanding the foregoing or any provision in any Secured Certificate to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such holder's Secured Certificate or Secured Certificates to such holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such holder with a bank located in the continental United States the amount to be distributed to such holder, for credit to the account of such holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate such holders for loss of use of funds at the Debt Rate until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Secured Certificate, except that, in the case of the final payment in respect of any Secured Certificate, such Secured Certificate shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Secured Certificate is registered on the Secured Certificate Register as the absolute owner and holder of such -23- 24 Secured Certificate for the purpose of receiving payment of all amounts payable with respect to such Secured Certificate and for all other purposes, and none of the Owner Trustee or the Indenture Trustee shall be affected by any notice to the contrary. So long as any signatory to the Participation Agreement or nominee thereof shall be a registered Certificate Holder, all payments to it shall be made to the account of such Certificate Holder specified in Schedule I thereto and otherwise in the manner provided in or pursuant to the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Secured Certificate (and such exclusion and withholding shall constitute payment in respect of such Secured Certificate) any and all United States withholding taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Secured Certificates, to withhold such amounts (and such withholding shall constitute payment in respect of such Secured Certificate) and timely pay the same to the appropriate authority in the name of and on behalf of the Certificate Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Certificate Holder (with a copy to the Owner Trustee and Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Certificate Holder may reasonably request from time to time. If a Certificate Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Secured Certificate(s) held by such holder is made (but prior to the making of such payment), or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by Law (after taking into account any applicable exemptions claimed by the Certificate Holder) to be withheld from payments hereunder or under the Secured Certificates held by such holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture -24- 25 Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Secured Certificates held by such holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Certificate Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Secured Certificates held by such holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Certificate Holder withholding taxes at the appropriate rate under Law (and such withholding shall constitute payment in respect of such Secured Certificates) and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. SECTION 2.05. APPLICATION OF PAYMENTS. In the case of each Secured Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Secured Certificate (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Secured Certificate; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Secured Certificate remaining unpaid (provided that such Secured Certificate shall not be subject to redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Secured Certificate in the inverse order of their normal maturity. SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE. A Certificate Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the Principal Amount of, -25- 26 Make-Whole Amount, if any, and interest on and other amounts due under all Secured Certificates held by such Certificate Holder and all other sums then payable to such Certificate Holder hereunder and under the other Operative Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall have been paid in full. SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED CERTIFICATES. The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the registration of Secured Certificates and the registration of transfers of Secured Certificates. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Secured Certificate Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the purpose of registering Secured Certificates and transfers of Secured Certificates as herein provided. A holder of any Secured Certificate intending to exchange such Secured Certificate shall surrender such Secured Certificate to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Secured Certificate, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Secured Certificate, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Secured Certificates of a like aggregate Principal Amount and of the same series. At the option of the Certificate Holder, Secured Certificates may be exchanged for other Secured Certificates of any authorized denominations of a like aggregate Principal Amount, upon surrender of the Secured Certificates to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Secured Certificates are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Secured Certificates which the Certificate Holder making the exchange is entitled to receive. All Secured Certificates issued upon any registration of transfer or exchange of Secured Certificates (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Trust Indenture, as the Secured Certificates surrendered upon such registration of transfer or exchange. Every Secured Certificate presented or surrendered for registration of transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Certificate Holder or such holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of any applicable state. The Indenture Trustee shall make a notation on each new Secured Certificate of the amount of all payments of Principal Amount previously made on the old Secured Certificate or Secured Certificates with respect to which such new Secured Certificate is issued and the date to which interest on such old Secured Certificate or Secured Certificates has been paid. Interest shall be deemed to have been paid on such new Secured Certificate to the date on which interest shall have been paid on such old Secured -26- 27 Certificate, and all payments of the Principal Amount marked on such new Secured Certificate, as provided above, shall be deemed to have been made thereon. The Owner Trustee shall not be required to exchange any surrendered Secured Certificates as provided above during the ten-day period preceding the due date of any payment on such Secured Certificate. The Owner Trustee shall in all cases deem the Person in whose name any Secured Certificate shall have been issued and registered as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable by the Owner Trustee with respect to such Secured Certificate and for all purposes until a notice stating otherwise is received from the Indenture Trustee and such change is reflected on the Secured Certificate Register. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of a Secured Certificate. Any such transferee of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to the provisions of the Participation Agreement applicable to Certificate Holders, including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(dd), 8(gg), 10, 13(b), 13(c), 15(b) and 15(c), and shall be deemed to have represented and warranted (except as provided above), and covenanted, to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by the original Loan Participant in the Participation Agreement. Subject to compliance by the Certificate Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates upon transfer or exchange within 10 Business Days of the date a Secured Certificate is surrendered for transfer or exchange. SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED CERTIFICATES. If any Secured Certificate shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the holder of such Secured Certificate, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Secured Certificate, payable in the same Principal Amount dated the same date and captioned as issued in connection with the Aircraft. If the Secured Certificate being replaced has become mutilated, such Secured Certificate shall be surrendered to the Indenture Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the Secured Certificate being replaced has been destroyed, lost or stolen, the holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be required by them to save the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Secured Certificate and of the ownership thereof. If a "qualified institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen Secured Certificate, then the written indemnity of such QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Secured Certificate. Subject to compliance by the Certificate Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all -27- 28 reasonable efforts to issue new Secured Certificates within 10 Business Days of the date of the written request therefor from the Certificate Holder. SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION. (a) No service charge shall be made to a Certificate Holder for any registration of transfer or exchange of Secured Certificates, but the Indenture Trustee, as Secured Certificate Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Secured Certificates; provided, however, that neither the Owner Trustee nor the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Secured Certificates surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Secured Certificates. SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES. (a) On the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders but without Make-Whole Amount. (b) If the Lease is terminated with respect to the Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the Lease is so terminated all the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES. Any or all of the Secured Certificates may be redeemed by the Owner Trustee in connection with a transaction described in, and subject to the terms and conditions of, Section 17 of the Participation Agreement upon at least 30 days' revocable prior written notice to the Indenture Trustee and the Certificate Holders, and the Secured Certificates shall, as provided in Section 17 of the Participation Agreement, be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. -28- 29 SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION. (a) Neither any redemption of any Secured Certificate nor any purchase by the Owner Trustee of any Secured Certificate may be made except to the extent and in the manner expressly permitted by this Trust Indenture. No purchase of any Secured Certificate may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Secured Certificates shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Certificate Holder of such Secured Certificates to be redeemed or purchased, at such Certificate Holder's address appearing in the Secured Certificate Register; provided that, in the case of a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be deemed revoked in the event that the Lease does not in fact terminate on the specified termination date or if notice of such redemption shall have been given in connection with a refinancing of Secured Certificates and the Indenture Trustee receives written notice of such revocation from Lessee or the Owner Trustee not later than three days prior to the redemption date. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Secured Certificate, and that, if any such Secured Certificates are then outstanding, interest on such Secured Certificates shall cease to accrue on and after such redemption date, and (4) the place or places where such Secured Certificates are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Secured Certificates to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption date in immediately available funds the redemption price of the Secured Certificates to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid (and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee or at any office or agency maintained for such purposes pursuant to Section 2.07, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Secured Certificates then outstanding shall cease to bear interest. Upon surrender of any such Secured Certificate for redemption or purchase in accordance with said notice, such Secured Certificate shall be redeemed at the redemption price. If any Secured Certificate called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Secured Certificate as of such redemption date. -29- 30 SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE. If, in accordance with Section 8(x) of the Participation Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a full recourse basis) all of the obligations of the Owner Trustee hereunder, under the Secured Certificates and all other Operative Documents by supplemental indenture satisfactory to the Indenture Trustee (which shall contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease and (ii) other provisions necessary or advisable to effectuate such assumption), then upon delivery of such supplemental indenture, payment by Lessee of all expenses (including reasonable fees and expenses of counsel) for the Owner Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of the Secured Certificates and other amounts owing to the Certificate Holders substantially in the form of the Guarantee, and delivery of an opinion of counsel for Lessee that such assumption has been duly and validly effected, the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Secured Certificates and all other Operative Documents and the Owner Participant shall be released and discharged from any further obligations under the Participation Agreement and any other Operative Document to which it is a party, except with respect to any such obligations that accrued prior thereto. SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.14, purchase all but not less than all of the Secured Certificates outstanding hereunder, and each Certificate Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Secured Certificates and except against Liens on such Secured Certificates arising by, through or under such holder), all of the right, title and interest of such Certificate Holder in and to the Trust Indenture Estate, this Trust Indenture and the Secured Certificates held by it, and such purchaser or its nominee shall assume all of such holder's obligations under the Participation Agreement and hereunder. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Participation Agreement to the holder thereof. Such option to purchase the Secured Certificates may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default, the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any. -30- 31 Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Secured Certificates shall become irrevocable upon the sixteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Certificate Holders will comply with all the provisions of Section 2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes, charges and expenses required pursuant to Section 2.09 in connection with the issuance of such new Secured Certificate shall be borne by the Owner Participant. SECTION 2.15. SUBORDINATION. (a) By acceptance of its Secured Certificates of any Series, each Certificate Holder of such Series hereby agrees that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g) hereof, except as expressly provided in Article III hereof. (b) By the acceptance of its Secured Certificates of any Series (other than Series A), each Certificate Holder of such Series agrees that in the event that such Certificate Holder, in its capacity as a Certificate Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.15 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article III hereof. (c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured Obligations in respect of Series A Secured Certificates have been paid in full and (ii) after the Secured Obligations in respect of Series A Secured Certificates have been paid in full, the Certificate Holders of Series B until the Secured Obligations in respect of Series B Secured Certificates have been paid in full. -31- 32 ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. BASIC RENT DISTRIBUTION. Except as otherwise provided in Section 3.03 hereof, each installment of Basic Rent or Interim Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly distributed in the following order of priority: FIRST, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Secured Certificates shall be distributed to the Certificate Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Secured Certificate bears to the aggregate amount of the payments then due under all Series A Secured Certificates; and (ii) after giving effect to paragraph (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Secured Certificates shall be distributed to the Certificate Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Secured Certificate bears to the aggregate amount of the payments then due under all Series B Secured Certificates; and SECOND, the balance, if any, of such installment remaining thereafter shall be distributed to the Owner Trustee; provided, however, that if an Event of Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "Second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 5.09 hereof until whichever of the following shall first occur: (i) all Events of Default shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "Second" without reference to this proviso, (ii) -32- 33 Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of such Section 3.03, or (iii) the 120th day after the receipt of such payment in which case such payment shall be distributed as provided in this clause "Second" without reference to this proviso. SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION; REFINANCING. Except as otherwise provided in Section 3.03 hereof, any payments received by the Indenture Trustee (i) with respect to the Aircraft as the result of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a refinancing of the Secured Certificates pursuant to Section 17 of the Participation Agreement shall be applied to redemption of the Secured Certificates and to all other amounts payable hereunder or to the Indenture Trustee or any Certificate Holder under the Participation Agreement by applying such funds in the following order of priority: FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for any reasonable costs or expenses incurred in connection with such redemption for which they are entitled to reimbursement under the Operative Documents and then (b) to pay any other amounts then due to the Indenture Trustee and the Certificate Holders under this Trust Indenture, the Participation Agreement or the Secured Certificates; SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series A Secured Certificates; and (ii) after giving effect to paragraph (i) above, to pay the amounts specified in paragraph (ii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series B Secured Certificates; and THIRD, as provided in clause "Fourth" of Section 3.03 hereof; provided, however, that if a Replacement Airframe or Replacement Engine shall be substituted for the Airframe or Engine subject to such Event of Loss as provided in Section 10 of the Lease and in accordance with Section 5.06 hereof, any insurance, condemnation or similar proceeds which result from such Event of Loss and are paid over to the Indenture Trustee shall be held by the Indenture Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be invested as provided in Section 5.09 hereof) as additional security for the obligations of Lessee under the Lessee Operative Documents and, unless otherwise applied pursuant to the Lease, such proceeds (and such investment earnings) shall be released to Lessee at Lessee's written request upon the release of such damaged Airframe or Engine and the replacement thereof as provided in the Lease. -33- 34 SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT. Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Section 15 of the Lease or Article IV hereof) after both an Event of Default shall have occurred and be continuing and the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, as well as all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly distributed by the Indenture Trustee in the following order of priority: FIRST, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate (all such property being herein called the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) incurred by the Indenture Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Certificate Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or any Certificate Holder, liquidated or otherwise, upon such Event of Default shall be applied by the Indenture Trustee as between itself and the Certificate Holders in reimbursement of such expenses and any other expenses for which the Indenture Trustee or the Certificate Holders are entitled to reimbursement under any Operative Document and in the case the aggregate amount to be so distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as shall be required to reimburse the then existing or prior Certificate Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to such then existing or prior Certificate Holders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Certificate Holder pursuant to said Section 5.03 hereof; THIRD, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series A, and in case the -34- 35 aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and FOURTH, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee. No Make-Whole Amount shall be due and payable on the Secured Certificates as a consequence of the acceleration of the Secured Certificates. SECTION 3.04. CERTAIN PAYMENTS. (a) Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in this Trust Indenture and for which such provision is made in the Lease, the Participation Agreement or any other Operative Document shall be applied forthwith to the purpose for which such payment was made in accordance with the terms of the Lease, the Participation Agreement or such other Operative Document, as the case may be. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case whether -35- 36 pursuant to Section 7 of the Participation Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the third paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the third paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) [Intentionally Omitted] (d) Notwithstanding anything to the contrary contained in this Article III, any amounts received by the Indenture Trustee which constitute Excluded Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. (e) Notwithstanding any provision of this Trust Indenture to the contrary, any amounts held by the Indenture Trustee that would, but for the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall, notwithstanding the provisions of said Section, be distributed to Lessee unless and until a Lease Event of Default shall have occurred and be continuing. SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any other Operative Document shall be distributed by the Indenture Trustee to the extent received or realized at any time (i) prior to the payment in full of all Secured Obligations due the Certificate Holders, in the order of priority specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in full of all Secured Obligations due the Certificate Holders, in the following order of priority: FIRST, to the extent payments or amounts described in clause "First" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "First" of Section 3.03 hereof, and SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof. Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04 hereof, all payments received and amounts realized by the Indenture Trustee under the Lease or otherwise with respect to the Aircraft (including, without limitation, all amounts realized upon the sale or release of the Aircraft after the termination of the Lease with respect thereto), to the extent received or realized at any time after payment in full of all Secured Obligations due the Certificate Holders, shall be distributed by the Indenture Trustee in the order of priority specified in clause (ii) of the immediately preceding sentence of this Section 3.05. -36- 37 SECTION 3.06. PAYMENTS TO OWNER TRUSTEE. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account (within the time limits contemplated by Section 2.04(a)) specified in Schedule I to the Participation Agreement. SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE. All payments received by the Indenture Trustee pursuant to the Guarantee shall be distributed forthwith by the Indenture Trustee in the same order of priority, and in the same manner, as it would have distributed the payment in respect of which such payment under the Guarantee was received. ARTICLE IV COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. COVENANTS OF OWNER TRUSTEE. The Owner Trustee hereby covenants and agrees (the covenants and agreements only in clause (b) below being made by the Owner Trustee in its individual capacity) as follows: (a) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Secured Certificates and hereunder in accordance with the terms of the Secured Certificates and this Trust Indenture and all amounts, if any, payable by it to the Certificate Holders under the Participation Agreement; (b) the Owner Trustee in its individual capacity covenants and agrees that it shall not, directly or indirectly, cause or permit to exist a Lessor Lien attributable to it in its individual capacity with respect to the Aircraft or any other portion of the Trust Estate; that it will promptly, at its own expense, take such action as may be necessary to duly discharge such Lessor Lien attributable to it in its individual capacity; and that it will make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Lessor Liens attributable to it in its individual capacity; -37- 38 (c) in the event the Owner Trustee shall have Actual Knowledge of an Event of Default, a Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Event of Default, Default or Event of Loss to the Indenture Trustee, each Certificate Holder, Lessee and the Owner Participant; (d) the Owner Trustee will furnish to the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of any Termination Notice and a copy of each report or notice received pursuant to Section 9(a) and 11(c) of the Lease to the extent that the same shall not have been furnished to the Indenture Trustee pursuant to the Lease; (e) except pursuant to the Operative Documents or with the consent of the Indenture Trustee (acting pursuant to instructions given in accordance with Section 9.01 hereof), the Owner Trustee will not contract for, create, incur, assume or suffer to exist any Debt, and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the Debt of any other person; and (f) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. EVENT OF DEFAULT. "EVENT OF DEFAULT" means any of the following events (whatever the reason for such Event of Default and whether 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): (a) any Lease Event of Default (provided that any such Lease Event of Default caused solely by a failure of Lessee to pay to the Owner Trustee or the Owner Participant when due any amount that is included in the definition of Excluded Payments shall not constitute an Event of Default unless notice is given by the Owner Trustee to the Indenture Trustee that such failure shall constitute an Event of Default); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due and payable under any Secured Certificate or hereunder (other than any such failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof or as a result of a Lease Event of Default or a Lease Default) and such failure shall have -38- 39 continued unremedied for ten Business Days in the case of any payment of Principal Amount or interest or Make-Whole Amount, if any, thereon and, in the case of any other amount, for ten Business Days after the Owner Trustee or the Owner Participant receives written demand from the Indenture Trustee or any Certificate Holder; or (c) any Lien required to be discharged by the Owner Trustee, in its individual capacity pursuant to Section 4.01(b) hereof or in its individual or trust capacity pursuant to Section 8(h) of the Participation Agreement, or by the Owner Participant pursuant to Section 8(h) of the Participation Agreement shall remain undischarged for a period of 30 days after the Owner Trustee and the Owner Participant shall have received written notice from the Indenture Trustee or any Certificate Holder of such Lien; or (d) any representation or warranty made by the Owner Participant or the Owner Trustee herein, in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in any certificate furnished by the Owner Participant or the Owner Trustee to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents shall prove to have been false or incorrect when made in any material respect and continues to be material; and if such misrepresentation is capable of being corrected and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 60 days (or, without affecting Section 4.02(f) hereof, in the case of the representations made in Section 8(c) of the Participation Agreement as to the citizenship of the Owner Trustee in its individual capacity or of the Owner Participant, respectively, as soon as is reasonably practicable but in any event within 60 days) following notice thereof from the Indenture Trustee or any Certificate Holder to the Owner Trustee or the Owner Participant, as the case may be; or (e) other than as provided in (c) above or (f) below, any failure by the Owner Trustee or Owner Participant to observe or perform any other covenant or obligation of the Owner Trustee or Owner Participant, as the case may be, for the benefit of the Indenture Trustee or the Certificate Holders contained in the Participation Agreement, Section 4.01(a) of the Trust Agreement, the Secured Certificates or this Trust Indenture which is not remedied within a period of 60 days after notice thereof has been given to the Owner Trustee and the Owner Participant; or (f) if at any time when the Aircraft is registered under the laws of the United States, the Owner Participant shall not be a Citizen of the United States, and as the result thereof the registration of the Aircraft under the Federal Aviation Act, and regulations then applicable thereunder, shall cease to be effective; provided that no Event of Default shall be deemed to have occurred under this paragraph (f) unless such circumstances continue unremedied for more than 60 days after the Owner Participant has Actual Knowledge of the state of facts that resulted in such ineffectiveness and of such loss of citizenship; or -39- 40 (g) at any time either (i) the commencement of an involuntary case or other proceeding in respect of the Owner Participant, the Owner Trustee or the Trust Estate 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 seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii) the commencement by the Owner Participant, the Owner Trustee or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee or the Trust Estate to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or the making by the Owner Participant, the Owner Trustee or the Trust Estate of any assignment for the benefit of creditors or the Owner Participant or the Owner Trustee shall take any action to authorize any of the foregoing; provided, however, that an event referred to in this Section 4.02(g) with respect to the Owner Participant shall not constitute an Event of Default if within 30 days of the commencement of the case or proceeding a final non-appealable order, judgment or decree shall be entered in such case or proceeding by a court or a trustee, custodian, receiver or liquidator, to the effect that, no part of the Trust Estate (except for the Owner Participant's beneficial interest therein) and no right, title or interest under the Trust Indenture Estate shall be included in, or be subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 4.02(g). SECTION 4.03. CERTAIN RIGHTS. The Indenture Trustee shall give the Certificate Holders, the Owner Trustee and the Owner Participant prompt written notice of any Event of Default of which the Indenture Trustee has Actual Knowledge and, if any such Event of Default results from a Lease Event of Default, shall give the Certificate Holders, the Owner Trustee and the Owner Participant not less than ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence and consummate the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the provisions of Section 15 of the Lease. If an Event of Default shall have occurred and be continuing, the Owner Trustee shall have the following rights hereunder, any of which may be exercised directly by the Owner Participant. If as a result of the occurrence of an Event of Default in respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease, the Indenture Trustee shall have insufficient funds to make any payment of Principal Amount and interest on -40- 41 any Secured Certificate on the day it becomes due and payable, the Owner Trustee or the Owner Participant may, but shall not be obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the manner provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an amount equal to the portion of the Principal Amount and interest (including interest, if any, on any overdue payments of such portion of Principal Amount and interest) then due and payable on the Secured Certificates, and, unless the Owner Trustee has cured Events of Default in respect of payments of Basic Rent on each of the three immediately preceding Basic Rent payment dates, or on the Commencement Date and each of the two immediately succeeding Basic Rent payment dates in respect of payment of Interim Rent, or the Owner Trustee has cured six previous Events of Default in respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any Event of Default which would otherwise have arisen on account of the nonpayment by Lessee of such installment of Interim Rent or Basic Rent (but not any other Default or Event of Default which shall have occurred and be continuing). If any Event of Default (other than in respect of the nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured has occurred, the Owner Trustee or the Owner Participant may, but shall not be obligated to, cure such Event of Default prior to the Enforcement Date as is necessary to accomplish the observance or performance of the defaulted covenant, condition or agreement. Except as hereinafter in this Section 4.03 provided, the Owner Trustee shall not, as a result of exercising the right to cure any such Event of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable under the Lease for or on account of costs or expenses incurred in connection with the exercise of such right, nor shall any claim of the Owner Trustee against Lessee or any other party for the repayment of such costs or expenses impair the prior right and security interest of the Indenture Trustee in and to the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner Participant pursuant to the first or second preceding paragraphs of this Section 4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be subrogated to the rights of the Indenture Trustee and the Certificate Holders in respect of the Interim Rent or Basic Rent which was overdue at the time of such payment and interest payable by Lessee on account of its being overdue and any Supplemental Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant to the immediately preceding paragraph (but in either case shall have no rights as a secured party hereunder), and thereafter, the Owner Trustee or the Owner Participant, as the case may be, shall be entitled to receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt thereof by the Indenture Trustee (and shall be entitled to bring an action against Lessee to enforce such payment); provided, however, that (i) if the Principal Amount and interest on the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to all Secured Certificates shall have been paid in full, be subordinate to the rights of the Indenture Trustee and the Certificate Holders in respect of such payment of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and -41- 42 (ii) the Owner Trustee shall not be entitled to seek to recover any such payment (or any payment in lieu thereof) except pursuant to the foregoing right of subrogation by demand or suit for damages. SECTION 4.04. REMEDIES. (a) Subject to the provisions of Section 2.14 hereof, if an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, then and in every such case the Indenture Trustee may, subject to the second paragraph of this Section 4.04(a), on and after the Enforcement Date if such Event of Default results from a Lease Event of Default, exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article IV and shall have and may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and, in the event such Event of Default is also a Lease Event of Default, any and all of the remedies pursuant to Section 15 of the Lease and may take possession of all or any part of the properties covered or intended to be covered by the Lien created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee and Lessee and all persons claiming under any of them wholly or partly therefrom, provided, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Trust Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder as a result of an Event of Default which arises solely by reason of one or more events or circumstances which constitute a Lease Event of Default unless the Indenture Trustee as security assignee of the Owner Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 15 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section -42- 43 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person. In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any rights or remedy of the Indenture Trustee hereunder) to participate in such proceedings. It is expressly understood and agreed that, subject only to the immediately preceding paragraph, the inability, described in such paragraphs, of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising any or all of its rights, powers and remedies under this Trust Indenture, including, without limitation, this Article IV. (b) If an Event of Default shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery of written notice or notices to the Owner Trustee and the Owner Participant, declare all the Secured Certificates to be due and payable, whereupon the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued but unpaid interest thereon (without Make-Whole Amount) and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. This Section 4.04(b), however, is subject to the condition that, if at any time after the Principal Amount of the Secured Certificates shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Secured Certificates and all other amounts payable under the Secured Certificates (except the Principal Amount of the Secured Certificates which by such declaration shall have become payable) shall have been duly paid, and every other Default and Event of Default with respect to any covenant or provision of this Trust Indenture shall have been cured, then and in every such case a Majority in Interest of Certificate Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. Any acceleration pursuant to this Section 4.04(b) shall be automatically rescinded in the event that the Owner Trustee or the Owner Participant, as the case may be, shall have cured, in accordance with Section 4.03, the Event of Default that resulted in such acceleration. -43- 44 (c) Any Certificate Holder shall be entitled, at any sale pursuant to Section 15 of the Lease or this Section 4.04, to credit against any purchase price bid at such sale by such holder all or any part of the unpaid obligations owing to such Certificate Holder and secured by the Lien of this Trust Indenture (but only to the extent that such purchase price would have been paid to such Certificate Holder pursuant to Article III hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c) were not given effect). (d) In the event of any sale of the Trust Indenture Estate, or any part thereof, pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Trust Indenture, the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued interest thereon, and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any Mortgaged Property or take any action with respect to any Mortgaged Property so acquired by it if such acquisition or action would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. RETURN OF AIRCRAFT, ETC. (a) If an Event of Default shall have occurred and be continuing, subject to Sections 4.03 and 4.04 hereof, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Mortgaged Property included in the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents to the fullest extent permitted by applicable law, and (ii) pursue all or part of such Mortgaged Property wherever it may be found and, in the event that a Lease Event of Default has occurred and is continuing, may enter any of the premises of Lessee wherever such Mortgaged Property may be or be supposed to be and search for such Mortgaged Property and take possession of and remove such Mortgaged Property. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Trust Indenture. -44- 45 (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Mortgaged Property, make all such expenditures for maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modifications or alterations to and of the Mortgaged Property, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the Mortgaged Property and to carry on the business and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Mortgaged Property, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modification or alteration of the Mortgaged Property or any part thereof as the Indenture Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Mortgaged Property and every part thereof, except Excluded Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Trust Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, improvement, modification or alteration of the Mortgaged Property and of conducting the business thereof, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Mortgaged Property or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Trust Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee with respect hereto. SECTION 4.06. REMEDIES CUMULATIVE. Each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or Lessee or to be an acquiescence therein. -45- 46 SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS. In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Trust Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Owner Trustee, the Indenture Trustee and Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Mortgaged Property, and all rights, remedies and powers of the Owner Trustee, the Indenture Trustee or Lessee shall continue as if no such proceedings had been instituted. SECTION 4.08. WAIVER OF PAST DEFAULTS. Upon written instruction from a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Default hereunder and its consequences and upon any such waiver such Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon; provided, that in the absence of written instructions from all the Certificate Holders, the Indenture Trustee shall not waive any Default (i) in the payment of the Principal Amount, Make-Whole Amount, if any, and interest and other amounts due under any Secured Certificate then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Certificate Holder. SECTION 4.09. APPOINTMENT OF RECEIVER. The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee thereof) for all or any part of the Mortgaged Property, whether such receivership be incidental to a proposed sale of the Mortgaged Property or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Mortgaged Property shall be entitled to exercise all the rights and powers of the Indenture Trustee with respect to the Mortgaged Property. SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC. The Owner Trustee irrevocably appoints the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture, whether pursuant to foreclosure or power of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Owner Trustee hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law. Nevertheless, if so requested by the -46- 47 Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Trust Indenture, the right of any Certificate Holder to receive payment of principal of, and premium, if any, and interest on a Secured Certificate on or after the respective due dates expressed in such Secured Certificate, or to bring suit for the enforcement of any such payment on or after such respective dates in accordance with the terms hereof, shall not be impaired or affected without the consent of such Certificate Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default arising from a failure to pay Rent, the Indenture Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms of Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default or Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture Trustee shall not have received instructions as above provided within 20 days after mailing notice of such Event of Default to the Certificate Holders, the Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default or Default as it shall determine advisable in the best interests of the Certificate Holders. If the Indenture Trustee shall at any time declare the Lease to be in default pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall forthwith notify the Owner Participant, the Certificate Holders, the Owner Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall not be deemed to have knowledge of a Default or an Event of Default (except, in the case of the Indenture Trustee, the failure of Lessee to pay any installment of Interim Rent or Basic Rent within one Business Day after the same shall become due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee, the Owner Participant or one or more Certificate Holders. -47- 48 SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, subject to the terms of this Section 5.02, take such of the following actions as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder as shall be specified in such instructions; (ii) give such notice or direction or exercise such right, remedy or power under the Lease, the Participation Agreement, the Purchase Agreement, or any other part of the Trust Indenture Estate as shall be specified in such instructions; and (iii) after the occurrence and during the continuance of an Event of Default, approve as satisfactory to the Indenture Trustee all matters required by the terms of the Lease to be satisfactory to the Owner Trustee, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall not approve any such matter as satisfactory to the Indenture Trustee; provided, that anything contained in this Trust Indenture, the Lease or the other Operative Documents to the contrary notwithstanding: (1) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excluded Payments from Lessee or the Guarantor, exercise any election or option or make any decision or determination or to give or receive any notice, consent, waiver or approval in respect of any Excluded Payment and seek legal or equitable remedies to require Lessee or the Guarantor to maintain the insurance coverage referred to in Section 11 of the Lease; provided, that the rights referred to in this clause (1) shall not be deemed to include the exercise of any remedies provided for in Section 15 of the Lease other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by Lessee or the Guarantor of such amounts included in Excluded Payments or performance by Lessee or the Guarantor of such insurance covenant or to recover damages for the breach thereof or for specific performance of any covenant of Lessee or the Guarantor; (2) unless an Event of Default and an Indenture Trustee Event shall have occurred and be continuing and except as provided in clause (4) below, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not a Default or Event of Default has occurred and is continuing, the Owner Trustee's consent shall be required with respect to any amendments, modifications, waivers or consents in respect of any of the provisions of Sections 5, 7, 9, 11 or 19 of the Lease, or of any other section of the Lease to the extent such action shall affect (y) the amount or timing of, or the right to enforce payment of any Excluded Payment or (z) the amount or timing of any amounts payable -48- 49 by Lessee under the Lease as originally executed (or as subsequently modified with the consent of the Owner Trustee) which, absent the occurrence and continuance of an Event of Default hereunder would be distributable to the Owner Trustee under Article III hereof; (3) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which any thereof is permitted or required to give or furnish to the Owner Trustee or Lessor pursuant to any Operative Document (including pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 11(e) of the Lease specifically confers on Lessor or the Owner Participant, (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of Lessor under Section 21 of the Lease and (v) to give notices of default under Section 14 of the Lease; (4) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee shall have the right to the exclusion of the Indenture Trustee to adjust Rent, Stipulated Loss Values and Termination Values as provided in Section 3(d) of the Lease and to select counsel with respect to any opinion relating to tax matters to be delivered solely to the Owner Participant; (5) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee may, without the consent of the Indenture Trustee, (i) solicit and make bids with respect to the Aircraft under Section 9 of the Lease in respect of a termination of the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales value" and "fair market rental value" under Section 19 of the Lease for all purposes except following an Event of Default pursuant to Section 15 of the Lease, and (iii) make an election pursuant to and in accordance with the provisions of Section 9(c) of the Lease; and (6) so long as no Event of Default shall have occurred and be continuing, except as provided in clauses (2) and (3) above, all rights of the "Lessor" under the Lease shall be exercised by the Owner Trustee to the exclusion of the Indenture Trustee including, without limitation, the right to (i) exercise all rights with respect to Lessee's use and operation, modification or maintenance of the Aircraft and any Engine which the Lease specifically confers on Lessor, and (ii) consent to and approve any assignment pursuant to Section 13 of the Lease; provided that the foregoing shall not limit (A) any rights separately granted to the Indenture Trustee under the Operative Documents or (B) the right of the Indenture Trustee to receive any funds to be delivered to the "Lessor" under the Lease (except with respect to Excluded Payments) and under the Purchase Agreement. -49- 50 Notwithstanding anything to the contrary contained herein, the Indenture Trustee shall have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) declare the Lease to be in default under Section 15 thereof and (B) subject only to the provisions of Sections 2.14, 4.03, 4.04(a) and 5.02(a) hereof, exercise the remedies set forth in such Section 15 (other than in connection with Excluded Payments) at any time that a Lease Event of Default shall have occurred and be continuing. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as specified by Lessee pursuant to Section 8(e) of the Participation Agreement or as may be specified from time to time in written instructions of a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee will furnish to each Certificate Holder (and, during the continuation of an Indenture Trustee Event, to the Owner Trustee and Owner Participant), promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder, including, without limitation, a copy of any Termination Notice (as defined in the Lease) and a copy of each report or notice received pursuant to Sections 9(a) and 11(c) of the Lease, respectively, to the extent that the same shall not have been furnished to such Certificate Holder pursuant hereto or to the Lease. (b) If any Lease Event of Default shall have occurred and be continuing and the Owner Trustee shall not have cured fully such Lease Event of Default under and in accordance with Section 4.03 hereof, on request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall declare the Lease to be in default pursuant to Section 15 thereof and exercise those remedies specified by such Certificate Holders. The Indenture Trustee agrees to provide to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with such declaration by the Indenture Trustee, notice of such declaration by the Indenture Trustee. SECTION 5.03. INDEMNIFICATION. The Indenture Trustee shall not be under any obligation to take any action under this Trust Indenture and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds or otherwise incur the risk of any financial liability in the performance of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (the written indemnity of any Certificate Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Indenture Trustee shall be accepted as reasonable assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture or any other Operative Document be deemed to impose a duty on the Indenture Trustee to take any action, -50- 51 if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or of the Lease or is otherwise contrary to Law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR INSTRUCTIONS. The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Trust Indenture or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Trust Indenture or as expressly provided in written instructions from Certificate Holders as provided in this Trust Indenture; and no implied duties or obligations shall be read into this Trust Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof), promptly take such action as may be necessary duly to discharge all liens and encumbrances on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the ownership of the Aircraft or the administration of the Trust Indenture Estate or any other transaction pursuant to this Trust Indenture or any document included in the Trust Indenture Estate. SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR INSTRUCTIONS. The Owner Trustee and the Indenture Trustee agree that they will not use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate except (i) as required by the terms of the Lease or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Trust Indenture and in accordance with the express terms hereof. SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES. At any time an Airframe or Engine is to be replaced under or pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of Default is continuing, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid, but only upon compliance by Lessee with the applicable provisions of Section 10 of the Lease and upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee, requesting such release specifically describing the Airframe and/or Engine(s) so to be released. -51- 52 (2) A certificate signed by a duly authorized officer of Lessee stating the following: A. With respect to the Replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe to be received (including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number) as consideration for the Airframe to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of such Replacement Airframe free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Airframe will on such date be in good working order and condition, and that such Replacement Airframe has been or, substantially concurrently with such withdrawal, will be duly registered in the name of the Owner Trustee under the Federal Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and that Lessee will have the full right and authority to use such Replacement Airframe; (iv) the existence of the insurance required by Section 11 of the Lease with respect to such Replacement Airframe and the payment of all premiums then due thereon; (v) that the Replacement Airframe is of the same or an improved model as the Airframe requested to be released from this Indenture; (vi) the fair market value of the Replacement Airframe as of the date of such certificate (which in the judgment of Lessee shall be not less than the then fair market value of the Airframe requested to be released (assuming such Airframe was in the condition and repair required to be maintained under the Lease)); -52- 53 (vii) the fair market value of the Airframe immediately prior to the date the Airframe suffered an Event of Loss (assuming such Airframe was in the condition and repair required to be maintained under the Lease); (viii) that no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default, has occurred which has not been remedied or waived, and that Lessee will not be in default, by the making and granting of the request for release and the addition of a Replacement Airframe, in the performance of any of the terms and covenants of the Lease; and (ix) that the release of the Airframe so to be released will not be in contravention of any of the provisions of this Indenture; or B. with respect to the replacement of any Engine: (i) a description of the Engine which shall be identified by manufacturer's serial number; (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) as consideration for the Engine to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Engine will on such date be in good working order and condition and that such Replacement Engine is substantially the same as the Engine to be released (or as improved model); (iv) the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then fair market value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease)); (v) the fair market value of the Engine to be released (immediately prior to any Event of Loss suffered by such Engine and assuming that such Engine was in the condition and repair required to be maintained under the Lease); -53- 54 (vi) that each of the conditions specified in Section 10(b) of the Lease with respect to such Replacement Engine have been satisfied and that Lessee will not be in default, by the making and granting of the request for release and the addition of the Replacement Engine, in the performance of any of the terms and covenants of the Lease; (vii) that, with respect to the replacement of an Engine pursuant to Section 9(d) of the Lease, no Lease Event of Default and no Lease Default has occurred which has not been remedied or waived; and (viii) that the release of the Engine so to be released will not be in contravention of any of the provisions of this Indenture. (3) (a) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting such Replacement Airframe or Replacement Engine and any related warranty rights to the lien of this Indenture. (b) With respect to the replacement of any Engine, such Uniform Commercial Code financing statements covering the lien created by this Indenture as deemed necessary or desirable by counsel for the Indenture Trustee to protect the lien under the Indenture in the Replacement Engine. (4) A certificate from either an aircraft engineer (who may be an employee of Lessee) or a firm of independent aircraft appraisers selected by Lessee confirming the accuracy of the information set forth in clause (2)A(vi) of this Section 5.06. (5) The opinion of in-house counsel to Lessee, or other counsel satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Trust Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be lawfully released from the lien of this Trust Indenture and all conditions precedent herein provided for relating to such release have been complied with; and -54- 55 (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Trust Indenture, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate and interest of the Owner Trustee to and the lien of this Trust Indenture on such Replacement Aircraft or Replacement Engine. SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS. If a Replacement Airframe or Replacement Engine is being substituted as contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Certificate Holders and Lessee, subject to fulfillment of the conditions precedent and compliance by Lessee with its obligations set forth in Section 10 of the Lease and the requirements of Section 5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to execute and deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease. SECTION 5.08. EFFECT OF REPLACEMENT. In the event of the substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced, and (b) the provisions of this Trust Indenture shall no longer be applicable to the Airframe or Engine or Engines being replaced, which shall be released from the Lien of this Trust Indenture. SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of the Lease shall be held in accordance with the terms of such Section and the Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of the Owner Trustee under such Section. Any amounts held by the Indenture Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee may acquire the same -55- 56 using its best efforts. Unless otherwise expressly provided in this Trust Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Trust Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever such sale is necessary to make a distribution required by this Trust Indenture. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse all monies constituting part of the Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its individual capacity, and the Indenture Trustee, in its individual capacity, shall not be answerable or accountable under any circumstances, except (i) for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be willful misconduct or negligence), (ii) in the case of the Indenture Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii) for liabilities that may result, in the case of the Owner Trustee, from the inaccuracy of any representation or warranty of the Owner Trustee expressly made in its individual capacity in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents) or, in the case of the Indenture Trustee (in its individual capacity), from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable for any action or inaction of the other or of the Owner Participant. SECTION 6.02. ABSENCE OF DUTIES. In the case of the Indenture Trustee, except in accordance with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the Lease or of this Trust Indenture or any other document, or to see to the maintenance of any such registration, recording or -56- 57 filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Lessee's covenants under the Lease with respect to the Aircraft. The Owner Participant shall not have any duty or responsibility hereunder, including, without limitation, any of the duties mentioned in clauses (i) through (v) above; provided, that nothing contained in this sentence shall limit any obligations of the Owner Participant under the Participation Agreement or relieve the Owner Participant from any restriction under Section 4.03 hereof. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR DOCUMENTS. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its individual capacity warrants that (i) the Owner Trustee has received on the Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Trustee in its individual capacity. Neither the Owner Trustee, in its individual capacity or as Owner Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual or trust capacities, makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Trust Indenture, the Trust Agreement, the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Owner Trustee made in its individual capacity and the representations and warranties of the Indenture Trustee, in each case expressly made in this Trust Indenture or in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the -57- 58 Refunding Agreement). The Loan Participants, the Certificate Holders and the Owner Participant make no representation or warranty hereunder whatsoever. SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the Certificate Holders, Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by Law or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under such general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for any interest thereon (except that the Indenture Trustee shall invest all monies held as directed by Lessee so long as no Lease Event of Default or Lease Default has occurred and is continuing (or in the absence of such direction, by the Majority In Interest of Certificate Holders) in Cash Equivalents; provided, however, that any payments received, or applied hereunder, by the Indenture Trustee shall be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL. Neither the Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors (or Executive Committee thereof) of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Secured Certificates outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to Lessee the manner of ascertainment of which is not specifically described herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee and the Indenture Trustee for any action taken or omitted to be taken by them in good faith in reliance thereon. The Indenture Trustee shall assume, and shall be fully protected in assuming, that the Owner Trustee is authorized by the Trust Agreement to enter into this Trust Indenture and to take all action to be taken by it pursuant to the provisions hereof, and shall not inquire into the authorization of the Owner Trustee with respect thereto. In the administration of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good -58- 59 faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled persons. SECTION 6.06. CAPACITY IN WHICH ACTING. The Owner Trustee acts hereunder solely as trustee as herein and in the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein, in the Trust Agreement and in the Participation Agreement. SECTION 6.07. COMPENSATION. The Indenture Trustee shall be entitled to reasonable compensation, including expenses and disbursements (including the reasonable fees and expenses of counsel), for all services rendered hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by Lessee, and shall have the right, on and subsequent to an Event of Default hereunder, to use or apply any monies held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against the Loan Participants, the Certificate Holders, the Owner Trustee or the Owner Participant for any fee as compensation for its services as trustee under this Trust Indenture. SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS. In the administration of the trusts created hereunder, the Indenture Trustee shall have the right to seek instructions from a Majority in Interest of Certificate Holders should any provision of this Trust Indenture appear to conflict with any other provision herein or should the Indenture Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no liability in refraining from acting until it receives such instructions. The Indenture Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.08. ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. SCOPE OF INDEMNIFICATION. The Owner Trustee, not in its individual capacity, but solely as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its individual and trust capacities), and its successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Trust Indenture), claims, actions, suits, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and -59- 60 nature whatsoever, which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also indemnified against by any other Person under any other document) in any way relating to or arising out of this Trust Indenture or any other Operative Document to which it is a party or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, to the extent not reimbursed by Lessee. Without limiting the foregoing, the Indenture Trustee agrees that, prior to seeking indemnification from the Trust Indenture Estate, it will demand, and take such action as it may in its discretion determine to be reasonable to pursue, indemnification available to the Indenture Trustee under the Lease or the Participation Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be entitled to any indemnification for any Expenses to the extent relating to or arising from the willful misconduct or gross negligence (or negligence in the case of handling funds) of the Indenture Trustee in the performance of its duties hereunder or resulting from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) referred to in Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities under such Sections. In addition, if necessary, the Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement including upon any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee, Lessee and the Certificate Holders. SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF SUCCESSOR. -60- 61 (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Certificate Holders may at any time (but only with the consent of Lessee, which consent shall not be unreasonably withheld, except that such consent shall not be necessary if a Lease Event of Default is continuing) remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Certificate Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so long as no Lease Event of Default shall have occurred and be continuing, shall be subject to Lessee's reasonable approval. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as above provided. (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee an instrument accepting such appointment and assuming the obligations of the Indenture Trustee under the Participation Agreement arising from and after the time of such appointment, and thereupon such successor Indenture Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee herein; but nevertheless upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all monies or other property then held by such predecessor Indenture Trustee hereunder. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having its principal place of business in the Borough of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations under the Operative Documents are guaranteed by an affiliated entity having) a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. -61- 62 (d) Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Indenture Trustee may be transferred, shall, subject to the terms of paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the Indenture Trustee under this Trust Indenture without further act. SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Trust Indenture Estate shall be situated or to make any claim or bring any suit with respect to or in connection with the Trust Indenture Estate, this Trust Indenture, any other Indenture Agreement, the Secured Certificates or any of the transactions contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interests of the Certificate Holders (and the Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture Trustee shall have been requested to do so by a Majority in Interest of Certificate Holders, then in any such case, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and such other instruments as may from time to time be necessary or advisable either (1) to constitute one or more bank or trust companies or one or more persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as additional trustee or trustees of all or any part of the Trust Indenture Estate, or to act as separate trustee or trustees of all or any part of the Trust Indenture Estate, in each case with such rights, powers, duties and obligations consistent with this Trust Indenture as may be provided in such supplemental indenture or other instruments as the Indenture Trustee or a Majority in Interest of Certificate Holders may deem necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional and separate trustee, subject in each case to the remaining provisions of this Section 8.03. If the Owner Trustee shall not have taken any action requested of it under this Section 8.03(a) that is permitted or required by its terms within 15 days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing provisions of this Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and perform any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee. In case any additional or separate trustee appointed under this Section 8.03(a) shall die, become incapable of acting, resign or be removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to the Indenture Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.03(a). -62- 63 (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Trust Indenture Estate or otherwise payable under any Operative Document to the Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights, powers, duties and obligations conferred or imposed upon any additional or separate trustee shall be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly except to the extent that applicable Law of any jurisdiction in which any particular act is to be performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of the Indenture Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Indenture Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.03 shall be subject to, and shall have the benefit of Articles IV through VIII and Article X hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. (c) If at any time the Indenture Trustee shall deem it no longer necessary or desirable in order to conform to any such law or take any such action or shall be advised by such counsel that it is no longer so necessary or desirable in the interest of the Certificate Holders, or in the event that the Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Certificate Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when and to the extent it could so act under Section 8.03(a) hereof. ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS. (a) Except as provided in Section 5.02 hereof, and except with respect to Excluded Payments, the Owner Trustee agrees it shall not enter into any amendment of or supplement to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and deliver any written waiver or -63- 64 modification of, or consent under, the terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee and a Majority in Interest of Certificate Holders. Anything to the contrary contained herein notwithstanding, without the necessity of the consent of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter into amendments of or additions to the Lease to modify Section 5 (except to the extent that such amendment would affect the rights or exercise of remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such amendments, modifications and changes do not and would not affect the time of, or reduce the amount of, Rent payments until after the payment in full of all Secured Obligations or otherwise adversely affect the Certificate Holders. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with the Certificate Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Certificate Holders, or does not adversely effect the Certificate Holders, but upon the written request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each holder of an affected Secured Certificate then outstanding, no such amendment of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an Event of Default) of the Lease, the definitions of "Event of Default", "Default", "Lease Event of Default", "Lease Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Secured Certificate, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in favor of the Certificate Holders, (iv) consent to any change in the Trust Indenture or the Lease which would permit redemption of Secured Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the -64- 65 Secured Certificates other than as permitted by Section 2.14 hereof, (v) modify any of the provisions of Section 3(d)(v) of the Lease, or modify, amend or supplement the Lease or consent to any assignment of the Lease, in either case releasing Lessee from its obligations in respect of the payment of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. So long as no Lease Event of Default has occurred and is continuing, without the consent of Lessee no amendment or supplement to this Trust Indenture or waiver or modification of the terms hereof shall adversely affect Lessee. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Certificate Holder for any of the following purposes: (i) (a) to cure any defect or inconsistency herein or in the Secured Certificates, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Certificate Holders in its capacity solely as Certificate Holder; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Trust Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Certificate Holders, or to surrender any rights or power herein conferred upon the Owner Trustee, the Owner Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and (vii) to include on the Secured Certificates any legend as may be required by law. SECTION 9.02. TRUSTEES PROTECTED. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of Section 9.01 hereof adversely affects any right, duty, immunity or indemnity with respect to such institution under this Trust Indenture or the Lease, such institution may in its discretion decline to execute such document. -65- 66 SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to Section 9.01 hereof, the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each Certificate Holder at its address last set forth in the Secured Certificate Register, but the failure of the Indenture Trustee to mail such copies shall not impair or affect the validity of such document. SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST AGREEMENT AND INDENTURE SUPPLEMENT. No written request or consent of the Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof shall be required to enable the Owner Trustee to enter into any Lease Supplement specifically required by the terms of the Lease or to execute and deliver a Trust Agreement and Indenture Supplement specifically required by the terms hereof. ARTICLE X MISCELLANEOUS SECTION 10.01. TERMINATION OF TRUST INDENTURE. Upon (or at any time after) payment in full of the Principal Amount of, Make-Whole Amount, if any, and interest on and all other amounts due under all Secured Certificates and provided that there shall then be no other Secured Obligations due to the Certificate Holders and the Indenture Trustee hereunder or under the Participation Agreement, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft and the Engines from the Lien of this Trust Indenture and releasing the Lease, the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto from the assignment and pledge thereof hereunder and the Indenture Trustee shall execute and deliver such instrument as aforesaid and give written notice thereof to Lessee; provided, however, that this Trust Indenture and the trusts created hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property constituting part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all monies or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE HOLDERS. No holder of a Secured Certificate shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Secured Certificate or -66- 67 other right, title and interest of any Certificate Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Trust Indenture or entitle such holder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Trust Indenture Estate. SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING. Any sale or other conveyance of the Trust Indenture Estate, or any part thereof (including any part thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind the Certificate Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders in and to such Trust Indenture Estate or part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS. Nothing in this Trust Indenture, whether express or implied, shall be construed to give any person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or equitable right, remedy or claim under or in respect of this Trust Indenture. SECTION 10.05. NOTICES. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), with a copy to the Owner Participant addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee, addressed to it at its office at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617) 664- 5371), (iii) if to any Participant, Lessee or any Certificate Holder, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party (if any) set forth on the signature pages to the Refunding Agreement or in the Secured Certificate Register. Whenever any notice in writing is required to be given by the Owner Trustee, any Participant or the Indenture Trustee or any Certificate Holder or Lessee to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after being mailed, addressed as provided above. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Trust Indenture. -67- 68 SECTION 10.06. SEVERABILITY. Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS. No term or provision of this Trust Indenture or the Secured Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Owner Trustee and the Indenture Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any Secured Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 10.08. SUCCESSORS AND ASSIGNS. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the permitted successors and assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificate Holder shall bind the successors and assigns of such holder. This Trust Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby, thereby and by the Participation Agreement. Each Certificate Holder by its acceptance of a Secured Certificate agrees to be bound by this Trust Indenture and all provisions of the Participation Agreement applicable to a Loan Participant or a Certificate Holder. SECTION 10.09. HEADINGS. The headings of the various Articles and sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.10. NORMAL COMMERCIAL RELATIONS. Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or any bank or other Affiliate of such Participant may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Lessee, fully to the same extent as if this Trust Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. -68- 69 SECTION 10.11. GOVERNING LAW; COUNTERPART FORM. THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the parties hereto in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.12. VOTING BY CERTIFICATE HOLDERS. All votes of the Certificate Holders shall be governed by a vote of a Majority in Interest of Certificate Holders, except as otherwise provided herein. SECTION 10.13. BANKRUPTCY. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee hereunder), shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any of the provisions of this Trust Indenture or the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner Trustee will take any action contrary to Lessee's rights under the Lease, including the right to possession and use of, and the quiet enjoyment of, the Aircraft, except in accordance with provisions of the Lease. -69- 70 IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to be duly executed by their respective officers thereof duly authorized as of the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, as Owner Trustee By:________________________________________ Name:______________________________________ Title:_____________________________________ STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By:________________________________________ Name:______________________________________ Title:_____________________________________ -70- 71 EXHIBIT A TO TRUST INDENTURE AND MORTGAGE TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1995 B] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1995 B], dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1995 B] dated as of December 13, 1995 (the "TRUST AGREEMENT"), between the Owner Trustee and the Owner Participant named therein. W I T N E S S E T H: WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1995 B], dated as of June 12, 1996 (as amended and supplemented to the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft, and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for recordation on the date hereof with the FAA as one document; NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust Indenture Estate covers all of Owner Trustee's right, title and interest in and to the following described property: EXHIBIT A-1 72 AIRFRAME One airframe identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Two aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows: Manufacturer Manufacturer's Model Serial Number together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to any of such engines. Together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts). As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Loan Participants and of the Certificate Holders, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under the Lease Supplement [of even date herewith] covering the property described above. EXHIBIT A-2 73 Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III of the Trust Indenture without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Trust Indenture Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. * * * IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, Owner Trustee By:________________________________________ Name: Title: EXHIBIT A-3 74 SCHEDULE I
PRINCIPAL AMOUNT INTEREST RATE Series A ............................. $23,169,369 7.67% Series B ............................. $ 7,400,345 8.07%
75 SECURED CERTIFICATES AMORTIZATION SERIES A AIRCRAFT: N536US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID -------------------------------------- ---------------------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 0.00000000% Jul 2, 1999 0.00000000% Jan 2, 2000 0.00000000% Jul 2, 2000 2.02608453% Jan 2, 2001 0.00000000% Jul 2, 2001 2.15326969% Jan 2, 2002 0.00000000% Jul 2, 2002 2.15326969% Jan 2, 2003 0.00000000% Jul 2, 2003 2.15326969% Jan 2, 2004 0.00000000% Jul 2, 2004 2.15326969% Jan 2, 2005 0.00000000% Jul 2, 2005 2.15326969% Jan 2, 2006 0.00000000% Jul 2, 2006 1.75724682% Jan 2, 2007 0.39602287% Jul 2, 2007 1.24738399% Jan 2, 2008 0.90588570% Jul 2, 2008 7.98950114% Jan 2, 2009 1.44318130% Jul 2, 2009 13.40881144% Jan 2, 2010 2.01275658% Jul 2, 2010 14.00022590% Jan 2, 2011 2.62685617% Jul 2, 2011 14.63787382% Jan 2, 2012 19.51528330% Jul 2, 2012 7.26653799%
76 SERIES B AIRCRAFT: N536US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID -------------------------------------- ---------------------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 0.00000000% Jul 2, 1999 0.00000000% Jan 2, 2000 0.00000000% Jul 2, 2000 0.00000000% Jan 2, 2001 0.00000000% Jul 2, 2001 0.00000000% Jan 2, 2002 0.00000000% Jul 2, 2002 2.24717902% Jan 2, 2003 0.00000000% Jul 2, 2003 2.24717902% Jan 2, 2004 0.00000000% Jul 2, 2004 2.24717902% Jan 2, 2005 0.00000000% Jul 2, 2005 12.04872205% Jan 2, 2006 0.00000000% Jul 2, 2006 31.31805342% Jan 2, 2007 0.00000000% Jul 2, 2007 34.67135654% Jan 2, 2008 0.00000000% Jul 2, 2008 15.22033094%
77 SCHEDULE II 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. Schedule II-1 EX-4.D3 29 LEASE AGREEMENT-1995 B 1 LEASE AGREEMENT [NW 1995 B] This LEASE AGREEMENT [NW 1995 B], dated as of December 13, 1995, between FIRST SECURITY BANK OF UTAH, 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 1995 B] and shall be equally applicable to both the singular and the plural forms of the terms herein defined: "Administrative Agent" means [______________], a [_______] banking corporation, as administrative agent pursuant to the Participation Agreement, and any successor acting as administrative agent. "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. "After-Tax Basis" means, with respect to any amount received or accrued by any Person (the "BASE AMOUNT"), the base amount, supplemented by a further payment, if necessary, to such Person such that, after reduction for all Taxes of any nature whatsoever imposed on such Person as a result of the receipt or accrual of the base amount and such further payment (determined without regard to any exclusions contained in Section 7(b)(ii) of the Participation Agreement and including, without limitation, income taxes, and after giving effect to all current deductions or credits, if any, actually utilized by such Person arising from the event or circumstance giving rise to the base amount), shall be equal to the base amount. With respect to any amount received or accrued by any Person other than the Owner Participant (or Lessee if it relates to a payment from the Owner Participant), such calculations shall be made, with respect to all Taxes, on the basis of the amounts actually required to 2 be paid by the recipient. With respect to any amount received or accrued by the Owner Participant (or by Lessee with respect to a payment received from the Owner Participant) such calculations shall be made with respect to all Taxes, other than income taxes, on the basis of the amounts actually required to be paid by recipient and with respect to income taxes, on the assumption that the recipient is subject to Federal and state and local income taxation at the Highest Marginal Rate. "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 two 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 Boeing 757-251 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. "Assumed Interest Rate" has the meaning set forth in Section 3(c) hereof. "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended, or any subsequent legislation that amends, supplements or supersedes such provisions. - 2 - 3 "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 Commencement Date and ending on June 20, 2016, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. "Bill of Sale" means a full warranty bill 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 Bill of Sale shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good title to the Airframe and each Engine described in such Bill 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 New York, New York; Boston, Massachusetts; Salt Lake City, Utah; San Francisco, California; or Minneapolis, Minnesota and, in connection with any payment of Rent and so long as any Secured Certificate is a Eurodollar Loan (as defined in the Trust Indenture), such day is also a day for trading by and between banks in the interbank Eurodollar market. "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. "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. - 3 - 4 "Code" means the Internal Revenue Code of 1986, as amended. "Commencement Date" means June 20, 1996. "Commitment" means the commitment of a Loan Participant 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 1995 B], 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. "Credit Agreement" means the Credit Agreement, dated as of November 2, 1995, among Lessee, the banks, financial institutions and other institutional lenders listed on the signature pages thereof, [_____________], as documentation agent, [_____________], as administrative agent, and [______________], as syndication agent, as the same may be amended, supplemented or otherwise modified from time to time. "Debt Rate" has the meaning set forth in the Trust Indenture. "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 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, 2002. "Documentation Agent" means [_______________], a bank organized under the laws of [________________], as documentation agent pursuant to the Participation Agreement, and any successor acting as documentation agent. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of the two Pratt & Whitney Model PW2037 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 two engines, together in each case with any and all Parts - 4 - 5 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 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 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 which is a member of OECD, 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 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 60 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, 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, 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 Lessee's entire U.S. registered fleet of Boeing Model 757-200 aircraft and Lessee, prior to the expiration of such two-year period, shall have conformed at least one - 5 - 6 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, 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 which is a member of OECD or any instrumentality or agency of any thereof, which shall have occurred during the Basic Term (or the Interim 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. "Expenses" has the meaning specified in Section 7(c) of the Participation Agreement. "FAA Bill of Sale" means a bill 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 - 6 - 7 any agency or instrumentality of the applicable government succeeding to the functions of any of the foregoing entities). "Funding Loss Amount" has the meaning assigned to that term in the Trust Indenture. "Guarantee" means the Guarantee [NW 1995 B], dated as of the date hereof, made by the Guarantor in favor of the Parties, 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. "Highest Marginal Rate" has the meaning assigned to that term in the Tax Indemnity Agreement. "Indemnitee" means the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Administrative Agent, the Documentation Agent, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents. "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 said 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, or a transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of Default is - 7 - 8 continuing and prior to the time that the Indenture Trustee has received all amounts due pursuant to the Trust Indenture. "Interest Period" means Interest Period as defined in the Trust Indenture. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions hereof. "Lease Agreement", "this Lease Agreement", "this Lease", "this Agreement", "herein", "hereof", "hereunder", "hereby" or other like words mean this Lease Agreement [NW 1995 B] 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 semi-annual periods throughout the Basic Term and any Renewal Term ending on a Lease Period Date, the first such period commencing on and including the Commencement Date. "Lease Period Date" means December 20, 1996 and each succeeding June 20 and December 20, 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 Bill of Sale, the Bill 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 of Utah, National Association, in its - 8 - 9 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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. "Loan Participant" means each institution executing the Participation Agreement as a Loan Participant, and its respective successors and assigns, and any Certificate Holder; at any time when there is only one Certificate Holder, "each Loan Participant" shall mean such 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. "Major Default" means any event which with the giving of notice or the lapse of time or both would become an Event of Default pursuant to Section 14(a), 14(b) or 14(e) hereof. - 9 - 10 "Majority in Interest of Certificate Holders" has the meaning assigned to that term in the Trust Indenture. "Manufacturer" means The Boeing Company, a Delaware corporation. "Manufacturer Documents" means the Purchase Agreement and the Consent and Agreement. "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 7.70 percent on a semi-annual basis. "OECD" means the Organization for Economic Cooperation and Development. "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 Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Guarantee, the Purchase Agreement Assignment and the Consent and Agreement. "Overall Transaction" means all the transactions contemplated by the Operative Documents. "Owner Participant" means the corporation executing the Participation Agreement as the Owner Participant and 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. - 10 - 11 "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 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 1995 B], dated as of the date hereof, among Lessee, the Loan Participants, the Indenture Trustee, the 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. "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. "Plan" means any employee benefit plan as defined in Section 3(3) of ERISA or any plan as defined in Section 4975(e)(1) of the Code. - 11 - 12 "Purchase Agreement" means the Purchase Agreement No. 1631, dated December 1, 1989, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1995 B], 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. "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. "Rent Differential Amount" has the meaning set forth in Section 3(c) hereof. "Secured Certificates" has the meaning assigned to that term in the Trust Indenture. "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 June 20, 2016, 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). To the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Interim Term or the Lease Period in which such Stipulated Loss Value Date occurs up to and including such Stipulated Loss Value Date is greater or less than the amount included in calculating the percentage set forth in Exhibit C with respect to such Stipulated Loss Value Date on account of such interest, the corresponding percentage set forth in Exhibit C shall be adjusted appropriately to compensate for such differential. "Stipulated Loss Value" as of any date after June 20, 2016 shall be the amount determined as provided in Section 19(a) hereof. "Stipulated Loss Value Date" means the twentieth calendar day of each calendar month during the Interim Term, Basic Term and any Renewal Term. - 12 - 13 "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. "Supplemental Rent" means all amounts, liabilities and obligations (other than Basic Rent) which Lessee assumes or agrees to pay to Lessor or others hereunder, under the Participation Agreement, under the Tax Indemnity Agreement or under any of the other Operative Documents. The parties acknowledge that Supplemental Rent is a general category and, accordingly, agree that any provision of any Operative Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment. "Tax Indemnitee" means the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors and permitted assigns. "Tax Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1995 B], dated as of the date hereof, 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 Interim Term, 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 June 20, 2016, 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 - 13 - 14 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). In the event that the Termination Date with respect to which Termination Value is determined is a date on which Basic Rent is payable in advance as indicated on Exhibit B, to the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Lease Period ending on such Termination Date is greater or less than the amount included in calculating the corresponding percentage set forth in Exhibit D with respect to such Termination Date on account of such interest, the corresponding percentage set forth in Exhibit D shall be adjusted appropriately to compensate for such differential. "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Bingham, Dana & Gould, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker, special counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Shearman & Sterling, special counsel to the Loan Participants, such information to be furnished by the Documentation Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee and Guarantor, such information to be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements (but excluding any sales or use tax which applies to the Aircraft), such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, and the out-of-pocket expenses of the Owner Participant, such information to be furnished by the Owner Participant, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust Indenture, such information to be furnished by the Indenture Trustee, (v) the fee of BK Associates, Inc. with respect to the appraisals of the Aircraft pursuant to Sections 4(a)(xx) and 4(a)(xxix) of the Participation Agreement, such information to be furnished by the Owner Participant and Lessee, (vi) the reasonable and actual fees, expenses and disbursements of White & Case, special counsel to the Owner Participant, such information to be furnished by the Owner Participant, (vii) the equity placement fee and reasonable disbursements of Babcock and Brown Financial Corporation, such information to be furnished by Lessee, and (viii) the fee payable to the Loan Participants on the Delivery Date. "Trust Agreement" means that certain Trust Agreement [NW 1995 B], dated as of the date hereof, between the Owner Participant and First Security Bank of Utah, 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 - 14 - 15 one or more Trust Supplements entered into pursuant to the applicable provisions thereof. "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 1995 B], dated as of the date hereof, between Lessor and the Indenture Trustee, as originally executed or as modified, amended or supplemented in accordance with the provisions thereof. "Trust Supplement" means a supplement to the Trust Agreement and the Trust Indenture, substantially in the form of Exhibit A to the Trust Indenture. "U.S. Air Carrier" means any Certificated Air Carrier as to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the regulations under the Federal Aviation Act, or which may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. "Wet Lease" means any arrangement whereby the Lessee (or any Sublessee) agrees to furnish the Airframe and Engines or engines installed thereon to a third party pursuant to which such Airframe and Engines or engines (i) shall be operated solely by regular employees of Lessee (or any Sublessee) possessing all current certificates and licenses that would be required under the Federal Aviation Act or, if the Aircraft is not registered in the United States, all certificates and licenses required by the laws of the jurisdiction of registry, for the performance by such employees of similar functions within the United States of America or such other jurisdiction of registry (it is understood that cabin attendants need not be regular employees of Lessee (or any Sublessee)) and (ii) shall be maintained by Lessee (or any Sublessee) in accordance with its normal maintenance practices. SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to satisfaction of the conditions set forth in Section 4(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 Section 4(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) Interim Term and Basic Term. The Interim Term shall commence on the Delivery Date and end on and include the day immediately preceding the Commencement Date unless earlier terminated pursuant to the provisions hereof. The Basic Term shall commence on the Commencement Date and end on - 15 - 16 June 20, 2016, 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 the Commencement Date and 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 Commencement Date or the applicable Lease Period Date specified in Exhibit B hereto. Although the Basic Rent percentages set forth in Exhibit B hereto have been computed on the assumption that the rate of interest on the Secured Certificates throughout the Term will be 7.70% per annum, computed on the basis of a 360-day year of twelve 30-day months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, each installment of Basic Rent shall be increased or decreased (but not below zero), as the case may be, by the Rent Differential Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT" shall mean, as of the Commencement Date or any Lease Period Date with respect to the Basic Term, the difference between (i) the aggregate amount of interest due and payable on the Commencement Date or such Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Commencement Date or such Lease Period Date if such Secured Certificates had borne interest at the Assumed Interest Rate, in each case for the period from and including the Lease Period Date (or the Commencement Date in the case of the first Lease Period) next preceding such Lease Period Date to but excluding such Lease Period Date or, in the case of the Commencement Date, the period from the Delivery Date to but excluding the Commencement Date. If, as of the Commencement Date or any Lease Period Date, the amount determined in accordance with clause (i) of the immediately preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Basic Rent payable on the Commencement Date or such Lease Period Date shall be increased by the Rent Differential Amount. If, as of the Commencement Date or any Lease Period Date, the amount determined in accordance with such clause (ii) shall exceed the amount determined in accordance with such clause (i), the amount of Basic Rent due on the Commencement Date or such Lease Period Date shall be decreased (but not below zero) by the Rent Differential Amount. (d) Adjustments to Basic Rent. (i) In the event that (A) the Delivery Date occurs other than on December 21, 1995, or (B) Transaction Expenses paid by Lessor pursuant to Section 16(a) of the Participation Agreement are determined to be other than - 16 - 17 1.35% of Lessor's Cost, then in each case the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated by the Owner Participant, on or prior to April 15, 1996 using the same methods and assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, 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. (ii) (A) In the event of a refinancing or a refunding as contemplated by Section 17 of the Participation Agreement, then the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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 which has been consented to by the Owner Participant in its sole discretion, then the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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 and the Special Purchase Price 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) Notwithstanding any other provision in any Operative Document, the Special Purchase Price shall not be decreased below the higher of (A) the estimated fair market value of the Aircraft on December 20, 2011, determined as of the Delivery Date and set forth in the opinion received by the Owner Participant from BK Associates, Inc. pursuant to Section 4(a)(xx) of the Participation Agreement (the "APPRAISAL"), and (B) the sum of the present values, as of December 20, 2011, of (1) Basic Rent payable with respect to the period from December 20, 2011 to and including June 20, 2016 and (2) the estimated fair market value of the Aircraft on June 20, 2016, determined as of the Delivery Date and set forth in the Appraisal utilizing the discount rate - 17 - 18 utilized by the Owner Participant in determining the Special Purchase Price as of the Delivery Date. (iv) Any recalculation of Basic Rent and Stipulated Loss Value and Termination Value percentages and Special Purchase Price 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 and Stipulated Loss Value and Termination Value percentages and Special Purchase Price 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, 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 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 Section Section 4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28 and with Section 467 of the Internal Revenue Code of 1986, as amended, 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, - 18 - 19 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 when due any amount of premium payable when due under the Trust Indenture and shall pay amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when the same shall become due and payable. 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 of Utah, National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW 1995 B (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 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, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1995 B (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 10 Business Days prior to the date such payment of Rent is due). 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 - 19 - 20 is made on such next succeeding Business Day) no interest shall accrue on the amount of such payment from and after such scheduled date. 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 of Utah, 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 that 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 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 - 20 - 21 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) Business 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 Pratt & Whitney Model PW2037 engines or two engines of the same or another manufacturer of not less than equivalent utility, value and remaining useful life as the Engines, and suitable for installation and use on the Airframe without impairing the value, utility or remaining useful life of the Aircraft (assuming for this purpose that the Aircraft includes the Engines); provided that both 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 that would be Lessor Liens but for the proviso in the definition of Lessor 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 Exhibit G. 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 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) bill 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 bill 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 - 21 - 22 Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens), against receipt from Lessor of a bill 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 that 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 contained in the fuel tanks of such Airframe, the value of such fuel at the price paid by Lessee for such fuel, 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 (i) 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 forty-five (45) days commencing on the date of such termination and (ii) parking facilities for the Aircraft (maintenance costs, other out-of-pocket costs and parking fees to be for the account of Lessor) for a period not exceeding an additional fifteen (15) days commencing at the end of such forty-five (45) day period, in each case at a location in the continental United States selected by Lessee used as a location for the parking or storage of aircraft; provided that Lessee shall have no obligation to move the Aircraft from such location during the storage periods. Lessee will maintain insurance for the Aircraft during such periods but not in excess of sixty (60) 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 that 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 Sublessee) either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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, - 22 - 23 (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, the 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 forty-five (45) days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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 temporary periods of storage in accordance with applicable regulations or during maintenance or modification permitted hereunder) under the Federal Aviation Act, except when all Boeing 757-200 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 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, - 23 - 24 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, (a) in any area excluded from coverage by any insurance required by the terms of Section 11 or (b) outside the United States or Canada in any recognized area of hostilities unless covered by war risk insurance or unless such operation is in accordance with a request, contract, arrangement or understanding with the United States Government or any agency or instrumentality thereof; 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 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 reasonably 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), 14(e) or 14(f) or Event of Default shall have occurred and be continuing at the time of such sublease, delivery, transfer or relinquishment of - 24 - 25 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 Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee 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 any 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 - 25 - 26 (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; (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 promptly to Lessor; or - 26 - 27 (x) Lessee may, at any time, enter into any sublease with (1) a U.S. Air Carrier, (2) any Person approved in writing by the Owner Participant and the Indenture Trustee, 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 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, in form and substance reasonably satisfactory to Lessor and the Indenture Trustee, 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 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, 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 - 27 - 28 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 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 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 ten Business Days prior to entering into any Sublessee with a foreign air carrier and, if practicable, not later than five days prior to entering into any Sublease with any other proposed Sublessee, but, in the case of a Sublease with a Sublessee other than a foreign air carrier, 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 of Utah, 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: - 28 - 29 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 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. - 29 - 30 (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) 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 original cost of all Obsolete Parts which shall have been removed and not replaced shall not exceed $500,000. 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 - 30 - 31 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]. (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") (i) specifying 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) stating that Lessee has determined in accordance with Section 9(a)(2) 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 non-exclusive agent for Lessor and at no expense to Lessor, shall use its best 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 - 31 - 32 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 cash bid (net of any brokerage commissions) 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 that 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 (net of any brokerage commissions) realized at such sale to be 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 sale 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 (including an amount equal to (x) the interest, if any, payable on the Secured Certificates plus (y) interest at the Past Due Rate specified in clause (ii) of the definition thereof on an amount equal to the excess of (a) the Termination Value of the Aircraft as of the Termination Date minus the amount of interest included in calculating the Termination Value of the Aircraft as of the Termination Date over (b) the principal amount of Secured Certificates outstanding on the Termination Date, in the case of clauses (x) and (y) for the period from and including the Termination Date to but excluding the third Business Day after the Termination Date) due on or prior to the Termination Date with respect to the Aircraft, and (C) the premium and Funding Loss 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 that 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 - 32 - 33 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 premium and Funding Loss Amount, if any, due on the Secured Certificates. 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 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 premium and Funding Loss 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 premium, Funding Loss 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 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. - 33 - 34 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) the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence) (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, 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. 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 payable pursuant to this Lease shall cease to accrue, provided that the obligations of Lessee under the other Operative Documents which, by their express terms, are stated to survive shall not be terminated, (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 that 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 bill of sale in form and - 34 - 35 substance consistent with Lessor's agreements contained in the Operative Documents and 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 bill of sale and a Federal Aviation Administration bill 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 that 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 bill of sale in form and substance consistent with Lessor's agreements contained in the Operative Documents and reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft 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 should 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 - 35 - 36 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 Pratt & Whitney Model PW2037 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 (assuming for this purpose that the Aircraft includes the Engines); provided that both 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) bill 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 that 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 bill of sale in form and substance consistent with Lessor's agreements contained in the Operative Documents and 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 - 36 - 37 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 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 which is a Member of OECD. 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 which is a member of OECD or any instrumentality or agency 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 - 37 - 38 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 Exhibit G) 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) bill 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 bill 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens) against receipt from Lessor of a bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 which is a Member of OECD. 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 which is a member of OECD 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. (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 - 38 - 39 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 or a Major 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 or Major 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 any 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 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 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 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 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 - 39 - 40 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 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 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, any 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 by Lessee 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 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 - 40 - 41 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 - 41 - 42 under the Sublease), (vii) shall waive any right of subrogation of the insurers against Lessor, the Owner 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) - 42 - 43 remaining after compliance with such Sections with respect to such loss shall be paid to Lessee (or any Sublessee if directed by Lessee). (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 by Lessee 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, 1996, a report, signed by Marsh & McLennan, Incorporated 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 - 43 - 44 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. (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. (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 or a Major 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 or Major Default, such - 44 - 45 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, Lessor, the Owner Participant or the Indenture Trustee or their respective authorized representatives may (not more than once every calendar year (unless an Event of Default has occurred and is continuing when such inspection right shall not be so limited and subject to the provisions of Section 5(a) hereof)) 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 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). 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) 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 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 - 45 - 46 (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 and in clauses (i)(B) and (ii) of the first sentence of second paragraph of Exhibit G) 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 one hundred eighty (180) 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 the representations and warranties in, or in connection with, the Credit Agreement) 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 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 - 46 - 47 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; or (h) the Guarantor shall have voluntarily rescinded or repudiated the Guarantee. provided, however, that, notwithstanding anything to the contrary contained in Section 14(c) or (d) hereof, 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 Mobility Command of the United States Air Force under any contract with Lessee (or any Sublessee) relating to the Aircraft: - 47 - 48 (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 the 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 Commencement 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 hereafter in this Section provided) as of the Lease Period Date specified as the payment date in such notice; - 48 - 49 (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 within the time period referred to in the immediately preceding sentence (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 Days after the end of such five- - 49 - 50 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 Lessee (and any Sublessee) shall have the right to bid at any such sale. 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 - 50 - 51 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 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 1996, 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 telecopy or other telecommunication means (with such telecopy or other telecommunication means to be confirmed in writing), or if such notice is impracticable, by - 51 - 52 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President-Finance and Treasurer (Telecopy No. (612) 726-0665), 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 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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). 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 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 - 52 - 53 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 two 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 one hundred twenty (120) days before the end of the Basic Term or the first 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. At the expiration of the second Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have the option to renew this Lease for a renewal term of one year 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"). Each such option to renew shall be exercised by Lessee delivering to Lessor, at least one hundred twenty (120) days prior to the commencement of such Fair Market Renewal Term, a written notice irrevocably electing to renew this Lease for a Fair Market Renewal Term. Lessee shall not be entitled to renew this Lease pursuant to this Section 19(a)(2) more than five 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 Major Default 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) and not to be less than fifteen percent (15%) of such average in the case of a Fixed Renewal Term, which Basic Rent shall be payable in semi-annual installments in arrears, 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 - 53 - 54 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 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. So long as no Event of Default shall have occurred and be continuing on the date of Lessee's giving of notice pursuant to this Section 19(b), Lessee shall have the option, upon at least one hundred twenty (120) 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 fair market sales value of the Aircraft; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the purchase price by Lessee will not constitute a preference under Section 547 of the Bankruptcy Code, Lessee shall not be entitled to purchase the Aircraft if there shall exist on such last Business Day of the Basic Term or any Renewal Term, as the case may be, a Default of the type referred to in Section 14(e) hereof. 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 that 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 - 54 - 55 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, 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 December 20, 2011 (or, if December 20, 2011 is not a Business Day, the Business Day immediately preceding December 20, 2011), 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; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the Special Purchase Price by Lessee will not constitute a preference under Section 547 of the Bankruptcy Code, Lessee shall not be entitled to purchase the Aircraft if there shall exist on December 20, 2011 (or, if December 20, 2011 is not a Business Day, on the Business Day immediately preceding December 20, 2011) a Default of the type referred to in Section 14(e) hereof. In addition, if - 55 - 56 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 2.15 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 that 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 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 - 56 - 57 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 Moody's 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 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 - 57 - 58 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. 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 continued possession, use and operation of, and quiet enjoyment of, the Aircraft or Lessee's rights, benefits and obligations - 58 - 59 pursuant to the Overall Transaction during the Term of this Lease, and this Lease shall not be terminated except as expressly provided herein. - 59 - 60 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 OF UTAH, 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 December, 1995. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee BY:______________________________ Title: - Signature Page - 61 EXHIBIT A TO LEASE AGREEMENT [NW 1995 B] LEASE SUPPLEMENT NO. [NW 1995 B] LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement [NW 1995 B], dated as of December 13, 1995, 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 1995 B], dated as of December 13, 1995, relating to one Boeing 757-251 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. 1The 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. 1The 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 Boeing 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the date hereof consists of the following components: __________________________________ 1 This language for other Lease Supplement No. 1. 2 This language for other Lease Supplements. 62 (i) Airframe: FAA Registration No. ______; manufacturer's serial no. _____; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P______ and P______ (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 June 20, 2016. 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 The Boeing Company, or any subcontractor or supplier of The Boeing Company, 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 63 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 OF UTAH, NATIONAL ASSOCIATION, Not in its Individual Capacity, but Solely as Owner Trustee, Lessor By __________________________________________ Title: NORTHWEST AIRLINES, INC., Lessee By _________________________________________ Title: 3Receipt 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: __________________________________ 2 This language contained in the original counterpart only. EXHIBIT A - PAGE 3 64 EXHIBIT B TO LEASE AGREEMENT [NW 1995 B] BASIC RENT, 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: Basic Rent Commencement (Percentage of Date Lessor's Cost) ---------------------------- ---------------------------------- Basic Rent (Percentage of Lease Period Date Lessor's Cost) ---------------------------- ---------------------------------- * Denotes payment in arrears from preceding Lease Period Date to specified Lease Period Date. ** Denotes payment in advance from specified Lease Period Date (or Commencement Date in the case of the first Lease Period) to succeeding Lease Period Date. 65 BASIC RENT, 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 (Percentage of Lease Period Date Lessor's Cost) ---------------------------- ---------------------------------- * Denotes payment in arrears from preceding Lease Period Date to specified Lease Period Date. ** Denotes payment in advance from specified Lease Period Date (or Commencement Date in the case of the first Lease Period) to succeeding Lease Period Date. EXHIBIT B - PAGE 2 66 Lessor's Cost for the Aircraft: Special Purchase Price: EXHIBIT B - PAGE 3 67 EXHIBIT C TO LEASE AGREEMENT [NW 1995 B] 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 ---------------------------- ---------------------------------- 68 EXHIBIT D TO LEASE AGREEMENT [NW 1995 B] 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 ---------------------------- -------------------------------- EX-4.D4 30 FIRST AMENDMENT TO LEASE AGREEMENT-1995 B 1 FIRST AMENDMENT TO LEASE AGREEMENT [NW 1995 B] This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1995 B], dated as of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee under the Trust Agreement [NW 1995 B], dated as of December 13, 1995 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a certain Lease Agreement [NW 1995 B], dated as of December 13, 1995 (the "ORIGINAL LEASE"), between Lessee and Lessor (the Original Lease, as supplemented by Lease Supplement No. 1 [NW 1995 B] ("LEASE SUPPLEMENT NO. 1") between Lessor and Lessee, dated December 21, 1995, herein called the "LEASE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; WITNESSETH: WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the Aircraft, which consists of the following components: (i) Airframe: FAA Registration No. N536US; manufacturer's serial No. 26483; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P727160 and P727161; WHEREAS, Section 17 of the Participation Agreement [NW 1995 B], dated as of December 13, 1995 (the "PARTICIPATION AGREEMENT"), among Lessee, [ ] (the "OWNER PARTICIPANT"), the loan participants named therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured Certificates issued by the Owner Trustee under the Trust Indenture and Security Agreement [NW 1995 B], dated as of December 13, 1995, between Lessor (in its individual capacity as expressly provided therein and as trustee) and the Indenture Trustee may be refinanced under certain circumstances; WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW 1995 B], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State Street Bank and Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines Corporation (the "GUARANTOR"); WHEREAS, Lessor and Lessee desire to recalculate the Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price in order to reflect, among other things, the interest rate of the refinanced Secured Certificates; 2 WHEREAS, in connection with the recalculation of the Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, Lessor and Lessee desire to amend the Lease; WHEREAS, a counterpart of the Original Lease, to which were attached and made a part thereof counterparts of Lease Supplement No. 1, the Trust Indenture and Security Agreement [NW 1995 B], dated as of December 13, 1995, and the Trust Agreement and Indenture Supplement [NW 1995 B], dated December 21, 1995, was recorded by the Federal Aviation Administration (the "FAA") on December 26, 1995, and assigned Conveyance No. P05092; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE. (a) The definitions of "Basic Term", "Business Day", "Certificated Air Carrier", "Commencement Date", "Delivery Date", "Indemnitee", "Indenture Trustee's Liens", "Lease Period", "Lease Period Date", "Loan Participant", "Net Present Value of Rents", "Operative Documents", "Rent", "Stipulated Loss Value", "Stipulated Loss Value Date", "Supplemental Rent", "Tax Indemnitee" and "Termination Value" in Section 1 of the Lease are hereby amended applicable on and after the Closing Date to read as follows: "BASIC TERM" means the term for which the Aircraft is leased hereunder pursuant to Section 3(a) hereof commencing on the Commencement Date and ending on July 2, 2016, or such earlier date as the Lease may be terminated in accordance with the provisions hereof. "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; Salt Lake City, Utah; San Francisco, California; or Minneapolis, Minnesota. "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. "COMMENCEMENT DATE" means July 2, 1996. "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. -2- 3 "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 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. "LEASE PERIOD" means each of the consecutive periods throughout the Basic Term and any Renewal Term and ending on a Lease Period Date, the first such period commencing on and including the Commencement Date. "LEASE PERIOD DATE" means January 2, 1997 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, 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. "LOAN PARTICIPANT" means for any period prior to the Closing, the Original Loan Participants and their successors and assigns, and from and after -3- 4 the Closing, the Purchasers and their successors and registered assigns, including any Certificate Holder. "NET PRESENT VALUE OF RENTS" means the net present value, as of the Commencement Date, of Basic Rent set forth in Exhibit B hereto, discounted at an annual interest rate of 7.70% on a semi-annual basis. "OPERATIVE DOCUMENTS" means each of the Participation Agreement, the documents referred to in Section 4(a)(v) of the Participation Agreement (including any amendments, modifications or supplements thereto), the Refunding Agreement, the Trust Indenture Amendment and the Refinancing Secured Certificates, collectively, and "OPERATIVE DOCUMENT" shall mean each of the Operative Documents, individually. "RENT" means Interim Rent, Basic Rent and Supplemental Rent, collectively. "STIPULATED LOSS VALUE" with respect to the Aircraft as of any date through and including July 2, 2016, means, but subject always to the provisions of Section 3(d)(v) hereof, the amount determined by multiplying Lessor's Cost 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 July 2, 2016 shall be the amount determined as provided in Section 19(a) hereof. "STIPULATED LOSS VALUE DATE" means, (a) during the Interim Term through the Closing Date, the twentieth calendar day of each calendar month, and (b) during the Interim Term after the Closing Date, during the Basic Term and during any Renewal Term, the second calendar day of each calendar month. "SUPPLEMENTAL RENT" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Interim Rent and 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 the Other 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 -4- 5 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, and (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. "TERMINATION VALUE" with respect to the Aircraft as of any date through and including July 2, 2016, means, but subject always to the provisions of Section 3(d)(v), the amount determined by multiplying Lessor's Cost 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). (b) The following definitions are hereby inserted in Section 1 of the Lease in alphabetical order to be applicable on and after the Closing Date: "CLOSING" means the consummation of the refinancing operation contemplated by Section 1 of the Refunding Agreement. "CLOSING DATE" means the date on which the Closing shall occur. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Provider and the Subordination Agent. "INTERIM RENT" means the rent payable for the Aircraft for the Interim Term pursuant to Section 3(b) hereof. "LIQUIDITY FACILITIES" means the two 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 Westdeutsche Landesbank Girozentrale acting through its New York branch, as Class A Liquidity Provider and Class B Liquidity Provider under the Liquidity Facilities, or any successor thereto. "MAKE-WHOLE AMOUNT" has the meaning assigned to that term in the Trust Indenture. -5- 6 "ORIGINAL LOAN PARTICIPANTS" means each institution executing the Participation Agreement as a Loan Participant. "ORIGINAL TRUST INDENTURE" means the Trust Indenture and Security Agreement [NW 1995 B], dated as of December 13, 1995, between the Owner Trustee and State Street Bank and Trust Company, as amended, modified and supplemented prior to the Closing Date. "OTHER PASS THROUGH TRUST AGREEMENTS" means the pass through trust agreement and supplements pursuant to which each of the Class C and Class D pass through certificates are issued. "PASS THROUGH CERTIFICATES" means the pass through certificates to be issued by the Pass Through Trustee in connection with the Refinancing Transaction. "PASS THROUGH TRUST AGREEMENT" means the pass through trust agreement and each of the two separate pass through trust supplements referred to on Schedule I to the Refunding Agreement to be entered into by and between Lessee and the Pass Through Trustee in connection with the Refinancing Transaction. "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. "PURCHASERS" means the Pass Through Trustees under each Pass Through Trust Agreement. "REFINANCING CERTIFICATE" means a certificate of an authorized representative of the Owner Participant delivered pursuant to Section 17(a)(1) of the Participation Agreement, setting forth, among other things, the Refinancing Date, the principal amount of debt to be issued by the Owner Trustee on the Refinancing Date, and the proposed revised schedules of Basic Rent, Stipulated Loss Value and Termination Value percentages, and the proposed Amortization Schedules. "REFINANCING DATE" means the proposed date on which the outstanding Secured Certificates will be redeemed and refinanced pursuant to Section 17 of the Participation Agreement. "REFINANCING EXPENSES" means the costs, fees, commissions and other expenses payable by the Owner Participant pursuant to Section 11(a) of the Refunding Agreement. -6- 7 "REFINANCING SECURED CERTIFICATES" means the Secured Certificates to be issued by Lessor to the Purchasers pursuant to the Trust Indenture Amendment and the Refunding Agreement on the Closing Date. "REFINANCING TRANSACTION" means a refinancing transaction pursuant to Section 17 of the Participation Agreement involving, among other things, (i) the redemption of the Secured Certificates issued on December 21, 1995 and the concurrent issuance and sale of the Refinancing Secured Certificates to the Pass Through Trustees (or their designee) and (ii) the issuance and sale of the Pass Through Certificates by the Pass Through Trustees. "REFUNDING AGREEMENT" means that certain Refunding Agreement [NW 1995 B], dated as of June 3, 1996, among Lessor, Lessee, the Owner Participant, the Purchasers, the Indenture Trustee, the Subordination Agent, and the Guarantor, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "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. "TRUST INDENTURE AMENDMENT" means the Amended and Restated Trust Indenture and Security Agreement [NW 1995 B], dated as of the Closing Date, between Lessor and State Street Bank and Trust Company, as Indenture Trustee. "TRUST INDENTURE ESTATE" has the meaning assigned to that term in the Trust Indenture. (c) The definitions of "Administrative Agent", "Assumed Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss Amount", "Interest Period", and "Rent Differential Amount" in Section 1 of the Lease are hereby deleted on and after the Closing Date. SECTION 2. AMENDMENT OF SECTIONS 3(A), 3(B), 3(C), 3(D), 3(E) AND 3(F) OF THE LEASE. (a) The second sentence of Section 3(a) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: The Basic Term shall commence on the Commencement Date and end on July 2, 2016, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. -7- 8 (b) Section 3(b) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: Interim Rent. Lessee shall pay Interim Rent on the Closing Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for Interim Rent on the Closing Date. (c) Section 3(c) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: Lessee shall pay Basic Rent with respect to each Lease Period during the Basic Term on the Commencement Date and 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 Commencement Date or the applicable Lease Period Date specified in Exhibit B hereto. (d) Section 3(d)(i) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (i) In the event that (A) the Closing Date occurs other than on June 12, 1996, or (B) Refinancing Expenses paid by Lessor or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement are determined to be other than 1.1394% of Lessor's Cost, then in each case, the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated by the Owner Participant, on or prior to October 1, 1996 using the same methods and assumptions used to calculate original Basic Rent and Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, 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. (e) Section 3(d)(ii) of the Lease is hereby amended by deleting on and after the Closing Date the words "or a refunding" in the first line thereof. (f) The second sentence of Section 3(e) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: 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 -8- 9 such Secured Certificates in accordance with such Section 2.10(b) or Section 2.11. (g) Section 3(f) of the Lease is hereby amended by (i) deleting on and after the Closing Date the numbers and punctuation "124-000-12" in the first sentence thereof and substituting therefor the numbers and punctuation "124-0000-12", and (ii) adding on and after the Closing Date the word "irrevocably" after the word "hereby" in the proviso in the first sentence thereof. SECTION 3. AMENDMENT OF SECTION 7(B) OF THE LEASE. Section 7(b)(x)(2) of the Lease is hereby amended by deleting on and after the Closing Date the words "the Owner Participant and the Indenture Trustee" and substituting therefor the word "Lessor". SECTION 4. AMENDMENT OF SECTION 9(C) OF THE LEASE. Section 9(c) of the Lease is hereby amended by deleting on and after the Closing Date the word "premium" each time it appears therein and substituting therefor the words "Make-Whole Amount" and by deleting on and after the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount" each time such words and such words and punctuation appear. SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE. Section 10(a) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence)" in clause (i)(y) thereof and substituting therefor the words "an earlier Business Day irrevocably specified fifteen days in advance by notice from Lessee to Lessor and the Indenture Trustee", and (ii) deleting on and after the Closing Date the word "should" and substituting therefor the word "will" in Section (6) in the last paragraph thereof. SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE. Section 14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date the words and punctuation ", the Refunding Agreement" after the words "Participation Agreement and (ii) adding on and after the Closing Date the words "and except for representations or warranties contained in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in the Refunding Agreement) or any document or instrument furnished pursuant to either thereof" after the word "Agreement" at the end of the first parenthetical phrase therein. SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: 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: -9- 10 (i) if to Lessee, for U.S. Mail at 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President - Finance and Treasurer, (Telecopy No. (612) 726-0665), or to such other address, telex number or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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 on the signature pages of the Refunding Agreement. SECTION 8. AMENDMENT OF SECTION 19(D) OF THE LEASE. The first and second sentences of Section 19(d) of the Lease are hereby amended to read in their entirety on and after the Closing Date as follows: On January 2, 2012 (or, if January 2, 2012 is not a Business Day, the Business Day immediately succeeding January 2, 2012), 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; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the Special Purchase Price by Lessee will not constitute a preference under Section 547 of the Bankruptcy Code, Lessee shall not be entitled to purchase the Aircraft if there shall exist on January 2, 2012 (or if January 2, 2012 is not a Business Day, on the Business Day immediately succeeding January 2, 2012) a Default of the type referred to in Section 14(e) hereof). 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. -10- 11 SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the Lease is hereby amended by (i) deleting on and after the Closing Date the word "or" between the words "Trust Agreement" and the words "the Trust Indenture" and substituting a comma therefor and (ii) inserting on and after the Closing Date the words "or the Refunding Agreement" after the words "Trust Indenture". SECTION 10. AMENDMENT OF EXHIBITS. (a) Exhibits B, C and D to the Lease attached hereto are applicable on and after the Closing Date. Exhibits B, C and D to the Lease are applicable until the Closing Date. (b) The parties hereto agree that Exhibits B, C and D attached hereto reflect the calculation of Interim Rent and the recalculation of Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price to take into account the interest rates borne by the Secured Certificates as of the Closing Date and the actual amount of Transaction Expenses. SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease set forth in Sections 1 through 10 hereof shall be effective as of the date hereof. SECTION 12. RATIFICATION. Except as amended hereby, the Lease as heretofore supplemented continues and shall remain in full force and effect in all respects. SECTION 13. MISCELLANEOUS. Any provision of this Amendment 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 Amendment 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. Nothing contained herein shall be construed as conveying to Lessee any right, title or interest in the Aircraft except as a lessee. The section and paragraph headings in this Amendment 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 Amendment. THIS AMENDMENT 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 Amendment 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. To the extent, if any, that this Amendment 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 Amendment may be created through -11- 12 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 as mortgagee under the Trust Indenture on the signature page thereof. -12- 13 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment to be duly executed on the day and year first above written. FIRST SECURITY BANK OF UTAH, 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: (1)Receipt of this original counterpart of the foregoing Amendment is hereby acknowledged this _____ day of ____________________, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: --------------------------------------- Title - ---------------------------- (1) This language contained in the original counterpart only. EX-4.D5 31 GUARANTEE-1995 B 1 GUARANTEE [NW 1995 B] This GUARANTEE [NW 1995 B], dated as of December 13, 1995 (as amended, modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I hereto (collectively, together with their successors and permitted assigns, the "PARTIES", and, individually, a "PARTY"). WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to enter into a Lease Agreement [NW 1995 B], dated as of the date hereof (as amended, modified or supplemented from time to time, the "LEASE"), between the Lessee and First Security Bank of Utah, National Association, not in its individual capacity but solely as Owner Trustee (as defined therein), except as expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing 757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines (such aircraft and engines, and any substitute Airframe and Engines under the Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation Agreement [NW 1995 B], dated as of the date hereof (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), among the Lessee and the Parties; and WHEREAS, it is a condition precedent to the obligations of the Parties to consummate the transactions contemplated by the Participation Agreement that the Guarantor execute and deliver this Guarantee; and WHEREAS, the Lessor will assign by way of collateral security certain of its right, title and interest in and to this Guarantee to the Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and Security Agreement [NW 1995 B], dated as of the date hereof, between the Lessor and the Indenture Trustee (as amended, modified or supplemented from time to time, the "TRUST INDENTURE"), as security for the obligations of the Lessor referred to therein; and WHEREAS, the capitalized terms used herein that are not defined herein are used herein as defined in the Lease; NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and to induce the other Parties referred to above to enter into the Participation Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 2 1. GUARANTEE. (a) The Guarantor does hereby acknowledge that it is fully aware of the terms and conditions of the Lease, the Participation Agreement and the other Operative Documents and the transactions and the other documents contemplated thereby, and does hereby irrevocably and fully and unconditionally guarantee, as primary obligor and not as surety merely, to the Parties, as their respective interests may appear, the payment by the Lessee of all payment obligations when due under the Lease (including, without limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement and the other Operative Documents to which the Lessee is a party (such obligations of the Lessee guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative Documents, and the timely performance of all other obligations of the Lessee thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby agree that in the event that the Lessee fails to pay any Financial Obligation when due for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within five days after the date on which such Financial Obligation became due and payable and the applicable grace period has expired, the Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Financial Obligation was not paid when due and for five days after the applicable grace period has expired, the amount of such Financial Obligation, together with all other Financial Obligations of the Lessee which are then due and unpaid. The Guarantor hereby agrees that in the event the Lessee fails to perform any Nonfinancial Obligation for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within 10 Business Days after the date on which such Nonfinancial Obligation is required to be performed (for avoidance of doubt, to include any applicable grace period), the Guarantor shall cause such Nonfinancial Obligation to be performed within 10 Business Days following the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Nonfinancial Obligation was not performed when so required and that any applicable grace period has expired. (b) The obligations of the Guarantor hereunder shall not be, to the fullest extent permitted by law, affected by: the genuineness, validity, regularity or enforceability (or lack thereof) of any of the Lessee's obligations under the Lease or any other Operative -2- 3 Document to which the Lessee is a party, any amendment, waiver or other modification of the Lease or such other Operative Document (except that any such amendment or other modification shall be given effect in determining the obligations of the Guarantor hereunder), or by any substitution, release or exchange of collateral for or other guaranty of any of the Obligations (except to the extent that said Obligations have been satisfied by such substitution, release or exchange in accordance with the terms of the other Operative Documents) without the consent of the Guarantor, or by any priority or preference to which any other obligations of the Lessee may be entitled over the Lessee's obligations under the Lease and the other Operative Documents to which the Lessee is a party, or by any other circumstance that might otherwise constitute a legal or equitable defense to or discharge of the obligations of a surety or guarantor including, without limitation, any defense arising out of any laws of the United States of America or any State thereof which would excuse, discharge, exempt, modify or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not, to the fullest extent permitted by law, affect the liability of the Guarantor hereunder: (a) the extension of the time for or waiver of, at any time or from time to time, without notice to the Guarantor, the Lessee's performance of or compliance with any of its obligations under the Operative Documents (except that such extension or waiver shall be given effect in determining the obligations of the Guarantor hereunder)), (b) any assignment, transfer, sublease or other arrangement by which the Lessee transfers possession or loses control of the use of the Aircraft, (c) any defect in the title, condition, design, operation or fitness for use of, or damage to or loss or destruction of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or with any other Person, or any sale, transfer, lease or disposal of any of its assets or (e) any change in the ownership of any shares of capital stock of the Lessee. (c) This Guarantee is an absolute, present and continuing guaranty of payment and performance and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Lessee any unpaid amounts due or otherwise to enforce performance by the Lessee. The Guarantor specifically agrees, to the fullest extent permitted by law, that it shall not be necessary or required, and that the Guarantor shall not be entitled to require, that any Party (i) file suit or proceed to obtain or assert a claim for personal judgment against the Lessee for the Obligations, or (ii) make any effort at collection of the Obligations from the Lessee, or (iii) foreclose against or seek to realize upon any security now or hereafter existing for the Obligations, including the Trust Estate or the Trust Indenture Estate (as such term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations, or make any effort at collection of the Obligations from any such other Person, or exercise or assert any other right or remedy to which any Party is or may be entitled in connection with the Obligations or any security or other guaranty therefor, or (v) assert or file any claim against the assets of the Lessee or any other guarantor or other Person liable for the Obligations, or any part thereof, before or as a condition of enforcing the liability of the Guarantor under this Guarantee or requiring payment of said Obligations by the Guarantor hereunder, or at any time thereafter. -3- 4 (d) The Guarantor agrees, to the fullest extent permitted by law, that, without limiting the generality of this Guarantee, if an Event of Default shall have occurred and be continuing and the Lessor (or any assignee thereof including, without limitation, the Indenture Trustee) shall be prevented by applicable law from exercising its remedies (or any of them) under Section 15 of the Lease, the Lessor (or any assignee thereof, including, without limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive hereunder from the Guarantor, upon demand therefor the sums that would otherwise have been due from the Lessee under the Lease had such remedies been able to be exercised. The Guarantor hereby unconditionally waives, to the fullest extent permitted by law, any requirement that, as a condition precedent to the enforcement of the obligations of the Guarantor hereunder, the Lessee or all or any one or more of any other guarantors of any of the Obligations be joined as parties to any proceedings for the enforcement of any provision of this Guarantee. 2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be deemed to create any right in any Person except a Party and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person. Following the termination of the Trust Indenture in accordance with its terms, none of the Persons listed on Schedule I hereto under the caption "Lender Parties" shall be, or be deemed to be, Parties for purposes of this Guarantee. 3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives notice of the acceptance of this Guarantee and of the performance or nonperformance by the Lessee, demand for payment from the Lessee or any other Person, notice of nonpayment or failure to perform on the part of the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent permitted by law, all other demands or notices whatsoever, other than the request for payment hereunder and notice provided for in Section 1 hereof. The obligations of the Guarantor shall be absolute and unconditional and shall remain in full force and effect until satisfaction of all Obligations hereunder and, without limiting the generality of the foregoing, to the extent not prohibited by applicable law, shall not be released, discharged or otherwise affected by the existence of any claims, set-off, defense or other rights that the Guarantor may have at any time and from time to time against any Party, whether in connection herewith or any unrelated transactions. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Financial Obligation is rescinded or must otherwise be returned by any Party upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding with respect to the Lessee or otherwise, all as though such payment had not been made. The Guarantor, by virtue of any payment or performance hereunder to a Party, shall be subrogated to such Party's claim against the Lessee or any other Person relating thereto; provided, however, that the Guarantor shall not be entitled to receive payment from the Lessee in respect of any claim against the Lessee arising from a payment by the Guarantor while an Event of Default shall have occurred and be continuing. 4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or waiver or modification of, or consent under, the terms hereof, shall be effective unless -4- 5 evidenced by an instrument in writing signed by the Guarantor and each Party against whom such amendment, supplement, waiver, modification or consent is to be enforced. 5. PAYMENTS. All payments by the Guarantor hereunder in respect of any Obligation shall be made in Dollars and otherwise as provided in the Lease, the Participation Agreement or any other Operative Document in which such Obligation is contained; provided that the Guarantor consents to all the terms of the Trust Indenture and agrees to make all payments hereunder directly to the Indenture Trustee until such time as the Indenture Trustee shall give notice to the Guarantor that the Lien of the Trust Indenture has been fully discharged and thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay directly to the Lessor, in its individual capacity, or to the Owner Participant or another Party, as the case may be, any amount owing to such Person as Supplemental Rent for indemnities provided in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or otherwise not constituting part of the Trust Indenture Estate (as such term is defined in the Trust Indenture). 6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust Indenture, the Lessor will assign, and create a security interest in, certain of its rights hereunder to and for the benefit of the Indenture Trustee. From and after the execution and delivery of the Trust Indenture, and until receipt by the Guarantor of a written notice from the Indenture Trustee to the effect that the Trust Indenture has been fully satisfied and discharged, no remedy or election hereunder may be exercised by the Lessor or consent given by the Lessor other than in respect of Excluded Payments (as such term is defined in the Trust Indenture), except by or with the prior written consent of the Indenture Trustee, and the Guarantor will make payment of all amounts hereunder that are assigned to the Indenture Trustee directly to the Indenture Trustee, and such payments shall discharge the obligations of the Guarantor to the Lessor to the extent of such payments. 7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Parties as follows: (a) It is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware. It has all requisite corporate power and authority to own and operate its properties, to carry on its business as presently conducted and to enter into and perform its obligations under this Guarantee. (b) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with or the taking of any other action in respect of, any Federal, state, municipal or other governmental department, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, is now, or under existing law in the future will be, required or necessary on its behalf to authorize the execution, delivery and performance (other than as contemplated by the Operative Documents in the case of the performance of the Non-Financial Obligations) by it of this Guarantee, or for the legality, validity, binding effect or enforceability hereof. -5- 6 (c) Neither the execution and delivery of this Guarantee, the performance of its obligations hereunder, nor its consummation of the transactions contemplated hereby, will conflict with or result in any breach of, or constitute a default under, or result in any creation or imposition of any Lien upon any of its property or assets under, any applicable laws or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject, or its Articles of Incorporation or by-laws. (d) The execution, delivery and performance by it of this Guarantee have been duly authorized by all necessary corporate action. This Guarantee has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 8. JURISDICTIONAL MATTERS. The Guarantor (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 Guarantee brought by any party, 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 Guarantee may not be enforced in or by such courts. The Guarantor hereby generally consents to service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of the Guarantor in New York City as from time to time may be designated by the Guarantor in writing to the Parties. 9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Parties, with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and (c) shall be binding upon the successors and assigns of the Guarantor shall inure to the benefit of, and shall be enforceable by, each of the Parties to the fullest extent permitted by applicable laws. The headings in this Guarantee are for purposes of reference only, and shall not limit or otherwise affect the meanings hereof. -6- 7 10. NOTICES. All requests, notices or other communications hereunder shall be in writing, addressed as follows: If to the Guarantor: Northwest Airlines Corporation for U.S. Mail: 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 for Overnight courier: 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President -- Finance and Treasurer Telecopy No.: (612) 726-0665 If to a Party: to the address or telecopy number set forth in the Participation Agreement All requests, notices or other communications shall be given in the manner, and shall be effective at the times and under the terms, set forth in Section 13(b) of the Participation Agreement. 11. NO WAIVERS. No failure on the part of any Party to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise of such right or remedy or the exercise of any other right or remedy. 12. SURVIVAL. All representations and warranties contained herein or made in writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee regardless of any investigation made by any Party or any other Person. 13. SEVERABILITY. To the fullest extent permitted by applicable law, any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or any provision in any other Operative Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN -7- 8 ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. 15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by such Party in enforcing, or collecting under, this Guarantee. 16. TERMINATION. Subject to the provisions of Section 3 hereof, this Guarantee shall terminate upon the indefeasible payment and performance in full of all of the Obligations. 17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to the Obligations described in Section 1 and nothing in this Guarantee shall be deemed to constitute a guarantee of payment of any of the Secured Certificates or shall give rise to any inference that the Lessee or the Guarantor has so guaranteed such payment. -8- 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed as of the date first hereinabove set forth. NORTHWEST AIRLINES CORPORATION By: -------------------------------- Name: Title: Accepted as of the above date: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, in its individual capacity and as Owner Trustee By: ________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By: ________________________ Name: Title: -9- 10 SCHEDULE I TO GUARANTEE [NW 1995 B] PARTIES EQUITY PARTIES First Security Bank of Utah, National Association, in its individual capacity and as Owner Trustee [Owner Participant] LENDER PARTIES [Bridge Lenders] EX-4.D6 32 PARTICIPATION AGREEMENT-1995 B 1 PARTICIPATION AGREEMENT [NW 1995 B] THIS PARTICIPATION AGREEMENT [NW 1995 B] dated as of December 13, 1995, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of the State of Minnesota (herein called "LESSEE"), (ii) the institution listed on Schedule I hereto and identified therein as the "OWNER PARTICIPANT" which executes and delivers a counterpart of this Agreement and of the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date referred to below, (iii) the institutions listed on Schedule I and identified therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, 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"), and (v) State Street Bank and Trust Company, a Massachusetts trust company, in its individual capacity and as Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein, in such latter capacity together with any successor indenture trustee, called the "INDENTURE TRUSTEE"); W I T N E S S E T H: WHEREAS, pursuant to the Purchase Agreement (as such term is defined in the Lease hereinafter referred to) between Lessee and the Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things, certain Boeing 757-251 aircraft, including the Aircraft which has been delivered by the Manufacturer to Lessee and is the subject of this Agreement; WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Lessee and the Owner Trustee are entering into a Purchase Agreement Assignment [NW 1995 B], dated as of the date hereof (herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to the Owner Trustee certain rights and interests of Lessee under the Purchase Agreement with respect to the Aircraft; and (ii) the Manufacturer has executed the Consent and Agreement [NW 1995 B] (herein called the "CONSENT AND AGREEMENT"), substantially in the form attached to the Purchase Agreement Assignment (herein called the "CONSENT AND AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Participant is entering into a Trust Agreement [NW 1995 B], 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 2 Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE") for the use and benefit of the Owner Participant; WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with the execution and delivery of this Agreement are entering into the Trust Indenture and Security Agreement [NW 1995 B], 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 issues to each of the Loan Participants one or more secured certificates (herein called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan Participants arising from the Loan Participants' making secured loans to the Owner Trustee to finance a portion of the Owner Trustee's purchase of the Aircraft, which Secured Certificates are to be secured by the mortgage and security interests created by the Owner Trustee in favor of the Indenture Trustee, and 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; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1995 B], dated as of the date hereof (such Lease Agreement, as the same may be amended or supplemented from time to time to the extent permitted by the terms thereof and this Agreement, herein called the "LEASE", such term to include, unless the context otherwise requires, the Lease Supplement referred to below), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft is sold and delivered by Lessee to the Owner Trustee under the Bill 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; WHEREAS, certain terms are used herein as defined in Section 13(a) hereof; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and conditions of this Agreement, each Loan Participant agrees to finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule II opposite the name of such Loan Participant. Each Loan Participant shall make such Loan to the Owner Trustee on a date to be designated pursuant to Section 2 hereof, but in no event later than December 29, 1995, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. - 2 - 3 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite such Loan Participant's name in Schedule II hereto. Upon the occurrence of the above transfers by the Loan Participants to the Owner Trustee, to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon, the Owner Trustee shall issue and the Indenture Trustee shall authenticate Secured Certificates which shall be delivered simultaneously to the Loan Participants under the Trust Indenture to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon. The Owner Trustee agrees to pay the Secured Certificates in installments in the amounts and on the dates provided in the Trust Indenture together with interest thereon and all other amounts payable with respect thereto, all as more fully provided in the Trust Indenture. (b) Participation by Owner Participant. Subject to the terms and conditions of this Agreement, the Owner Participant hereby agrees to participate in the payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft on a date to be designated pursuant to Section 2 hereof, but in no event later than December 29, 1995, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite the Owner Participant's name in Schedule II hereto. (c) General Provisions. The amount of the participation of each of the Loan Participants and the Owner Participant to be made as provided above in the payment of Lessor's Cost for the Aircraft is hereinafter called such party's "COMMITMENT" for the Aircraft. In case any of the Loan Participants or the Owner Participant shall default in its obligation under the provisions of this Section 1, no other such party shall have any obligation to make any portion of such defaulted amount available or to increase the amount of its Commitment and the obligation of such nondefaulting party shall remain subject to the terms and conditions set forth in this Agreement. Upon receipt by the Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant to this Section 1 and the satisfaction of the conditions set forth in Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take title to and accept delivery of the Aircraft. In consideration of the transfer of title to and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall, simultaneously with such transfer of title and delivery, pay to Lessee from the amounts so furnished it by the Participants, the Lessor's Cost of the Aircraft. (d) Determination of Interest Period. The length of each Interest Period shall be determined by Lessee on behalf of the Owner Trustee in accordance with Section 2.02 of the Trust Indenture. SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each Participant, the Owner Trustee and the Indenture Trustee at least two Business Days' telecopy - 3 - 4 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 and the amount of each Participant's Commitment for the Aircraft. As to each Participant, the making of its Commitment for the Aircraft available in the manner required by Section 1 shall constitute a waiver of such notice. SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant agrees that its releasing the amount of its Commitment for the Aircraft to the account of the Owner Trustee in accordance with the terms of Section 1 shall constitute, subject to satisfaction or waiver of the conditions set forth in Section 4(a), without further act, authorization and direction by the Owner Participant to the Owner Trustee: (i) to pay to Lessee the Lessor's Cost for the Aircraft; (ii) to the extent not previously accomplished by a prior authorization, to authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees, or an agent or agents, of Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant to the Acceptance Certificate; (iii) to accept from Lessee the Bill of Sale and the FAA Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9); (iv) to execute an Aircraft Registration Application, the Lease Supplement and the Trust Supplement, in each case covering the Aircraft; (v) to borrow from the Loan Participants to finance a portion of the Lessor's Cost for the Aircraft and to issue to the Loan Participants Secured Certificates in aggregate principal amount equal to the amount borrowed, pursuant hereto and to the Trust Indenture; and (vi) to take such other action as may be required to be taken by the Owner Trustee on the Delivery Date by the terms of any Operative Document. SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations in the Aircraft. It is agreed that the obligations of each of the Loan Participants and the Owner Participant to participate in the payment of Lessor's Cost and to make available the amount of its respective Commitment are subject to the satisfaction prior to or on the Delivery Date of the following conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it relates to representations and warranties only contained in the Tax Indemnity Agreement), (xx), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and (xxvii) shall not be a condition precedent to the obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a condition precedent to the obligation of the Owner Participant: - 4 - 5 (i) The Loan Participants 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 applicable law or regulations or guidelines or interpretations thereof by appropriate regulatory authorities shall be in effect which, in the opinion of such Loan Participant or the Owner Participant, as the case may be, or their respective counsel, would make it a violation of law or regulations or guidelines for such Loan Participant or the Owner Participant to make its Commitment available in accordance with Section 1 hereof or, in the case of such Loan Participant, to acquire a Secured Certificate or to realize the benefits of the security afforded by the Trust Indenture. (iii) In the case of the Owner Participant, the Loan Participants shall have made available the amount of their Commitments for the Aircraft in accordance with Section 1 hereof. (iv) In the case of the Loan Participants, 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 Documentation Agent and the Owner Participant and shall be in full force and effect and executed counterparts shall have been delivered to the Loan Participants and the Owner Participant, or their respective counsel, provided that only each Loan Participant shall receive an executed original of its respective Secured Certificate and provided, further, that an excerpted copy of the Purchase Agreement shall only be delivered to and retained by the Owner Trustee and the Owner Participant (but the Indenture Trustee shall also retain an excerpted copy of the Purchase Agreement which may be inspected by the Documentation Agent and its counsel before the Delivery Date and subsequent to the Delivery Date may be inspected and reviewed by the Indenture Trustee, any Loan Participant and their respective counsel if and only if there shall occur and be continuing an Event of Default), 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 shall only be delivered to Lessee and the Owner Participant and their respective counsel: (1) an excerpted copy of the Purchase Agreement (insofar as it relates to the Aircraft); (2) the Purchase Agreement Assignment; (3) the Lease; - 5 - 6 (4) a Lease Supplement covering the Aircraft dated the Delivery Date; (5) the Tax Indemnity Agreement; (6) the Trust Agreement; (7) a Trust Supplement covering the Aircraft dated the Delivery Date; (8) the Bill of Sale; (9) the FAA Bill of Sale; (10) an acceptance certificate covering the Aircraft in the form agreed to by the Documentation Agent, 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; (12) the Secured Certificates; (13) the Consent and Agreement; and (14) the Guarantee. All of the foregoing documents, together with this Agreement, are sometimes referred to herein, collectively, as the "OPERATIVE DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT". (vi) A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the Granting Clause of the Trust Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Owner 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 Owner Participant or the Documentation Agent shall have been executed and delivered by Lessee or the Owner Trustee and duly filed. (vii) The Loan Participants and the Owner Participant shall have received the following, in each case in form and substance satisfactory to the Documentation Agent and the Owner Participant: (1) a certified copy of the Certificate of Incorporation and By-Laws of Lessee and a copy of resolutions of the board of directors of Lessee, certified - 6 - 7 by a Vice President, the Secretary or an Assistant Secretary of Lessee, duly authorizing the sale of the Aircraft and the lease by Lessee of the Aircraft under the Lease and the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the Purchase Agreement Assignment, the Tax Indemnity Agreement and each other document required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof, and a certified copy of the Certificate of Incorporation and By-Laws of the Guarantor and a copy of resolutions of the Board of Directors of the Guarantor, certified by a Vice President, the Secretary or an Assistant Secretary of the Guarantor, duly authorizing the execution, delivery and performance by the Guarantor of the Guarantee; (2) such other documents and evidence with respect to Lessee, the Guarantor, the Manufacturer, the Owner Trustee, the Owner Participant, the Indenture Trustee, and the Loan Participants as the Loan Participants or the Owner Participant, or the respective counsel for the Loan Participants or the Owner Participant, may reasonably request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; and (3) a certificate of Lessee as to the person or persons authorized to execute and deliver this Agreement, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft and any other documents to be executed on behalf of Lessee in connection with the transactions contemplated hereby and as to the signatures of such person or persons, and a certificate of the Guarantor as to the person or persons authorized to execute and deliver the Guarantee and as to the signatures of such person or persons. (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 following statements shall be true, and the Documentation Agent and the Owner Participant shall have received evidence satisfactory to it to the effect that: (1) the Owner Trustee has good title (subject to filing and recording the FAA Bill of Sale with the Federal Aviation Administration) to the Aircraft - 7 - 8 on such Delivery Date, free and clear of Liens other than the rights of Lessee under the Lease and Lease Supplement covering the Aircraft, the mortgage and security interests created by the Trust Indenture, the rights of the Owner Participant under the Trust Agreement and the Trust Supplement, and Liens permitted by clause (v) of Section 6 of the Lease; (2) the Aircraft has been duly certified by the Federal Aviation Administration (or there shall have been received adequate assurances from the Federal Aviation Administration that the certification will be issued as soon as the registration of the Aircraft is complete) as to type and airworthiness in accordance with the terms of the Lease; (3) the FAA Bill of Sale, the Lease, the Lease Supplement, the Trust Indenture and the Trust Supplement covering the Aircraft shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the Federal Aviation Administration, and the Trust Agreement shall have been filed (or shall be in the process of being so filed) with the Federal Aviation Administration; and (4) application for registration of the Aircraft in the name of the Owner Trustee has been duly made with the Federal Aviation Administration. (x) On the Delivery Date, (A) the representations and warranties of Lessee, the Owner Participant and the Owner Trustee contained in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing, or would result from the purchase, sale, lease or mortgage of the Aircraft, which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default. (xi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for Lessee and the Guarantor, as to New York and certain federal law matters, and Lessee's and the Guarantor's in-house or other counsel, as to Minnesota and certain federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota and has the corporate power and authority to carry on its business as now conducted and to enter into and perform its obligations under the Lessee Documents. Lessee is a Certificated Air Carrier. The Guarantor is a corporation duly organized and validly existing - 8 - 9 pursuant to the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under the Guarantee; (2) the execution, delivery and performance of the Lessee Documents by Lessee and of the Guarantee by the Guarantor have been duly authorized by all necessary corporate action on the part of Lessee and the Guarantor, as the case may be, do not require any approval of stockholders of Lessee or the Guarantor, as the case may be, or, to the knowledge of such counsel, any approval or consent of any trustee or holders of any indebtedness or obligations of Lessee or the Guarantor, as the case may be (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of any thereof by Lessee or the Guarantor, as the case may be, nor the performance by Lessee or the Guarantor, as the case may be, of its respective obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel, judgment or order applicable to or binding on Lessee or the Guarantor, as the case may be, or (B) to the knowledge of such counsel, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Permitted Liens) upon any property of Lessee or the Guarantor, as the case may be, under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter, by-law or permit issued by any Minnesota or United States governmental authority to which Lessee or the Guarantor, as the case may be, is a party or by which Lessee or the Guarantor, as the case may be, or its properties may be bound or affected; (3) neither the execution and delivery by Lessee of the Lessee Documents or by the Guarantor of the Guarantee nor the performance by Lessee or the Guarantor of their respective 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, except for (A) the registration of the Aircraft (including the placement on board of the owner's copy of the application for registration of the Aircraft and, if necessary, a flying time wire), recordations and other actions referred to in paragraph 5 below and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents or the Guarantee after the Delivery Date; (4) the Guarantee has been duly entered into and delivered by the Guarantor, the Purchase Agreement (insofar as it relates to the Aircraft) has been duly entered into and delivered by Lessee, and each of the other Lessee Documents has been duly entered into and delivered by Lessee and each of such other Lessee Documents and the Guarantee constitutes 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 its - 9 - 10 respective terms, except as limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally, (C) applicable laws which may affect the remedies provided in the Lease, which laws, however, do not in the opinion of such counsel make the remedies provided in the Lease inadequate for the practical realization of the benefits provided thereby, but no opinion is expressed as to the amount or priority of any recovery under any particular circumstances and, in particular, no opinion is expressed as to the effect on such remedies of Section 1-201(37) of the Uniform Commercial Code, as in effect in any jurisdiction, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations; (5) subject to the registration of the Aircraft with the Federal Aviation Administration in the name of the Owner Trustee, and assuming the due and timely filing for recordation in accordance with the provisions of the Federal Aviation Act of (A) the FAA Bill of Sale, (B) the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and made a part thereof and (C) the Trust Indenture with the Trust Supplement attached thereto and made a part thereof, with respect to such portion of the Aircraft as is covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code by virtue of the same constituting an "aircraft" or an "aircraft engine" as defined in the Federal Aviation Act, no further filing or recording of any document (including any financing statement with respect to the Lease under Article 9 of the Uniform Commercial Code of Minnesota or Utah), is necessary in any applicable jurisdiction within the United States in order (x) to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee or any third parties or (y) to create and perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee or any third parties. With respect to such portion of the Aircraft, if any, as may not be deemed to constitute an "aircraft" or "aircraft engine" as defined in the Federal Aviation Act, except for the filing of financing statements in appropriate filing offices in the States of Minnesota and Utah and such other states as may be specified in such counsel's opinion, and for the filings of periodic continuation statements with respect to such filings as and when required, (x) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary under Article 9 of the Uniform Commercial Code in order to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee and any third parties in any applicable jurisdiction within the United States, and (y) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary or advisable under Article 9 of the Uniform Commercial Code in order to create or perfect the Indenture - 10 - 11 Trustee's security interest in such portion of the Aircraft as against the Owner Trustee and any third parties in any applicable jurisdiction within the United States; and (6) to the best knowledge of such in-house counsel, there are no legal or governmental proceedings pending or threatened to which Lessee or any of its subsidiaries is a party or to which any of the properties of Lessee or any of its subsidiaries is subject other than those proceedings summarized in the Guarantor's publicly filed annual, quarterly and other reports filed with the Securities and Exchange Commission, and proceedings which such in-house counsel believes would not reasonably be expected to have a material adverse effect on Lessee and its subsidiaries, taken as a whole, or on the power or ability of Lessee to perform its obligations under the Lessee Documents. The opinion contemplated by this paragraph (xi) shall be to such further effect with respect to such other matters as the Documentation Agent or the Owner Participant may reasonably request. Such opinion with respect to the matters specified in this paragraph (xi) may rely exclusively (A) upon the opinion of special counsel in Oklahoma City, Oklahoma, referred to in paragraph (xv) of this Section 4(a) with respect to the matters stated therein, and (B) upon the opinion of Ray, Quinney & Nebeker with respect to the opinion in paragraph (5) above insofar as it relates to the laws of the State of Utah and (C) upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, with respect to matters of fact, and may state that no opinion is expressed as to laws other than laws of the State of New York (in the case of such special counsel's opinion), the State of Minnesota and the Delaware General Corporation Law (in the case of Lessee's in-house or other counsel's opinion) and the Federal laws of the United States. Such counsel may assume that, except for the filings and recordations contemplated herein, there are no filings or recordations with respect to the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement or the Trust Indenture with the Federal Aviation Administration, or of Uniform Commercial Code financing statements naming the Owner Trustee as a debtor in the filing offices of the Secretary of State of Minnesota, the Secretary of State of Utah or in any other filing office in the States of Minnesota or Utah, or in such other filing offices in such other jurisdictions as shall be identified in such counsel's opinion. (xii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from a counsel to the Manufacturer, with respect to the Manufacturer Documents and such other matters as such parties may reasonably request. - 11 - 12 (xiii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, to the effect that: (1) First Security Bank of Utah, National Association is a national banking association duly organized, validly existing and in good standing under the laws of the United States, is a Citizen of the United States and has under the laws of the State of Utah and federal banking law the power, authority and legal right to execute, deliver and carry out in its capacity as Owner Trustee or in its individual capacity, as the case may be, the terms of the Owner Trustee Documents, including the Secured Certificates; (2) each of the Owner Trustee Documents has been duly authorized, executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, and each of the Owner Trustee Documents constitutes the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations, and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (3) the execution, delivery and performance by the Owner Trustee and by First Security Bank of Utah, National Association, in its individual capacity, or both, as the case may be, of the Owner Trustee Documents and the consummation of the transactions by the Owner Trustee and by First Security Bank of Utah, National Association in its individual capacity contemplated thereby are not and will not be in violation of the articles of association or By-Laws of First Security Bank of Utah, National Association or of any indenture, mortgage, credit agreement, license or other agreement or instrument known to such counsel after due inquiry to which First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee is a party or by which it is bound, or of any Federal or Utah law, governmental rule or - 12 - 13 regulation applicable to First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee or any judgment or order applicable to it and known to such counsel after due inquiry; (4) neither the execution and delivery by the Owner Trustee and, where appropriate, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, of the Owner Trustee's Documents nor the consummation of any of the transactions by the Owner Trustee, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing Federal law governing the banking and trust powers of First Security Bank of Utah, National Association or Utah law (except for filings pursuant to the Uniform Commercial Code, and except for compliance with requirements of the Federal Aviation Act as to which such counsel may express no opinion); (5) the Trust Agreement, as supplemented by the Trust Supplement, duly creates for the benefit of the Owner Participant the trust interest in the Trust Estate which the Trust Agreement by its terms purports to create; (6) assuming that Utah law were to govern the perfection of the security interests in the Trust Indenture Estate under the Trust Indenture, except for (i) the Indenture Trustee's taking of possession of the original counterparts of the Lease and the Lease Supplement covering the Aircraft (insofar as the Lease and the Lease Supplement covering the Aircraft may constitute chattel paper (as such term is defined in the Uniform Commercial Code as in effect in Utah)) and all monies and securities (including instruments) required to be deposited with the Indenture Trustee, and (ii) the filing of Uniform Commercial Code financing statements with the office of the Division of Corporations and Commercial Code of the State of Utah with respect to the security interests created in the Trust Indenture Estate under the Trust Indenture, naming the Owner Trustee as debtor and the Indenture Trustee as secured party, which filing has been duly effected, no other filing or recording or refiling or rerecording is necessary in the State of Utah to create, perfect or maintain the perfected status of such security interest (except for the timely filing of continuation statements in respect of such financing statements); (7) assuming that the Operative Documents were negotiated to a substantial degree in the State of New York and that the closing of a substantial portion of the transactions contemplated by the Operative Documents occurred in the State of New York, the choice of New York law to govern the Participation Agreement, the Lease, and each other Operative Document (other than the Trust Agreement) to which the Owner Trustee or First Security Bank - 13 - 14 of Utah, National Association in its individual capacity, or both, is a party is, under the laws of the State of Utah, a valid choice of law and should, in a properly presented case, be honored by the courts of the State of Utah; (8) the Owner Trustee has received from Lessee such title to the Aircraft as Lessee had immediately prior to the conveyance to the Owner Trustee, subject to the rights of the Owner Trustee and Lessee under the Lease and the security interest created pursuant to the Trust Indenture and the Trust Supplement; (9) no taxes, fees or other charges, except taxes imposed on fees payable to the Owner Trustee, will be imposed by Salt Lake City or the State of Utah or any political subdivision or taxing authority thereof on or with respect to the execution, delivery or performance of any of the Operative Documents and the trust created pursuant to the Trust Agreement will not be subject to any such taxes, fees or other charges on, based on or measured by the net income of the Trust Estate (as distinguished from the net income of the Owner Participant) solely by reason of the Owner Trustee's location in Salt Lake City or the State of Utah (assuming for purposes of this opinion that the Owner Participant, the Owner Trustee and the Trust Estate would not be subject to any such tax, fee or other charge if the Owner Trustee performed its duties under the Trust Agreement and the Trust Indenture from an office located outside Utah); and (10) to the knowledge of such counsel, there are no pending or threatened proceedings against or affecting the Owner Trustee before any court or administrative agency, individually or in the aggregate, which, if determined adversely to it, would materially adversely affect the power or ability of the Owner Trustee to perform its obligations under the Owner Trustee Documents. Such opinion shall be to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Indenture Trustee or Lessee may reasonably request. Such opinion may state that (A) no opinion is expressed as to laws other than the laws of the State of Utah, the Federal laws of the United States governing the banking and trust powers of First Security Bank of Utah, National Association, and the Federal Aviation Act as it relates to paragraph (1) and (B) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. Such opinion may assume (M) the due authentication of the Secured Certificates by the Indenture Trustee, (N) that the Operative Documents (other than the Trust Agreement) are legal, valid and binding under the laws of the State of New York and (O) the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and of the other Operative Documents by each of the parties thereto other than First Security Bank of Utah, National Association in its individual capacity and as the Owner Trustee. - 14 - 15 (xiv) The Loan Participants shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Trustee and Lessee, from White & Case, special counsel for the Owner Participant as to New York and certain federal law matters, and the Owner Participant's in-house counsel, as to California, certain federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) the Owner Participant is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Documents; (2) the Owner Participant Documents have been duly authorized, executed and delivered by the Owner Participant and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitute legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations; (3) neither the execution and delivery by the Owner Participant of the Owner Participant Documents nor the consummation of any of the transactions by the Owner Participant contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency of the United States, the State of Delaware or the State in which the principal office of the Owner Participant is located (except as shall have been duly obtained or given, specifying the same); (4) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the other parties, if any, thereto (other than the Owner Participant in the case of this Agreement), and the due authentication of the Secured Certificates by the Indenture Trustee, the Owner Trustee Documents (other than the Trust Agreement) constitute legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; - 15 - 16 (5) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the Indenture Trustee as aforesaid, the Trust Indenture duly creates for the benefit of the Indenture Trustee the security interests which the Trust Indenture purports to create and the Indenture Trustee is entitled to the benefits and security afforded by the Trust Indenture; (6) assuming the due authorization, execution and delivery by the Owner Trustee of the Secured Certificates being issued and delivered on the Delivery Date, and the due authentication thereof by the Indenture Trustee, such Secured Certificates are legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; (7) the execution, delivery and performance of the Owner Participant Documents by the Owner Participant does not require any approval of stockholders of the Owner Participant, or, to the knowledge of such counsel, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Documents by the Owner Participant nor the performance by the Owner Participant of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel, judgment or order applicable to or binding on the Owner Participant or (B) to the knowledge of such counsel, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for or contemplated in the Operative Documents) upon any property of the Owner Participant under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other material agreement or instrument, corporate charter or by-law or material permit issued by any Delaware or United States governmental authority to which the Owner Participant is a party or by which it or its properties may be bound or affected; and (8) to the knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting the Owner Participant before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant, would have a material adverse effect on the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; and to such further effect with respect to such other matters or documents relating to the Owner Participant's obligations in connection with this Agreement as the - 16 - 17 Documentation Agent, the Indenture Trustee, the Owner Trustee or Lessee may reasonably request. Such opinion may rely upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, as to matters of fact. Such opinion may state that (M) no opinion is expressed as to laws other than the laws of the State of New York (in the case of such special counsel's opinion), the laws of the State of California and the General Corporation Law of the State of Delaware (in the case of the Owner Participant's in-house or other counsel), and the Federal laws of the United States, and (N) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. (xv) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to the effect that: (1) the FAA Bill of Sale, the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and the Trust Indenture with the Trust Supplement attached thereto are in due form for recording by and have been duly filed for recordation with the Federal Aviation Administration in accordance with the provisions of Section 44107 of Title 49 of the United States Code; (2) proper application for registration of the Aircraft in the name of the Owner Trustee together with the affidavits of the Owner Trustee and the Owner Participant required by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations and the Trust Agreement have been duly filed with the Federal Aviation Administration in accordance with the Federal Aviation Act, and such counsel is of the opinion that the Federal Aviation Administration will issue a Certificate of Aircraft Registration (AC Form 8050-3) in response to said application; (3) the Owner Trustee is the owner of the legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interests created by the Trust Indenture and such other Liens as are permitted by the Lease or this Agreement; (4) the Aircraft is eligible for registration in the name of the Owner Trustee and will be duly registered in due course in the name of the Owner Trustee pursuant to and in accordance with the provisions of Sections 44102 and 44103 of Title 49 of the United States Code; (5) the Trust Indenture as supplemented by the Trust Supplement creates a duly and validly perfected first priority security interest in the Aircraft and a duly perfected assignment of all the right, title and interest of the Owner - 17 - 18 Trustee in, to and under the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), subject only to the Lease and to Liens permitted by the Lease and the Trust Indenture, it being understood that no opinion need be expressed as to the validity or enforceability of such security interest under local law or as against third parties in respect of the Aircraft when the same is outside the United States; (6) none of the Trust Indenture, the Trust Agreement, the Trust Supplement, the Lease or the Lease Supplement is required to be filed or recorded in any other place within the United States in order to perfect the security interest in the Aircraft and the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), under the applicable laws of any jurisdiction within the United States; and (7) no authorization, approval, consent, license or order of, or registration with, or giving of notice to, the FAA Aircraft Registry is required for the valid authorization, delivery or performance of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture and the Trust Supplement except for such authorizations, approvals, consents, licenses, orders, registrations, and notices as have been effected. Such opinion may state that no opinion is expressed as to laws other than the Federal laws of the United States, and may assume that the Aircraft is not registered in any other country. Said opinion may also contain a statement to the effect that such opinion is limited to the records maintained by the Federal Aviation Administration Aircraft Registry and does not cover liens that are perfected without the filing of notice thereof with the Federal Aviation Administration, such as Federal tax liens, liens arising under Section 1368(a) of Title 29 of the United States Code and possessory artisans' liens, and is subject to the accuracy of FAA personnel in the filing, indexing and recording of instruments filed with the FAA and in the search for encumbrance cross-reference index cards for the Engines. Said opinion may also rely on the opinion obtained by such counsel from counsel for the Aeronautical Center of the FAA, satisfactory in form and scope to such counsel, and on past practice of the FAA which is consistent with such Aeronautical Center counsel's opinion. (xvi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana & Gould, special counsel for the Indenture Trustee, to the effect that: - 18 - 19 (1) State Street Bank and Trust Company is a Massachusetts trust company, duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the full corporate power, authority and legal right to enter into and perform its obligations under the Indenture Trustee Documents and, in its capacity as Indenture Trustee, to authenticate the Secured Certificates to be delivered on the Delivery Date; (2) the execution, delivery and performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the Indenture Trustee Documents and the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby and compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with the terms thereof including, without limitation, the authentication of the Secured Certificates to be delivered on the Delivery Date, have been duly authorized by all necessary corporate action on the part of State Street Bank and Trust Company, and neither the execution and delivery thereof nor the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby nor compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with any of the terms and provisions thereof (i) does or will contravene any law or governmental rule or regulation of the United States governing the banking or trust powers of State Street Bank and Trust Company or the Commonwealth of Massachusetts or any order or judgment known to such counsel and applicable to or binding on State Street Bank and Trust Company, or (ii) does or will contravene or result in any breach of, or constitute any default under, the charter documents or by-laws of State Street Bank and Trust Company or the provisions of any indenture, mortgage, contract or other agreement, in each case known to such counsel, to which State Street Bank and Trust Company is a party or by which it or any of its properties is or may be bound or affected; (3) neither the execution and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, of the Indenture Trustee Documents or the certificates of authentication on the Secured Certificates to be delivered on the Delivery Date, nor the performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the transactions contemplated thereby requires or required the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or Massachusetts governmental authority or agency governing the banking or trust powers of State Street Bank and Trust Company or under any Massachusetts law; - 19 - 20 (4) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; (5) the Secured Certificates to be issued and dated the Delivery Date have been duly authenticated and delivered by the Indenture Trustee pursuant to the terms of the Indenture Trustee Documents; (6) to the knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting State Street Bank and Trust Company before any court or administrative agency or arbitration board or tribunal which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of State Street Bank and Trust Company to perform its obligations under the Indenture Trustee Documents; and (7) there are no taxes, fees or other governmental charges ("TAXES") payable under the laws of the Commonwealth of Massachusetts with respect to the execution of and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the Indenture Trustee Documents (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts. Neither State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, the Owner Participant, the Owner Trustee, nor the trust created by the Trust Agreement will, as a result of the transactions contemplated thereby, be subject to any taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would have not been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts, and there are no taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its - 20 - 21 individual capacity) upon or with respect to the Aircraft or any Engine or any part of any interest therein, or the purchase, ownership, delivery, lease, sublease, possession, presence, use, operation, condition, storage, maintenance, modification, alteration, repair, sale, return, transfer or other disposition of the Aircraft or any Engine which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts; and to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee may reasonably request. Such opinion may state that no opinion is expressed as to laws other than the internal substantive laws of the Commonwealth of Massachusetts and the Federal laws of the United States. Such opinion may further state that with respect to paragraph (4) in connection with the opinion relating to legality, validity and binding effect of the documents there referred to, such counsel has assumed that the laws of the jurisdictions whose laws govern such documents are not materially different from the internal substantive laws of the Commonwealth of Massachusetts. (xvii) The Loan Participants shall have received from Shearman & Sterling, special counsel for the Loan Participants, a favorable opinion addressed to the Loan Participants and satisfactory in substance and form to the Documentation Agent, as to such matters incident to the transactions contemplated hereby as the Documentation Agent may reasonably request. (xviii) The Loan Participants and the Owner Participant shall have received a certificate signed by the President, any Executive Vice President, any Senior Vice President or any Vice President of Lessee, dated the Delivery Date, addressed to the Loan Participants and the Owner Participant and certifying as to the matters stated in paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this Section 4(a). Copies of the orders, permits, waivers, authorizations, exemptions and approvals referred to in Section 4(a)(viii) shall have been furnished to the Loan Participants and the Owner Participant. (xix) The Owner Participant shall, by making its Commitment available as provided in Section 1(b) of this Agreement, be deemed to have reaffirmed the representations and warranties made by it in Section 8 of this Agreement. (xx) The Owner Participant shall have received an opinion, in form and substance satisfactory to the Owner Participant, from BK Associates, Inc., independent aircraft appraisers, or such other recognized aircraft appraiser agreed upon by the Owner Participant and Lessee. (xxi) The Loan Participants and Owner Participant shall have received an independent insurance broker's report, in form and substance satisfactory to the - 21 - 22 Documentation Agent 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. (xxii) On the Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to the Airframe or any Engine has occurred. (xxiii) Lessor's Cost for the Aircraft shall be $50,000,000. (xxiv) 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. (xxv) The representations and warranties of the Indenture Trustee and the Loan Participants contained in Section 8 shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and each Participant shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President of the Indenture Trustee addressed to such Participant and certifying as to the foregoing matters with respect to the Indenture Trustee. (xxvi) The Owner Participant shall have received from White & Case, special counsel to the Owner Participant, 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. (xxvii) In the opinion of the Owner Participant and its special counsel, there shall have been, since the date hereof, 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 hereof, 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. (xxviii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants and the Owner Participant, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for Lessee, - 22 - 23 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. (xxix) The Loan Participants shall have received an opinion, in form and substance reasonably satisfactory to the Documentation Agent, from BK Associates, Inc., independent aircraft appraisers, to the effect that the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost. 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 Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to the due and valid registration of the Aircraft in the name of the Owner Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement, such Trust Supplement, the Lease and 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. It is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are all subject to the fulfillment to the satisfaction of Lessee 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 4(a)(ii), 4(a)(iii) and 4(a)(iv) hereof shall have been satisfied. (iii) Those documents described in Section 4(a)(v) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Lessee and the Guarantor) in the manner specified in Section 4(a)(v), shall each be satisfactory in form and substance to Lessee, shall be in full force and effect on the Delivery Date, and an executed counterpart of each thereof (other than the Secured Certificates) shall have been delivered to Lessee or its special counsel. - 23 - 24 (iv) Lessee shall have received a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant, or other evidence of authority satisfactory to Lessee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing or evidencing authority for the execution, delivery and performance by the Owner Participant of all of the Owner Participant Documents, and a copy of the general authorizing resolutions of the boards of directors of the Indenture Trustee and the Owner Trustee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Indenture Trustee and the Owner Trustee, respectively, which authorize the execution, delivery and performance by the Indenture Trustee of the Indenture Trustee Documents and the Secured Certificates and by the Owner Trustee of the Owner Trustee Documents, together with such other documents and evidence with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee as Lessee or its special counsel may reasonably request in order to establish the 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) The representations and warranties of the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, contained in Section 8 hereof shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and Lessee shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President or other authorized representative of the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively, addressed to Lessee and certifying as to the foregoing matters with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively. (vi) Lessee shall have received the opinions set forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case addressed to Lessee and dated the Delivery Date and in each case in scope and substance reasonably satisfactory to Lessee and Lessee's special counsel. (vii) 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. (viii) No applicable law or regulations or guidelines or interpretations by appropriate regulatory authorities shall be in effect which, in the opinion of Lessee or - 24 - 25 its special counsel, would make it a violation of law or regulations or guidelines for Lessee to enter into any transaction contemplated by the Operative Documents. (ix) 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. (x) Lessee shall have been paid Lessor's Cost for the Aircraft. SECTION 5. CONFIDENTIALITY OF APPRAISAL, PARTICIPATION AGREEMENT, LEASE AND GUARANTEE. The Owner Trustee, the Participants, the Administrative Agent, the Documentation Agent, the Certificate Holders and the Indenture Trustee shall keep the appraisal referred to in Section 4(a)(xx) hereof, this Agreement, the Lease and the Guarantee confidential and shall not disclose, or cause to be disclosed, the same to any Person, except (A) to prospective and permitted transferees of Owner Trustee's, a Loan Participant's, a Certificate Holder's, the Owner Participant's or the Indenture Trustee's interest who agree to hold such information confidential, (B) to the Owner Trustee's, a Loan Participant's, a Certificate Holder's, the Owner Participant's or the Indenture Trustee's counsel or special counsel, independent insurance brokers or other agents who agree to hold such information confidential, (C) as may be required by any statute, court or administrative order or decree or governmental ruling or regulation or to any regulatory authorities having jurisdiction over them, (D) such other Persons as reasonably deemed necessary by Owner Trustee, the Participants, the Certificate Holders or the Indenture Trustee in order to protect the interests of any of such parties or for the purposes of enforcing such documents by the Owner Trustee or the Indenture Trustee or (E) to the extent that it is now, or in the future through no fault of such Person becomes, part of the public domain; provided, however, that any and all disclosures of all or any part of the appraisal referred to in Section 4(a)(xx) hereof and this Agreement, the Lease and the Guarantee which are permitted by (C) or (D) above shall be made only to the extent necessary to meet the specific requirements or needs of the Persons to whom such disclosures are hereby permitted; and provided further that this Section 5 shall not apply to the Owner Participant with respect to the appraisal referred to in Section 4(a)(xx) hereof. SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate Holder (as defined in the Trust Indenture) shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Trust Indenture when and if the principal of and interest on all Secured Certificates held by such holder and all other sums payable to such holder hereunder, under the Trust Indenture and under such Secured Certificates shall have been paid in full. Each of the Loan Participants and, by its acceptance of a Secured Certificate, each Certificate Holder agrees that it will look solely to the income - 25 - 26 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 Loan Participants 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. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and the Owner Participant that as of the Delivery Date: (i) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires, other than failures to qualify which would not have a material adverse effect on the consolidated business, assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents; is a Certificated Air Carrier; has its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) located at Eagan, Minnesota; holds all licenses, certificates, permits and franchises from the appropriate agencies of the United States and/or all other governmental authorities having jurisdiction necessary to authorize Lessee to engage in air transport and to carry on scheduled passenger service as presently conducted (other than those licenses, certificates, permits and franchises which, if not obtained, would not have a material adverse effect on the consolidated business assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents); and has the corporate power and authority to own or hold under lease its properties wherever located or used and to enter into and perform its obligations under the Lessee Documents; (ii) the execution, delivery and performance by Lessee of the Lessee Documents will, on the Delivery Date, have been duly authorized by all necessary corporate action on the part of Lessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Lessee except such as have been duly obtained or by the Delivery Date will have been duly obtained, and none of such agreements contravenes any law, judgment, government rule, regulation or order binding on Lessee or the certificate of incorporation or by-laws of Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its properties may be bound or affected; (iii) neither the execution and delivery by Lessee of the Lessee Documents nor the performance by Lessee of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other - 26 - 27 action in respect of, any Federal, State or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee 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 will on the Delivery Date 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), (B) the registration of the Aircraft referred to in Section 4(a)(ix)(4) and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Delivery Date; (iv) on the Delivery Date the Lessee Documents will each constitute legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof (subject to the qualifications set forth in clause (4) of the form of opinion of counsel to Lessee in Section 4(a)(xi)); (v) there are no pending or, to the best of Lessee's knowledge, threatened actions, suits or proceedings before any court or administrative agency which might materially adversely affect the business, condition (financial or otherwise), operations or properties of Lessee and its subsidiaries taken as a whole or Lessee's ability to perform its obligations under the Operative Documents; (vi) except for (A) the registration of the Aircraft pursuant to the Federal Aviation Act, (B) the filing for recording pursuant to said 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 Bill of Sale, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such documents under the Uniform Commercial Code of Minnesota and Utah and such other states as may be specified in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the taking of possession by the Indenture Trustee of the original counterpart of each of the Lease and the Lease Supplement covering the Aircraft, no further action, including any 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 in order to establish and perfect the Owner Trustee's title to and the Indenture Trustee's security interest in the Aircraft as against Lessee and any third parties in any applicable jurisdictions in the United States; (vii) there has not occurred any event which constitutes an Event of Default under the Lease (or any event which with the giving of notice or the passage of time or both would constitute an Event of Default under the Lease) which is presently continuing; - 27 - 28 (viii) 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; (ix)(a) The consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of December 31, 1994 and the related consolidated statements of operations, cash flows and common stockholders' equity of the Guarantor and its consolidated subsidiaries for the year then ended, which have been audited by independent certified public accountants, and (b) the consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of September 30, 1995 and the related consolidated statements of operations, cash flows and common stockholders' equity for the nine-month period then ended, copies of which have been furnished to the Owner Participant and each Loan Participant, fairly present the consolidated financial condition of the Guarantor and its consolidated subsidiaries as at such date and the results of operations and cash flow of the Guarantor and its consolidated subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied and since September 30, 1995 there has been no material adverse change in the consolidated financial condition, cash flow or results of operations of the Guarantor and its consolidated subsidiaries; (x) on the Delivery Date, the Owner Trustee will receive good title to the Aircraft free and clear of all Liens, except Liens permitted by clause (v) of Section 6 of the Lease, the rights of Lessee under the Lease and the Lease Supplement covering the Aircraft, the Lien of the Trust Indenture and the beneficial interest of the Owner Participant in the Aircraft; (xi) 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 or U of the Board of Governors of the Federal Reserve System; (xii) Lessee is not in default in the performance of any term or condition of the Purchase Agreement which materially adversely impairs the transactions contemplated hereby; (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; and - 28 - 29 (xiv) On the Delivery Date, the Aircraft will be duly certified by the FAA as to type and airworthiness, will be insured by Lessee in accordance with the terms of the Lease and will be in the condition and state of repair required under the terms of the Lease. (b) General Tax Indemnity. [Reserved] - 29 - 30 withhold such Tax from such payment and pay the amount of the Tax withheld to the relevant Taxing Authority when due. If such Tax is an Indemnified Tax Lessee shall pay an additional amount such that the net amount actually received by Lessor will, after such withholding, equal the full amount of the payment then due, but Lessee shall have no such obligation with respect any other Tax. If it is finally determined that Lessee has failed to pay an additional amount with respect to any Indemnified Tax which has been withheld from Basic Rent, Lessee shall pay such amount to Owner Participant together with interest from the date of such withholding until the date of payment at Base Rate plus 1%. (c) General Indemnity. [Reserved] - 30 - 31 (d) Income Tax. For purposes of this Section 7, the term "INCOME TAX" means any Tax based on or measured by gross or net income or receipts (other than Taxes in the nature of sales, use, license or property Taxes) (including, without limitation, capital gains taxes, minimum taxes, income taxes collected by withholding and taxes on tax preference items), and Taxes which are capital, doing business, excess profits or net worth taxes and interest, additions to tax, penalties, or other charges in respect thereof. SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner Participant represents that it is acquiring its interest in the Trust Estate for investment and not with a present intent as to any resale or distribution thereof (subject nonetheless to any requirement of law that the disposition of its properties shall at all times be and remain within - 31 - 32 its control) and that neither it nor anyone acting on its behalf has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended. (b) Lessee represents and warrants that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended. (c) Each of the Owner Participant and First Security Bank of Utah, National Association, in its individual capacity, represents and warrants to the other parties to this Agreement that it is, and on the Delivery Date will be, a Citizen of the United States without making use of any voting trust, voting powers agreement or similar arrangement. The Owner Participant agrees, solely for the benefit of Lessee and the Loan Participants, that if (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 hereto 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 in the first sentence of this Section 8(c) 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 Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). First Security Bank of Utah, 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 of Utah, National Association, shall obtain actual knowledge that First Security Bank of Utah, National Association, has ceased to be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under the Federal Aviation Act as in effect at such time or, if it is not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Loan Participants, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or First Security Bank of Utah, National Association, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an event which would constitute an - 32 - 33 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, National Association, in its individual capacity, represents that it has not offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire the same from, anyone, and that no officer or responsible employee of the Corporate Trust Department of First Security Bank of Utah, National Association, has knowledge of any such offer or solicitation except 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 each of the Loan Participants 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 and reasonably acceptable to the Owner Participant 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 - 33 - 34 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 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, 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 the aircraft maintenance standards of the new country of registry shall not be materially different from those of the United States, France, Germany, Japan, the Netherlands or the United Kingdom, and the Owner Trustee and the Indenture Trustee shall have received a certificate to such effect signed by the President, any Executive Vice President, any Senior Vice President or any Vice President of Lessee which certificate shall, as among the parties hereto, be presumed to be correct as to the matters stated therein absent conclusive evidence to the contrary. 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. - 34 - 35 (g) The Owner Participant represents and warrants to Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in its capacity as such and in its individual capacity, as follows: (i) the Owner Participant is a corporation duly organized and validly existing in good standing under the laws of its jurisdiction of organization, has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under the Owner Participant Documents, and has a tangible net worth (exclusive of goodwill) greater than $75,000,000; (ii) the Owner Participant Documents have been duly authorized by all necessary corporate action on the part of the Owner Participant, do not require any approval not already obtained of stockholders of the Owner Participant or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of the Owner Participant, and have been duly executed and delivered by the Owner Participant, and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by the Owner Participant with any of the terms and provisions thereof will contravene any United States Federal or state law (other than Section 406 of ERISA and/or Section 4975 of the Code), judgment, governmental rule, regulation or order 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 financing or the citizenship requirements of the Owner Participant under applicable aviation law) or contravene or result in any breach of or constitute any default under, or result in the creation of any Lien (other than Liens provided for or otherwise permitted in the Operative Documents) upon the Trust Estate under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Owner Participant is a party or by which it or its properties may be bound or affected; (iii) each of the Owner Participant Documents constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant in accordance with the terms thereof (subject to the qualifications set forth in clause (2) of the opinion of counsel to the Owner Participant in Section 4(a)(xiv)); (iv) there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which, if determined adversely to the Owner Participant, would materially adversely affect the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; - 35 - 36 (v) upon the execution and delivery of the Trust Indenture, the Trust Indenture Estate will be free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Participant; and (vi) neither the execution and delivery by the Owner Participant of the Owner Participant Documents nor the performance by the Owner Participant of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, state or foreign government authority or agency except for those exceptions referred to in Section 7(a)(iii) which may be applicable to the Owner Participant and the Owner Participant Documents. (h) Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from Lessor Liens (including for this purpose Liens that 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 other than Taxes or Expenses which (i) First Security Bank of Utah, National Association, is required to discharge pursuant to this paragraph (h) (or any similar Taxes or Expenses attributable to a successor Owner Trustee under the Trust Agreement in its individual capacity), (ii) State Street Bank and Trust Company is required to discharge pursuant to paragraph (i) of this Section (or any similar Taxes or Expenses attributable to a successor Indenture Trustee under the Indenture in its individual capacity) or (iii) are attributable to any act or omission to act by, or any revenues or income of, any Loan Participant. (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 - 36 - 37 Trust Estate, the Trust Indenture Estate or the Operative Documents other than a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9 hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of Default is continuing and prior to the time that the Indenture Trustee has received all amounts due pursuant to the Trust Indenture. (j) Each Loan Participant represents, warrants, covenants and agrees as to itself: (i) that this Agreement has been duly authorized, executed and delivered by such Loan Participant and this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of its jurisdiction of organization; and (iii) that such Loan Participant has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. (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, and which is consistent with the applicable provisions of the Credit Agreement. (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 - 37 - 38 actually receives any Excess Payment (as hereinafter defined) which reflects any payment by the Owner Trustee (in its individual capacity) or the Owner Participant on account of (ii) above, then such holder(s) or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Trustee or the Owner Participant (whichever shall have made such payment) such Excess Payment. For purposes of this Section 8(l), "EXCESS PAYMENT" means the amount by which such payment exceeds the amount which would have been received by the holder(s) of the Secured Certificates or the Indenture Trustee if the Owner Trustee (in its individual capacity) or the Owner Participant had not become subject to the recourse liability referred to in (ii) above. Nothing contained in this Section 8(l) shall prevent the holder of a Secured Certificate or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Owner Trustee (in its individual capacity) or the Owner Participant under this Agreement or the Trust Indenture (and any exhibits or annexes thereto). (m) State Street Bank and Trust Company represents and warrants, in its individual capacity, to Lessee, the Owner Trustee and each Participant as follows: (i) it is a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other 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 trust agreement or other similar arrangement, is likely to change and that it will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other similar arrangement; (ii) it is a Massachusetts trust company duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the requisite corporate power and authority to enter into and perform its obligations under the Trust Indenture and this Agreement and to authenticate the Secured Certificates to be delivered on the Delivery Date; (iii) the Indenture Trustee Documents and the authentication of the Secured Certificates to be delivered on the Delivery Date have been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or state law or governmental rule or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its charter or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (iv) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity - 38 - 39 or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. (n) The Owner Participant will not, directly or indirectly, sell, assign, convey or otherwise transfer any of its right, title or interest in and to this Agreement, the Trust Estate or the Trust Agreement or any proceeds therefrom to any person or entity, unless (i) the proposed transferee is a "Transferee" (as defined below), and (ii) 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 and as evidenced by the most recently available financial statements and a representation and warranty to such effect, 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 Loan Participants, 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 Loan Participants, 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 Majority in Interest of Certificate Holders; provided, however, that any Transferee shall not be (A) 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 (B) a Person (other than an Affiliate of the transferring Owner Participant) included in the consolidated group of companies where the primary business of such group is that of an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or other similar business. Each such transfer to a Transferee shall be subject to the conditions that (M) upon giving effect to such transfer, the Transferee is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or other similar arrangement unless approved by Lessee), and has full power and authority to enter into the transactions contemplated hereby, (N) the Transferee has the requisite power and authority to enter into and carry out the transactions contemplated hereby and such Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants an opinion of counsel in form and substance reasonably satisfactory to Lessee, the Owner Trustee, the Indenture Trustee and a Majority in Interest of Certificate Holders 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 guarantor, (O) the Transferee enters into an agreement or agreements, in form and substance reasonably satisfactory to the Owner Trustee, the Majority in Interest of Certificate Holders, Lessee and the Indenture Trustee, whereby the Transferee confirms that it shall be deemed a party to this - 39 - 40 Agreement and a party to the Trust Agreement and agrees to be bound by all the terms of, and to undertake all of the obligations of the transferor Owner Participant contained in, the Owner Participant Documents (to the extent of the participation so transferred to it) and makes representations and warranties substantially similar to the representations and warranties made by the Owner Participant thereunder, (P) such transfer does not adversely 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 pays, or causes to be paid, all of the reasonable costs and expenses (including, without limitation, reasonable fees and expenses of counsel) incurred in connection with such transfer, including the reasonable costs and expenses of the Owner Trustee, the Indenture Trustee, Lessee and the Loan Participants in connection therewith, and (R) the terms of the Operative Documents and the Overall Transaction shall not be altered except to the extent necessary to evidence such transfer. 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 Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, specifying the name and address of the proposed Transferee. (o) Notwithstanding the provisions of Section 8(x) hereof, unless waived by the Loan Participants, Lessee shall not be entitled to assume the Secured Certificates on the date for purchase of the Aircraft pursuant to Section 19(d) of the Lease if on such date an Event of Default shall have occurred and be continuing or any condition or event shall exist which, with the passage of time or giving of notice or both, would become such an Event of Default. (p) First Security Bank of Utah, 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)(A) Each Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Secured Certificate or any interests represented thereby with the assets of any Plan. 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 of such Secured Certificate (or any part thereof) constitutes assets of any Plan or that such transfer will not result in a non-exempt prohibited transaction (as defined in Section 4975 of - 40 - 41 the Code and ERISA). The Owner Participant agrees that it will not transfer any of its right, title or interest in and to this Agreement, the Trust Estate or the Trust Agreement or any proceeds therefrom to any entity unless such entity makes (or is deemed to have made) a representation and warranty as of the date of transfer that either no part of the funds to be used by it for the purchase of such right, title and interest (or any part thereof) constitutes assets of any Plan or that such transfer will not result in a non-exempt prohibited transaction (as defined in Section 4975 of the Code and ERISA). (B) Lessee represents and warrants that: none of (i) the execution and delivery of this Agreement, (ii) the initial purchase by the Loan Participants of the Secured Certificates, and (iii) the initial acquisition by the Owner Participant of its beneficial interest in the Trust Estate will involve any non-exempt prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation being made in reliance upon and subject to the accuracy of the representations contained in subparagraph (A) of this Section 8(q)). (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, and (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 and not specifically reserved to Lessee under Section 1 thereof, 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 Loan Participants 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. - 41 - 42 (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. Each Loan Participant agrees that Lessee may, on behalf of the Owner Trustee and upon notice to the affected Certificate Holder, arrange for another institution (which may be a Certificate Holder) to purchase the Secured Certificates of the affected Certificate Holder by paying the affected Certificate Holder an amount equal to the unpaid principal amount of the Secured Certificates held by the affected Certificate Holder plus accrued but unpaid interest thereon to the date of payment of such principal amount. For purposes of this Section 8(t), "AFFECTED CERTIFICATE HOLDER" shall mean a Certificate Holder which has asserted claims against the Owner Trustee or Lessee under or sought rights or remedies provided by Section 7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture. (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) First Security Bank of Utah, National Association, in its individual capacity, represents and warrants that: (i) the Trust Agreement and, assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, each of the other Owner Trustee Documents has been duly executed and delivered by one of its officers who is duly authorized to execute and deliver such instruments on behalf of First Security Bank of Utah, National Association or the Owner Trustee, as the case may be; (ii) the Trust Estate is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to First Security Bank of Utah, National Association, in its individual capacity, and there are no Liens affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Trust Indenture Estate resulting from any act or claim against First Security Bank of Utah, National Association, in its individual capacity, arising out of any event or condition not related to the ownership, leasing, use or operation of the Aircraft or to any other transaction contemplated by this Agreement or any of the Operative Documents, including any such Lien resulting from the nonpayment by First Security Bank of Utah, National Association, in its individual capacity, of any Taxes imposed or measured by its net income; - 42 - 43 (iii) there has not occurred any event which constitutes (or to the best of its knowledge would, with the passage 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 First Security Bank of Utah, National Association, in its individual capacity, and which is presently continuing; (iv) it is a national banking association duly organized, validly existing and in good standing under the laws of the United States and has the full corporate power, authority and legal right to enter into and perform its obligations under each of the Owner Trustee Documents; (v) each of the Owner Trustee Documents has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal law governing the banking and trust powers of First Security Bank of Utah, National Association, or Utah law or regulation or contravene or result in any breach of the provisions of its articles of association or By-laws or any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (vi) each of the Owner Trustee Documents has been duly executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, each thereof is the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (vii) there are no Taxes payable by it (either in its individual capacity or as Owner Trustee), the Trust Estate, the Owner Participant, Lessee, the Indenture Trustee or the Loan Participants to the State of Utah in connection with the execution, delivery and performance of the Operative Documents solely because First Security Bank of Utah, National Association is a national banking association with its principal office in the State of Utah and will perform its obligations under the Operative Documents in the State of Utah, other than franchise or other taxes based on or measured by any fees or compensation received or accrued by First Security Bank of Utah, National Association for services rendered in connection with the transactions contemplated by the Operative Documents. (w) The Owner Participant covenants and agrees that if (i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by causing the Aircraft to be - 43 - 44 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. (x) Each of the Owner Participant, the Owner Trustee, the Indenture Trustee, each Loan Participant 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 in form consistent with the agreements contained in the Operative Documents 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 obligations in respect of the Secured Certificates, the Trust Indenture and all other Operative Documents (other than those which by the express terms of the Operative Documents are to survive) and all such other actions as are reasonably necessary to permit such assumption by Lessee. (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 each Participant an agreement in form and substance reasonably satisfactory to such 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; - 44 - 45 (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 each 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 Participants, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (ii) above comply with this subparagraph (A) of Section 8(y) and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any such consolidation or merger or any such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety in accordance with this subparagraph (A) of Section 8(y), the successor corporation or Person formed by such consolidation or into which Lessee is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, Lessee under this Agreement with the same effect as if such successor corporation or Person had been named as Lessee herein. No such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety shall have the effect of releasing Lessee or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this subparagraph (A) of Section 8(y) from its liability in respect of any Operative Document to which it is a party. (B) Lessee shall at all times maintain its corporate existence except as permitted by subparagraph (A) of this Section 8(y). (z) Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust Supplement and any financing statements or other instruments as are necessary to maintain, so long as the Trust Indenture or the Lease is in effect, the perfection of the security interests created by the Trust Indenture and any security interest that may be claimed to have been created by the Lease and the interest of the Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the Indenture Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable them to take such action. Lessee will notify the Owner Trustee, the Owner Participant and the Indenture Trustee of any change in the location of its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) promptly after making such change or in any event within the period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. (aa) Section 3 of the Lease contemplates that, under certain circumstances, the Owner Participant will make certain recalculations of Basic Rent, Special Purchase Price, Stipulated Loss Value and Termination Value, and the Owner Participant hereby agrees to - 45 - 46 make such recalculations as and when contemplated by the Lease and subject to all the terms and conditions of the Lease and promptly to take such further actions as may be necessary or desirable to give effect to and to cause the Owner Trustee to give effect to the provisions of Section 3 of the Lease. (bb) [___________] agrees to act as Administrative Agent hereunder. The Administrative Agent agrees to notify each of the Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual interest expected to accrue on the Secured Certificates during each Interest Period promptly after the commencement of such Interest Period and after the occurrence of any event that would cause such actual interest expected to accrue during such Interest Period to change from the amount previously notified. The Administrative Agent further agrees to perform all of the functions that are required to be performed by the Administrative Agent pursuant to the terms of the Trust Indenture. (cc) The Owner Participant hereby agrees with Lessee that it will pay, or cause to be paid, all costs and expenses that are for the account of the Owner Trustee pursuant to Section 5(d) of the Lease. (dd) 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(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(dd) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture). (ee) [ ] agrees to act as Documentation Agent hereunder and to perform all of the functions that are required to be performed by the Documentation Agent hereunder. (ff) [ ], [ ] and [ ] each agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate (as defined in the Trust Indenture). (gg) Lessee, each Loan Participant, the Indenture Trustee and the Owner Trustee hereby covenant and agree, upon the written request of the Owner Participant, to amend the Operative Documents to permit the Owner Participant to (A) provide additional security for the Secured Certificates by transferring such additional property to the Indenture Trustee for the security and benefit of the Loan Participants as the Owner Participant shall determine in its sole discretion (the "ADDITIONAL COLLATERAL"), or (B) guarantee the payment of principal and interest on the Secured Certificates, or any portion of such principal and interest, as the Owner Participant shall determine in its sole discretion (the "OWNER PARTICIPANT GUARANTEE"); provided that Lessee shall have no obligation to amend the Operative Documents if, in Lessee's sole judgment, such amendment would increase any liability of - 46 - 47 Lessee under the Operative Documents. The Owner Participant agrees to pay all of the reasonable costs and expenses (including, without limitation, reasonable fees and expenses of counsel) incurred in connection with any such amendment, including the reasonable costs and expenses of Lessee, the Loan Participants, the Indenture Trustee and the Owner Trustee incurred in connection therewith. Notwithstanding any other provision in any Operative Document to the contrary: (A) the Indenture Trustee and each Loan Participant hereby irrevocably agree (1) to exercise all remedies available to any of them under the Operative Documents or otherwise available to any of them at law or in equity prior to the exercise of any remedies against the Additional Collateral or the Owner Participant Guarantee and (2) to return such Additional Collateral to the Owner Participant, and to release the Owner Participant from the Owner Participant Guarantee, promptly upon the written request of the Owner Participant to do so, such request to be delivered to the Indenture Trustee and each Loan Participant; provided that the Indenture Trustee and the Loan Participants shall not be obligated to return such Additional Collateral or to release the Owner Participant from the Owner Participant Guarantee if an Event of Default or Major Default has occurred and is continuing; and (B) the provision of the Additional Collateral and the Owner Participant Guarantee will be in the sole discretion of the Owner Participant. (hh) Lessee hereby agrees with the Owner Participant that, in the event that Lessee shall elect to substitute an aircraft (or an airframe or an airframe and one or more engines, as the case may be) pursuant to the provisions of Section 10(a) of the Lease, Lessee shall not effect any such substitution unless the Owner Participant has received an opinion of counsel mutually agreed upon by the Owner Participant and Lessee to the effect that a Reasonable Basis exists to support the conclusion that such substitution will not result in any loss of Interest Deductions or MACRS Deductions or an Inclusion Event (as defined in the Tax Indemnity Agreement) for which Lessee has not reimbursed the Owner Participant at the time of such substitution. SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall, pursuant to this Section 9 and in accordance with the requirements of Section 3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt payment structures. Within forty-five Business Days after the need for an adjustment to Rent has been established pursuant to Section 3 of the Lease, the Owner Participant shall deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of debt amortization and Basic Rent, Special Purchase Price, Stipulated Loss Value and Termination Value percentages. Within forty-five days of its receipt of the Reoptimization Certificate, Lessee may demand a verification, pursuant to Exhibit E of the Lease, of the information set forth in the Reoptimization Certificate. Upon - 47 - 48 the acceptance by Lessee of the accuracy of the information set forth in the Reoptimization Certificate or the determination pursuant to such verification procedures of such information, the Owner Participant will cause the Owner Trustee (M) to execute a Lease Supplement setting forth the reoptimized Basic Rent, Special Purchase Price, Stipulated Loss Value and Termination Value percentages, and (N) to exchange new Secured Certificates containing reoptimized amortization schedules for the Secured Certificates outstanding immediately prior to such reoptimization. (b) In connection with reoptimization adjustments of Basic Rent, Special Purchase Price, Stipulated Loss Value and Termination Value percentages pursuant to this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will allow changes in the amortization schedule of the Secured Certificates, and (N) each Loan Participant will exchange the Secured Certificates held by it immediately prior to such reoptimization for new Secured Certificates containing reoptimized amortization schedules; provided that such changes do not (X) change the final maturity of any Secured Certificates to beyond twenty years from December 11, 1995 or, without the consent of the Owner Participant, to a date which is more than six (6) months longer than the original maturity of the Secured Certificates or (Y) increase the weighted average lives of the Secured Certificates as of December 11, 1995 (based on an assumption that the Secured Certificates were issued on December 11, 1995) to more than 15 years or, without the consent of the Owner Participant, increase the weighted average lives of the Secured Certificates by more than six (6) months. SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the Owner Trustee hereby (A) agrees with Lessee and the Loan Participants to comply with all of the terms of the Trust Agreement (as the same may hereafter be amended or supplemented from time to time in accordance with the terms thereof) applicable to it; (B) agrees with Lessee, the Loan Participants 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 Loan Participants. 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 10.05 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. - 48 - 49 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 Bill 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 Bill of Sale, second, the Lease, with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the Trust Indenture, with the Trust Supplement attached. SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby agreed among Lessee, the Owner Participant and the Owner Trustee that for Federal income tax purposes the Owner Participant will be the owner of the Aircraft to be delivered under the Lease and Lessee will be the lessee thereof, and each party hereto agrees to characterize the Lease as a lease for Federal income tax purposes. SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO JURISDICTION. (a) Except as otherwise defined in this Agreement, terms used herein in capitalized form shall have the meanings attributed thereto in the Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set forth in the Trust Indenture. The term "REASONABLE BASIS" means a basis in law and fact that is reasonable within the meaning of Formal Opinion 85-352 of the American Bar Association. 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. - 49 - 50 (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 Owner Trustee, the Loan Participants, the Administrative Agent, the Documentation 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, or (D) if to the Guarantor, addressed to the Guarantor at such address as the Guarantor shall have furnished by notice to the parties hereto. (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, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of Lessee in New York City as from time to time may be designated by Lessee in writing to the Owner Participant, the Owner Trustee and the Indenture Trustee. SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant agrees that if, at any time, the Trust Estate becomes subject to any Taxes for which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States from the state in which it is then located, the situs of the trust may be moved with the written consent of the Owner Participant (which consent shall not be unreasonably withheld) and the Owner Participant will take whatever action may be reasonably necessary to accomplish such removal; provided that (A) Lessee shall provide such additional tax indemnification as the - 50 - 51 Owner Participant and the Loan Participants may reasonably request, (B) the rights and obligations under the Operative Documents of the Owner Participant and the Loan Participants 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 Loan Participants shall have received an opinion or opinions of counsel (satisfactory to the Owner Participant and the Loan Participants), in scope, form and substance satisfactory to the Owner Participant and the Loan Participants 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 Loan Participants, 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 Loan Participants and to the Owner Participant covering the matters described in Section 4(a)(xiii) hereof and such other matters as the Loan Participants and the Owner Participant may reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner Participant, the Indenture Trustee and the Loan Participants on an 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, the Indenture Trustee and the Loan Participants in connection with such change of situs. SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, or the Indenture Trustee under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture Trustee. (b) The representations, warranties, indemnities and agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee, the Administrative Agent, the Documentation Agent and the Owner Participant provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan Participants', the Indenture Trustee's, the Administrative Agent's, the Documentation Agent's and the Owner Participant's obligations under any and all thereof, shall survive the making available of the respective Commitments by the Loan Participants and 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 - 51 - 52 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 its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and assigns, each Certificate Holder and its successors and registered assigns, the Indenture Trustee and its successors as Indenture Trustee under the Trust Indenture, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, the Administrative Agent and the Documentation Agent. 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 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 - 52 - 53 the Lease pursuant to the Trust Indenture, will be entitled to the benefits of 11 U.S.C. Section 1110 in the event of any reorganization of Lessee under such Section. SECTION 16. EXPENSES. (a) Invoices and Payment. Each of the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan Participants shall promptly submit to the Owner Participant and Lessee for their prompt approval (which shall not be unreasonably withheld) copies of invoices in reasonable detail of the Transaction Expenses for which it is responsible for providing information as they are received (but in no event later than February 15, 1996). The Owner Participant agrees to pay all invoices of Transaction Expenses that have been approved by it and Lessee promptly upon receipt thereof but in any event no later than March 1, 1996. Notwithstanding the foregoing, to the extent that Transaction Expenses exceed 1.35% of Lessor's Cost, Lessee at its sole option shall have the right to pay directly any or all Transaction Expenses which are in excess of 1.35% of Lessor's Cost. (b) Payment of Other Expenses. In the event that the transaction contemplated by this Participation Agreement fails to close as a result of the Owner Participant's failure to negotiate in good faith or to comply with the terms and conditions upon which its participation in the transaction was predicated, the Owner Participant will be responsible for all of its fees and expenses, including but not limited to the fees, expenses and disbursements of its special counsel and the fees of the appraiser referred to in Section 4(a)(xx). In the event that the transaction fails to close for reasons other than those described in the immediately preceding sentence, Lessee shall be responsible for all Transaction Expenses. SECTION 17. REFINANCINGS. (a) Lessee shall have the right, subject to compliance with the terms of this Section 17, 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 (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. Upon such agreement: (1) within ten Business Days after the reaching of such agreement, the Owner Participant will deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REFINANCING CERTIFICATE") setting forth (i) the proposed date on which the outstanding Secured Certificates will be redeemed, any new debt will be issued and the other aspects of such refinancing will be consummated (such date, the "REFINANCING DATE") and (ii) the following information calculated pursuant to the provisions of paragraph (6) of this - 53 - 54 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, Termination Value percentages and Special Purchase Price. 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, Termination Value percentages and Special Purchase Price (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 (the agreements to which they will be a party to be in form and substance reasonably satisfactory to the Owner Participant, the Owner Trustee and Lessee) 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, Termination Value and Special Purchase Price 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; - 54 - 55 (5) unless otherwise agreed by the Owner Participant, Lessee shall pay all of the expenses of such refinancing (including, but not limited to, the reasonable fees, expenses and disbursements of counsel and any placement or underwriting fees); (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 Section Section 4.02(5), 4.07 and 4.08(1) 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; (7) the appropriate parties will execute and deliver appropriate closing documents in form and substance satisfactory to the Owner Participant, Indenture Trustee, Lessee and the holders of the New Debt, execute and deliver appropriate closing certificates and deliver appropriate opinions of counsel; and (8) notwithstanding the foregoing, the Owner Participant shall have no obligation to proceed with any refinancing transaction as contemplated by this Section 17: (i) if the rights and obligations of the Owner Participant under the trust indenture to be executed in connection with such refinancing would when taken as a whole be materially adverse to Owner Participant, as determined in Owner Participant's reasonable judgment; or (ii) unless (A) the Owner Participant has received an opinion of tax counsel mutually agreed upon by the Owner Participant and Lessee to the effect that there are no adverse tax consequences to it as a result of such refinancing or (B) Lessee has indemnified the Owner Participant in a manner satisfactory to it with respect to the tax consequences of such refinancing and the Owner Participant has received an opinion of tax counsel mutually agreed upon by the Owner Participant and Lessee to the effect that a Reasonable Basis exists to support the conclusion that such refinancing transaction will not result in the loss of Interest Deductions or MACRS Deductions or an Inclusion Event (as defined in the Tax Indemnity Agreement) for which Lessee has not reimbursed the Owner Participant at the time of the refinancing. (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. - 55 - 56 (c) If a refinancing of Secured Certificates under this Section 17 involves an offering of securities registered under the Securities Act of 1933, as amended, or pursuant to Rule 144A thereof (or a successor rule thereto), (i) the provisions of Section 8(k), Section 8(q)(A) and the first three sentences of Section 8(t) shall not apply to any Loan Participant so long as such securities are outstanding if at the time of such refinancing the Lease is amended to delete the reference to Loan Participant Liens contained in clause (iii) of Section 6 of the Lease and (ii) so long as the appropriate underwriter's exemption is available, there will not be a prohibition on the purchase of such securities by an employee benefit plan and in the event it is not available, the parties hereto intend to agree upon appropriate limitations, if any, to such purchase. SECTION 18. AGENTS. (a) Each Loan Participant hereby appoints and authorizes each of the Administrative Agent and the Documentation Agent (each, an "AGENT") to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Operative Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. Each Agent shall have no duties or responsibilities except those expressly set forth in the Operative Documents. As to any matters not expressly provided for hereby or by the Trust Indenture, each Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority in Interest of Certificate Holders (as defined in the Trust Indenture), and such instructions shall be binding upon all Loan Participants and all Certificate Holders; provided, however, that such Agent shall not be required to take any action that exposes such Agent to personal liability or that is contrary to the Operative Documents or applicable law. Each Agent agrees to give to each Loan Participant prompt notice of each notice given to it by the Owner Trustee, the Owner Participant or Lessee pursuant to the terms of the Operative Documents. (b) No Agent nor such Agent's directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the Trust Indenture, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Loan Participant and shall not be responsible to any Loan Participant for any statements, warranties or representations (whether written or oral) made in or in connection with the Operative Documents; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Operative Documents on the part of any party thereto or to inspect the property (including the books and records) of any such party; (iv) shall not be responsible to any Loan Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created - 56 - 57 under or in connection with, the Operative Documents or any other instrument or document furnished pursuant thereto; and (v) shall incur no liability under or in respect of the Operative Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. (c) With respect to their Loans and any Secured Certificates issued to them, [____________] and [____________] shall have the same rights and powers under the Operative Documents as any other Loan Participant and may exercise the same as though they were not Agents and the term "Loan Participant" or "Certificate Holder" shall, unless otherwise expressly indicated, include [____________] and [____________] in their individual capacity. [____________] and its Affiliates and [____________] and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Owner Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any Person who may do business with or own securities of any of such Persons, all as if [____________] and [____________] were not Agents and without any duty to account therefor to the Loan Participants. (d) Each Loan Participant acknowledges that it has, independently and without reliance upon the Agents or any other Loan Participant and based on the financial statements referred to in Section 7(a)(ix) of this Agreement and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Loan Participant also acknowledges that it will, independently and without reliance upon the Agents or any other Loan Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. (e) Subject to the appointment and acceptance of a successor agent as provided below, any Agent may resign at any time by giving written notice thereof to the Loan Participants, the Owner Trustee and Lessee and may be removed at any time with or without cause by the Majority in Interest of Certificate Holders (as defined in the Trust Indenture). Upon any such resignation or removal, the Majority in Interest of Certificate Holders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority in Interest of Certificate Holders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or removal of the retiring Agent by the Majority in Interest of Certificate Holders, then the retiring Agent may, on behalf of the Loan Participants, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the Trust Indenture. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section 18 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent - 57 - 58 under this Agreement and the Trust Indenture. Notwithstanding anything contrary herein, the Administrative Agent and the Documentation Agent hereunder and under the Trust Indenture shall be the same institution, respectively, as the Administrative Agent and the Documentation Agent under (and as defined in) the Credit Agreement. - 58 - 59 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: ------------------------------------------- Title: Address: U.S. Mail --------- 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier ----------------- 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 [___________________], Owner Participant By: ---------------------------------------- Title: Address: Attn: Telecopy No.: - Signature Page - 60 STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: ------------------------------------------- Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: ------------------------------------------- Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 - Signature Page - 61 [INSERT BRIDGE LENDERS] - Signature Page - 62 SCHEDULE I NAMES AND ADDRESSES Lessee: Northwest Airlines, Inc. U.S. Mail --------- 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier ----------------- 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 Wire Transfer ------------- First Bank, N.A., Minneapolis ABA No. 091000022 Acct. No. 150250099440 Owner Participant:
63 Indenture Trustee: State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 Wire Transfer ------------- State Street Bank and Trust Company ABA No. 011-00-0028 for credit to State Street Bank and Trust Company Acct. No. 9903-943-0 Attn: Corporate Trust Department Reference: Northwest/NW 1995 B Owner Trustee: First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 Payments made to the Owner Trustee as provided in Section 3(f) of the Lease shall be made to: First Security Bank of Utah, National Association ABA No. 124-0000-12 Acct. No. 051-0922115 Attn: Corporate Trust Department Credit: Northwest/NW 1995 B
SCHEDULE I - PAGE 2 64 SCHEDULE II COMMITMENTS
Percentage of Loan Participants: Lessor's Cost - ----------------- -------------
65
Owner Participant: - ----------------- ------------- Total Commitments: 100.000000%
SCHEDULE II - PAGE 2 66 EXHIBIT A TO PARTICIPATION AGREEMENT [NW 1995 B] 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
EX-4.D7 33 FIRST AMENDMENT TO PARTICIPATION AGREEMENT-1995 B 1 FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1995 B] This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1995 B], dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) [ ], a [ ] corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the two separate Pass Through Trust Agreements (as defined below), (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 (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; W I T N E S S E T H: WHEREAS, Lessee, the Owner Participant, the Owner Trustee, [ ], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1995 B], dated as of December 13, 1995 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1995 B], dated as of December 13, 1995, as supplemented by Trust Agreement and Indenture Supplement [NW 1995 B], dated December 2 21, 1995 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1995 B] relating to the Aircraft, dated as of December 13, 1995, as supplemented by Lease Supplement No. 1 [NW 1995 B] dated December 21, 1995 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1995 B], dated as of December 13, 1995 (the "TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1995 B] relating to the Aircraft, dated as of December 13, 1995 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1995 B] dated as of December 13, 1995 (the "GUARANTEE"), pursuant to which the Guarantor guaranteed certain obligations of Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, prior to the execution and delivery of this Amendment, Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent have entered into the Refunding Agreement [NW 1995 B], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1995 B], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue -2- 3 new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES") in two series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1995 B], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1995 B] dated as of June 3, 1996 (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in Section 1 of the Refunding Agreement), two 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing 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 Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") entered into two revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of Certificates of each Pass Through Trust, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent entered into the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Participation Agreement is amended as follows: -3- 4 SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 2. AMENDMENT OF SECTION 5 OF THE ORIGINAL PARTICIPATION AGREEMENT . Section 5 of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation "the Participants" from the first line thereof, (ii) deleting the words and punctuation ", this Agreement, the Lease and the Guarantee" both times they appear therein, and (iii) deleting the words "which are permitted" in the first proviso thereof and substituting therefor the words "which is permitted". SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation Agreement is hereby amended by (i) deleting the words "other than a Loan Participant" from clauses (1), (3), and (10) thereof, (ii) deleting clauses (2) and (4) thereof in their entirety and by substituting therefor "Intentionally Omitted", (iii) deleting the words "a Loan Participant" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (iv) deleting the words "any Loan Participant or any Certificate Holder" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (C) from clause (11) thereof and deleting "(D)" from such clause and substituting therefor "(C)", and (vi) deleting the parenthetical clause in clause (13) thereof. SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation Agreement is hereby amended by deleting the second sentence of the last paragraph thereof. SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement is hereby amended by (I) deleting the second and third sentences thereof and (ii) deleting the words "other than a Loan Participant" in the first sentence thereof. SECTION 6. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL PARTICIPATION AGREEMENT . Section 7(c) of the Original Participation Agreement is hereby amended by (i) deleting the word "and" between the words "expenses" and "Transaction Expenses" in the second parenthetical phrase of the first paragraph thereof and substituting a comma therefor, (ii) inserting after the phrase "to Section 16 hereof" in such second parenthetical phrase the words "and Refinancing Expenses to the extent not required to be paid by the Owner Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement", (iii) adding the words and punctuation "and, only in the case of an Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words "in respect thereof" in the first clause (A) thereof, and (iv) adding the words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after the words "Operative Documents" in the second clause (B) thereof. SECTION 7. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby amended by -4- 5 deleting the words "each of the Loan Participants" and substituting therefor the words "the Indenture Trustee" in the first line thereof. SECTION 8. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation "the Loan Participants," each time they appear in the second sentence thereof, (ii) deleting the words "the Majority in Interest of the Certificate Holders" from the first proviso of the second sentence thereof and substituting therefor the words "Indenture Trustee", (iii) deleting the "," between the words "Owner Trustee" and "the Indenture Trustee" in clauses (N) and (O) of the third sentence thereof and substituting therefor "and", (iv) deleting the words "and the Loan Participants" each time they appear in the third sentence thereof other than in clause (Q) thereof, (v) deleting the words and punctuation "the Majority in Interest of the Certificate Holders," from clauses (N) and (O) of the third sentence thereof, and (vi) deleting the words and punctuation "to the Loan Participants," from the fifth sentence thereof. SECTION 9. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement is hereby amended by (i) deleting the word "Each" in the first sentence thereof and substituting therefor the words "The Owner", and (ii) adding a new sentence to the end thereof to read as follows: "The Pass Through Trustee agrees that it will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of the initial supplement (other than the initial supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust Agreement without the prior written consent of the Owner Participant.". SECTION 10. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is hereby amended by deleting the fourth and fifth sentences thereof. SECTION 11. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby amended by (i) deleting the words "each Loan Participant" therefrom and (ii) adding a new second paragraph thereto at the end thereof: 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. Section1110; 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. SECTION 12. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement is hereby amended by (i) -5- 6 deleting the words "each" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii) deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Indenture Trustee and the Owner", (iii) inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement Assignment", the words and punctuation ", the Refunding Agreement", (iv) deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and substituting therefor the words "the Owner", and (v) deleting the word "Participants" the first time it appears in Section 8(y)(A)(iv) and substituting therefor the words "the Indenture Trustee and the Owner Participant". SECTION 13. AMENDMENT OF SECTION 8(bb) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(bb) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 14. AMENDMENT OF SECTION 8(ee) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(ee) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 15. AMENDMENT OF SECTION 8(ff) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(ff) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 16. AMENDMENT OF SECTION 9 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 17. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", the Loan Participants" from clause (B) thereof, (ii) deleting the words "Loan Participants" the second time they appear in clause (C) thereof and substituting therefor with the words "Indenture Trustee", and (iii) deleting the words "or 10.05" from clause (iii) of the second sentence thereof. SECTION 18. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby amended by deleting the words "at the foot of this Agreement" in clause (A) of the second sentence thereof and substituting therefor the words "on the signature pages to the Refunding Agreement". SECTION 19. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is hereby amended by (i) deleting the words "Loan Participants" each time they appear in clauses (A), (B), and (D) thereof and substituting therefor the words "Indenture Trustee", (ii) deleting the "," both times it appears between the words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and substituting therefor "and", and (iii) deleting the words "and the Loan Participants" both times they appear in clause (E) thereof. -6- 7 SECTION 20. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Section 15. Miscellaneous. (a) The Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor. SECTION 21. AMENDMENT OF SECTION 18 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 22. RATIFICATION. Except as hereby modified, the Original Participation Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Participation Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Participation Agreement or any word or phrase referring to a section or provision of the Participation Agreement is deemed for all purposes to be a reference to the Participation Agreement or such section or provision as amended pursuant to this Amendment. SECTION 23. MISCELLANEOUS. (a) Each of the parties hereto agrees that the transactions contemplated hereby shall constitute one of the three refinancing operations permitted in Section 17 of the Participation Agreement. (b) Each party hereto acknowledges and agrees that the Purchaser is a Loan Participant under the Participation Agreement, the Lease and the other Operative Documents, and is entitled to the benefits of the covenants and other provisions therein running in favor of the Loan Participants, and to the security purported to be afforded by the Trust Indenture, but that (i) the Purchaser has no liability arising out of any actions or inactions of the Original Loan Participants or any prior Certificate Holder or any event or condition which occurred or existed prior to the Closing, (ii) the Purchaser is making no representations or warranties other than those set forth in the Refunding Agreement (except to the extent such representations and warranties therein relate to a date prior to the Closing Date), and (iii) the Purchaser has no liability or obligation under any covenant in any of such agreements for any period prior to the Closing. (c) This Amendment 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 Amendment 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 -7- 8 Trustee. The terms of this Amendment shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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. THIS AMENDMENT 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 AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -8- 9 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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: _________________________________________ Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: ________________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ________________________________________ Name: Title: [ ], as Owner Participant By: ________________________________________ Name: Title: -9- 10 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Subordination Agent By: ________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee By: ________________________________ Name: Title -10- 11 SCHEDULE I TO PARTICIPATION AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. -11- EX-4.D8 34 REFUNDING AGREEMENT-1995 B 1 REFUNDING AGREEMENT [NW 1995 B] This REFUNDING AGREEMENT [NW 1995 B], dated as of June 3, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii) [__________], a [__________] corporation (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the two separate Pass Through Trust Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Participation Agreement (as defined below) as if the Closing Date had occurred. W I T N E S S E T H: WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, [Bridge Lenders], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1995 B], dated as of December 13, 1995 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust 2 Indenture and Security Agreement [NW 1995 B], dated as of December 13, 1995, as supplemented by Trust Agreement and Indenture Supplement [NW 1995 B], dated December 21, 1995 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Lessee entered into the Lease Agreement [NW 1995 B] relating to the Aircraft, dated as of December 13, 1995, as supplemented by Lease Supplement No. 1 [NW 1995 B] dated December 21, 1995 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1995 B], dated as of December 13, 1995 (the "TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1995 B] relating to the Aircraft, dated as of December 13, 1995 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1995 B] dated as of December 13, 1995 (the "GUARANTEE") pursuant to which the Guarantor guaranteed certain obligations of the Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and the Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1995 B], dated as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in two series; -3- 3 WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Trustee and the Lessee entered into the First Amendment to Lease Agreement [NW 1995 B], dated as of the date hereof (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"), containing amendments, modifications and additions necessary to give effect to the transactions described herein; WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent will enter into the First Amendment to Participation Agreement [NW 1995 B], dated as of the Refinancing Date (the "PA AMENDMENT NO. 1"; the Original Participation Agreement, as amended by the PA Amendment No. 1, the "PARTICIPATION AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1995 B] dated as of the date hereof (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, two 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing Secured Certificates bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will enter into two 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 Refinancing Date (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; -4- 4 NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on June 12, 1996 or on such other date agreed to by the parties hereto (the "REFINANCING DATE"): (i) immediately prior to the Closing, the Lessee shall pay to the Owner Trustee, as a payment of Interim Rent under the Lease, an amount equal to the unpaid interest on the Original Secured Certificates accrued up to but not including the Refinancing Date; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Refinancing Secured Certificates being issued to such Pass Through Trustee as set forth in clause (vii) below; (iii) the Owner Trustee shall pay to the Indenture Trustee for the benefit of the holders of the Original Secured Certificates an amount equal to the aggregate principal amount of Original Secured Certificates outstanding on the Refinancing Date, together with accrued and unpaid interest on the Original Secured Certificates up to but not including the Refinancing Date; (iv) pursuant to the Indenture, the Indenture Trustee shall disburse to the holders of the Original Secured Certificates the amounts of principal and interest, if any, described in clause (iii) above, owing to them on the Refinancing Date with respect to the Original Secured Certificates as a prepayment of the Original Secured Certificates; (v) simultaneously with the disbursement by the Indenture Trustee of amounts described in clause (iv) above to the holders of the Original Secured Certificates, the Indenture Trustee shall receive the Original Secured Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture; (vii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Refinancing 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; and -5- 5 (viii) the Owner Trustee shall disburse to the Owner Participant the excess of the amounts received by it pursuant to clauses (i) and (ii) above over the amount paid by it pursuant to clause (iii) above. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) In case any Pass Through Trustee shall for any reason fail to purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on or prior to June 12, 1996 or such other date as shall be agreed in writing by the parties hereto, the written notice given by the Lessee pursuant to Section 17 of the Original Participation Agreement shall be deemed never to have been given, none of the Owner Participant, the Owner Trustee nor the Lessee shall have any obligation to pay to the holders of the Original Secured Certificates any amount in respect of the prepayment of the Original Secured Certificates, the Original Secured Certificates shall remain outstanding and in full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall not take place. (d) The closing (the "CLOSING") of the transactions described in this Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such other place as the parties hereto may agree. (e) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Refinancing Date. (f) In order to facilitate the transactions contemplated hereby, the Lessee and the Guarantor have entered into the Underwriting Agreement, the date hereof, among the Lessee, the Guarantor and the several underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to the terms and conditions hereof, the Lessee and the Guarantor will enter into each of the Pass Through Trust Agreements and will undertake to perform certain administrative and ministerial duties under such Pass Through Trust Agreements. SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured Certificates shall be payable as to principal in accordance with the terms of the Indenture, and the Refinancing Secured Certificates shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Refinancing Secured Certificates in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Refinancing Secured Certificates bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such -6- 6 Refinancing Secured Certificates shall be dated and authenticated as of the Refinancing Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through Trustee to make the payments described in Section l(a)(ii) and the obligations of the Owner Trustee and the Owner Participant to make the payments and participate in the transactions contemplated by this Agreement on the Refinancing Date are subject to the fulfillment, prior to or on the Refinancing Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder, and paragraph (r) shall not be a condition precedent to the obligations of the Pass Through Trustee hereunder): (a) The Owner Trustee shall have tendered the Refinancing Secured Certificates to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Refinancing Secured Certificates and shall have tendered the Refinancing Secured Certificates to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts or conformed copies of the following documents: (1) this Agreement; (2) the Lease Amendment No. 1; (3) the Indenture; (4) the PA Amendment No. 1; (5) each of the Pass Through Trust Agreements; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A and Class B Trusts. (c) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Lessee and the Guarantor (as the case may be) as to the person or persons authorized to execute and deliver this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the TIA -7- 7 Amendment No. 1 and any other documents to be executed on behalf of the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Lessee and the Guarantor or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the 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 the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby; and (3) a copy of the certificate of incorporation of the Lessee and the Guarantor, certified by the Secretary of State of the State of Minnesota in the case of the 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 the Lessee and the Guarantor, certified by the Secretary or Assistant Secretary of the 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 the 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 Refinancing Date, as to the due incorporation and good standing of the Lessee or the Guarantor (as the case may be) in such state. (d) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received a certificate signed by an authorized officer of the Lessee (and, with respect to the matters set forth in clauses (4) and (5) below, of the Guarantor), dated the Refinancing Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Original Lease and has a current, valid certificate of airworthiness; (2) the FAA Bill of Sale, the Original Lease and the Original Indenture have been duly recorded, and the Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49, United States Code, relating to aviation (the "FEDERAL AVIATION ACT"); (3) the Aircraft has been registered with the FAA in the name of the Owner Trustee and the Lessee has authority to operate the Aircraft; -8- 8 (4) the representations and warranties contained herein of the Lessee and the Guarantor are correct as though made on and as of the Refinancing Date, except to the extent that such representations and warranties (other than those contained in clause (v) of Section 8(d)) relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (5) there has been no material adverse change in the financial condition of the Guarantor and its subsidiaries, taken as a whole, since December 31, 1995. (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement, the Indenture, the PA Amendment No. 1, 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 and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary or an Assistant Secretary of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Refinancing 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). (f) The Pass Through Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement, the PA Amendment No. 1 and any other documents to be executed on behalf -9- 9 of the Owner Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the 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; (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 Refinancing Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Refinancing 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). (g) The Pass Through Trustee and the Owner Trustee each shall have received a certificate signed by an authorized officer of the Owner Participant, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Refinancing 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). (h) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an independent insurance broker's report as to the due compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (i) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for the Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal department, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee and the Owner Participant each shall have received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. -10- 10 (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form and substance satisfactory to each of them. (l) The Pass Through Trustee and the Owner Trustee each shall have received an opinion addressed to it from White & Case, special counsel for the Owner Participant, and an opinion addressed to it from corporate counsel to the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee shall have received an opinion of White & Case, special counsel for the Liquidity Provider, and in-house German counsel for the Liquidity Provider, in form and substance satisfactory to the Pass Through Trustee. (n) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The 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 Refinancing Secured Certificates to be purchased from the Owner Trustee. (p) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustees to make the payments described in Section l(a)(ii) or for the Owner Trustee or the Owner Participant to participate in the transactions contemplated by this Agreement on the Refinancing Date. (q) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee or the Guarantor which are required in connection with the Pass Through Trustee's making of the payments described in Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Refinancing Date shall have been duly obtained. (r) The Lessee and the Owner Participant shall each have executed and delivered to the other the TIA Amendment No. 1. Promptly following the recording of the Lease Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of the Lease Amendment No. 1 and the Indenture. -11- 11 SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in the transactions contemplated by this Agreement and to execute and deliver each of the Pass Through Trust Agreements and the PA Amendment No. 1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion referred to in subsections (j) through (n) of Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter from counsel rendering such opinion authorizing the Lessee and the Guarantor to rely on such opinion as if it were addressed to the Lessee and the Guarantor, (ii) each certificate referred to in subsections (e) through (g) of Section 3, (iii) executed counterparts or conformed copies of the TIA Amendment No. 1, and (iv) such other documents and evidence with respect to each other party hereto as the Lessee, the Guarantor or their counsel 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) The respective obligations of each of the Lessee, the Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Pass Through Trustee are correct as though made on and as of the Refinancing 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), (ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) 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. SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Indenture. The Lessee and the Guarantor, by execution and delivery hereof, consent to such execution and delivery of the Indenture. The Indenture shall be effective as of the Refinancing Date. SECTION 6. AMENDMENT OF THE ORIGINAL LEASE.. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, by execution and delivery hereof, consent to the amendment to the Original Lease effected by, and request and instruct the Owner Trustee to execute and deliver, the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1 shall be effective as provided therein. -12- 12 SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the execution and delivery of the PA Amendment No. 1 by each of the parties thereto, the Original Participation Agreement shall be amended as set forth in the PA Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall be a party thereto from and after the Refinancing Date to the extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing Date. SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) each of the 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 on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under (i) in the case of the Lessee, this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 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; (b) the 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; (c) the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, and the performance of the obligations of the Lessee or the Guarantor (as the case may be) under this Agreement, the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement and each other Operative Document to which the Lessee or the -13- 13 Guarantor (as the case may be) is a party, have been duly authorized by all necessary corporate action on the part of the 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 the 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 the Lessee or the Guarantor (as the case may be) or the certificate of incorporation or by-laws of the 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 the Lessee or the Guarantor (as the case may be) under, any indenture, mortgage, contract or other agreement to which the 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; (d) neither the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 or any other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, nor the performance of the obligations of the Lessee or the Guarantor (as the case may be) hereunder or under the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement or the other Operative Documents to which the Lessee or the Guarantor (as the case may be) is a party, nor the consummation by the Lessee or the Guarantor (as the case may be) 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 in respect of, the Department of Transportation, the FAA, or any other federal, state or foreign governmental authority having jurisdiction, other than (i) 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, (ii) 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, (iii) the consents, approvals, notices, registrations and other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement, (iv) the registrations and filings referred to in Section 8(f), and (v) 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 -14- 14 effect on the condition (financial or otherwise), business or properties of the Guarantor and its subsidiaries considered as one enterprise; (e) this Agreement constitutes, and each of the Participation Agreement, the Pass Through Trust Agreements, the Tax Indemnity Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment No. 1 and the Lease Amendment No. 1 shall have been executed and delivered by each of the parties thereto, will constitute, the legal, valid and binding obligations of the Lessee or the Guarantor (as the case may be) enforceable against the 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, 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; (f) except for the filings and registrations referred to in Section 7(a)(vi) of the Participation Agreement, such filings and registrations as shall have been made or effected subsequent thereto and the filing for recording pursuant to the Federal Aviation Act of the Indenture and the Lease Amendment No. 1, 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 the 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 other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease and the Lease Amendment No. 1 (to the extent the Lease constitutes chattel paper) and the filing of continuation statements at periodic intervals with respect to the Uniform Commercial Code financing statements in effect on the Refinancing Date covering the security interests created by the Original Indenture or describing the Lease as a lease; (g) neither the 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; -15- 15 (h) neither the Lessee nor the Guarantor is an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (i) 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; and (j) 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. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the parties below represents, warrants and covenants to each of the other parties to this Agreement and to the Liquidity Provider as follows: (a) The Indenture Trustee in its individual capacity represents, warrants and covenants that: (1) 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 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 PA Amendment No. 1, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party; (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, the PA Amendment No. 1 and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party 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; (3) this Agreement constitutes, and the Participation Agreement, when the PA Amendment No. 1 has been executed and delivered by the -16- 16 Indenture Trustee, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) 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 (5) there are no Indenture Trustee Liens on the Aircraft or any portion of the Trust Estate. (b) The Owner Trustee, in its individual capacity (except as provided in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7) and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and (11) below) as Owner Trustee, represents and warrants that: (1) 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, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver the Trust Agreement, has the corporate power and authority to carry out the terms of the Trust Agreement, and has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of the Trust Agreement by the Owner Participant), as Owner Trustee, and to the extent expressly provided herein or therein, in its individual capacity, the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Refinancing Secured Certificates, the Lease, the PA Amendment No. 1 and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) 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 and (assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant) this Agreement constitutes, and each of the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Indenture, when entered -17- 17 into, and the Lease, when the Lease Amendment No. 1 shall have been entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, enforceable against it in its individual capacity or as Owner Trustee, as the case may be, in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, the Owner Trustee has duly authorized, and on the Refinancing Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Refinancing Secured Certificates pursuant to the terms and provisions hereof and of the Indenture, and each Refinancing Secured Certificate on the Refinancing Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Refinancing Secured Certificate and the Indenture; (4) neither the execution and delivery by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, the Original Participation Agreement, the PA Amendment No. 1, the Trust Agreement, the Original Indenture, the Indenture, the Original Lease, the Lease Amendment No. 1, the Refinancing Secured Certificates or any other Operative Document to which it is a party, 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 hereby or 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 hereof and 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; (5) 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 -18- 18 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 Indenture, the Lease, the Refinancing 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 8(d); (6) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (7) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (8) 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 redemption of the Original Secured Certificates or the issuance of the Refinancing Secured Certificates, or the execution and delivery in its individual capacity or as Owner Trustee, as the -19- 19 case may be, of any of the instruments referred to in clauses (1), (2), (3) and (4) 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 of Utah, 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; (9) 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 (1), (2), (3) and (4) above; (10) 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; (11) the Owner Trustee has not, in its individual capacity or as Owner Trustee, directly or indirectly offered any Refinancing 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, the Original Loan Participants 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 Refinancing 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; and (12) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) 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, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Original Participation Agreement, the Tax Indemnity Agreement, the PA Amendment No. 1, the TIA Amendment No. -20- 20 1; this Agreement has been duly authorized, executed and delivered by it; and this Agreement constitutes, and the Participation Agreement when the PA Amendment No. 1 shall have been entered into, and the Tax Indemnity Agreement when the TIA Amendment No. 1 shall have been entered into, will constitute, the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their 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; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or 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, 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; (3) 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 or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the TIA Amendment No. 1 and the PA Amendment No. 1; (4) there are no pending or, to its knowledge, threatened actions or proceedings against the Owner Participant before any court or administrative agency or arbitrator which, if determined adversely to the Owner Participant, would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the PA Amendment No. 1, or the TIA Amendment No. 1; (5) 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 refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Refinancing -21- 21 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 was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Refinancing 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 that 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 Indenture, (D) which the Owner Participant 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). (d) The Pass Through Trustee represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements, the Intercreditor Agreement and the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery of the PA Amendment No. 1), the Participation Agreement, will constitute, the legal, valid and binding obligations of the Pass Through Trustee enforceable against it -22- 22 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; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the performance by the Pass Through Trustee of the Participation Agreement, the purchase by the Pass Through Trustee of the Refinancing 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; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby or by the Participation Agreement, 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; (5) 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, the Intercreditor Agreement or the Participation 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 Refinancing 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 -23- 23 that the trusts created by the Pass Through Trust Agreements will not be taxable as corporations, but, rather, each will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Code, such trusts will not be subject to any Taxes imposed by the Commonwealth of Massachusetts or any political subdivision thereof; (6) 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 Participation Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) 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, the Lessee or the Guarantor. (e) The Subordination Agent represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement and, when the PA Amendment No. 1 has been executed and delivered by each of the parties thereto, the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent each of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and -24- 24 (upon execution and delivery by the Subordination Agent of the PA Amendment No. 1) the Participation Agreement, will 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; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the Participation Agreement, or the performance by the Subordination Agent of the Participation 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; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby or by the Participation Agreement requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement, the PA Amendment No. 1 or the Participation 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 Refinancing 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 -25- 25 connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (6) 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 PA Amendment No. 1, the Participation Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter, the Lessee or the Guarantor. SECTION 10. NOTICES. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and any such notice shall become effective upon being deposited in the United States mail, with proper postage for first-class registered or certified mail prepaid, or when delivered personally or, if promptly confirmed by mail as provided above, when dispatched by facsimile or other written telecommunication, addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement. SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Indenture Trustee and the Original Loan Participants in connection with the transactions contemplated by this 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) shall be paid promptly by the Owner Participant, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Refinancing Secured Certificates issued under the Indenture of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee and the -26- 26 Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for the Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special counsel for the Original Loan Participants; (2) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that Refinancing Expenses are in excess of 1.1394% of Lessor's Cost, the Lessee shall pay directly any and all Refinancing Expenses which are in excess of 1.1394% of Lessor's Cost. In the event that the transactions contemplated by this Section 11 and the agreements referred to herein are not consummated, the Lessee shall bear and pay all costs, expenses and fees referred to in this Section 11. SECTION 12. 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. SECTION 13. MISCELLANEOUS. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations, warranties and agreements herein of the Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee, and the Lessee's, the Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the Subordination Agent's and the Pass Through Trustee's obligations under any and all thereof, shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. (b) This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each -27- 27 counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only 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 each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and, subject to the terms of the Participation 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 Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject to the provisions of the Participation Agreement, its successors and permitted assigns. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. No purchaser or holder of any Refinancing Secured Certificates shall be deemed to be a successor or assign of any holder of the Original Secured Certificates. SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -28- 28 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. NORTHWEST AIRLINES, INC., Lessee By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -29- 29 NORTHWEST AIRLINES CORPORATION, Guarantor By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -30- 30 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: __________________________________ Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Facsimile: (801) 246-5053 -31- 31 [ ] Owner Participant By: __________________________________________________ Title: Address: Attn: Facsimile: -32- 32 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: _____________________________________________ Title: Address: Two International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Facsimile: (617) 664-5371 -33- 33 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: _____________________________________________ Title: Address: c/o State Street Bank and Trust Company Two International Place, 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Facsimile: (617) 664-5371 -34- 34 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee, Indenture Trustee By: ___________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -35- 35 SCHEDULE I TO REFUNDING AGREEMENT PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1A dated as of the Closing Date. 2. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1B dated as of the Closing Date. 36 SCHEDULE II TO REFUNDING AGREEMENT REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
Interest Rate Purchaser and Maturity --------- ------------- Northwest Airlines Principal Purchase Pass Through Trust Amount Price --------- -------- 1996-1A [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1B [ _ ]% Refinancing Secured Certificates due [ ] $[ ]
EX-4.E1 35 TRUST AGREEMENT-1996 A 1 TRUST AGREEMENT [NW 1996 A] This TRUST AGREEMENT [NW 1996 A] dated as of February 27, 1996 between [____________________________], a [_____________] corporation (the "ORIGINAL OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); W I T N E S S E T H: ARTICLE I DEFINITIONS AND TERMS SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall otherwise require and except as contained in this Section 1.01, the capitalized terms used herein shall have the respective meanings assigned thereto in the Lease (as hereinafter defined) for all purposes hereof. All definitions contained in this Section 1.01 shall be equally applicable to both the singular and plural forms of the terms defined. For all purposes of this Trust Agreement the following terms shall have the following meanings: "Excluded Payments" has the meaning ascribed to such term in the Trust Indenture. "Indenture Event of Default" has the meaning which the term "Event of Default" has in the Trust Indenture. "Lease" means that certain Lease Agreement [NW 1996 A], to be dated as of the date hereof, and to be entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of this Trust Agreement, as said Lease Agreement may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Trust Agreement. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Event of Default" has the meaning which the term "Event of Default" has in the Lease. "Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns. 2 "Owner Participant" means the Original Owner Participant and each Subsequent Owner Participant to the extent that the same shall, at the relevant time, have an Ownership Interest. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by this Trust Agreement, which percentage shall be 100%. "Participation Agreement" has the meaning ascribed to such term in the Lease. "Replacement Airframe" has the meaning ascribed to such term in the Trust Indenture. "Replacement Engine" has the meaning ascribed to such term in the Trust Indenture. "Subsequent Owner Participant" means any corporation to which the Original Owner Participant or any transferee from the Original Owner Participant or any Subsequent Owner Participant shall have transferred at any time after the Delivery Date all of the undivided right, title and interest originally held by the Original Owner Participant in this Trust Agreement, the Trust Estate and the Participation Agreement, to the extent permitted by Section 8.01 of this Trust Agreement and Section 8 of the Participation Agreement, provided that any such transfer: (i) shall be effected by a written agreement, in form and substance reasonably satisfactory to the Owner Trustee in its individual capacity, among such transferee, its transferor and the Owner Trustee, which shall provide that such transferee thereby becomes a party to, and beneficiary of, this Trust Agreement and an Owner Participant for all purposes hereof and that such transferee assumes all of the obligations of its transferor under this Trust Agreement; and (ii) so long as the Lease shall be in effect or any Secured Certificates remain unpaid, such transferee and its transferor shall have complied with all of the terms of Section 8(n) of the Participation Agreement. "Trust Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant, the Loan Participants or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its individual capacity, or to the Loan Participants or any other holder of a Secured Certificate, or to any of their respective directors, officers, employees, servants and agents, pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. "Trust Indenture Estate" has the meaning ascribed to such term in the Trust Indenture. -2- 3 "Trust Office" shall mean the principal corporate trust office of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or the principal corporate trust office of any successor Owner Trustee. "Trust Supplement" means a supplement to the Trust Indenture and to this Trust Agreement in substantially the form of Exhibit A to the Trust Indenture which shall particularly describe the Aircraft, and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Trust Agreement. ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS; DECLARATION OF TRUST SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant hereby authorizes and directs the Owner Trustee to execute and deliver the Operative Documents and any other agreements, instruments or documents to which the Owner Trustee is a party in the respective forms thereof in which delivered from time to time by the Owner Participant to the Owner Trustee for execution and delivery and, subject to the terms hereof, to perform its duties and, upon instructions from the Owner Participant, exercise its rights under said Operative Documents in accordance with the terms thereof. SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the Owner Participant, subject, however, to the provisions of and the Lien created by the Trust Indenture and to the provisions of the Lease. ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF SECURED CERTIFICATES SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, on the Delivery Date, subject to due compliance with the terms of Section 3.02 hereof: (a) purchase the Aircraft pursuant to the Participation Agreement and the Bill of Sale; (b) accept from Lessee the delivery of the Bill of Sale and the FAA Bill of Sale; -3- 4 (c) cause the Aircraft to be leased to Lessee under the Lease, and in furtherance thereof execute and deliver a Lease Supplement covering the Aircraft; (d) execute and deliver the Trust Supplement covering the Aircraft; (e) issue to the Loan Participants Secured Certificates in the amounts and otherwise as provided in Section 1(a) of the Participation Agreement; (f) execute and deliver the financing statements referred to in Section 4(a)(vi) of the Participation Agreement, together with all other agreements, documents and instruments referred to in Section 4 of the Participation Agreement to which the Owner Trustee is a party; and (g) effect the registration of the Aircraft in the name of the Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of Sale; (ii) an application for registration of the Aircraft in the name of the Owner Trustee (including without limitation an affidavit from the Owner Trustee in compliance with the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement. SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation of the Owner Trustee to take the action required by Section 3.01 hereof with respect to the Aircraft shall be subject to the following conditions precedent: (a) the Original Owner Participant shall have made the full amount of its Commitment set forth in Schedule II of the Participation Agreement available to the Owner Trustee, in immediately available funds, in accordance with Section 1 of the Participation Agreement; and (b) the terms and conditions of Section 4 of the Participation Agreement, insofar as they relate to the Aircraft, shall have been complied with in a manner satisfactory to the Original Owner Participant and the Owner Trustee. SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, take the actions specified to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in accordance with the provisions of such Section 8(x). SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR REPLACEMENT ENGINES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of a Replacement Airframe and Replacement Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a Replacement Engine being substituted pursuant to -4- 5 Section 10(b) of the Lease, subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease, as the case may be: (a) to the extent not previously accomplished by a prior authorization, authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees of Lessee) to accept delivery of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engines; (b) accept from Lessee or other vendor of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine a bill of sale or bills of sale (if tendered), and the invoice, if any, with respect to the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine being furnished pursuant to Section 10(a) or (b) of the Lease; (c) in the case of a Replacement Airframe, make application to the Federal Aviation Administration for the registration in the name of the Owner Trustee of the Aircraft of which such Replacement Airframe is a part; (d) execute and deliver a Lease Supplement and a Trust Supplement covering (i) the Aircraft of which such Replacement Airframe is part or (ii) such Replacement Engine, as the case may be; (e) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) and to the Airframe and Engines (if any) or the Engine being replaced to Lessee; (f) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Airframe and Engines or engines (if any) or the Engine or engine being replaced from the lien created under the Trust Indenture and release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such replaced Airframe and Engines, if any, or Engine) from the assignment and pledge under the Trust Indenture; and (g) upon instructions from the Owner Participant, take such further action as may be contemplated by clauses (A) and (B) of the third paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of Section 10(b) of the Lease, as the case may be. SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In the event of the substitution of a Replacement Airframe for the Airframe or the substitution of a Replacement Engine for any Engine or engine, all provisions of this Trust Agreement relating to such replaced Airframe or Engine or engine shall be applicable to such Replacement Airframe or Replacement Engine with the same force and effect as if such Replacement Airframe or Replacement Engine were the same airframe or engine as the Airframe or Engine being replaced but for the Event of Loss with respect to such Airframe or Engine. -5- 6 SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of an engine being transferred to the Owner Trustee pursuant to Section 5(b) of the Lease, subject to due compliance with the terms of such Section 5(b): (a) accept from Lessee the bill of sale with respect to such engine contemplated by such Section 5(b) (if tendered); (b) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) and to an Engine to Lessee as contemplated by such Section 5(b); and (c) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Engine being transferred to Lessee pursuant to such Section 5(b) from the lien of the Trust Indenture and to release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such Engine) from the assignment and pledge under the Trust Indenture. ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture Trustee. Until the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with the provisions of Article III of the Trust Indenture. (b) Payments to Owner Trustee; Other Parties. After the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, any payment of the type referred to in Section 4.01(a) hereof (other than Excluded Payments) received by the Owner Trustee, any payments received from the Indenture Trustee other than as specified in Section 4.01(d) hereof and any other amount received as part of the Trust Estate and for the application or distribution of which no provision is made herein, shall be distributed forthwith upon receipt by the Owner Trustee in the following order of priority: first, so much of such payment as shall be required to reimburse the Owner Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof shall be retained by the Owner Trustee; second, so much of the remainder for which provision as to the application thereof is contained in the Lease or any of the other Operative Documents -6- 7 shall be applied and distributed in accordance with the terms of the Lease or such other Operative Document; and third, the balance, if any, shall be paid to the Owner Participant. (c) Certain Distributions to Owner Participant. All amounts from time to time distributable by the Indenture Trustee to the Owner Participant pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be distributed by the Owner Trustee to the Owner Participant in accordance with the provisions of Article III of the Trust Indenture. (d) Excluded Payments. Any Excluded Payments received by the Owner Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded Payments are payable under the provisions of the Participation Agreement, the Tax Indemnity Agreement or the Lease. SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make distributions or cause distributions to be made to the Owner Participant pursuant to this Article IV by transferring by wire transfer the amount to be distributed to such account or accounts of the Owner Participant as the Owner Participant may designate from time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner Trustee will, if so requested by the Owner Participant in writing, pay any or all amounts payable to the Owner Participant pursuant to this Article IV either (i) by crediting such amount or amounts to an account or accounts maintained by the Owner Participant with the Owner Trustee in its individual capacity in immediately available funds, (ii) by payment at the Trust Office of the Owner Trustee, in immediately available funds, or (iii) by mailing an official bank check or checks in such amount or amounts payable to the Owner Participant at such address as the Owner Participant shall have designated in writing to the Owner Trustee. ARTICLE V DUTIES OF THE OWNER TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall have knowledge of a Lease Event of Default or Indenture Event of Default (or an event which with the passage of time or the giving of notice or both would constitute a Lease Event of Default or an Indenture Event of Default) the Owner Trustee shall give to the Owner Participant prompt telephonic or telecopy notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event. Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain from taking such action, not -7- 8 inconsistent with the provisions of the Trust Indenture, with respect to such Lease Event of Default, Indenture Event of Default or other event as the Owner Trustee shall be directed in writing by the Owner Participant. If the Owner Trustee shall not have received instructions as above provided within twenty (20) days after the mailing of such notice to the Owner Participant, the Owner Trustee until instructed otherwise in accordance with the preceding sentence may, but shall be under no duty to, take or refrain from taking such action with respect to such Lease Event of Default, Indenture Event of Default or other event, not inconsistent with the provisions of the Trust Indenture, as it shall deem advisable in the best interests of the Owner Participant. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by an officer of FSBU in the Corporate Trust Department, the Owner Trustee shall not be deemed to have knowledge of a Lease Event of Default, Indenture Event of Default or other event referred to in this Section 5.01 unless notified in writing by the Indenture Trustee, the Owner Participant or Lessee. SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of Sections 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of the Owner Participant, the Owner Trustee will take such of the following actions, not inconsistent with the provisions of the Trust Indenture, as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder or under any of the Operative Documents to which the Owner Trustee is a party or in respect of all or any part of the Trust Estate as shall be specified in such instructions (including entering into agreements referred to in clause (i) of the definition of "Subsequent Owner Participant"); (ii) take such action to preserve or protect the Trust Estate (including the discharge of Liens) as may be specified in such instructions; (iii) approve as satisfactory to it all matters required by the terms of the Lease or the other Operative Documents to be satisfactory to the Owner Trustee, it being understood that without written instructions of the Owner Participant, the Owner Trustee shall not approve any such matter as satisfactory to it (it being understood that the provisions of Sections 3.03, 3.04 and 3.06 hereof do not constitute instructions by the Owner Participant for the Owner Trustee to approve of or consent to the matters to be approved of or consented to by the Owner Trustee in the sections of the Lease referred to in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of Lessee under the Operative Documents, after the expiration or earlier termination of the Lease, deliver the Aircraft to the Owner Participant in accordance with such instructions, convey all of the Owner Trustee's right, title and interest in and to the Aircraft for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or net lease the Aircraft on such terms and to such lessee or lessees as shall be designated in such instructions. SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be required to take any action under Section 5.01 (other than the giving of the notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have been indemnified by the Owner Participant, in manner and form satisfactory to the Owner Trustee, against any liability, cost or expense (including reasonable counsel fees and disbursements) which may be incurred in connection therewith; and, if the Owner Participant shall have directed the Owner Trustee to take any such action or refrain from taking any action, the Owner Participant agrees to furnish -8- 9 such indemnity as shall be required and, in addition, to the extent not otherwise paid pursuant to the provisions of the Lease or of the Participation Agreement, to pay the reasonable compensation of the Owner Trustee for the services performed or to be performed by it pursuant to such direction and any fees and disbursements of counsel or agents employed by the Owner Trustee in connection therewith. The Owner Trustee shall not be required to take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably determine, or shall have been advised by counsel, that such action is contrary to the terms of any of the Operative Documents to which the Owner Trustee is a party, or is otherwise contrary to law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with any of the Operative Documents to which the Owner Trustee is a party, except as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, or (to the extent not inconsistent with the provisions of the Trust Indenture) as expressly provided by the terms hereof or in written instructions from the Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or obligations shall be read into this Trust Agreement against the Owner Trustee. FSBU agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof) promptly take such action as may be necessary to duly discharge and satisfy in full all Lessor Liens which it is required to discharge pursuant to Section 8(h) of the Participation Agreement and otherwise comply with the terms of said Section binding on it. SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to the contrary notwithstanding, the Owner Trustee shall comply with the provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of special counsel for the Owner Trustee, of all the applicable conditions precedent specified in Section 3.02 hereof and in Section 4 of the Participation Agreement. SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to, and the Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate except (i) as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, (ii) as expressly provided by the terms hereof, or (iii) as expressly provided in written instructions from the Owner Participant pursuant to Section 5.01 or 5.02 hereof. -9- 10 ARTICLE VI THE OWNER TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts hereby created and agrees to perform the same but only upon the terms hereof applicable to it. The Owner Trustee also agrees to receive and disburse all monies received by it constituting part of the Trust Estate upon the terms hereof. FSBU shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence, (b) for performance of the terms of the last sentence of Section 5.04 hereof, (c) for its or the Owner Trustee's failure to use ordinary care to disburse funds and (d) for liabilities that may result from the inaccuracy of any representation or warranty of it (or from the failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation Agreement. SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with written instructions furnished pursuant to Section 5.02 hereof and except as provided in, and without limiting the generality of, Section 5.04 hereof and the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU shall have any duty (i) to see to any recording or filing of any Operative Document or of any supplement to any thereof or to see to the maintenance of any such recording or filing or any other filing of reports with the Federal Aviation Administration or other governmental agencies, except that FSBU, in its individual capacity, shall comply with the reporting requirements set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall, to the extent that information for that purpose is supplied by Lessee pursuant to any of the Operative Documents, complete and timely submit (and furnish the Owner Participant with a copy of) any and all reports relating to the Aircraft which may from time to time be required by the Federal Aviation Administration or any government or governmental authority having jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, other than to forward to the Owner Participant copies of all reports and other written information which the Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against any part of the Trust Indenture Estate or the Trust Estate, except as provided in Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and records with respect to the Aircraft at any time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease or any other Operative Document. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, -10- 11 MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity warrants that on the Delivery Date the Owner Trustee shall have received whatever title was conveyed to it by Lessee and that the Aircraft shall during the Term be free of Lessor Liens attributable to it, or (b) any representation or warranty as to the validity, legality or enforceability of this Trust Agreement or any Operative Document to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof except to the extent that any such statement is expressly made herein or therein as a representation by FSBU in its individual capacity or by the Owner Trustee and except that FSBU in its individual capacity hereby represents and warrants that this Trust Agreement has been, and (assuming due authorization, execution and delivery by the Original Owner Participant of this Trust Agreement) the Operative Documents to which it or the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by it or the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of itself or the Owner Trustee, as the case may be. SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as provided in Section 22 of the Lease, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law, and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The Owner Trustee shall incur no liability to anyone in acting in reliance upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Unless other evidence in respect thereof is specifically prescribed herein, any request, direction, order or demand of the Owner Participant or Lessee mentioned herein or in any of the Operative Documents to which the Owner Trustee is a party shall be sufficiently evidenced by written instruments signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director and in the name of the Owner Participant or Lessee, as the case may be. The Owner Trustee may accept a copy of a resolution of the Board of Directors or Executive Committee of Lessee, certified by the secretary or any assistant secretary of Lessee as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or Committee and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Owner Trustee may for all purposes hereof rely on a certificate signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it -11- 12 in good faith in reliance thereon. In the administration of trusts hereunder, the Owner Trustee may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may, at the expense of the Trust Estate, consult with counsel, accountants and other skilled persons to be selected and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such agent, attorney, counsel, accountant or other skilled person appointed by it with due care hereunder. SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder, the Owner Trustee acts solely as trustee and not in its individual capacity except as otherwise expressly provided herein; and, subject to the terms of the Participation Agreement and the Trust Indenture, all persons, other than the Owner Participant, as provided herein, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Trust Estate for payment or satisfaction thereof. SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the Owner Participant or (subject to the provisions of the Trust Indenture) the Trust Estate for any fee as compensation for its services hereunder; provided, however, that the Owner Trustee shall have a lien upon the Trust Estate (subject, however, to the lien of the Trust Indenture) for any such fee not paid by Lessee as contemplated by the last paragraph of Section 7(c) of the Participation Agreement. SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all monies under this Trust Agreement or any agreement contemplated hereby. The Owner Participant shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Owner Participant. The Owner Trustee shall be responsible for causing to be prepared, at the request and expense of the Owner Participant, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. The Owner Participant or the Owner Trustee, as the case may be, upon request, will furnish the Owner Trustee or the Owner Participant, as the case may be, with all such information as may be reasonably required from the Owner Participant or the Owner Trustee, as the case may be, in connection with the preparation of such income tax returns. ARTICLE VII INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner Participant hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and hereby indemnify, protect, save and keep harmless FSBU in its individual capacity and its successors, assigns, legal representatives, -12- 13 agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its individual capacity on or measured by any compensation received by FSBU in its individual capacity for its services hereunder or in connection with the transactions contemplated by the Operative Documents), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and including without limitation any liability of an owner, any strict liability and any liability without fault) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against FSBU in its individual capacity (whether or not also indemnified against by Lessee under the Lease or under the Participation Agreement or also indemnified against by any other person but only to the extent not otherwise paid or reimbursed by Lessee or such other person) in any way relating to or arising out of this Trust Agreement or any of the Operative Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of the Owner Trustee or FSBU in its individual capacity hereunder, except (a) in the case of willful misconduct or gross negligence on the part of the Owner Trustee or FSBU in its individual capacity in the performance or non-performance of its duties hereunder or (b) those resulting from the inaccuracy of any representation or warranty of FSBU in its individual capacity (or from the failure of FSBU in its individual capacity to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture or, with respect to representations or warranties of FSBU in its individual capacity only, in Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the Participation Agreement or in any of the other Operative Documents or (c) as may result from a breach by FSBU in its individual capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in the case of the failure to use ordinary care on the part of the Owner Trustee or FSBU in its individual capacity in the disbursement of funds. The indemnities contained in this Section 7.01 extend to FSBU only in its individual capacity and shall not be construed as indemnities of the Trust Indenture Estate or the Trust Estate (except to the extent, if any, that FSBU in its individual capacity has been reimbursed by the Trust Indenture Estate or the Trust Estate for amounts covered by the indemnities contained in this Section 7.01). The indemnities contained in this Section 7.01 shall survive the termination of this Trust Agreement. In addition, if necessary, FSBU in its individual capacity shall be entitled to indemnification from the Trust Estate, subject to the Lien of the Trust Indenture, for any liability, obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee, the Owner Participant or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same FSBU in its individual capacity shall have a Lien on the Trust Estate, subject to the Lien of the Trust Indenture, which shall be prior to any interest therein of the Owner Participant. The payor of any indemnity under this Article VII shall be subrogated to any right of the person indemnified in respect of the matter as to which such indemnity was paid. -13- 14 ARTICLE VIII TRANSFER OF THE OWNER PARTICIPANT'S INTEREST SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n) of the Participation Agreement shall (with the same force and effect as if set forth in full, mutatis mutandis, in this Section 8.01) be applicable to any assignment, conveyance or other transfer by any Owner Participant of its right, title or interest in and to the Participation Agreement, the Trust Estate or this Trust Agreement. ARTICLE IX SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the Participation Agreement and (ii) may resign at any time without cause by giving at least sixty (60) days' prior written notice to the Owner Participant, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such resignation to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In addition, the Owner Participant may at any time remove the Owner Trustee without cause by a notice in writing delivered to the Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such removal to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or removal of the Owner Trustee, the Owner Participant may appoint a successor Owner Trustee by an instrument signed by the Owner Participant. If a successor Owner Trustee shall not have been appointed within thirty (30) days after such notice of resignation or removal, the Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor shall have been appointed as above provided. Any successor Owner Trustee so appointed by such court shall immediately and without further act be superseded by any successor Owner Trustee appointed as above provided. (b) Execution and Delivery of Documents, etc. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee and the Owner Participant an instrument accepting such appointment, and thereupon such successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts hereunder with like effect as if originally named the Owner Trustee herein; but nevertheless, upon the written request of such successor Owner Trustee, such -14- 15 predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to such successor Owner Trustee all monies or other property then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will execute such documents as are provided to it by such successor Owner Trustee and will take such further actions as are requested of it by such successor Owner Trustee as are reasonably required to cause registration of the Aircraft included in the Trust Estate to be transferred upon the records of the Federal Aviation Administration, or other governmental authority having jurisdiction, into the name of the successor Owner Trustee. (c) Qualification. Any successor Owner Trustee, however appointed, shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement and shall also be a bank or trust company organized under the laws of the United States or any state thereof having a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. (d) Merger, etc. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee may be transferred, shall, subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without further act. SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee shall have been directed to do so by the Owner Participant, the Owner Trustee and the Owner Participant shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement) approved by the Owner Trustee and the Owner Participant, either to act as co-trustee, jointly with the Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as an "ADDITIONAL trustee"). In the event an Indenture Event of Default not arising from a Lease Event of Default shall occur and be continuing, the Owner Trustee may act under the foregoing provisions of this Section 9.02 without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 9.02 in such contingency. Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: -15- 16 (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; (E) the Owner Participant, at any time, by an instrument in writing may remove any such additional trustee unless such additional trustee was appointed by the Owner Trustee without the concurrence of the Owner Participant during the occurrence of an Indenture Event of Default not arising from a Lease Event of Default, in which case the Owner Trustee shall have the power to remove any such additional trustee without the concurrence of the Owner Participant, and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact for it in such connection in such contingency; and (F) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, the Trust Indenture or affect the interests of the Indenture Trustee or the holders of the Secured Certificates in the Trust Indenture Estate. ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS SECTION 10.01. SUPPLEMENTS AND AMENDMENTS. (a) Supplements and Amendments. This Trust Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Owner Trustee and the Owner Participant. Subject to Section 10.02 hereof and the first sentence of Section 10 of the Participation Agreement, the Owner Trustee will execute any amendment, supplement or other -16- 17 modification of this Trust Agreement or of any other Operative Document to which the Owner Trustee is a party which it is requested to execute by the Owner Participant, except that the Owner Trustee shall not execute any such amendment, supplement or other modification which, by the express provisions of any of the above documents, requires the consent of any other party unless such consent shall have been obtained. (b) Delivery of Amendments and Supplements to Certain Parties. A signed copy of each amendment or supplement referred to in Section 10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each holder of a Secured Certificate. SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to executing any document required to be executed by it pursuant to the terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its counsel to the effect that the execution of such document is authorized hereunder. If in the opinion of the Owner Trustee any such document adversely affects any right, duty, immunity or indemnity in favor of the Owner Trustee hereunder or under any other Operative Document to which the Owner Trustee is a party, the Owner Trustee may in its discretion decline to execute such document. SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be necessary for any written request furnished pursuant to Section 10.01 hereof to specify the particular form of the proposed documents to be executed pursuant to such Section, but it shall be sufficient if such request shall indicate the substance thereof. SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the execution by the Owner Trustee of any document entered into pursuant to Section 10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof to the Owner Participant, but the failure of the Owner Trustee to mail such conformed copy shall not impair or affect the validity of such document. SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be required to enable the Owner Trustee to enter into the Lease Supplement covering the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and Section 3.01 hereof. ARTICLE XI MISCELLANEOUS SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement and the trusts created hereby shall be of no further force or effect upon the earlier of (a) both the final discharge of the Trust Indenture pursuant to Section 10.01 thereof and the sale or other final disposition by the Owner Trustee of all property constituting part of the Trust Estate and the final distribution by the Owner Trustee of all monies or other property or -17- 18 proceeds constituting part of the Trust Estate in accordance with Article IV hereof, provided that at such time Lessee shall have fully complied with all of the terms of the Lease and the Participation Agreement or (b) twenty-one years less one day after the death of the last survivor of all of the descendants of the grandparents of David Rockefeller living on the date of the earliest execution of this Trust Agreement by any party hereto; otherwise this Trust Agreement and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE. The Owner Participant shall not have legal title to any part of the Trust Estate. No transfer, by operation of law or otherwise, of any right, title and interest of the Owner Participant in and to the Trust Estate hereunder shall operate to terminate this Trust Agreement or the trusts hereunder or entitle any successors or transferees of the Owner Participant to an accounting or to the transfer of legal title to any part of the Trust Estate. SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment, sale, transfer or other conveyance of its interest in the Aircraft by the Owner Trustee made pursuant to the terms hereof or of the Lease or the Participation Agreement shall bind the Owner Participant and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Owner Participant in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY. Except for the terms of Section 8(n) of the Participation Agreement incorporated in Article VIII hereof and except as otherwise provided in Articles IX and X hereof, nothing herein, whether expressed or implied, shall be construed to give any Person other than the Owner Trustee and the Owner Participant any legal or equitable right, remedy or claim under or in respect of this Trust Agreement; but this Trust Agreement shall be held to be for the sole and exclusive benefit of the Owner Trustee and the Owner Participant. SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. (a) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 11.05(a). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.05(a), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the Owner Participant, to the respective addresses set forth below the signatures of such parties on the signature page of the Participation Agreement, or (B) if to a Subsequent Owner Participant, addressed to such Subsequent Owner Participant at such address as such -18- 19 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. (b) Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Trust Agreement, the Participation Agreement, 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 the Participation 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. SECTION 11.06. SEVERABILITY. Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.07. WAIVERS, ETC. No term or provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing entered into in compliance with the terms of Article X hereof; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. SECTION 11.08. COUNTERPARTS. This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.09. BINDING EFFECT, ETC. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII hereof, its assigns. Any request, notice, direction, consent, waiver or other instrument or action by the Owner Participant shall bind its successors and assigns. Any Owner Participant which shall cease to have any Ownership Interest shall thereupon cease to be a party hereto or an Owner Participant for any reason and shall have no further obligations hereunder. -19- 20 SECTION 11.10. HEADINGS; REFERENCES. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. -20- 21 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [Owner Participant] BY ___________________________________ Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION BY ___________________________________ Title: -21- EX-4.E2 36 TRUST INDENTURE-1996 A 1 AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 A] AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 A], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Owner Trustee under the Trust Agreement referred to below (together with its successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity, except as expressly stated herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE"). W I T N E S S E T H WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and the Owner Trustee have entered into the Trust Agreement whereby, among other things, (i) the Owner Trustee has established a certain trust for the use and benefit of the Owner Participant subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of, and with the priority of payment to, the holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has been authorized and directed to execute and deliver this Trust Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 A] dated as of February 27, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the Trust Agreement and Indenture Supplement [NW 1996 A] (the "SUPPLEMENT") dated February 29, 1996 to the Original Indenture, (iii) the Original Indenture and the Supplement were recorded by the Federal Aviation Administration on March 1, 1996 and were assigned Conveyance No. P05935 and (iv) the Lease Agreement [NW 1996 A] dated as of even date with the Original Indenture between the Owner Trustee and Lessee and the Lease Supplement No. 1 [NW 1996 A] were recorded by the Federal Aviation Administration on March 1, 1996 and were assigned Conveyance No. P05934 and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Loan Participants Secured Certificates (as defined in the Original Indenture); WHEREAS, the parties have agreed that subject to certain conditions, Lessee shall have the right to cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Secured Certificates issued to the Loan Participant pursuant to the Original Indenture shall be redeemed and new Secured Certificates (the "REFINANCING SECURED CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee); 2 WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Trust Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Refinancing Secured Certificates and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of all of the Owner Trustee's right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Certificate Holders, subject to Section 2.15 and Article III hereof; WHEREAS, all things have been done to make the Secured Certificates, when executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid, binding and enforceable obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Trust Indenture the valid, binding and legal obligation of the Owner Trustee for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened: -2- 3 GRANTING CLAUSE NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Secured Certificates from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions herein and in the Participation Agreement and the Secured Certificates contained, for the benefit of the Certificate Holders and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Certificate Holders by the Owner Trustee and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Secured Certificates by the holders thereof, and for other good and valuable consideration the receipt and adequacy whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors in trust and assigns, for the security and benefit of the Certificate Holders, a first priority security interest in and mortgage lien on all right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges, other than Excluded Payments (which collectively, excluding Excluded Payments but including all property hereafter specifically subjected to the Lien of this Trust Indenture by the Trust Agreement and Indenture Supplement or any mortgage supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire title as provided herein and in the Lease), all as more particularly described in the Trust Agreement and Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture; (2) the Lease and any Lease Supplement and all Rent thereunder (including, without limitation, all amounts of Interim Rent, Basic Rent, Supplemental Rent and payments of any kind thereunder (excluding any Excluded Payments)), and the Guarantee; (3) the Purchase Agreement (to the extent specified in the Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent and Agreement and the Bill of Sale; (4) all rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the lien of this Indenture; (5) all insurance and requisition proceeds with respect to the Aircraft, including but not limited to the insurance required under Section 11 of the Lease, but excluding insurance proceeds described in clauses (ii) and (iii) of the definition of Excluded Payments; -3- 4 (6) all rights of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under the Participation Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder, but excluding amounts described in clauses (i) and (v) of the definition of Excluded Payments; (7) all monies and securities from time to time deposited or required to be deposited with the Indenture Trustee pursuant to any terms of this Indenture or the Lease or required hereby or by the Lease to be held by the Indenture Trustee hereunder (other than Excluded Payments); and (8) all proceeds of the foregoing. BUT EXCLUDING from the foregoing and from the Trust Indenture Estate all Excluded Payments, and the right to enforce and collect the same, and SUBJECT TO all of the terms and conditions of this Trust Indenture and the rights of the Owner Trustee and the Owner Participant hereunder. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the original executed counterpart of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt is attached), and executed copies of the Participation Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and its successors and assigns, in trust for the benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III hereof without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (8) inclusive above, subject to the terms and provisions set forth in this Trust Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Owner Trustee shall remain liable under each of the Indenture Agreements to which it is a party to perform all of the obligations assumed by it thereunder, except to the extent prohibited or excluded from doing so pursuant to the terms and provisions thereof, and the Indenture Trustee and the Certificate Holders shall have no obligation or liability under the Indenture Agreements, by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to any of the Indenture Agreements to which it is a party, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. -4- 5 The Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, and with full power (in the name of the Owner Trustee or otherwise) to ask for, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds but in all cases excluding Excluded Payments) due and to become due under or arising out of the Indenture Agreements, and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Without limiting the generality of the foregoing, but subject to the rights of the Owner Trustee and the Owner Participant hereunder, during the continuance of any Event of Default under this Trust Indenture, the Indenture Trustee shall have the right under such power of attorney to accept any offer in connection with the exercise of remedies as set forth herein of any purchaser to purchase the Airframe and Engines and upon such purchase to execute and deliver in the name of and on behalf of the Owner Trustee an appropriate bill of sale and other instruments of transfer relating to the Airframe and Engines, when purchased by such purchaser, and to perform all other necessary or appropriate acts with respect to any such purchase, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or appropriate to protect and preserve the right, title and interest of the Indenture Trustee in and to such Rents and other sums and the security intended to be afforded hereby; provided, however, that no action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or liabilities of the Owner Trustee to any Person beyond those obligations and liabilities specifically set forth in this Trust Indenture and in the other Operative Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture shall not have been fully discharged, to make all payments of Rent (other than Excluded Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to, or as directed by, the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Trust Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Trust Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem necessary or desirable to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be created hereby or to obtain for the Indenture Trustee the full benefits of the assignment hereunder and of the rights and powers herein granted. The parties hereto acknowledge that neither the Owner Trustee nor the Owner Participant shall have any obligation as to any -5- 6 recording, filing, refiling or re-recording of any documents or instruments in regard to maintaining the perfection of the security interests created hereunder, in the Trust Indenture Estate or any security interest that may be claimed to have been created by the Lease or the ownership interest of the Owner Trustee in the Aircraft. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants and agrees that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee and its predecessor(s) in this transaction, and that it will not, except as otherwise provided in this Trust Indenture and except with respect to Excluded Payments to which it is entitled, (i) accept any payment from Lessee under any Indenture Agreement, (ii) enter into any agreement amending or supplementing any Indenture Agreement, (iii) execute any waiver or modification of, or consent under, the terms of, or exercise any rights, powers or privileges under, any Indenture Agreement, (iv) settle or compromise any claim (other than those relating to an Excluded Payment) arising under any Indenture Agreement or (v) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any Indenture Agreement to arbitration thereunder. The Owner Trustee does hereby further agree that it will not without the written consent of the Indenture Trustee: (a) collect or agree to the receipt or collection of any payment of Rent (other than Excluded Payments), including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease prior to the date for the payment thereof provided for by the Lease or assign, transfer or hypothecate (other than to the Indenture Trustee hereunder) any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease, then due or to accrue in the future under the Lease in respect of the Airframe and Engines; or (b) except as contemplated by the Trust Agreement in connection with the appointment of a successor owner trustee, sell, mortgage, transfer, assign or hypothecate (other than to the Indenture Trustee hereunder) its interest in the Airframe and Engines or any part thereof or in any amount to be received by it from the use or disposition of the Airframe and Engines, other than amounts distributed to it pursuant to Article III hereof. It is hereby further agreed that any and all property described or referred to in the granting clauses hereof which is hereafter acquired by the Owner Trustee shall ipso facto, and without any further conveyance, assignment or act on the part of the Owner Trustee or the -6- 7 Indenture Trustee, become and be subject to the Lien herein granted as fully and completely as though specifically described herein, but nothing contained in this paragraph shall be deemed to modify or change the obligations of the Owner Trustee contained in the foregoing paragraphs. The Owner Trustee does hereby ratify and confirm the Lease and does hereby agree that it will not violate any covenant or agreement made by it therein, herein or in any of the other Owner Trustee Documents. Notwithstanding the Granting Clause or any of the foregoing paragraphs, there is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excluded Payments. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Definitions. For all purposes of this Indenture the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "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. "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 hereof. "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 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 -7- 8 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. "Cash Equivalents" shall mean the investments specified in Section 22(a) of the Lease. "Certificate Holder" shall mean any holder from time to time of one or more Secured Certificates. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Continuous Stay Period" shall have the meaning specified in Section 4.04(a) hereof. "Corporate Trust Department" or "Trust Office" means the principal corporate trust office of the Owner Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, 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 Two International Place, 4th Floor, Boston, Massachusetts 02110, 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. "Debt" shall mean any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments or for the deferred purchase price of property, goods or services. "Debt 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" means any event or condition that with the giving of notice or the lapse of time or both would become an Event of Default or Lease Event of Default (excluding Lease Events of Default related to Excluded Payments). "Dollars" and "$" shall mean the lawful currency of the United States of America. "Enforcement Date" shall have meaning specified in Section 4.03 hereof. -8- 9 "Event of Default" shall have the meaning specified in Section 4.02 hereof. "Excess Amount" shall have the meaning specified in Section 2.03(b) hereof. "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 hereof, 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. "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 Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Guarantor" shall have the meaning specified in the Lease. "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 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 -9- 10 foreclose the Lien of the Trust Indenture or otherwise commence the exercise of any significant remedy under the Trust Indenture or the Lease. "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" shall mean that certain Lease Agreement [NW 1996 A], dated as of February 27, 1996, entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of the Original Trust Indenture, as said Lease Agreement has been, or may from time to time be, supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Indenture. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Default" shall mean a "Default" as defined in the Lease. "Lease Event of Default" shall mean an "Event of Default" as defined in the Lease. "Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Lessee Operative Documents" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. "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 hereof (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 (plus, in the case of Series C Secured Certificates, 75 basis points) 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, -10- 11 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. "Mortgaged Property" shall have the meaning specified in Section 3.03 hereof. "Owner Indemnitee" shall have the meaning specified in the definition of Excluded Payments herein. "Owner Participant" shall mean [ ], so long as such party shall have any interest in the Trust Estate, and transferees thereof as permitted by Section 8 of the Participation Agreement. "PA Amendment No. 1" shall mean the First Amendment to Participation Agreement [NW 1996 A], dated as of the Closing Date, among Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and State Street Bank and Trust Company, in its individual capacity and as Indenture Trustee. "Participants" shall mean and include the Loan Participants and the Owner Participant. "Participation Agreement" shall mean that certain Participation Agreement [NW 1996 A], dated as of February 27, 1996, among the Owner Trustee, the Indenture Trustee, Lessee and the Participants, as amended by the PA Amendment No. 1, as the same may from time to time be supplemented or further amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Past Due Rate" shall mean, with respect to the Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in effect from time to time. -11- 12 "Payment Date" shall mean each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Secured Certificates have been paid in full. "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. "QIB" shall have the meaning specified in Section 2.08 hereof. "Replacement Airframe" shall mean any airframe substituted for the Airframe pursuant to Section 5.06 hereof. "Replacement Engine" shall mean any engine substituted for an Engine pursuant to Section 5.06 hereof. "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. "Section 1110 Period" shall have the meaning specified in Section 4.04(a) hereof. "Secured Certificates" shall mean and include any Secured Certificates issued hereunder, and issued in exchange therefor or replacement thereof. "Secured Obligations" shall have the meaning specified in Section 2.06 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Holder" shall have the meaning specified in Section 2.15(c) hereof. "Series A" or "Series A Secured Certificates" means Secured Certificates issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A." "Series B" or "Series B Secured Certificates" means Secured Certificates issued and designated as "Series B" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series B." -12- 13 "Series C" or "Series C Secured Certificates" means Secured Certificates issued and designated as "Series C" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series C." "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. "Transactions" means the transactions contemplated by the Participation Agreement and the other Operative Documents. "Trust Agreement and Indenture Supplement" shall mean a supplement to the Trust Agreement and to this Indenture, in substantially the form of Exhibit A hereto, 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. "Trust Indenture", "this Trust Indenture", "the Trust Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this Amended and Restated Trust Indenture and Security Agreement [NW 1996 A] as it may from time to time be supplemented or amended as herein provided, including supplementing by the Trust Agreement and Indenture Supplement pursuant hereto. "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 this Trust Indenture, excluding Excluded Payments. SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this Trust Indenture the terms used but not defined herein are used as defined in the Lease. ARTICLE II THE SECURED CERTIFICATES SECTION 2.01. Form of Secured Certificates. The Secured Certificates shall be substantially in the form set forth below: THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. -13- 14 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [NW 1996 A] DATED AS OF FEBRUARY 27, 1996. SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N537US. No.____ Date:[______,__] $_______________ INTEREST RATE MATURITY DATE [________] [______,______] FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 A], dated as of February 27, 1996, between the Owner Participant named therein and the Owner Trustee (herein as such Trust Agreement may be supplemented or amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Interest Rate indicated above. The Principal Amount of this Secured Certificate shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Secured Certificate set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including _______, _____. Notwithstanding the foregoing, the final payment made on this Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Secured Certificate. Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "TRUST INDENTURE" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 A], dated as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from time to time. All other -14- 15 capitalized terms used in this Secured Certificate and not defined herein shall have the respective meanings assigned in the Trust Indenture. This Secured Certificate shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Trust Indenture or the Participation Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Trust Indenture and each holder hereof, by its acceptance of this Secured Certificate, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the holder hereof as above provided and that none of the Owner Participant, the Owner Trustee or the Indenture Trustee is personally liable or liable in any manner extending to any assets other than the Trust Indenture Estate to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Trust Indenture or in the Participation Agreement, for any liability under the Trust Indenture or the Participation Agreement; provided, however, that nothing herein contained shall limit, restrict or impair the right of the Indenture Trustee, subject always to the terms and provisions of the Trust Indenture, to accelerate the maturity of this Secured Certificate upon occurrence of an Event of Default under the Trust Indenture in accordance with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment against the Owner Trustee on this Secured Certificate for purposes of realizing upon the Trust Indenture Estate and to exercise all rights and remedies provided under the Trust Indenture or otherwise realize upon the Trust Indenture Estate. There shall be maintained a Secured Certificate Register for the purpose of registering transfers and exchanges of Secured Certificates at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Trust Indenture. The Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Trust Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Secured Certificate, except that in the case of any final payment with respect to this Secured Certificate, the Secured Certificate shall be surrendered promptly thereafter by the Indenture Trustee to the Owner Trustee for cancellation. -15- 16 The holder hereof, by its acceptance of this Secured Certificate, agrees that, except as provided in the Trust Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts hereunder) to the date of such payment, second, to the payment of the Principal Amount of this Secured Certificate then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of Principal Amount of this Secured Certificate remaining unpaid in the inverse order of their normal maturity. This Secured Certificate is one of the Secured Certificates referred to in the Trust Indenture which have been or are to be issued by the Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Secured Certificates. The provisions of this Secured Certificate are subject to the Trust Indenture. Reference is hereby made to the Trust Indenture and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Secured Certificate and the rights and obligations of the holders of, and the nature and extent of the security for, any other Secured Certificates executed and delivered under the Trust Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust Indenture, to all of which terms and conditions in the Trust Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Secured Certificate. As provided in the Trust Indenture and subject to certain limitations therein set forth, this Secured Certificate is exchangeable for a like aggregate Principal Amount of Secured Certificates of different authorized denominations, as requested by the holder surrendering the same. Prior to due presentment for registration of transfer of this Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the person in whose name this Secured Certificate is registered as the owner hereof for all purposes whether or not this Secured Certificate be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Secured Certificate is subject to redemption as provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This Secured Certificate is also subject to assumption by Lessee as provided in Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.14 of the Trust Indenture but not otherwise. [The indebtedness evidenced by this Secured Certificate is, to the extent and in the manner provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Trust Indenture) in respect -16- 17 of [Series A Secured Certificates](1) [Series A and Series B Secured Certificates](2), and this Secured Certificate is issued subject to such provisions. The Certificate Holder of this Secured Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]** Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Secured Certificate shall not be entitled to any benefit under the Trust Indenture or be valid or obligatory for any purpose. THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. * * * - --------------------- (1) To be inserted in the case of a Series B Secured Certificate. (2) To be inserted in the case of a Series C Secured Certificate. ** To be inserted for each Secured Certificate other than any Series A Secured Certificate. -17- 18 IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Certificate to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By ---------------------------------- Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Secured Certificates referred to in the within-mentioned Trust Indenture. STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By ---------------------------------- Name: Title: -18- 19 SCHEDULE I SECURED CERTIFICATES AMORTIZATION Percentage of Principal Amount Payment Date to be Paid ------------ ---------------- [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES. The Secured Certificates shall be dated the date of issuance thereof, shall be issued in three separate series consisting of Series A, Series B and Series C and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Agreements as set forth in Schedule II hereto in connection therewith and (ii) the Secured Certificates issued under the Original Indenture shall be concurrently redeemed. The Secured Certificates shall be issued in registered form only. The Secured Certificates shall be issued in denominations of $1,000 and integral multiples thereof, except that one Secured Certificate of each Series may be in an amount that is not an integral multiple of $1,000. Each Secured Certificate shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Secured Certificate shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Secured Certificates. Notwithstanding the foregoing, the final payment made under each Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Secured Certificate. Each Secured Certificate shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Secured Certificate becomes due and payable is not a -19- 20 Business Day then such payment shall not be made on such scheduled date but shall be made on the next succeeding Business Day and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Certificate Holders, (iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass Through Trustees, in each case pursuant to Section 7 of the Participation Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Advances (as defined in the Liquidity Facilities) under any Liquidity Facility except to the extent included in Net Interest and Related Charges, and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used in this Section, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes, plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Secured Certificate a fraction, the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes issued under Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any Series D Secured Certificates or Series D Equipment Notes. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to the Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount which would be payable if such drawings bore interest at the Designated Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding Liquidity Facility) which result from any Interest Drawing, Final Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities). As used in this Section "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) except with respect to that portion of any Final Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section, a Payment Default when used in connection with a Secured Certificate or -20- 21 Equipment Note means a default in the payment of principal thereof or interest thereon other than a default in the payment of principal or interest on a Series D Equipment Note which has not been cured other than solely because of acceleration. The following terms are used in this Section as defined in the Intercreditor Agreement without regard to any amendment, modification or supplement thereto after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and Series D Equipment Notes. The Secured Certificates shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Secured Certificates bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Secured Certificates or did not hold such offices at the respective dates of such Secured Certificates. The Owner Trustee may from time to time execute and deliver Secured Certificates with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Secured Certificates shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Secured Certificates to be authenticated hereunder on original issue with respect to the Aircraft. No Secured Certificate shall be secured by or entitled to any benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears on such Secured Certificate a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Secured Certificates shall be conclusive evidence, and the only evidence, that such Secured Certificate has been duly authenticated and delivered hereunder. SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY. (a) Without impairing any of the other rights, powers, remedies, privileges, liens or security interests of the Certificate Holders under this Trust Indenture, each Certificate Holder, by its acceptance of a Secured Certificate, agrees that as between it and the Owner Trustee, except as expressly provided in this Trust Indenture, the Participation Agreement or any other Operative Document, (i) the obligation to make all payments of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Secured Certificates, and the performance by the Owner Trustee of every obligation or covenant contained in this Trust Indenture and in the Participation Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained -21- 22 in this Trust Indenture and any agreement referred to herein other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Trust Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Owner Trustee is responsible for, or is making, in its individual capacity, for which there would be personal liability of the Owner Trustee), no recourse shall be had with respect to this Trust Indenture 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, and (ii) none of the Owner Trustee, in its individual capacity, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Participation Agreement or any of the other Operative Documents or under the Secured Certificates except as expressly provided herein or in the Participation Agreement; provided, however, that nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Trust Indenture or such other agreements of rights and remedies against the Trust Estate. These provisions are not intended as any release or discharge of the indebtedness represented by the Secured Certificates and the Trust Indenture, but are intended only as a covenant not to sue the Owner Participant, the Owner Trustee or the Indenture Trustee in their individual capacities, except as expressly provided herein or in the Participation Agreement, for a deficiency with respect to such indebtedness, the indebtedness represented by this Trust Indenture and the Secured Certificates to remain in full force and effect as fully as though these provisions were not contained in this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders have expressly reserved all their rights and remedies against the Trust Indenture Estate, including the right, in the event of a default in the payment of all or part of the Principal Amount of, interest on, Make-Whole Amount, if any, or any other amount due with respect to any Secured Certificate within the periods provided for in Section 4.02(b) hereof, or upon the occurrence and continuation of any other Event of Default under this Trust Indenture, to foreclose upon this Trust Indenture, and/or to receive the proceeds from the Trust Indenture Estate and otherwise to enforce any other right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner Participant from personal liability, or constitute a covenant not to sue the Owner Participant, for any breach by it of any of its covenants, representations or warranties contained in the Participation Agreement or for any of the payments it has agreed to make pursuant to the Participation Agreement or (y) release the Owner Trustee or constitute a covenant not to sue the Owner Trustee for any breach by it of any representations, warranties or covenants of the Owner Trustee contained in the Operative Documents or (z) release the Owner Trustee in its individual capacity from personal liability, or constitute a covenant not to sue the Owner Trustee in its individual capacity for any breach by it of any representations, warranties or covenants of the Owner Trustee made in its individual capacity in the Operative Documents. -22- 23 (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, 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 any Certificate Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of the Owner Trustee (in its individual capacity), to make payment on account of any amount payable as principal, Make-Whole Amount, if any, interest or other amounts on the Secured Certificates or under this Indenture and (iii) any Certificate Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Owner Trustee (in its individual capacity) or the Owner Participant on account of clause (ii) above, then such Certificate Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Trustee (in its individual capacity) or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a Certificate Holder 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 clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Certificate Holder 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 the Participation Agreement or this Trust Indenture (and any exhibits or annexes hereto or thereto) or by separate agreement or from retaining any amount paid by Owner Participant under Section 2.14 or 4.03 hereof. SECTION 2.04. METHOD OF PAYMENT. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Secured Certificate or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Certificate Holders in the manner provided herein. The Owner Trustee shall not have any responsibility for the distribution of such payment to any Certificate Holder. Notwithstanding the foregoing or any provision in any Secured Certificate to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such holder's Secured Certificate or Secured Certificates to such holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such holder with a bank located in the continental United States the amount to be distributed to such holder, for credit to the account -23- 24 of such holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate such holders for loss of use of funds at the Debt Rate until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Secured Certificate, except that, in the case of the final payment in respect of any Secured Certificate, such Secured Certificate shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Secured Certificate is registered on the Secured Certificate Register as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable with respect to such Secured Certificate and for all other purposes, and none of the Owner Trustee or the Indenture Trustee shall be affected by any notice to the contrary. So long as any signatory to the Participation Agreement or nominee thereof shall be a registered Certificate Holder, all payments to it shall be made to the account of such Certificate Holder specified in Schedule I thereto and otherwise in the manner provided in or pursuant to the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Secured Certificate (and such exclusion and withholding shall constitute payment in respect of such Secured Certificate) any and all United States withholding taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Secured Certificates, to withhold such amounts (and such withholding shall constitute payment in respect of such Secured Certificate) and timely pay the same to the appropriate authority in the name of and on behalf of the Certificate Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Certificate Holder (with a copy to the Owner Trustee and Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Certificate Holder may reasonably request from time to time. -24- 25 If a Certificate Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Secured Certificate(s) held by such holder is made (but prior to the making of such payment), or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by Law (after taking into account any applicable exemptions claimed by the Certificate Holder) to be withheld from payments hereunder or under the Secured Certificates held by such holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Secured Certificates held by such holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Certificate Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Secured Certificates held by such holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Certificate Holder withholding taxes at the appropriate rate under Law and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. SECTION 2.05. APPLICATION OF PAYMENTS. In the case of each Secured Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; -25- 26 Second: to the payment of the Principal Amount of such Secured Certificate (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Secured Certificate; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Secured Certificate remaining unpaid (provided that such Secured Certificate shall not be subject to redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Secured Certificate in the inverse order of their normal maturity. SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE. A Certificate Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Secured Certificates held by such Certificate Holder and all other sums then payable to such Certificate Holder hereunder and under the other Operative Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall have been paid in full. SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED CERTIFICATES. The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the registration of Secured Certificates and the registration of transfers of Secured Certificates. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Secured Certificate Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the purpose of registering Secured Certificates and transfers of Secured Certificates as herein provided. A holder of any Secured Certificate intending to exchange such Secured Certificate shall surrender such Secured Certificate to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Secured Certificate, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Secured Certificate, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Secured Certificates of a like aggregate Principal Amount and of the same series. At the option of the Certificate Holder, Secured Certificates may be exchanged for other Secured Certificates of any authorized denominations of a like aggregate Principal Amount, upon surrender of the Secured Certificates to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Secured Certificates are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Secured Certificates -26- 27 which the Certificate Holder making the exchange is entitled to receive. All Secured Certificates issued upon any registration of transfer or exchange of Secured Certificates (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Trust Indenture, as the Secured Certificates surrendered upon such registration of transfer or exchange. Every Secured Certificate presented or surrendered for registration of transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Certificate Holder or such holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of any applicable state. The Indenture Trustee shall make a notation on each new Secured Certificate of the amount of all payments of Principal Amount previously made on the old Secured Certificate or Secured Certificates with respect to which such new Secured Certificate is issued and the date to which interest on such old Secured Certificate or Secured Certificates has been paid. Interest shall be deemed to have been paid on such new Secured Certificate to the date on which interest shall have been paid on such old Secured Certificate, and all payments of the Principal Amount marked on such new Secured Certificate, as provided above, shall be deemed to have been made thereon. The Owner Trustee shall not be required to exchange any surrendered Secured Certificates as provided above during the ten-day period preceding the due date of any payment on such Secured Certificate. The Owner Trustee shall in all cases deem the Person in whose name any Secured Certificate shall have been issued and registered as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable by the Owner Trustee with respect to such Secured Certificate and for all purposes until a notice stating otherwise is received from the Indenture Trustee and such change is reflected on the Secured Certificate Register. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of a Secured Certificate. Any such transferee of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to the provisions of the Participation Agreement applicable to Certificate Holders, including Sections 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(ff), 10, 13(b), 13(c), 15(b) and 15(c), and shall be deemed to have represented and warranted (except as provided above), and covenanted, to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by the original Loan Participant in the Participation Agreement. Subject to compliance by the Certificate Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates upon transfer or exchange within 10 Business Days of the date a Secured Certificate is surrendered for transfer or exchange. SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED CERTIFICATES. If any Secured Certificate shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the holder of such Secured Certificate, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new -27- 28 Secured Certificate, payable in the same Principal Amount dated the same date and captioned as issued in connection with the Aircraft. If the Secured Certificate being replaced has become mutilated, such Secured Certificate shall be surrendered to the Indenture Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the Secured Certificate being replaced has been destroyed, lost or stolen, the holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be required by them to save the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Secured Certificate and of the ownership thereof. If a "qualified institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen Secured Certificate, then the written indemnity of such QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Secured Certificate. Subject to compliance by the Certificate Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates within 10 Business Days of the date of the written request therefor from the Certificate Holder. SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION. (a) No service charge shall be made to a Certificate Holder for any registration of transfer or exchange of Secured Certificates, but the Indenture Trustee, as Secured Certificate Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Secured Certificates; provided, however, that neither the Owner Trustee nor the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Secured Certificates surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Secured Certificates. SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES. (a) On the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders but without Make-Whole Amount. -28- 29 (b) If the Lease is terminated with respect to the Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the Lease is so terminated all the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES. Any or all of the Secured Certificates may be redeemed by the Owner Trustee in connection with a transaction described in, and subject to the terms and conditions of, Section 17 of the Participation Agreement upon at least 30 days' revocable prior written notice to the Indenture Trustee and the Certificate Holders, and the Secured Certificates shall, as provided in Section 17 of the Participation Agreement, be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION. (a) Neither any redemption of any Secured Certificate nor any purchase by the Owner Trustee of any Secured Certificate may be made except to the extent and in the manner expressly permitted by this Trust Indenture. No purchase of any Secured Certificate may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Secured Certificates shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Certificate Holder of such Secured Certificates to be redeemed or purchased, at such Certificate Holder's address appearing in the Secured Certificate Register; provided that, in the case of a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be deemed revoked in the event that the Lease does not in fact terminate on the specified termination date or if notice of such redemption shall have been given in connection with a refinancing of Secured Certificates and the Indenture Trustee receives written notice of such revocation from Lessee or the Owner Trustee not later than three days prior to the redemption date. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Secured Certificate, and that, if any such Secured Certificates are then outstanding, interest on such Secured Certificates shall cease to accrue on and after such redemption date, and (4) the place or places where such Secured Certificates are to be surrendered for payment of the redemption price. -29- 30 (c) On or before the redemption date, the Owner Trustee (or any person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Secured Certificates to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption date in immediately available funds the redemption price of the Secured Certificates to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid (and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee or at any office or agency maintained for such purposes pursuant to Section 2.07, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Secured Certificates then outstanding shall cease to bear interest. Upon surrender of any such Secured Certificate for redemption or purchase in accordance with said notice, such Secured Certificate shall be redeemed at the redemption price. If any Secured Certificate called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Secured Certificate as of such redemption date. SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE. If, in accordance with Section 8(x) of the Participation Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a full recourse basis) all of the obligations of the Owner Trustee hereunder, under the Secured Certificates and all other Operative Documents by supplemental indenture satisfactory to the Indenture Trustee (which shall contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease and (ii) other provisions necessary or advisable to effectuate such assumption), then upon delivery of such supplemental indenture, payment by Lessee of all expenses (including reasonable fees and expenses of counsel) for the Owner Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of the Secured Certificates and other amounts owing to the Certificate Holders substantially in the form of the Guarantee, and delivery of an opinion of counsel for Lessee that such assumption has been duly and validly effected, the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Secured Certificates and all other Operative Documents and the Owner Participant shall be released and discharged from any further obligations under the Participation Agreement and any other Operative Document to which it is a party, except with respect to any such obligations that accrued prior thereto. SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.14, purchase all but not less than all of the Secured Certificates outstanding hereunder, and each Certificate Holder agrees that it will, upon such events and subject to such terms and conditions and upon -30- 31 receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Secured Certificates and except against Liens on such Secured Certificates arising by, through or under such holder), all of the right, title and interest of such Certificate Holder in and to the Trust Indenture Estate, this Trust Indenture and the Secured Certificates held by it, and such purchaser or its nominee shall assume all of such holder's obligations under the Participation Agreement and hereunder. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Participation Agreement to the holder thereof. Such option to purchase the Secured Certificates may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default, the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Secured Certificates shall become irrevocable upon the sixteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Certificate Holders will comply with all the provisions of Section 2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes, charges and expenses required pursuant to Section 2.09 in connection with the issuance of such new Secured Certificate shall be borne by the Owner Participant. SECTION 2.15. SUBORDINATION. (a) The Owner Trustee and, by acceptance of its Secured Certificates of any Series, each Certificate Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of -31- 32 such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g) hereof, except as expressly provided in Article III hereof. (b) By the acceptance of its Secured Certificates of any Series (other than Series A), each Certificate Holder of such Series agrees that in the event that such Certificate Holder, in its capacity as a Certificate Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.15 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article III hereof. (c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured Obligations in respect of Series A Secured Certificates have been paid in full and (ii) after the Secured Obligations in respect of Series A Secured Certificates have been paid in full, the Certificate Holders of Series B until the Secured Obligations in respect of Series B Secured Certificates have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Basic Rent Distribution. Except as otherwise provided in Section 3.03 hereof, each installment of Basic Rent or Interim Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly distributed in the following order of priority: FIRST, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Secured Certificates shall be distributed to the Certificate Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Secured Certificate bears to the aggregate amount of the payments then due under all Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest -32- 33 and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Secured Certificates shall be distributed to the Certificate Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Secured Certificate bears to the aggregate amount of the payments then due under all Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series C Secured Certificates shall be distributed to the Certificate Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Secured Certificate bears to the aggregate amount of the payments then due under all Series C Secured Certificates; and SECOND, the balance, if any, of such installment remaining thereafter shall be distributed to the Owner Trustee; provided, however, that if an Event of Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "Second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 5.09 hereof until whichever of the following shall first occur: (i) all Events of Default shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "Second" without reference to this proviso, (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of such Section 3.03, or (iii) the 120th day after the receipt of such payment in which case such payment shall be distributed as provided in this clause "Second" without reference to this proviso. SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION; REFINANCING. Except as otherwise provided in Section 3.03 hereof, any payments received by the Indenture Trustee (i) with respect to the Aircraft as the result of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a refinancing of the Secured Certificates pursuant to Section 17 of the Participation Agreement shall be applied to redemption of the Secured Certificates and to all -33- 34 other amounts payable hereunder or to the Indenture Trustee or any Certificate Holder under the Participation Agreement by applying such funds in the following order of priority: FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for any reasonable costs or expenses incurred in connection with such redemption for which they are entitled to reimbursement, or indemnity by Lessee, under the Operative Documents and then (b) to pay any other amounts then due to the Indenture Trustee and the Certificate Holders under this Trust Indenture, the Participation Agreement or the Secured Certificates; SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, to pay the amounts specified in paragraph (ii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, to pay the amounts specified in paragraph (iii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series C Secured Certificates; and THIRD, as provided in clause "Fourth" of Section 3.03 hereof; provided, however, that if a Replacement Airframe or Replacement Engine shall be substituted for the Airframe or Engine subject to such Event of Loss as provided in Section 10 of the Lease and in accordance with Section 5.06 hereof, any insurance, condemnation or similar proceeds which result from such Event of Loss and are paid over to the Indenture Trustee shall be held by the Indenture Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be invested as provided in Section 5.09 hereof) as additional security for the obligations of Lessee under the Lessee Operative Documents and, unless otherwise applied pursuant to the Lease, such proceeds (and such investment earnings) shall be released to Lessee at Lessee's written request upon the release of such damaged Airframe or Engine and the replacement thereof as provided in the Lease. SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT. Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Section 15 of the Lease or Article IV hereof) after both an Event of Default shall have occurred and be continuing and the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, as well as all payments or amounts then held by the Indenture Trustee as part of the Trust -34- 35 Indenture Estate, shall be promptly distributed by the Indenture Trustee in the following order of priority: FIRST, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate (all such property being herein called the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) incurred by the Indenture Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Certificate Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or any Certificate Holder, liquidated or otherwise, upon such Event of Default shall be applied by the Indenture Trustee as between itself and the Certificate Holders in reimbursement of such expenses and any other expenses for which the Indenture Trustee or the Certificate Holders are entitled to reimbursement under any Operative Document and in the case the aggregate amount to be so distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as shall be required to reimburse the then existing or prior Certificate Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to such then existing or prior Certificate Holders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Certificate Holder pursuant to said Section 5.03 hereof; THIRD, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series -35- 36 A Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and FOURTH, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee. No Make-Whole Amount shall be due and payable on the Secured Certificates as a consequence of the acceleration of the Secured Certificates. SECTION 3.04. CERTAIN PAYMENTS. (a) Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in this Trust Indenture and for which such provision is -36- 37 made in the Lease, the Participation Agreement or any other Operative Document shall be applied forthwith to the purpose for which such payment was made in accordance with the terms of the Lease, the Participation Agreement or such other Operative Document, as the case may be. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of the Participation Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the third paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the third paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) [Intentionally Omitted] (d) Notwithstanding anything to the contrary contained in this Article III, any amounts received by the Indenture Trustee which constitute Excluded Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. (e) Notwithstanding any provision of this Trust Indenture to the contrary, any amounts held by the Indenture Trustee that would, but for the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall, notwithstanding the provisions of said Section, be distributed to Lessee unless and until a Lease Event of Default shall have occurred and be continuing. SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any other Operative Document shall be distributed by the Indenture Trustee to the extent received or realized at any time (i) prior to the payment in full of all Secured Obligations due the Certificate Holders, in the order of priority specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in full of all Secured Obligations due the Certificate Holders, in the following order of priority: FIRST, to the extent payments or amounts described in clause "First" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "First" of Section 3.03 hereof, and SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof. -37- 38 Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04 hereof, all payments received and amounts realized by the Indenture Trustee under the Lease or otherwise with respect to the Aircraft (including, without limitation, all amounts realized upon the sale or release of the Aircraft after the termination of the Lease with respect thereto), to the extent received or realized at any time after payment in full of all Secured Obligations due the Certificate Holders, shall be distributed by the Indenture Trustee in the order of priority specified in clause (ii) of the immediately preceding sentence of this Section 3.05. SECTION 3.06. PAYMENTS TO OWNER TRUSTEE. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account (within the time limits contemplated by Section 2.04(a)) specified in Schedule I to the Participation Agreement. SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE. All payments received by the Indenture Trustee pursuant to the Guarantee shall be distributed forthwith by the Indenture Trustee in the same order of priority, and in the same manner, as it would have distributed the payment in respect of which such payment under the Guarantee was received. ARTICLE IV COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Owner Trustee. The Owner Trustee hereby covenants and agrees (the covenants and agreements only in clause (b) below being made by the Owner Trustee in its individual capacity) as follows: (a) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Secured Certificates and hereunder in accordance with the terms of the Secured -38- 39 Certificates and this Trust Indenture and all amounts, if any, payable by it to the Certificate Holders under the Participation Agreement; (b) the Owner Trustee in its individual capacity covenants and agrees that it shall not, directly or indirectly, cause or permit to exist a Lessor Lien attributable to it in its individual capacity with respect to the Aircraft or any other portion of the Trust Estate; that it will promptly, at its own expense, take such action as may be necessary to duly discharge such Lessor Lien attributable to it in its individual capacity; and that it will make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Lessor Liens attributable to it in its individual capacity; (c) in the event the Owner Trustee shall have Actual Knowledge of an Event of Default, a Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Event of Default, Default or Event of Loss to the Indenture Trustee, each Certificate Holder, Lessee and the Owner Participant; (d) the Owner Trustee will furnish to the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of any Termination Notice and a copy of each report or notice received pursuant to Section 9(a) and 11(c) of the Lease to the extent that the same shall not have been furnished to the Indenture Trustee pursuant to the Lease; (e) except pursuant to the Operative Documents or with the consent of the Indenture Trustee (acting pursuant to instructions given in accordance with Section 9.01 hereof), the Owner Trustee will not contract for, create, incur, assume or suffer to exist any Debt, and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the Debt of any other person; and (f) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. EVENT OF DEFAULT. "EVENT OF DEFAULT" means any of the following events (whatever the reason for such Event of Default and whether 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): -39- 40 (a) any Lease Event of Default (provided that any such Lease Event of Default caused solely by a failure of Lessee to pay to the Owner Trustee or the Owner Participant when due any amount that is included in the definition of Excluded Payments shall not constitute an Event of Default unless notice is given by the Owner Trustee to the Indenture Trustee that such failure shall constitute an Event of Default); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due and payable under any Secured Certificate or hereunder (other than any such failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof or as a result of a Lease Event of Default or a Lease Default) and such failure shall have continued unremedied for ten Business Days in the case of any payment of Principal Amount or interest or Make-Whole Amount, if any, thereon and, in the case of any other amount, for ten Business Days after the Owner Trustee or the Owner Participant receives written demand from the Indenture Trustee or any Certificate Holder; or (c) any Lien required to be discharged by the Owner Trustee, in its individual capacity pursuant to Section 4.01(b) hereof or in its individual or trust capacity pursuant to Section 8(h) of the Participation Agreement, or by the Owner Participant pursuant to Section 8(h) of the Participation Agreement shall remain undischarged for a period of 30 days after the Owner Trustee and the Owner Participant shall have received written notice from the Indenture Trustee or any Certificate Holder of such Lien; or (d) any representation or warranty made by the Owner Participant or the Owner Trustee herein, in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in any certificate furnished by the Owner Participant or the Owner Trustee to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents shall prove to have been false or incorrect when made in any material respect and continues to be material; and if such misrepresentation is capable of being corrected and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 60 days (or, without affecting Section 4.02(f) hereof, in the case of the representations made in Section 8(c) of the Participation Agreement as to the citizenship of the Owner Trustee in its individual capacity or of the Owner Participant, respectively, as soon as is reasonably practicable but in any event within 60 days) following notice thereof from the Indenture Trustee or any Certificate Holder to the Owner Trustee or the Owner Participant, as the case may be; or (e) other than as provided in (c) above or (f) below, any failure by the Owner Trustee or Owner Participant to observe or perform any other covenant or obligation of the Owner Trustee or Owner Participant, as the case may be, for the benefit of the Indenture Trustee or the Certificate Holders contained in the Participation Agreement, Section 4.01(a) of the Trust Agreement, the Secured Certificates or this -40- 41 Trust Indenture which is not remedied within a period of 60 days after notice thereof has been given to the Owner Trustee and the Owner Participant; or (f) if at any time when the Aircraft is registered under the laws of the United States, the Owner Participant shall not be a Citizen of the United States, and as the result thereof the registration of the Aircraft under the Federal Aviation Act, and regulations then applicable thereunder, shall cease to be effective; provided that no Event of Default shall be deemed to have occurred under this paragraph (f) unless such circumstances continue unremedied for more than 60 days after the Owner Participant has Actual Knowledge of the state of facts that resulted in such ineffectiveness and of such loss of citizenship; or (g) at any time either (i) the commencement of an involuntary case or other proceeding in respect of the Owner Participant, the Owner Trustee or the Trust Estate 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 seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii) the commencement by the Owner Participant, the Owner Trustee or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee or the Trust Estate to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or the making by the Owner Participant, the Owner Trustee or the Trust Estate of any assignment for the benefit of creditors or the Owner Participant or the Owner Trustee shall take any action to authorize any of the foregoing; provided, however, that an event referred to in this Section 4.02(g) with respect to the Owner Participant shall not constitute an Event of Default if within 30 days of the commencement of the case or proceeding a final non-appealable order, judgment or decree shall be entered in such case or proceeding by a court or a trustee, custodian, receiver or liquidator, to the effect that, no part of the Trust Estate (except for the Owner Participant's beneficial interest therein) and no right, title or interest under the Trust Indenture Estate shall be included in, or be subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 4.02(g). SECTION 4.03. CERTAIN RIGHTS. The Indenture Trustee shall give the Certificate Holders, the Owner Trustee and the Owner Participant prompt written notice of any Event of Default of which the Indenture -41- 42 Trustee has Actual Knowledge and, if any such Event of Default results from a Lease Event of Default, shall give the Certificate Holders, the Owner Trustee and the Owner Participant not less than ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence and consummate the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the provisions of Section 15 of the Lease. If an Event of Default shall have occurred and be continuing, the Owner Trustee shall have the following rights hereunder, any of which may be exercised directly by the Owner Participant. If as a result of the occurrence of an Event of Default in respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease, the Indenture Trustee shall have insufficient funds to make any payment of Principal Amount and interest on any Secured Certificate on the day it becomes due and payable, the Owner Trustee or the Owner Participant may, but shall not be obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the manner provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an amount equal to the portion of the Principal Amount and interest (including interest, if any, on any overdue payments of such portion of Principal Amount and interest) then due and payable on the Secured Certificates, and, unless the Owner Trustee has cured Events of Default in respect of payments of Basic Rent on each of the three immediately preceding Basic Rent payment dates, or on the Commencement Date and each of the two immediately succeeding Basic Rent payment dates in respect of payment of Interim Rent, or the Owner Trustee has cured six previous Events of Default in respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any Event of Default which would otherwise have arisen on account of the nonpayment by Lessee of such installment of Interim Rent or Basic Rent (but not any other Default or Event of Default which shall have occurred and be continuing). If any Event of Default (other than in respect of the nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured has occurred, the Owner Trustee or the Owner Participant may, but shall not be obligated to, cure such Event of Default prior to the Enforcement Date as is necessary to accomplish the observance or performance of the defaulted covenant, condition or agreement. Except as hereinafter in this Section 4.03 provided, the Owner Trustee shall not, as a result of exercising the right to cure any such Event of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable under the Lease for or on account of costs or expenses incurred in connection with the exercise of such right, nor shall any claim of the Owner Trustee against Lessee or any other party for the repayment of such costs or expenses impair the prior right and security interest of the Indenture Trustee in and to the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner Participant pursuant to the first or second preceding paragraphs of this Section 4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be subrogated to the rights of the Indenture Trustee and the Certificate Holders in respect of the Interim Rent or Basic Rent which was overdue at the time of such payment and interest payable by Lessee on account of its being overdue and any -42- 43 Supplemental Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant to the immediately preceding paragraph (but in either case shall have no rights as a secured party hereunder), and thereafter, the Owner Trustee or the Owner Participant, as the case may be, shall be entitled to receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt thereof by the Indenture Trustee (and shall be entitled to bring an action against Lessee to enforce such payment); provided, however, that (i) if the Principal Amount and interest on the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to all Secured Certificates shall have been paid in full, be subordinate to the rights of the Indenture Trustee and the Certificate Holders in respect of such payment of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and (ii) the Owner Trustee shall not be entitled to seek to recover any such payment (or any payment in lieu thereof) except pursuant to the foregoing right of subrogation by demand or suit for damages. SECTION 4.04. REMEDIES. (a) Subject to the provisions of Section 2.14 hereof, if an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, then and in every such case the Indenture Trustee may, subject to the second paragraph of this Section 4.04(a), on and after the Enforcement Date if such Event of Default results from a Lease Event of Default, exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article IV and shall have and may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and, in the event such Event of Default is also a Lease Event of Default, any and all of the remedies pursuant to Section 15 of the Lease and may take possession of all or any part of the properties covered or intended to be covered by the Lien created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee and Lessee and all persons claiming under any of them wholly or partly therefrom, provided, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Trust Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder as a result of an Event of Default which arises solely by reason of one or more events or circumstances which constitute a Lease Event of Default unless the Indenture Trustee as security assignee of the Owner Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 15 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being -43- 44 the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person. In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any rights or remedy of the Indenture Trustee hereunder) to participate in such proceedings. It is expressly understood and agreed that, subject only to the immediately preceding paragraph, the inability, described in such paragraphs, of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising any or all of its rights, powers and remedies under this Trust Indenture, including, without limitation, this Article IV. (b) If an Event of Default shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery of written notice or notices to the Owner Trustee and the Owner Participant, declare all the Secured Certificates to be due and payable, whereupon the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued but unpaid interest thereon (without Make-Whole Amount) and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. This Section 4.04(b), however, is subject to the condition that, if at any time after the Principal Amount of the Secured Certificates shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Secured Certificates and all other amounts payable under the Secured Certificates (except the Principal Amount of the Secured Certificates which by such declaration shall have become payable) shall have been duly paid, and every other Default and Event of Default with respect to any covenant or provision of this Trust Indenture shall have been cured, then and in every such case a Majority in Interest of Certificate Holders may (but shall not be obligated to), by written instrument filed with the -44- 45 Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. (c) Any Certificate Holder shall be entitled, at any sale pursuant to Section 15 of the Lease or this Section 4.04, to credit against any purchase price bid at such sale by such holder all or any part of the unpaid obligations owing to such Certificate Holder and secured by the Lien of this Trust Indenture (but only to the extent that such purchase price would have been paid to such Certificate Holder pursuant to Article III hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c) were not given effect). (d) In the event of any sale of the Trust Indenture Estate, or any part thereof, pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Trust Indenture, the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued interest thereon, and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any Mortgaged Property or take any action with respect to any Mortgaged Property so acquired by it if such acquisition or action would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. RETURN OF AIRCRAFT, ETC. (a) If an Event of Default shall have occurred and be continuing, subject to Sections 4.03 and 4.04 hereof, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Mortgaged Property included in the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents to the fullest extent permitted by applicable law, and (ii) pursue all or part of such Mortgaged Property wherever it may be found and, in the event that a Lease Event of Default has occurred and is continuing, may enter any of the premises of Lessee wherever such Mortgaged Property may be or be supposed to be and search for such Mortgaged Property and take possession of and remove such -45- 46 Mortgaged Property. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Trust Indenture. (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Mortgaged Property, make all such expenditures for maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modifications or alterations to and of the Mortgaged Property, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the Mortgaged Property and to carry on the business and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Mortgaged Property, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modification or alteration of the Mortgaged Property or any part thereof as the Indenture Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Mortgaged Property and every part thereof, except Excluded Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Trust Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, improvement, modification or alteration of the Mortgaged Property and of conducting the business thereof, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Mortgaged Property or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Trust Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee with respect hereto. SECTION 4.06. REMEDIES CUMULATIVE. Each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or Lessee or to be an acquiescence therein. -46- 47 SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS. In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Trust Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Owner Trustee, the Indenture Trustee and Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Mortgaged Property, and all rights, remedies and powers of the Owner Trustee, the Indenture Trustee or Lessee shall continue as if no such proceedings had been instituted. SECTION 4.08. WAIVER OF PAST DEFAULTS. Upon written instruction from a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Default hereunder and its consequences and upon any such waiver such Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon; provided, that in the absence of written instructions from all the Certificate Holders, the Indenture Trustee shall not waive any Default (i) in the payment of the Principal Amount, Make-Whole Amount, if any, and interest and other amounts due under any Secured Certificate then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Certificate Holder. SECTION 4.09. APPOINTMENT OF RECEIVER. The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee thereof) for all or any part of the Mortgaged Property, whether such receivership be incidental to a proposed sale of the Mortgaged Property or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Mortgaged Property shall be entitled to exercise all the rights and powers of the Indenture Trustee with respect to the Mortgaged Property. SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC.. The Owner Trustee irrevocably appoints the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture, whether pursuant to foreclosure or power of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Owner Trustee hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law. Nevertheless, if so requested by the -47- 48 Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Trust Indenture, the right of any Certificate Holder to receive payment of principal of, and premium, if any, and interest on a Secured Certificate on or after the respective due dates expressed in such Secured Certificate, or to bring suit for the enforcement of any such payment on or after such respective dates in accordance with the terms hereof, shall not be impaired or affected without the consent of such Certificate Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default arising from a failure to pay Rent, the Indenture Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms of Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default or Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture Trustee shall not have received instructions as above provided within 20 days after mailing notice of such Event of Default to the Certificate Holders, the Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default or Default as it shall determine advisable in the best interests of the Certificate Holders. If the Indenture Trustee shall at any time declare the Lease to be in default pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall forthwith notify the Owner Participant, the Certificate Holders, the Owner Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall not be deemed to have knowledge of a Default or an Event of Default (except, in the case of the Indenture Trustee, the failure of Lessee to pay any installment of Interim Rent or Basic Rent within one Business Day after the same shall become due, if any portion of such installment was then required to be paid to the Indenture -48- 49 Trustee, which failure shall constitute knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee, the Owner Participant or one or more Certificate Holders. SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, subject to the terms of this Section 5.02, take such of the following actions as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder as shall be specified in such instructions; (ii) give such notice or direction or exercise such right, remedy or power under the Lease, the Participation Agreement, the Purchase Agreement, or any other part of the Trust Indenture Estate as shall be specified in such instructions; and (iii) after the occurrence and during the continuance of an Event of Default, approve as satisfactory to the Indenture Trustee all matters required by the terms of the Lease to be satisfactory to the Owner Trustee, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall not approve any such matter as satisfactory to the Indenture Trustee; provided, that anything contained in this Trust Indenture, the Lease or the other Operative Documents to the contrary notwithstanding: (1) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excluded Payments from Lessee or the Guarantor, exercise any election or option or make any decision or determination or to give or receive any notice, consent, waiver or approval in respect of any Excluded Payment and seek legal or equitable remedies to require Lessee or the Guarantor to maintain the insurance coverage referred to in Section 11 of the Lease; provided, that the rights referred to in this clause (1) shall not be deemed to include the exercise of any remedies provided for in Section 15 of the Lease other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by Lessee or the Guarantor of such amounts included in Excluded Payments or performance by Lessee or the Guarantor of such insurance covenant, or to recover damages for the breach thereof or for specific performance of any covenant of Lessee or the Guarantor; (2) unless an Event of Default and an Indenture Trustee Event shall have occurred and be continuing and except as provided in clause (4) below, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, whether or not an Event of Default shall have occurred and be continuing, no amendment, modification, waiver or consent in respect of the Lease -49- 50 shall affect the amount or timing of, or the right to enforce payment of, any Excluded Payment; (3) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which any thereof is permitted or required to give or furnish to the Owner Trustee or Lessor pursuant to any Operative Document (including pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 11(e) of the Lease specifically confers on Lessor or the Owner Participant, (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of Lessor under Section 21 of the Lease and (v) to give notices of default under Section 14 of the Lease; (4) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee shall have the right to the exclusion of the Indenture Trustee to adjust Rent, Stipulated Loss Values and Termination Values as provided in Section 3(d) of the Lease and to select counsel with respect to any opinion relating to tax matters to be delivered solely to the Owner Participant; (5) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee may, without the consent of the Indenture Trustee, (i) solicit and make bids with respect to the Aircraft under Section 9 of the Lease in respect of a termination of the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales value" and "fair market rental value" under Section 19 of the Lease for all purposes except following an Event of Default pursuant to Section 15 of the Lease, and (iii) make an election pursuant to and in accordance with the provisions of Section 9(c) of the Lease; and (6) so long as no Event of Default shall have occurred and be continuing, except as provided in clauses (2) and (3) above, all rights of the "Lessor" under the Lease shall be exercised by the Owner Trustee to the exclusion of the Indenture Trustee including, without limitation, the right to (i) exercise all rights with respect to Lessee's use and operation, modification or maintenance of the Aircraft and any Engine which the Lease specifically confers on Lessor, and (ii) consent to and approve any assignment pursuant to Section 13 of the Lease; provided that the foregoing shall not limit (A) any rights separately granted to the Indenture Trustee under the Operative Documents or (B) the right of the Indenture Trustee to receive any funds to be delivered to the "Lessor" under the Lease (except with respect to Excluded Payments) and under the Purchase Agreement. Notwithstanding anything to the contrary contained herein, the Indenture Trustee shall have the right, to the exclusion of the Owner Trustee and the Owner Participant, -50- 51 to (A) declare the Lease to be in default under Section 15 thereof and (B) subject only to the provisions of Sections 4.03, 4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15 (other than in connection with Excluded Payments) at any time that a Lease Event of Default shall have occurred and be continuing. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as specified by Lessee pursuant to Section 8(e) of the Participation Agreement or as may be specified from time to time in written instructions of a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee will furnish to each Certificate Holder (and, during the continuation of an Indenture Trustee Event, to the Owner Trustee and Owner Participant), promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder, including, without limitation, a copy of any Termination Notice (as defined in the Lease) and a copy of each report or notice received pursuant to Sections 9(a) and 11(c) of the Lease, respectively, to the extent that the same shall not have been furnished to such Certificate Holder pursuant hereto or to the Lease. (b) If any Lease Event of Default shall have occurred and be continuing and the Owner Trustee shall not have cured fully such Lease Event of Default under and in accordance with Section 4.03 hereof, on request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall declare the Lease to be in default pursuant to Section 15 thereof and exercise those remedies specified by such Certificate Holders. The Indenture Trustee agrees to provide to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with such declaration by the Indenture Trustee, notice of such declaration by the Indenture Trustee. SECTION 5.03. INDEMNIFICATION. The Indenture Trustee shall not be under any obligation to take any action under this Trust Indenture and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds or otherwise incur the risk of any financial liability in the performance of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (the written indemnity of any Certificate Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Indenture Trustee shall be accepted as reasonable assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture or any other Operative Document be deemed to impose a duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or of the Lease or is otherwise contrary to Law. -51- 52 SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR INSTRUCTIONS. The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Trust Indenture or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Trust Indenture or as expressly provided in written instructions from Certificate Holders as provided in this Trust Indenture; and no implied duties or obligations shall be read into this Trust Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof), promptly take such action as may be necessary duly to discharge all liens and encumbrances on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the ownership of the Aircraft or the administration of the Trust Indenture Estate or any other transaction pursuant to this Trust Indenture or any document included in the Trust Indenture Estate. SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR INSTRUCTIONS. The Owner Trustee and the Indenture Trustee agree that they will not use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate except (i) as required by the terms of the Lease or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Trust Indenture and in accordance with the express terms hereof. SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES. At any time an Airframe or Engine is to be replaced under or pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of Default is continuing, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid, but only upon compliance by Lessee with the applicable provisions of Section 10 of the Lease and upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee, requesting such release specifically describing the Airframe and/or Engine(s) so to be released. (2) A certificate signed by a duly authorized officer of Lessee stating the following: -52- 53 A. With respect to the Replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe to be received (including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number) as consideration for the Airframe to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of such Replacement Airframe free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Airframe will on such date be in good working order and condition, and that such Replacement Airframe has been or, substantially concurrently with such withdrawal, will be duly registered in the name of the Owner Trustee under the Federal Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and that Lessee will have the full right and authority to use such Replacement Airframe; (iv) the existence of the insurance required by Section 11 of the Lease with respect to such Replacement Airframe and the payment of all premiums then due thereon; (v) that the Replacement Airframe is of the same or an improved model as the Airframe requested to be released from this Indenture; (vi) the fair market value of the Replacement Airframe as of the date of such certificate (which in the judgment of Lessee shall be not less than the then fair market value of the Airframe requested to be released (assuming such Airframe was in the condition and repair required to be maintained under the Lease)); (vii) the fair market value of the Airframe immediately prior to the date the Airframe suffered an Event of Loss (assuming such Airframe was in the condition and repair required to be maintained under the Lease); -53- 54 (viii) that no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default, has occurred which has not been remedied or waived, and that Lessee will not be in default, by the making and granting of the request for release and the addition of a Replacement Airframe, in the performance of any of the terms and covenants of the Lease; and (ix) that the release of the Airframe so to be released will not be in contravention of any of the provisions of this Indenture; or B. with respect to the replacement of any Engine: (i) a description of the Engine which shall be identified by manufacturer's serial number; (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) as consideration for the Engine to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Engine will on such date be in good working order and condition and that such Replacement Engine is substantially the same as the Engine to be released (or as improved model); (iv) the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then fair market value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease)); (v) the fair market value of the Engine to be released (immediately prior to any Event of Loss suffered by such Engine and assuming that such Engine was in the condition and repair required to be maintained under the Lease); (vi) that each of the conditions specified in Section 10(b) of the Lease with respect to such Replacement Engine have been satisfied and that Lessee will not be in default, by the making and granting of the request for release and the addition of the Replacement Engine, in the performance of any of the terms and covenants of the Lease; -54- 55 (vii) that, with respect to the replacement of an Engine pursuant to Section 9(d) of the Lease, no Lease Event of Default and no Lease Default has occurred which has not been remedied or waived; and (viii) that the release of the Engine so to be released will not be in contravention of any of the provisions of this Indenture. (3) (a) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting such Replacement Airframe or Replacement Engine and any related warranty rights to the lien of this Indenture. (b) With respect to the replacement of any Engine, such Uniform Commercial Code financing statements covering the lien created by this Indenture as deemed necessary or desirable by counsel for the Indenture Trustee to protect the lien under the Indenture in the Replacement Engine. (4) A certificate from either an aircraft engineer (who may be an employee of Lessee) or a firm of independent aircraft appraisers selected by Lessee confirming the accuracy of the information set forth in clause (2)A(vi) of this Section 5.06. (5) The opinion of in-house counsel to Lessee, or other counsel satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Trust Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be lawfully released from the lien of this Trust Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Trust Indenture, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate -55- 56 and interest of the Owner Trustee to and the lien of this Trust Indenture on such Replacement Aircraft or Replacement Engine. SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS. If a Replacement Airframe or Replacement Engine is being substituted as contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Certificate Holders and Lessee, subject to fulfillment of the conditions precedent and compliance by Lessee with its obligations set forth in Section 10 of the Lease and the requirements of Section 5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to execute and deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease. SECTION 5.08. EFFECT OF REPLACEMENT. In the event of the substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced, and (b) the provisions of this Trust Indenture shall no longer be applicable to the Airframe or Engine or Engines being replaced, which shall be released from the Lien of this Indenture. SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of the Lease shall be held in accordance with the terms of such Section and the Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of the Owner Trustee under such Section. Any amounts held by the Indenture Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee may acquire the same using its best efforts. Unless otherwise expressly provided in this Trust Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Trust Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its -56- 57 maturity) by the Indenture Trustee without instructions whenever such sale is necessary to make a distribution required by this Trust Indenture. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse all monies constituting part of the Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its individual capacity, and the Indenture Trustee, in its individual capacity, shall not be answerable or accountable under any circumstances, except (i) for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be willful misconduct or negligence), (ii) in the case of the Indenture Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii) for liabilities that may result, in the case of the Owner Trustee, from the inaccuracy of any representation or warranty of the Owner Trustee expressly made in its individual capacity in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents) or, in the case of the Indenture Trustee (in its individual capacity), from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable for any action or inaction of the other or of the Owner Participant. SECTION 6.02. ABSENCE OF DUTIES. In the case of the Indenture Trustee, except in accordance with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the Lease or of this Trust Indenture or any other document, or to see to the maintenance of any such registration, recording or filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Lessee's covenants under the Lease with respect to the Aircraft. The Owner Participant shall -57- 58 not have any duty or responsibility hereunder, including, without limitation, any of the duties mentioned in clauses (i) through (v) above; provided, that nothing contained in this sentence shall limit any obligations of the Owner Participant under the Participation Agreement or relieve the Owner Participant from any restriction under Section 4.03 hereof. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR DOCUMENTS. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its individual capacity warrants that (i) the Owner Trustee has received on the Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Trustee in its individual capacity. Neither the Owner Trustee, in its individual capacity or as Owner Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual or trust capacities, makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Trust Indenture, the Trust Agreement, the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Owner Trustee made in its individual capacity and the representations and warranties of the Indenture Trustee, in each case expressly made in this Trust Indenture or in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement). The Loan Participants, the Certificate Holders and the Owner Participant make no representation or warranty hereunder whatsoever. SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the Certificate Holders, Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by Law or Section 10(f) or 11(g) of the Lease and Section 5.09 -58- 59 hereof, and may be deposited under such general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for any interest thereon (except that the Indenture Trustee shall invest all monies held as directed by Lessee so long as no Lease Event of Default or Lease Default has occurred and is continuing (or in the absence of such direction, by the Majority In Interest of Certificate Holders) in Cash Equivalents; provided, however, that any payments received, or applied hereunder, by the Indenture Trustee shall be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL. Neither the Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors (or, in the case of the Owner Participant which originally executed the Participation Agreement, evidence of the approval by the Executive Committee thereof) of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Secured Certificates outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to Lessee the manner of ascertainment of which is not specifically described herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee and the Indenture Trustee for any action taken or omitted to be taken by them in good faith in reliance thereon. The Indenture Trustee shall assume, and shall be fully protected in assuming, that the Owner Trustee is authorized by the Trust Agreement to enter into this Trust Indenture and to take all action to be taken by it pursuant to the provisions hereof, and shall not inquire into the authorization of the Owner Trustee with respect thereto. In the administration of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled persons. SECTION 6.06. CAPACITY IN WHICH ACTING. The Owner Trustee acts hereunder solely as trustee as herein and in the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein, in the Trust Agreement and in the Participation Agreement. -59- 60 SECTION 6.07. COMPENSATION. The Indenture Trustee shall be entitled to reasonable compensation, including expenses and disbursements (including the reasonable fees and expenses of counsel), for all services rendered hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by Lessee, and shall have the right, on and subsequent to an Event of Default hereunder, to use or apply any monies held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against the Loan Participants, the Certificate Holders, the Owner Trustee or the Owner Participant for any fee as compensation for its services as trustee under this Trust Indenture. SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS. In the administration of the trusts created hereunder, the Indenture Trustee shall have the right to seek instructions from a Majority in Interest of Certificate Holders should any provision of this Trust Indenture appear to conflict with any other provision herein or should the Indenture Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no liability in refraining from acting until it receives such instructions. The Indenture Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.08. ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. SCOPE OF INDEMNIFICATION. The Owner Trustee, not in its individual capacity, but solely as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its individual and trust capacities), and its successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Trust Indenture), claims, actions, suits, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever, which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also indemnified against by any other Person under any other document) in any way relating to or arising out of this Trust Indenture or any other Operative Document to which it is a party or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust -60- 61 Indenture Estate or the action or inaction of the Indenture Trustee hereunder, to the extent not reimbursed by Lessee. Without limiting the foregoing, the Indenture Trustee agrees that, prior to seeking indemnification from the Trust Indenture Estate, it will demand, and take such action as it may in its discretion determine to be reasonable to pursue, indemnification available to the Indenture Trustee under the Lease or the Participation Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be entitled to any indemnification for any Expenses to the extent relating to or arising from the willful misconduct or gross negligence (or negligence in the case of handling funds) of the Indenture Trustee in the performance of its duties hereunder or resulting from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) referred to in Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities under such Sections. In addition, if necessary, the Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement including upon any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee, Lessee and the Certificate Holders. SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Certificate Holders may at any time (but only with the consent of Lessee, which consent shall not be unreasonably withheld, except that such consent shall not be necessary if a Lease Event of Default is continuing) remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Certificate Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a -61- 62 successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so long as no Lease Event of Default shall have occurred and be continuing, shall be subject to Lessee's reasonable approval. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as above provided. (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee an instrument accepting such appointment and assuming the obligations of the Indenture Trustee under the Participation Agreement arising from and after the time of such appointment, and thereupon such successor Indenture Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee herein; but nevertheless upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all monies or other property then held by such predecessor Indenture Trustee hereunder. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having its principal place of business in the Borough of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations under the Operative Documents are guaranteed by an affiliated entity having) a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. (d) Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Indenture Trustee may be transferred, shall, subject to the terms of paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the Indenture Trustee under this Trust Indenture without further act. -62- 63 SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Trust Indenture Estate shall be situated or to make any claim or bring any suit with respect to or in connection with the Trust Indenture Estate, this Trust Indenture, any other Indenture Agreement, the Secured Certificates or any of the transactions contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interests of the Certificate Holders (and the Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture Trustee shall have been requested to do so by a Majority in Interest of Certificate Holders, then in any such case, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and such other instruments as may from time to time be necessary or advisable either (1) to constitute one or more bank or trust companies or one or more persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as additional trustee or trustees of all or any part of the Trust Indenture Estate, or to act as separate trustee or trustees of all or any part of the Trust Indenture Estate, in each case with such rights, powers, duties and obligations consistent with this Trust Indenture as may be provided in such supplemental indenture or other instruments as the Indenture Trustee or a Majority in Interest of Certificate Holders may deem necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional and separate trustee, subject in each case to the remaining provisions of this Section 8.03. If the Owner Trustee shall not have taken any action requested of it under this Section 8.03(a) that is permitted or required by its terms within 15 days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing provisions of this Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and perform any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee. In case any additional or separate trustee appointed under this Section 8.03(a) shall die, become incapable of acting, resign or be removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to the Indenture Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.03(a). (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Trust Indenture Estate or otherwise payable under any Operative Document to the Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights, powers, duties and obligations conferred or imposed -63- 64 upon any additional or separate trustee shall be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly except to the extent that applicable Law of any jurisdiction in which any particular act is to be performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of the Indenture Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Indenture Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.03 shall be subject to, and shall have the benefit of Articles IV through VIII and Article X hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. (c) If at any time the Indenture Trustee shall deem it no longer necessary or desirable in order to conform to any such law or take any such action or shall be advised by such counsel that it is no longer so necessary or desirable in the interest of the Certificate Holders, or in the event that the Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Certificate Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when and to the extent it could so act under Section 8.03(a) hereof. ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS. (a) Except as provided in Section 5.02 hereof, and except with respect to Excluded Payments, the Owner Trustee agrees it shall not enter into any amendment of or supplement to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee and a Majority in Interest of Certificate Holders. Anything to the contrary contained herein notwithstanding, without the necessity of the consent of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant -64- 65 may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter into amendments of or additions to the Lease to modify Section 5 (except to the extent that such amendment would affect the rights or exercise of remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such amendments, modifications and changes do not and would not affect the time of, or reduce the amount of, Rent payments until after the payment in full of all Secured Obligations or otherwise adversely affect the Certificate Holders. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Section 5.02(a)(2)(i) hereof, the Indenture Trustee agrees with the Certificate Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Certificate Holders, or does not adversely effect the Certificate Holders, but upon the written request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each holder of an affected Secured Certificate then outstanding, no such amendment of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an Event of Default) of the Lease, the definitions of "Event of Default", "Default", "Lease Event of Default", "Lease Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Secured Certificate, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in favor of the Certificate Holders, (iv) consent to any change in the Trust Indenture or the Lease which would permit redemption of Secured Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as permitted by Section 2.14 hereof, (v) modify any of the provisions of Section 3(d)(v) of the Lease, or modify, amend or supplement the Lease or consent to any assignment of the Lease, in either case releasing Lessee from its obligations in respect of the payment of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 3 and 18 of the Lease or (vi) permit the creation of -65- 66 any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. So long as no Lease Event of Default has occurred and is continuing, without the consent of Lessee no amendment or supplement to this Trust Indenture or waiver or modification of the terms hereof shall adversely affect Lessee. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Certificate Holder for any of the following purposes: (i) (a) to cure any defect or inconsistency herein or in the Secured Certificates, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Certificate Holders in its capacity solely as Certificate Holder; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Trust Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Certificate Holders, or to surrender any rights or power herein conferred upon the Owner Trustee, the Owner Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and (vii) to include on the Secured Certificates any legend as may be required by law. SECTION 9.02. TRUSTEES PROTECTED. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of Section 9.01 hereof adversely affects any right, duty, immunity or indemnity with respect to such institution under this Trust Indenture or the Lease, such institution may in its discretion decline to execute such document. SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to Section 9.01 hereof, the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each Certificate Holder at its address last set forth in the Secured Certificate Register, but the failure of the Indenture Trustee to mail such copies shall not impair or affect the validity of such document. -66- 67 SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST AGREEMENT AND INDENTURE SUPPLEMENT. No written request or consent of the Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof shall be required to enable the Owner Trustee to enter into any Lease Supplement specifically required by the terms of the Lease or to execute and deliver a Trust Agreement and Indenture Supplement specifically required by the terms hereof. ARTICLE X MISCELLANEOUS SECTION 10.01. TERMINATION OF TRUST INDENTURE. Upon (or at any time after) payment in full of the Principal Amount of, Make-Whole Amount, if any, and interest on and all other amounts due under all Secured Certificates and provided that there shall then be no other Secured Obligations due to the Certificate Holders and the Indenture Trustee hereunder or under the Participation Agreement, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft and the Engines from the Lien of this Trust Indenture and releasing the Lease, the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto from the assignment and pledge thereof hereunder and the Indenture Trustee shall execute and deliver such instrument as aforesaid and give written notice thereof to Lessee; provided, however, that this Trust Indenture and the trusts created hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property constituting part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all monies or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE HOLDERS. No holder of a Secured Certificate shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Secured Certificate or other right, title and interest of any Certificate Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Trust Indenture or entitle such holder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Trust Indenture Estate. -67- 68 SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING. Any sale or other conveyance of the Trust Indenture Estate, or any part thereof (including any part thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind the Certificate Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders in and to such Trust Indenture Estate or part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS. Nothing in this Trust Indenture, whether express or implied, shall be construed to give any person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or equitable right, remedy or claim under or in respect of this Trust Indenture. SECTION 10.05. NOTICES. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), with a copy to the Owner Participant addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee, addressed to it at its office at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to any Participant, Lessee or any Certificate Holder, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party (if any) set forth on the signature pages to the Refunding Agreement or in the Secured Certificate Register. Whenever any notice in writing is required to be given by the Owner Trustee, any Participant or the Indenture Trustee or any Certificate Holder or Lessee to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after being mailed, addressed as provided above. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Trust Indenture. SECTION 10.06. SEVERABILITY. Any provision of this Trust Indenture which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or -68- 69 unenforceability without invalidating the remaining provisions hereof. Any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS. No term or provision of this Trust Indenture or the Secured Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Owner Trustee and the Indenture Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any Secured Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 10.08. SUCCESSORS AND ASSIGNS. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the permitted successors and assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificate Holder shall bind the successors and assigns of such holder. This Trust Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby, thereby and by the Participation Agreement. Each Certificate Holder by its acceptance of a Secured Certificate agrees to be bound by this Trust Indenture and all provisions of the Participation Agreement applicable to a Loan Participant or a Certificate Holder. SECTION 10.09. HEADINGS. The headings of the various Articles and sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.10. NORMAL COMMERCIAL RELATIONS. Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or any bank or other Affiliate of such Participant may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Lessee, fully to the same extent as if this Trust Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. -69- 70 SECTION 10.11. GOVERNING LAW; COUNTERPART FORM. THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the parties hereto in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.12. VOTING BY CERTIFICATE HOLDERS. All votes of the Certificate Holders shall be governed by a vote of a Majority in Interest of Certificate Holders, except as otherwise provided herein. SECTION 10.13. BANKRUPTCY. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee hereunder), shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any of the provisions of this Trust Indenture or the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner Trustee will take any action contrary to Lessee's rights under the Lease, including the right to possession and use of, and the quiet enjoyment of, the Aircraft, except in accordance with provisions of the Lease. -70- 71 IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to be duly executed by their respective officers thereof duly authorized as of the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, as Owner Trustee By: ----------------------------------- Name: --------------------------------- Title: -------------------------------- STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By: ----------------------------------- Name: --------------------------------- Title: -------------------------------- -71- 72 EXHIBIT A TO TRUST INDENTURE AND MORTGAGE TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 A] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 A], dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 A] dated as of February 27, 1996 (the "TRUST AGREEMENT"), between the Owner Trustee and the Owner Participant named therein. W I T N E S S E T H: WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 A], dated as of June 12, 1996 (as amended and supplemented to the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft, and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for recordation on the date hereof with the FAA as one document; NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust Indenture Estate covers all of Owner Trustee's right, title and interest in and to the following described property: 73 AIRFRAME One airframe identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number - ------------ ----- ------------ -------------- together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Two aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows: Manufacturer Manufacturer's Model Serial Number - ------------ -------------------- ------------- together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to any of such engines. Together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts). As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Loan Participants and of the Certificate Holders, in the trust created by the Trust Indenture, all of the right, title and EXHIBIT A-2 74 interest of the Owner Trustee in, to and under the Lease Supplement [of even date herewith] covering the property described above. Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III of the Trust Indenture without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Trust Indenture Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. EXHIBIT A-3 75 IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, Owner Trustee By: ---------------------------------- Name: Title: EXHIBIT A-4 76 SCHEDULE I
PRINCIPAL AMOUNT INTEREST RATE ---------------- ------------- Series A . . . . . . . . . . . $25,822,519 7.67% Series B . . . . . . . . . . . $ 8,607,488 8.07% Series C . . . . . . . . . . . $ 5,569,993 8.97%
77 SECURED CERTIFICATES AMORTIZATION SERIES A AIRCRAFT: N537US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 2.00014181% Jul 2, 1997 0.00000000% Jan 2, 1998 1.99999466% Jul 2, 1998 0.00000000% Jan 2, 1999 1.99999466% Jul 2, 1999 0.00000000% Jan 2, 2000 1.99999466% Jul 2, 2000 0.00000000% Jan 2, 2001 1.99999466% Jul 2, 2001 0.00000000% Jan 2, 2002 1.99999466% Jul 2, 2002 0.00000000% Jan 2, 2003 1.99999466% Jul 2, 2003 0.00000000% Jan 2, 2004 1.99999466% Jul 2, 2004 0.00000000% Jan 2, 2005 1.99999466% Jul 2, 2005 0.00000000% Jan 2, 2006 1.99999466% Jul 2, 2006 0.00000000% Jan 2, 2007 1.99999466% Jul 2, 2007 0.00000000% Jan 2, 2008 1.84681053% Jul 2, 2008 0.15318413% Jan 2, 2009 1.41749920% Jul 2, 2009 0.58249546% Jan 2, 2010 10.28099544% Jul 2, 2010 1.02852863% Jan 2, 2011 11.47321065% Jul 2, 2011 1.50796675% Jan 2, 2012 11.97103970% Jul 2, 2012 2.02488766% Jan 2, 2013 12.50778052% Jul 2, 2013 2.58221516% Jan 2, 2014 13.08648471% Jul 2, 2014 7.53681312%
78 SERIES B AIRCRAFT: N537US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 1.99999117% Jul 2, 1997 0.00000000% Jan 2, 1998 1.99999117% Jul 2, 1998 0.00000000% Jan 2, 1999 1.99999117% Jul 2, 1999 0.00000000% Jan 2, 2000 1.99999117% Jul 2, 2000 0.00000000% Jan 2, 2001 1.99999117% Jul 2, 2001 0.00000000% Jan 2, 2002 1.99999117% Jul 2, 2002 0.00000000% Jan 2, 2003 1.99999117% Jul 2, 2003 0.00000000% Jan 2, 2004 1.99999117% Jul 2, 2004 0.00000000% Jan 2, 2005 1.99999117% Jul 2, 2005 0.00000000% Jan 2, 2006 1.99999117% Jul 2, 2006 0.00000000% Jan 2, 2007 1.99999117% Jul 2, 2007 0.00000000% Jan 2, 2008 18.59999108% Jul 2, 2008 0.00000000% Jan 2, 2009 27.44044488% Jul 2, 2009 0.00000000% Jan 2, 2010 2.18722350% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 0.00000000% Jul 2, 2014 29.77243767%
79 SERIES C AIRCRAFT: N537US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 5.91392126% Jul 2, 1997 0.00000000% Jan 2, 1998 0.97578220% Jul 2, 1998 0.00000000% Jan 2, 1999 2.02389841% Jul 2, 1999 0.00000000% Jan 2, 2000 3.16601834% Jul 2, 2000 0.00000000% Jan 2, 2001 4.41059800% Jul 2, 2001 0.00000000% Jan 2, 2002 5.76679360% Jul 2, 2002 0.00000000% Jan 2, 2003 7.24465901% Jul 2, 2003 0.00000000% Jan 2, 2004 8.85509192% Jul 2, 2004 0.00000000% Jan 2, 2005 10.60997743% Jul 2, 2005 0.00000000% Jan 2, 2006 12.52225990% Jul 2, 2006 0.00000000% Jan 2, 2007 29.90511837% Jul 2, 2007 0.00000000% Jan 2, 2008 8.60588155%
80 SCHEDULE II 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. EX-4.E3 37 LEASE AGREEMENT-1996 A 1 LEASE AGREEMENT [NW 1996 A] This LEASE AGREEMENT [NW 1996 A], dated as of February 27, 1996, between FIRST SECURITY BANK OF UTAH, 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 1996 A] and shall be equally applicable to both the singular and the plural forms of the terms herein defined: "Administrative Agent" means [_____________], a [__________] banking corporation, as administrative agent pursuant to the Participation Agreement, and any successor acting as administrative agent. "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 two 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 Boeing 757-251 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 2 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. "Assumed Interest Rate" has the meaning set forth in Section 3(c) hereof. "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 Commencement Date and ending on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. "Bill of Sale" means a full warranty bill 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 Bill of Sale shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good title to the Airframe and each Engine described in such Bill 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 New York, New York; Boston, Massachusetts; Salt Lake City, Utah; Phoenix, Arizona or Minneapolis, Minnesota and, in connection with any payment of Rent and so long as any Secured Certificate is a Eurodollar Loan (as defined in the Trust Indenture), such day is also a day for trading by and between banks in the interbank Eurodollar market. - 2 - 3 "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. "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. "Code" means the Internal Revenue Code of 1986, as amended. "Commencement Date" means January 2, 1997. "Commitment" means the commitment of a Loan Participant 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 1996 A], 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. "Credit Agreement" means the Credit Agreement, dated as of November 2, 1995, among Lessee, the banks, financial institutions and other institutional lenders listed on the signature pages thereof, [______________], as documentation agent, [____________], as administrative agent, and [________________], as syndication agent, as the same may be amended, supplemented or otherwise modified from time to time. "Debt Rate" has the meaning set forth in the Trust Indenture. "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. - 3 - 4 "Depreciation Period" means the period commencing on the Delivery Date and ending on December 31, 2003, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. "Documentation Agent" means [_____________], a bank organized under the laws of [______________], as documentation agent pursuant to the Participation Agreement, and any successor acting as documentation agent. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of the two Pratt & Whitney Model PW2037 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 two 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 hereunder. The term "Engines" means, as of any date of determination, all Engines then leased hereunder. "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 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 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 - 4 - 5 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, 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, 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 Lessee's entire U.S. registered fleet of Boeing Model 757-200 aircraft and Lessee, 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, 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 the Interim 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 the Transition Date or the Commencement 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 the Transition Date or the Commencement Date; provided, however, that, to the extent that the aggregate amount of interest due and payable on the Transition Date on the Secured Certificates relating to the period from and including the Delivery Date to but excluding the Transition Date is less than the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Transition Date if such Secured Certificates had borne interest at the Assumed Interest Rate for such period, the corresponding percentage set forth in Exhibit B shall be decreased by the amount which when multiplied by Lessor's Cost will equal such differential. "Expenses" has the meaning specified in Section 7(c) of the Participation Agreement. - 5 - 6 "FAA Bill of Sale" means a bill 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). "Funding Loss Amount" has the meaning assigned to that term in the Trust Indenture. "Guarantee" means the Guarantee [NW 1996 A], dated as of the date hereof, made by the Guarantor in favor of the Parties, 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 the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Administrative Agent, the Documentation Agent, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents. - 6 - 7 "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. "Interest Period" means Interest Period as defined in the Trust Indenture. "Interim Rent" means the rent payable for the Aircraft for the Interim Term pursuant to Section 3(b) hereof. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions hereof. "Lease Agreement", "this Lease Agreement", "this Lease", "this Agreement", "herein", "hereof", "hereunder", "hereby" or other like words mean this Lease Agreement [NW 1996 A] 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 semi-annual periods throughout the Basic Term and any Renewal Term ending on a Lease Period Date, the first such period commencing on and including the Commencement Date. - 7 - 8 "Lease Period Date" means July 2, 1997 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 Bill of Sale, the Bill 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 - 8 - 9 in favor of First Security Bank of Utah, 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. "Loan Participant" means each institution executing the Participation Agreement as a Loan Participant, and its respective successors and assigns, and any Certificate Holder; at any time when there is only one Certificate Holder, "each Loan Participant" shall mean such 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. "Manufacturer" means The Boeing Company, a Delaware corporation. "Manufacturer Documents" means the Purchase Agreement and the Consent and Agreement. "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 7.166 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 Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Guarantee, the Purchase Agreement Assignment and the Consent and Agreement. "Overall Transaction" means all the transactions contemplated by the Operative Documents. "Owner Participant" means the corporation executing the Participation Agreement as the Owner Participant and any person to which such corporation - 9 - 10 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 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 1996 A], dated as of the date hereof, among Lessee, the Loan Participants, the Indenture Trustee, the 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. "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 - 10 - 11 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. "Prepaid Rent" has the meaning assigned in Section 3(g) hereof. "Purchase Agreement" means the Purchase Agreement No. 1631, dated December 1, 1989, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1996 A], 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. "Reimbursement Amount" has the meaning set forth in Section 3(g) hereof. "Renewal Term" means any Fixed Renewal Term or Fair Market Renewal Term as those terms are defined in Section 19 hereof. "Rent" means Interim Rent, Basic Rent and Supplemental Rent, collectively. "Rent Differential Amount" has the meaning set forth in Section 3(c) hereof. "Secured Certificates" has the meaning assigned to that term in the Trust Indenture. "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 January 2, 2019, means, but subject always to the - 11 - 12 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). To the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Interim Term or the Lease Period in which such Stipulated Loss Value Date occurs up to and including such Stipulated Loss Value Date is greater or less than the amount included in calculating the percentage set forth in Exhibit C with respect to such Stipulated Loss Value Date on account of such interest, the corresponding percentage set forth in Exhibit C shall be adjusted appropriately to compensate for such differential. "Stipulated Loss Value" as of any date after January 2, 2019 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 Interim Term, 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. "Supplemental Rent" means all amounts, liabilities and obligations (other than Interim Rent and Basic Rent) which Lessee assumes or agrees to pay to Lessor or others hereunder, under the Participation Agreement, under the Tax Indemnity Agreement or under any of the other Operative Documents. The parties acknowledge that Supplemental Rent is a general category and, accordingly, agree that any provision of any Operative Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment. "Tax Indemnitee" means the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors and permitted assigns. "Tax Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1996 A], dated as of the date hereof, between the Owner Participant and Lessee, as originally executed or as modified, amended or supplemented pursuant to the applicable provisions thereof. - 12 - 13 "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 Interim Term, 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 January 2, 2019, 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). In the event that the Termination Date with respect to which Termination Value is determined is a date on which Basic Rent is payable in advance as indicated on Exhibit B, to the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Lease Period ending on such Termination Date is greater or less than the amount included in calculating the corresponding percentage set forth in Exhibit D with respect to such Termination Date on account of such interest, the corresponding percentage set forth in Exhibit D shall be adjusted appropriately to compensate for such differential. "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Bingham, Dana & Gould, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker, special counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Vedder, Price, Kaufman & Kammholz, special counsel to the Loan Participants, such information to be furnished by the Documentation Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee and Guarantor, such information to be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust - 13 - 14 Indenture, such information to be furnished by the Indenture Trustee, (v) the fee of BK Associates, Inc. with respect to the appraisal of the Aircraft pursuant to Section 4(a)(xxix) of the Participation Agreement, such information to be furnished by Lessee, (vi) the reasonable and actual fees, expenses and disbursements of Feltman, Karesh, Major & Farbman, special counsel to the Owner Participant, such fees not to exceed the amount previously agreed to by the Owner Participant and Lessee, and the reasonable and actual fees, expenses and disbursements of David, Hagner, Kuney & Krupin, P.C., special tax counsel to the Owner Participant, such fees not to exceed the amount previously agreed to by the Owner Participant and Lessee, such information to be furnished by the Owner Participant, (vii) the equity placement fee and reasonable disbursements of Babcock and Brown Financial Corporation, such information to be furnished by Lessee, and (viii) the fee payable to the Loan Participants on the Delivery Date. "Transition Date" means the date designated as such in Exhibit B to the Lease. "Trust Agreement" means that certain Trust Agreement [NW 1996 A], dated as of the date hereof, between the Owner Participant and First Security Bank of Utah, 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 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 1996 A], dated as of the date hereof, between Lessor and the Indenture Trustee, as originally executed or as modified, amended or supplemented in accordance with the provisions thereof. "Trust Supplement" means a supplement to the Trust Agreement and the Trust Indenture, substantially in the form of Exhibit A to the Trust Indenture. "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 - 14 - 15 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. SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to satisfaction of the conditions set forth in Section 4(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 Section 4(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) Interim Term and Basic Term. The Interim Term shall commence on the Delivery Date and end on and include the day immediately preceding the Commencement Date unless earlier terminated pursuant to the provisions hereof. The Basic Term shall commence on the Commencement Date and end on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. (b) Interim Rent. Lessee shall pay Interim Rent on the Commencement Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for Interim Rent on the Commencement Date. Although the Interim Rent percentage set forth in Exhibit B hereto has been computed on the assumption that the rate of interest on the Secured Certificates will be the Assumed Interest Rate, Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, the Interim Rent payable on the Commencement Date shall be increased or decreased (but not below zero) by the difference between (i) the aggregate amount of interest due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to but excluding the Commencement Date and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to the Commencement Date if such Secured Certificates had borne interest at the Assumed Interest Rate. If the amount determined in accordance with clause (i) of the preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of - 15 - 16 Interim Rent payable on the Commencement Date shall be increased by such difference. If the amount determined in accordance with clause (i) of the preceding sentence shall be less than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be decreased (but not below zero) by such difference. (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 applicable Lease Period Date specified in Exhibit B hereto. Although the Basic Rent percentages set forth in Exhibit B hereto have been computed on the assumption that the rate of interest on the Secured Certificates throughout the Term will be 7.166% per annum, computed on the basis of a 360-day year of twelve 30-day months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, each installment of Basic Rent shall be increased or decreased (but not below zero), as the case may be, by the Rent Differential Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with respect to the Basic Term, the difference between (i) the aggregate amount of interest due and payable on such Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on such Lease Period Date if such Secured Certificates had borne interest at the Assumed Interest Rate, in each case for the period from and including the Lease Period Date (or the Commencement Date in the case of the first Lease Period) next preceding such Lease Period Date to but excluding such Lease Period Date. If, as of any Lease Period Date, the amount determined in accordance with clause (i) of the immediately preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Basic Rent payable on such Lease Period Date shall be increased by the Rent Differential Amount. If, as of any Lease Period Date, the amount determined in accordance with such clause (ii) shall exceed the amount determined in accordance with such clause (i), the amount of Basic Rent due on such Lease Period Date shall be decreased (but not below zero) by the Rent Differential Amount. (d) Adjustments to Basic Rent. (i) In the event that (A) the Delivery Date occurs other than on February 29, 1996, or (B) Transaction Expenses paid by Lessor pursuant to Section 16(a) of the Participation Agreement are determined to be other than 1.0% 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 - 16 - 17 the Owner Participant, on or prior to June 15, 1996 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. (ii) (A) In the event of a refinancing or a refunding 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 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. In addition, (X) any recalculation of Basic Rent, Stipulated Loss Value or Termination Value percentages made pursuant to this Section 3(d) shall take into account any decrease in the Excess Amount with respect to the Transition Date required by the proviso to the definition of "Excess Amount", (Y) after January 31, 1997 but prior to July 2, 1997, the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C and the Termination Value percentages set forth in Exhibit D shall be recalculated to take into account any decrease in Excess Amount with respect to the Transition Date that has not therefore been taken into account in accordance with clause (X) of this sentence, and (Z) at the time of any payment of Stipulated Loss Value or Termination Value, the Stipulated Loss Value percentage set forth in Exhibit C or the Termination Value percentage set forth in Exhibit D, by reference to which the amount of such payment is determined shall be recalculated to take into account any decrease in the Excess Amount with respect to the Transition - 17 - 18 Date that has not theretofore been taken into account in accordance with clause (X) or clause (Y) of this sentence. (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 Interim Rent and 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 Interim Rent, 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 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), 4.07 and 4.08(1) of Rev. Proc. 75-28 and with Section 467 of the Internal Revenue Code of 1986, as amended, as each is in effect on the Delivery Date (provided that the test of Rev. Proc. 75-28 Section 4.08(1) and Section 467 shall be applied on a prospective basis from the date of such adjustment if and to the extent permitted by applicable law, as then in effect) 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 - 18 - 19 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 when due any amount of premium payable when due under the Trust Indenture and shall pay amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when the same shall become due and payable. 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 Interim Rent and 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 of Utah, National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW 1996 A (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 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, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1996 A (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 10 Business Days prior to the date such payment of Rent is due). 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). - 19 - 20 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 the Transition Date or the Commencement Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall on the Transition Date or the Commencement Date, prepay on the Transition Date or the Commencement 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 shall, under all circumstances and whether or not an Event of Default shall be continuing on the Transition Date, pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount equal to the excess, if any, of the interest on the Secured Certificates relating to the period from and including the Delivery Date to but excluding the Transition Date over the Excess Amount payable on the Transition Date; provided, further, 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 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 Interim Rent or Basic Rent to an amount insufficient, together with the Excess Amount and all other amounts payable - 20 - 21 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 of Utah, 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 that 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 so long as this Lease shall not have been declared in default pursuant to Section 15 hereof, (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, 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, - 21 - 22 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 Pratt & Whitney Model PW2037 engines or two 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 both 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 that 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 Exhibit G. 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 thereto, provided that such cooperation shall not interfere with the operation or maintenance of the Aircraft by Lessee or any Sublessee. - 22 - 23 (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) bill 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 bill 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 that 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 bill 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 that 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens), Loan Participant Liens, and Indenture Trustee's Liens, (iv) Liens - 23 - 24 for taxes of Lessee (or any Sublessee) either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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, the 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 forty-five (45) days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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 temporary periods of storage in accordance with applicable regulations or during maintenance or modification permitted hereunder) under the Federal Aviation Act, except when all Boeing 757-200 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 - 24 - 25 same manner and standard of maintenance, service, repair or 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), 14(e) or 14(f) or Event of Default shall have occurred and be continuing at the time of such sublease, delivery, transfer or relinquishment of - 25 - 26 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 Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee 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 any 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 - 26 - 27 (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; (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 - 27 - 28 (x) Lessee may, at any time, enter into any sublease with (1) a U.S. Air Carrier, (2) any Person approved in writing by the Owner Participant and the Indenture Trustee, 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 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 - 28 - 29 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 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 of Utah, 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 - 29 - 30 (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 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 - 30 - 31 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) 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 $400,000. 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) - 31 - 32 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]. (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 its best 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 - 32 - 33 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 that 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 selling price realized at such sale to be 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 sale 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 premium and Funding Loss 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 that 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 premium and Funding Loss 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 premium and Funding Loss 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 - 33 - 34 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 premium, Funding Loss 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, 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 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 Interim Rent or 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) the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but - 34 - 35 not earlier than thirty (30) days after such occurrence) (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 the Commencement Date or 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 the Commencement Date or such Lease Period Date an amount equal to the Interim Rent or Basic Rent that would have been due on the Commencement Date or 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. 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 that 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 bill 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 - 35 - 36 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 bill of sale and a Federal Aviation Administration bill 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 that 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 bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft 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 Interim Rent or 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 - 36 - 37 Lessor, as replacement for the Engine with respect to which such Event of Loss occurred, title to another Pratt & Whitney Model PW2037 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 both 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) bill 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 that 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 bill 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 Interim Rent or 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 - 37 - 38 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 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 Exhibit G) 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) bill of sale with respect to each such engine, in form and substance - 38 - 39 reasonably satisfactory to Lessor (together with an opinion of counsel to the effect that such full warranty bill 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 that 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 bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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. (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 any 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) - 39 - 40 the amount of public liability and property damage insurance from time to time applicable to aircraft owned or operated by Lessee 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 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 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 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). - 40 - 41 (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 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 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, any 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 by Lessee 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 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 - 41 - 42 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 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 - 42 - 43 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). (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 by Lessee 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, 1996, a report, signed by Marsh & McLennan, Incorporated or any other independent firm of insurance brokers reasonably acceptable to Lessor (the "INSURANCE BROKERS"), describing in reasonable detail the - 43 - 44 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. (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. - 44 - 45 (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, Lessor, the Owner Participant or the Indenture Trustee or their respective authorized representatives may (not more than once every calendar year (unless an 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 - 45 - 46 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 Interim Rent, Basic Rent or Stipulated Loss Value within ten (10) 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 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 and in clauses (i)(B) and (ii) of the first sentence of second paragraph of Exhibit G) to be performed or observed by it under any Operative Document, and such failure - 46 - 47 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 one hundred eighty (180) 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 the representations and warranties in, or in connection with, the Credit Agreement) 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 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 - 47 - 48 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 Section 14(c) or (d) hereof, 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 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 - 48 - 49 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 the 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 Interim Rent or Basic Rent for the Aircraft due for the Commencement Date, Lease Periods commencing on or after the Commencement Date or the Lease Period Date specified as the payment date in such notice), any unpaid Interim Rent or Basic Rent due on the Commencement Date and 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 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 Interim Rent or Basic Rent for the Aircraft - 49 - 50 due on or after such date), any unpaid Interim Rent or 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 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 - 50 - 51 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 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 - 51 - 52 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 1996, 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 telecopy 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President-Finance and Treasurer (Telecopy No. (612) 726-0665), or to such other address - 52 - 53 or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246- 5053), 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. - 53 - 54 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 three 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 three 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), 14(e) or 14(f) 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 - 54 - 55 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 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 50% 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 that 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 - 55 - 56 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, 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 July 2, 2014 (or, if July 2, 2014 is not a Business Day, the Business Day immediately succeeding July 2, 2014), 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 2.15 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 that 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. - 56 - 57 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 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 - 57 - 58 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 Moody's 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 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 - 58 - 59 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. 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 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. - 59 - 60 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 OF UTAH, 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 _________________, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee BY: _____________________________ Title: - SIGNATURE PAGE - 61 EXHIBIT A TO LEASE AGREEMENT [NW 1996 A] LEASE SUPPLEMENT NO. [NW 1996 A] LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement [NW 1996 A], dated as of February 27, 1996, 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 1996 A], dated as of February 27, 1996, relating to one Boeing 757-251 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 Boeing 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the date hereof consists of the following components: - -------------------- (1) This language for Lease Supplement No. 1. (2) This language for other Lease Supplements. 62 (i) Airframe: FAA Registration No. ______; manufacturer's serial no. _____; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P______ and P______ (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 January 2, 2019. 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 The Boeing Company, or any subcontractor or supplier of The Boeing Company, 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 63 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 OF UTAH, 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 64 EXHIBIT B TO LEASE AGREEMENT [NW 1996 A] INTERIM RENT, BASIC RENT, EXCESS AMOUNT, LESSOR'S COST, TRANSITION DATE 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. Interim Rent, Basic Rent and Excess Amount:
Excess Amount Transition (Percentage of Date Lessor's Cost) ---------- -------------- Excess Amount Interim Rent Commencement (Percentage of (Percentage of Date Lessor's Cost) Lessor's Cost) ------------ -------------- -------------- Basic Rent (Percentage of Lease Period Date Lessor's Cost) ----------------- --------------
* Denotes payment in arrears from preceding Lease Period Date (or Commencement 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. 65 INTERIM RENT, BASIC RENT, EXCESS AMOUNT, LESSOR'S COST, TRANSITION DATE 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 (Percentage of Lease Period Date Lessor's Cost) ----------------- --------------
* Denotes payment in arrears from preceding Lease Period Date (or Commencement 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 66 INTERIM RENT, BASIC RENT, EXCESS AMOUNT, LESSOR'S COST, TRANSITION DATE, AND SPECIAL PURCHASE PRICE SCHEDULE Lessor's Cost for the Aircraft: Special Purchase Price: Transition Date: EXHIBIT B - PAGE 3 67 EXHIBIT C TO LEASE AGREEMENT [NW 1996 A] 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 --------------- ----------------
68 EXHIBIT D TO LEASE AGREEMENT [NW 1996 A] 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 ----------- -----------
69 EXHIBIT E TO LEASE AGREEMENT [NW 1996 A] 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. 70 EXHIBIT F TO LEASE AGREEMENT [NW 1996 A] 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. 71 EXHIBIT G TO LEASE AGREEMENT [NW 1996 A] 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. EX-4.E4 38 FIRST AMENDMENT TO LEASE AGREEMENT-1996 A 1 FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 A] This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 A], dated as of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee under the Trust Agreement [NW 1996 A], dated as of February 27, 1996 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a certain Lease Agreement [NW 1996 A], dated as of February 27, 1996 (the "ORIGINAL LEASE"), between Lessee and Lessor (the Original Lease, as supplemented by Lease Supplement No. 1 [NW 1996 A] ("LEASE SUPPLEMENT NO. 1") between Lessor and Lessee, dated February 29, 1996, herein called the "LEASE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; WITNESSETH: WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the Aircraft, which consists of the following components: (i) Airframe: FAA Registration No. N537US; manufacturer's serial No. 26484; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P727164 and P727165; WHEREAS, Section 17 of the Participation Agreement [NW 1996 A], dated as of February 27, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee, [ ] (the "OWNER PARTICIPANT"), the loan participants named therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured Certificates issued by the Owner Trustee under the Trust Indenture and Security Agreement [NW 1996 A], dated as of February 27, 1996, between Lessor (in its individual capacity as expressly provided therein and as trustee) and the Indenture Trustee may be refinanced under certain circumstances; WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW 1996 A], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State Street Bank and Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines Corporation (the "GUARANTOR"); WHEREAS, Lessor and Lessee desire to recalculate the Excess Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages in order to reflect, among other things, the interest rate of the refinanced Secured Certificates; 2 WHEREAS, in connection with the recalculation of the Excess Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages, Lessor and Lessee desire to amend the Lease; WHEREAS, a counterpart of the Original Lease, to which were attached and made a part thereof counterparts of Lease Supplement No. 1, the Trust Indenture and Security Agreement [NW 1996 A], dated as of February 27, 1996, and the Trust Agreement and Indenture Supplement [NW 1996 A], dated February 29, 1996, was recorded by the Federal Aviation Administration (the "FAA") on March 1, 1996, and assigned Conveyance No. P05934; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE. (a) The definitions of "Business Day", "Certificated Air Carrier", "Delivery Date", "Indemnitee", "Indenture Trustee's Liens", "Loan Participant", "Net Present Value of Rents", "Operative Documents", "Stipulated Loss Value", "Supplemental Rent", "Tax Indemnitee", "Termination Value" and "Transaction Expenses" in Section 1 of the Lease are hereby amended applicable on and after the Closing Date to read as follows: "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. "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. "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. "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) -2- 3 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'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. "LOAN PARTICIPANT" means for any period prior to the Closing, the Original Loan Participants and their successors and assigns, and from and after the Closing, the Purchasers and their successors and registered assigns, including any Certificate Holder. "NET PRESENT VALUE OF RENTS" means the net present value, as of the Commencement Date, of Basic Rent set forth in Exhibit B hereto, discounted at an annual interest rate of 7.166% on a semi-annual basis. "OPERATIVE DOCUMENTS" means each of the Participation Agreement, the documents referred to in Section 4(a)(v) of the Participation Agreement (including any amendments, modifications or supplements thereto), the Refunding Agreement, the Trust Indenture Amendment and the Refinancing Secured Certificates, collectively, and "Operative Document" shall mean each of the Operative Documents, individually. "STIPULATED LOSS VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v) hereof, the amount determined by multiplying Lessor's Cost 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 -3- 4 Value" as of any date after January 2, 2019 shall be the amount determined as provided in Section 19(a) hereof. "SUPPLEMENTAL RENT" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Interim Rent or 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 the Other Pass Through Trust Agreement, 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. "TERMINATION VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v), the amount determined by multiplying Lessor's Cost 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: (i) the reasonable and actual fees, expenses and disbursements of (1) Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker, special counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Shearman & Sterling, special counsel to the Loan Participants, such information to be furnished by the Documentation Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee and Guarantor, such information to be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished -4- 5 by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust Indenture, such information to be furnished by the Indenture Trustee, (v) the fee of BK Associates, Inc. with respect to the appraisal of the Aircraft pursuant to Section 4(a)(xxix) of the Participation Agreement, such information to be furnished by Lessee, (vi) the reasonable and actual fees, expenses and disbursements of Feltman, Karesh, Major & Farbman, special counsel to the Owner Participant, such fees not to exceed the amount previously agreed to by the Owner Participant and Lessee, and the reasonable and actual fees, expenses and disbursements of David, Hagner, Kuney & Krupin, P.C., special tax counsel to the Owner Participant, such fees not to exceed the amount previously agreed to by the Owner Participant and Lessee, such information to be furnished by the Owner Participant, (vii) the equity placement fee and reasonable disbursements of Babcock and Brown Financial Corporation, such information to be furnished by Lessee, and (viii) the fee payable to the Loan Participants on the Delivery Date. (b) The following definitions are hereby inserted in Section 1 of the Lease in alphabetical order to be applicable on and after the Closing Date: "BANKRUPTCY CODE" means the Bankruptcy Reform Act of 1978, as amended, or any subsequent legislation that amends, supplements or supersedes such provisions. "CLOSING" means the consummation of the refinancing operation contemplated by Section 1 of the Refunding Agreement. "CLOSING DATE" means the date on which the Closing shall occur. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Provider and the Subordination Agent. "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 Westdeutsche Landesbank Girozentrale, acting through its New York branch, as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider under the Liquidity Facilities, or any successor thereto. -5- 6 "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. "ORIGINAL LOAN PARTICIPANTS" means each institution executing the Participation Agreement as a Loan Participant. "ORIGINAL TRUST INDENTURE" means the Trust Indenture and Security Agreement [NW 1996 A], dated as of February 27, 1996, between the Owner Trustee and State Street Bank and Trust Company, as amended, modified and supplemented prior to the Closing Date. "OTHER PASS THROUGH TRUST AGREEMENT" means the pass through trust agreement and supplement pursuant to which the Class D pass through certificates are issued. "PASS THROUGH CERTIFICATES" means the pass through certificates to be issued by the Pass Through Trustee in connection with the Refinancing 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 Refunding Agreement to be entered into by and between Lessee and the Pass Through Trustee in connection with the Refinancing Transaction. "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. "PURCHASERS" means the Pass Through Trustees under each Pass Through Trust Agreement. "REFINANCING CERTIFICATE" means a certificate of an authorized representative of the Owner Participant delivered pursuant to Section 17(a)(1) of the Participation Agreement, setting forth, among other things, the Refinancing Date, the principal amount of debt to be issued by the Owner Trustee on the Refinancing Date, and the proposed revised schedules of Excess Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages, and the proposed Amortization Schedules. -6- 7 "REFINANCING DATE" means the proposed date on which the outstanding Secured Certificates will be redeemed and refinanced pursuant to Section 17 of the Participation Agreement. "REFINANCING EXPENSES" means the costs, fees, commissions and other expenses payable by the Owner Participant pursuant to Section 11(a) of the Refunding Agreement. "REFINANCING SECURED CERTIFICATES" means the Secured Certificates to be issued by Lessor to the Purchasers pursuant to the Trust Indenture Amendment and the Refunding Agreement on the Closing Date. "REFINANCING TRANSACTION" means a refinancing transaction pursuant to Section 17 of the Participation Agreement involving, among other things, (i) the redemption of the Secured Certificates issued on February 29, 1996 and the concurrent issuance and sale of the Refinancing Secured Certificates to the Pass Through Trustees (or their designee) and (ii) the issuance and sale of the Pass Through Certificates by the Pass Through Trustees. "REFUNDING AGREEMENT" means that certain Refunding Agreement [NW 1996 A], dated as of June 3, 1996, among Lessor, Lessee, the Owner Participant, the Purchasers, the Indenture Trustee, the Subordination Agent and the Guarantor, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "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. "TRUST INDENTURE AMENDMENT" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 A], dated as of the Closing Date, between Lessor and State Street Bank and Trust Company, as Indenture Trustee. "TRUST INDENTURE ESTATE" has the meaning assigned to that term in the Trust Indenture. (c) The definitions of "Administrative Agent", "Assumed Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in Section 1 of the Lease are hereby deleted on and after the Closing Date. -7- 8 SECTION 2. AMENDMENT OF SECTIONS 3(B), 3(C), 3(D), 3(E), 3(F) AND 3(G) OF THE LEASE. (a) Section 3(b) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (b) Section 3(c) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (c) Section 3(d)(i) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (i) In the event that (A) the Closing Date occurs other than on June 12, 1996, or (B) Refinancing Expenses paid by Lessor or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement is determined to be other than 1.3481% of Lessor's Cost, then in each case, 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 by the Owner Participant, on or prior to October 1, 1996 using the same methods and assumptions used to calculate original Basic Rent and 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. (d) Section 3(d)(ii) of the Lease is hereby amended by deleting on and after the Closing Date the words "or a refunding" in the first line thereof. (e) Section 3(d)(iii) of the Lease is hereby amended by deleting on and after the Closing Date the second sentence thereof. (f) The second sentence of Section 3(e) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "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 such Section 2.10(b) or Section 2.11." (g) Section 3(f) of the Lease is hereby amended by (i) deleting on and after the Closing Date the numbers and punctuation "124-000-12" in the first sentence thereof and substituting therefor the numbers and punctuation "124-0000-12", (ii) adding on and after the Closing Date the word "irrevocably" after the word "hereby" in the proviso in the first sentence thereof, and (iii) deleting on and after the Closing Date the word "All" at the -8- 9 beginning of the second sentence thereof and substituting the words "Lessor hereby directs and Lessee agrees that all" therefor. (h) Section 3(g) of the Lease is hereby amended by deleting it in its entirety on and after the Closing Date. SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE. Section 7(b)(x)(2) of the Lease is hereby amended by deleting on and after the Closing Date the words "the Owner Participant and the Indenture Trustee" and substituting therefor the word "Lessor". SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE. Section 9(c) of the Lease is hereby amended by deleting on and after the Closing Date the word "premium" each time it appears therein and substituting therefor the words "Make-Whole Amount" and by deleting on and after the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount" each time such words and such words and punctuation appear. SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE. Section 10(a) of the Lease is hereby amended by deleting on and after the Closing Date the words "the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence)" in clause (i)(y) thereof and substituting therefor the words "an earlier Business Day irrevocably specified fifteen days in advance by notice from Lessee to Lessor and the Indenture Trustee". SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE. Section 14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date the words and punctuation ", the Refunding Agreement" after the words "Participation Agreement" and (ii) adding on and after the Closing Date the words "and except for representations or warranties contained in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in the Refunding Agreement) or any document or instrument furnished pursuant to either thereof" after the word "Agreement" at the end of the first parenthetical phrase therein. SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "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 -9- 10 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President - Finance and Treasurer, (Telecopy No. (612) 726-0665), or to such other address, telex number or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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 on the signature pages of the Refunding Agreement." SECTION 8. AMENDMENT OF SECTION 19(D) OF THE LEASE. The second sentence of Section 19(d) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: 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. SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the Lease is hereby amended by (i) deleting on and after the Closing Date the word "or" between the words "Trust Agreement" and the words "the Trust Indenture" and substituting a comma therefor and (ii) inserting on and after the Closing Date the words "or the Refunding Agreement" after the words "Trust Indenture". -10- 11 SECTION 10. AMENDMENT OF EXHIBITS. (a) Exhibits B, C and D to the Lease attached hereto are applicable on and after the Closing Date. Exhibits B, C and D to the Lease are applicable until the Closing Date. (b) The parties hereto agree that Exhibits B, C and D attached hereto reflect the recalculation of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value percentages to take into account the interest rates borne by the Secured Certificates as of the Closing Date and the actual amount of Transaction Expenses. SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease set forth in Sections 1 through 10 hereof shall be effective as of the date hereof. SECTION 12. RATIFICATION. Except as amended hereby, the Lease as heretofore supplemented continues and shall remain in full force and effect in all respects. SECTION 13. MISCELLANEOUS. Any provision of this Amendment 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 Amendment 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. Nothing contained herein shall be construed as conveying to Lessee any right, title or interest in the Aircraft except as a lessee. The section and paragraph headings in this Amendment 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 Amendment. THIS AMENDMENT 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 Amendment 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. To the extent, if any, that this Amendment 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 Amendment 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 as mortgagee under the Trust Indenture on the signature page thereof. -11- 12 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment to be duly executed on the day and year first above written. FIRST SECURITY BANK OF UTAH, 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: (1)Receipt of this original counterpart of the foregoing Amendment is hereby acknowledged this _____ day of __________, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: --------------------------------------- Title: - ------------------------------- (1) This language contained in the original counterpart only. EX-4.E5 39 GUARANTEE-1996 A 1 GUARANTEE [NW 1996 A] This GUARANTEE [NW 1996 A], dated as of February 27, 1996 (as amended, modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I hereto (collectively, together with their successors and permitted assigns, the "PARTIES", and, individually, a "PARTY"). WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to enter into a Lease Agreement [NW 1996 A], dated as of the date hereof (as amended, modified or supplemented from time to time, the "LEASE"), between the Lessee and First Security Bank of Utah, National Association, not in its individual capacity but solely as Owner Trustee (as defined therein), except as expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing 757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines (such aircraft and engines, and any substitute Airframe and Engines under the Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation Agreement [NW 1996 A], dated as of the date hereof (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), among the Lessee and the Parties; and WHEREAS, it is a condition precedent to the obligations of the Parties to consummate the transactions contemplated by the Participation Agreement that the Guarantor execute and deliver this Guarantee; and WHEREAS, the Lessor will assign by way of collateral security certain of its right, title and interest in and to this Guarantee to the Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and Security Agreement [NW 1996 A], dated as of the date hereof, between the Lessor and the Indenture Trustee (as amended, modified or supplemented from time to time, the "TRUST INDENTURE"), as security for the obligations of the Lessor referred to therein; and WHEREAS, the capitalized terms used herein that are not defined herein are used herein as defined in the Lease; NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and to induce the other Parties referred to above to enter into the Participation Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. GUARANTEE. (a) The Guarantor does hereby acknowledge that it is fully aware of the terms and conditions of the Lease, the Participation Agreement and the other Operative 2 Documents and the transactions and the other documents contemplated thereby, and does hereby irrevocably and fully and unconditionally guarantee, as primary obligor and not as surety merely, to the Parties, as their respective interests may appear, the payment by the Lessee of all payment obligations when due under the Lease (including, without limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement and the other Operative Documents to which the Lessee is a party (such obligations of the Lessee guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative Documents, and the timely performance of all other obligations of the Lessee thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby agree that in the event that the Lessee fails to pay any Financial Obligation when due for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within five days after the date on which such Financial Obligation became due and payable and the applicable grace period has expired, the Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Financial Obligation was not paid when due and for five days after the applicable grace period has expired, the amount of such Financial Obligation. The Guarantor hereby agrees that in the event the Lessee fails to perform any Nonfinancial Obligation for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within 10 Business Days after the date on which such Nonfinancial Obligation is required to be performed (for avoidance of doubt, to include any applicable grace period), the Guarantor shall cause such Nonfinancial Obligation to be performed within 10 Business Days following the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Nonfinancial Obligation was not performed when so required and that any applicable grace period has expired. (b) The obligations of the Guarantor hereunder shall not be, to the fullest extent permitted by law, affected by: the genuineness, validity, regularity or enforceability (or lack thereof) of any of the Lessee's obligations under the Lease or any other Operative Document to which the Lessee is a party, any amendment, waiver or other modification of the Lease or such other Operative Document (except that any such amendment or other modification shall be given effect in determining the obligations of the Guarantor hereunder), or by any substitution, release or exchange of collateral for or other guaranty of any of the Obligations (except to the extent that such substitution, release or exchange is undertaken in - 2 - 3 accordance with the terms of the Operative Documents) without the consent of the Guarantor, or by any priority or preference to which any other obligations of the Lessee may be entitled over the Lessee's obligations under the Lease and the other Operative Documents to which the Lessee is a party, or by any other circumstance that might otherwise constitute a legal or equitable defense to or discharge of the obligations of a surety or guarantor including, without limitation, any defense arising out of any laws of the United States of America or any State thereof which would excuse, discharge, exempt, modify or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not, to the fullest extent permitted by law, affect the liability of the Guarantor hereunder: (a) the extension of the time for or waiver of, at any time or from time to time, without notice to the Guarantor, the Lessee's performance of or compliance with any of its obligations under the Operative Documents (except that such extension or waiver shall be given effect in determining the obligations of the Guarantor hereunder)), (b) any assignment, transfer, sublease or other arrangement by which the Lessee transfers possession or loses control of the use of the Aircraft, (c) any defect in the title, condition, design, operation or fitness for use of, or damage to or loss or destruction of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or with any other Person, or any sale, transfer, lease or disposal of any of its assets or (e) any change in the ownership of any shares of capital stock of the Lessee. (c) This Guarantee is an absolute, present and continuing guaranty of payment and performance and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Lessee any unpaid amounts due or otherwise to enforce performance by the Lessee. The Guarantor specifically agrees, to the fullest extent permitted by law, that it shall not be necessary or required, and that the Guarantor shall not be entitled to require, that any Party (i) file suit or proceed to obtain or assert a claim for personal judgment against the Lessee for the Obligations, or (ii) make any effort at collection of the Obligations from the Lessee, or (iii) foreclose against or seek to realize upon any security now or hereafter existing for the Obligations, including the Trust Estate or the Trust Indenture Estate (as such term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations, or make any effort at collection of the Obligations from any such other Person, or exercise or assert any other right or remedy to which any Party is or may be entitled in connection with the Obligations or any security or other guaranty therefor, or (v) assert or file any claim against the assets of the Lessee or any other guarantor or other Person liable for the Obligations, or any part thereof, before or as a condition of enforcing the liability of the Guarantor under this Guarantee or requiring payment of said Obligations by the Guarantor hereunder, or at any time thereafter. (d) The Guarantor agrees, to the fullest extent permitted by law, that, without limiting the generality of this Guarantee, if an Event of Default shall have occurred and be continuing and the Lessor (or any assignee thereof including, without limitation, the Indenture Trustee) shall be prevented by applicable law from exercising its remedies (or any of them) under Section 15 of the Lease, the Lessor (or any assignee thereof, including, without - 3 - 4 limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive hereunder from the Guarantor, upon demand therefor the sums that would otherwise have been due from the Lessee under the Lease had such remedies been able to be exercised. The Guarantor hereby unconditionally waives, to the fullest extent permitted by law, any requirement that, as a condition precedent to the enforcement of the obligations of the Guarantor hereunder, the Lessee or all or any one or more of any other guarantors of any of the Obligations be joined as parties to any proceedings for the enforcement of any provision of this Guarantee. 2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be deemed to create any right in any Person except a Party and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person. 3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives notice of the acceptance of this Guarantee and of the performance or nonperformance by the Lessee, demand for payment from the Lessee or any other Person, notice of nonpayment or failure to perform on the part of the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent permitted by law, all other demands or notices whatsoever, other than the request for payment hereunder and notice provided for in Section 1 hereof. The obligations of the Guarantor shall be absolute and unconditional and shall remain in full force and effect until satisfaction of all Obligations hereunder and, without limiting the generality of the foregoing, to the extent not prohibited by applicable law, shall not be released, discharged or otherwise affected by the existence of any claims, set-off, defense or other rights that the Guarantor may have at any time and from time to time against any Party, whether in connection herewith or any unrelated transactions. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Financial Obligation is rescinded or must otherwise be returned by any Party upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding with respect to the Lessee or otherwise, all as though such payment had not been made. The Guarantor, by virtue of any payment or performance hereunder to a Party, shall be subrogated to such Party's claim against the Lessee or any other Person relating thereto; provided, however, that the Guarantor shall not be entitled to receive payment from the Lessee in respect of any claim against the Lessee arising from a payment by the Guarantor: (a) while an Event of Default shall have occurred and be continuing, in which case no such payment in respect of such a claim by the Guarantor may be made by the Lessee; or (b) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings relating to the Lessee, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Lessee, whether or not involving insolvency or bankruptcy proceedings, in which case the Obligations shall be paid and performed in full before any payment in respect of a claim by the Guarantor shall be made by or on behalf of the Lessee. - 4 - 5 4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or waiver or modification of, or consent under, the terms hereof, shall be effective unless evidenced by an instrument in writing signed by the Guarantor and each Party against whom such amendment, supplement, waiver, modification or consent is to be enforced. 5. PAYMENTS. All payments by the Guarantor hereunder in respect of any Obligation shall be made in Dollars and otherwise as provided in the Lease, the Participation Agreement or any other Operative Document in which such Obligation is contained; provided that the Guarantor consents to all the terms of the Trust Indenture and agrees to make all payments hereunder directly to the Indenture Trustee until such time as the Indenture Trustee shall give notice to the Guarantor that the Lien of the Trust Indenture has been fully discharged and thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay directly to the Lessor, in its individual capacity, or to the Owner Participant or another Party, as the case may be, any amount owing to such Person as Supplemental Rent for indemnities provided in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or otherwise not constituting part of the Trust Indenture Estate (as such term is defined in the Trust Indenture). 6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust Indenture, the Lessor will assign, and create a security interest in, certain of its rights hereunder to and for the benefit of the Indenture Trustee. From and after the execution and delivery of the Trust Indenture, and until receipt by the Guarantor of a written notice from the Indenture Trustee to the effect that the Trust Indenture has been fully satisfied and discharged, no remedy or election hereunder may be exercised by the Lessor or consent given by the Lessor, except by or with the prior written consent of the Indenture Trustee, and the Guarantor will make payment of all amounts hereunder that are assigned to the Indenture Trustee directly to the Indenture Trustee, and such payments shall discharge the obligations of the Guarantor to the Lessor to the extent of such payments. 7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Parties as follows: (a) It is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware. It has all requisite corporate power and authority to own and operate its properties, to carry on its business as presently conducted and to enter into and perform its obligations under this Guarantee. (b) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with or the taking of any other action in respect of, any Federal, state, municipal or other governmental department, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, is now, or under existing law in the future will be, required or necessary on its behalf to authorize the execution, delivery and performance (other than as contemplated by the Operative Documents in the case of the - 5 - 6 performance of the Non-Financial Obligations) by it of this Guarantee, or for the legality, validity, binding effect or enforceability hereof. (c) Neither the execution and delivery of this Guarantee, the performance of its obligations hereunder, nor its consummation of the transactions contemplated hereby, will conflict with or result in any breach of, or constitute a default under, or result in any creation or imposition of any Lien upon any of its property or assets under, any applicable laws or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject, or its Articles of Incorporation or by-laws. (d) The execution, delivery and performance by it of this Guarantee have been duly authorized by all necessary corporate action. This Guarantee has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 8. JURISDICTIONAL MATTERS. The Guarantor (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 Guarantee brought by any party, 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 Guarantee may not be enforced in or by such courts. The Guarantor hereby generally consents to service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of the Guarantor in New York City as from time to time may be designated by the Guarantor in writing to the Parties. 9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Parties, with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and (c) shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of, and shall be enforceable by, each of the Parties to the fullest extent permitted by applicable laws. The headings in this Guarantee are for purposes of reference only, and shall not limit or otherwise affect the meanings hereof. - 6 - 7 10. NOTICES. All requests, notices or other communications hereunder shall be in writing, addressed as follows: If to the Guarantor: Northwest Airlines Corporation for U.S. Mail: 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 for Overnight courier: 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President -- Finance and Treasurer Telecopy No.: (612) 726-0665 If to a Party: to the address or telecopy number set forth in the Participation Agreement All requests, notices or other communications shall be given in the manner, and shall be effective at the times and under the terms, set forth in Section 13(b) of the Participation Agreement. 11. NO WAIVERS. No failure on the part of any Party to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise of such right or remedy or the exercise of any other right or remedy. 12. SURVIVAL. All representations and warranties contained herein or made in writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee regardless of any investigation made by any Party or any other Person. 13. SEVERABILITY. To the fullest extent permitted by applicable law, any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or any provision in any other Operative Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 14. GOVERNING LAW . THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING - 7 - 8 ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK. 15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by such Party in enforcing, or collecting under, this Guarantee. 16. TERMINATION. Subject to the provisions of Section 3 hereof, this Guarantee shall terminate upon the indefeasible payment and performance in full of all of the Obligations. 17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to the Obligations described in Section 1 and nothing in this Guarantee shall be deemed to constitute a guarantee of payment of any of the Secured Certificates or shall give rise to any inference that the Lessee or the Guarantor has so guaranteed such payment. - 8 - 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed as of the date first hereinabove set forth. NORTHWEST AIRLINES CORPORATION By: --------------------------- Name: Title: Accepted as of the above date: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION in its individual capacity and as Owner Trustee By: ------------------------------ Name: Title: STATE STREET BANK AND TRUST COMPANY in its individual capacity and as Indenture Trustee By: ------------------------------ Name: Title: - 9 - 10 SCHEDULE I TO GUARANTEE [NW 1996 A] PARTIES First Security Bank of Utah, National Association, in its individual capacity and as Owner Trustee State Street Bank and Trust Company, as Indenture Trustee [Owner Participant] [Bridge Lenders] EX-4.E6 40 PARTICIPATION AGREEMENT-1996 A 1 PARTICIPATION AGREEMENT [NW 1996 A] THIS PARTICIPATION AGREEMENT [NW 1996 A] dated as of February 27, 1996, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of the State of Minnesota (herein called "LESSEE"), (ii) the institution listed on Schedule I hereto and identified therein as the "OWNER PARTICIPANT" which executes and delivers a counterpart of this Agreement and of the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date referred to below, (iii) the institutions listed on Schedule I and identified therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, 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"), and (v) State Street Bank and Trust Company, a Massachusetts trust company, in its individual capacity and as Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein, in such latter capacity together with any successor indenture trustee, called the "INDENTURE TRUSTEE"); W I T N E S S E T H: WHEREAS, pursuant to the Purchase Agreement (as such term is defined in the Lease hereinafter referred to) between Lessee and the Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things, certain Boeing 757-251 aircraft, including the Aircraft which has been delivered by the Manufacturer to Lessee and is the subject of this Agreement; WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Lessee and the Owner Trustee are entering into a Purchase Agreement Assignment [NW 1996 A], dated as of the date hereof (herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to the Owner Trustee certain rights and interests of Lessee under the Purchase Agreement with respect to the Aircraft; and (ii) the Manufacturer has executed the Consent and Agreement [NW 1996 A] (herein called the "CONSENT AND AGREEMENT"), substantially in the form attached to the Purchase Agreement Assignment (herein called the "CONSENT AND AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996 A], 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 2 Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE") for the use and benefit of the Owner Participant; WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with the execution and delivery of this Agreement are entering into the Trust Indenture and Security Agreement [NW 1996 A], 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 issues to each of the Loan Participants one or more secured certificates (herein called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan Participants arising from the Loan Participants' making secured loans to the Owner Trustee to finance a portion of the Owner Trustee's purchase of the Aircraft, which Secured Certificates are to be secured by the mortgage and security interests created by the Owner Trustee in favor of the Indenture Trustee, and 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; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1996 A], dated as of the date hereof (such Lease Agreement, as the same may be amended or supplemented from time to time to the extent permitted by the terms thereof and this Agreement, herein called the "LEASE", such term to include, unless the context otherwise requires, the Lease Supplement referred to below), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft is sold and delivered by Lessee to the Owner Trustee under the Bill 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; WHEREAS, certain terms are used herein as defined in Section 13(a) hereof; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and conditions of this Agreement, each Loan Participant agrees to finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule II opposite the name of such Loan Participant. Each Loan Participant shall make such Loan to the Owner Trustee on a date to be designated pursuant to Section 1 hereof, but in no event later than March 15, 1996, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, - 2 - 3 ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite such Loan Participant's name in Schedule II hereto. Upon the occurrence of the above transfers by the Loan Participants to the Owner Trustee, to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon, the Owner Trustee shall issue and the Indenture Trustee shall authenticate Secured Certificates which shall be delivered simultaneously to the Loan Participants under the Trust Indenture to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon. The Owner Trustee agrees to pay the Secured Certificates in installments in the amounts and on the dates provided in the Trust Indenture together with interest thereon and all other amounts payable with respect thereto, all as more fully provided in the Trust Indenture. (b) Participation by Owner Participant. Subject to the terms and conditions of this Agreement, the Owner Participant hereby agrees to participate in the payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft on a date to be designated pursuant to Section 2 hereof, but in no event later than March 15, 1996, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite the Owner Participant's name in Schedule II hereto. (c) General Provisions. The amount of the participation of each of the Loan Participants and the Owner Participant to be made as provided above in the payment of Lessor's Cost for the Aircraft is hereinafter called such party's "COMMITMENT" for the Aircraft. In case any of the Loan Participants or the Owner Participant shall default in its obligation under the provisions of this Section 1, no other such party shall have any obligation to make any portion of such defaulted amount available or to increase the amount of its Commitment and the obligation of such nondefaulting party shall remain subject to the terms and conditions set forth in this Agreement. Upon receipt by the Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant to this Section 1 and the satisfaction of the conditions set forth in Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take title to and accept delivery of the Aircraft. In consideration of the transfer of title to and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall, simultaneously with such transfer of title and delivery, pay to Lessee from the amounts so furnished it by the Participants, the Lessor's Cost of the Aircraft. (d) Determination of Interest Period. The length of each Interest Period shall be determined by Lessee on behalf of the Owner Trustee in accordance with Section 2.02 of the Trust Indenture. SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each Participant, the Owner Trustee and the Indenture Trustee at least two Business Days' telecopy - 3 - 4 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 and the amount of each Participant's Commitment for the Aircraft. As to each Participant, the making of its Commitment for the Aircraft available in the manner required by Section 1 shall constitute a waiver of such notice. SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant agrees that its releasing the amount of its Commitment for the Aircraft to the account of the Owner Trustee in accordance with the terms of Section 1 shall constitute, subject to satisfaction or waiver of the conditions set forth in Section 4(a), without further act, authorization and direction by the Owner Participant to the Owner Trustee: (i) to pay to Lessee the Lessor's Cost for the Aircraft; (ii) to the extent not previously accomplished by a prior authorization, to authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees, or an agent or agents, of Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant to the Acceptance Certificate; (iii) to accept from Lessee the Bill of Sale and the FAA Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9); (iv) to execute an Aircraft Registration Application, the Lease Supplement and the Trust Supplement, in each case covering the Aircraft; (v) to borrow from the Loan Participants to finance a portion of the Lessor's Cost for the Aircraft and to issue to the Loan Participants Secured Certificates in aggregate principal amount equal to the amount borrowed, pursuant hereto and to the Trust Indenture; and (vi) to take such other action as may be required to be taken by the Owner Trustee on the Delivery Date by the terms of any Operative Document. SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations in the Aircraft. It is agreed ft that the obligations of each of the Loan Participants and the Owner Participant to participate in the payment of Lessor's Cost and to make available the amount of its respective Commitment are subject to the satisfaction prior to or on the Delivery Date of the following conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it relates to representations and warranties only contained in the Tax Indemnity Agreement), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and (xxvii) shall not be a condition precedent to the obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a condition precedent to the obligation of the Owner Participant: - 4 - 5 (i) The Loan Participants 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 applicable law or regulations or guidelines or interpretations thereof by appropriate regulatory authorities shall be in effect which, in the opinion of such Loan Participant or the Owner Participant, as the case may be, or their respective counsel, would make it a violation of law or regulations or guidelines for such Loan Participant or the Owner Participant to make its Commitment available in accordance with Section 1 hereof or, in the case of such Loan Participant, to acquire a Secured Certificate or to realize the benefits of the security afforded by the Trust Indenture. (iii) In the case of the Owner Participant, the Loan Participants shall have made available the amount of their Commitments for the Aircraft in accordance with Section 1 hereof. (iv) In the case of the Loan Participants, 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 Documentation Agent and the Owner Participant and shall be in full force and effect and executed counterparts shall have been delivered to the Loan Participants and the Owner Participant, or their respective counsel, provided that only each Loan Participant shall receive an executed original of its respective Secured Certificate and provided, further, 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 the Documentation Agent and their respective counsel before the Delivery Date and subsequent to the Delivery Date may be inspected and reviewed by the Indenture Trustee, any Loan Participant or their respective counsel if and only if there shall occur and be continuing an Event of Default), 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 shall only be delivered to Lessee and the Owner Participant and their respective counsel: (1) an excerpted copy of the Purchase Agreement (insofar as it relates to the Aircraft); (2) the Purchase Agreement Assignment; (3) the Lease; - 5 - 6 (4) a Lease Supplement covering the Aircraft dated the Delivery Date; (5) the Tax Indemnity Agreement; (6) the Trust Agreement; (7) a Trust Supplement covering the Aircraft dated the Delivery Date; (8) the Bill of Sale; (9) the FAA Bill of Sale; (10) an acceptance certificate covering the Aircraft in the form agreed to by the Documentation Agent, 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; (12) the Secured Certificates; (13) the Consent and Agreement; and (14) the Guarantee. All of the foregoing documents, together with this Agreement, are sometimes referred to herein, collectively, as the "OPERATIVE DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT". (vi) A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the Granting Clause of the Trust Indenture that are not covered by the recording system established by the Federal Aviation Act, shall have been executed and delivered by the Owner 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 Owner Participant or the Documentation Agent shall have been executed and delivered by Lessee or the Owner Trustee and duly filed. (vii) The Loan Participants and the Owner Participant shall have received the following, in each case in form and substance satisfactory to the Documentation Agent and the Owner Participant: (1) a certified copy of the Certificate of Incorporation and By-Laws of Lessee and a copy of resolutions of the board of directors of Lessee, certified - 6 - 7 by a Vice President, the Secretary or an Assistant Secretary of Lessee, duly authorizing the sale of the Aircraft and the lease by Lessee of the Aircraft under the Lease and the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the Purchase Agreement Assignment, the Tax Indemnity Agreement and each other document required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof, and a certified copy of the Certificate of Incorporation and By-Laws of the Guarantor and a copy of resolutions of the Board of Directors of the Guarantor, certified by a Vice President, the Secretary or an Assistant Secretary of the Guarantor, duly authorizing the execution, delivery and performance by the Guarantor of the Guarantee; (2) such other documents and evidence with respect to Lessee, the Guarantor, the Manufacturer, the Owner Trustee, the Owner Participant, the Indenture Trustee, and the Loan Participants as the Documentation Agent or the Owner Participant, or the respective counsel for the Loan Participants or the Owner Participant, may reasonably request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; and (3) a certificate of Lessee as to the person or persons authorized to execute and deliver this Agreement, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft and any other documents to be executed on behalf of Lessee in connection with the transactions contemplated hereby and as to the signatures of such person or persons, and a certificate of the Guarantor as to the person or persons authorized to execute and deliver the Guarantee and as to the signatures of such person or persons. (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 following statements shall be true, and the Documentation Agent and the Owner Participant shall have received evidence satisfactory to it to the effect that: (1) the Owner Trustee has good title (subject to filing and recording the FAA Bill of Sale with the Federal Aviation Administration) to the Aircraft - 7 - 8 on such Delivery Date, free and clear of Liens other than the rights of Lessee under the Lease and Lease Supplement covering the Aircraft, the mortgage and security interests created by the Trust Indenture, the rights of the Owner Participant under the Trust Agreement and the Trust Supplement, and Liens permitted by clause (v) of Section 6 of the Lease; (2) the Aircraft has been duly certified by the Federal Aviation Administration (or there shall have been received adequate assurances from the Federal Aviation Administration that the certification will be issued as soon as the registration of the Aircraft is complete) as to type and airworthiness in accordance with the terms of the Lease; (3) the FAA Bill of Sale, the Lease, the Lease Supplement, the Trust Indenture and the Trust Supplement covering the Aircraft shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the Federal Aviation Administration, and the Trust Agreement shall have been filed (or shall be in the process of being so filed) with the Federal Aviation Administration; and (4) application for registration of the Aircraft in the name of the Owner Trustee has been duly made with the Federal Aviation Administration. (x) On the Delivery Date, (A) the representations and warranties of Lessee, the Owner Participant and the Owner Trustee contained in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing, or would result from the purchase, sale, lease or mortgage of the Aircraft, which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default. (xi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for Lessee and the Guarantor, as to New York and certain federal law matters, and Lessee's and the Guarantor's in-house or other counsel, as to Minnesota and certain federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota and has the corporate power and authority to carry on its business as now conducted and to enter into and perform its obligations under the Lessee Documents. Lessee is a Certificated Air Carrier. The Guarantor is a corporation duly organized and validly existing - 8 - 9 pursuant to the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under the Guarantee; (2) the execution, delivery and performance of the Lessee Documents by Lessee and of the Guarantee by the Guarantor have been duly authorized by all necessary corporate action on the part of Lessee and the Guarantor, as the case may be, do not require any approval of stockholders of Lessee or the Guarantor, as the case may be, or, to the knowledge of such counsel, any approval or consent of any trustee or holders of any indebtedness or obligations of Lessee or the Guarantor, as the case may be (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of any thereof by Lessee or the Guarantor, as the case may be, nor the performance by Lessee or the Guarantor, as the case may be, of its respective obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel, judgment or order applicable to or binding on Lessee or the Guarantor, as the case may be, or (B) to the knowledge of such counsel, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Permitted Liens) upon any property of Lessee or the Guarantor, as the case may be, under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter, by-law or permit issued by any Minnesota or United States governmental authority to which Lessee or the Guarantor, as the case may be, is a party or by which Lessee or the Guarantor, as the case may be, or its properties may be bound or affected; (3) neither the execution and delivery by Lessee of the Lessee Documents or by the Guarantor of the Guarantee nor the performance by Lessee or the Guarantor of their respective 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, except for (A) the registration of the Aircraft (including the placement on board of the owner's copy of the application for registration of the Aircraft and, if necessary, a flying time wire), recordations and other actions referred to in paragraph 5 below and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents or the Guarantee after the Delivery Date; (4) the Guarantee has been duly entered into and delivered by the Guarantor, the Purchase Agreement (insofar as it relates to the Aircraft) has been duly entered into and delivered by Lessee, and each of the other Lessee Documents has been duly entered into and delivered by Lessee and each of such other Lessee Documents and the Guarantee constitutes 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 its - 9 - 10 respective terms, except as limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally, (C) applicable laws which may affect the remedies provided in the Lease, which laws, however, do not in the opinion of such counsel make the remedies provided in the Lease inadequate for the practical realization of the benefits provided thereby, but no opinion is expressed as to the amount or priority of any recovery under any particular circumstances and, in particular, no opinion is expressed as to the effect on such remedies of Section 1-201(37) of the Uniform Commercial Code, as in effect in any jurisdiction, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations; (5) subject to the registration of the Aircraft with the Federal Aviation Administration in the name of the Owner Trustee, and assuming the due and timely filing for recordation in accordance with the provisions of the Federal Aviation Act, of (A) the FAA Bill of Sale, (B) the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and made a part thereof and (C) the Trust Indenture with the Trust Supplement attached thereto and made a part thereof, with respect to such portion of the Aircraft as is covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code by virtue of the same constituting an "aircraft" or an "aircraft engine" as defined in the Federal Aviation Act, no further filing or recording of any document (including any financing statement with respect to the Lease under Article 9 of the Uniform Commercial Code of Minnesota or Utah), is necessary in any applicable jurisdiction within the United States in order (x) to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee or any third parties or (y) to create and perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee or any third parties. With respect to such portion of the Aircraft, if any, as may not be deemed to constitute an "aircraft" or "aircraft engine" as defined in the Federal Aviation Act, except for the filing of financing statements in appropriate filing offices in the States of Minnesota and Utah and such other states as may be specified in such counsel's opinion, and for the filings of periodic continuation statements with respect to such filings as and when required, (x) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary under Article 9 of the Uniform Commercial Code in order to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee and any third parties in any applicable jurisdiction within the United States, and (y) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary or advisable under Article 9 of the Uniform Commercial Code in order to create or perfect the Indenture - 10 - 11 Trustee's security interest in such portion of the Aircraft as against the Owner Trustee and any third parties in any applicable jurisdiction within the United States; and (6) to the best knowledge of such in-house counsel, there are no legal or governmental proceedings pending or threatened to which Lessee or any of its subsidiaries is a party or to which any of the properties of Lessee or any of its subsidiaries is subject other than those proceedings summarized in the Guarantor's publicly filed annual, quarterly and other reports filed with the Securities and Exchange Commission, and proceedings which such in-house counsel believes would not reasonably be expected to have a material adverse effect on Lessee and its subsidiaries, taken as a whole, or on the power or ability of Lessee to perform its obligations under the Lessee Documents. The opinion contemplated by this paragraph (xi) shall be to such further effect with respect to such other matters as the Documentation Agent or the Owner Participant may reasonably request. Such opinion with respect to the matters specified in this paragraph (xi) may rely exclusively (A) upon the opinion of special counsel in Oklahoma City, Oklahoma, referred to in paragraph (xv) of this Section 4(a) with respect to the matters stated therein, and (B) upon the opinion of Ray, Quinney & Nebeker with respect to the opinion in paragraph (5) above insofar as it relates to the laws of the State of Utah and (C) upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, with respect to matters of fact, and may state that no opinion is expressed as to laws other than laws of the State of New York (in the case of such special counsel's opinion), the State of Minnesota and the Delaware General Corporation Law (in the case of Lessee's in-house or other counsel's opinion) and the Federal laws of the United States. Such counsel may assume that, except for the filings and recordations contemplated herein, there are no filings or recordations with respect to the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement or the Trust Indenture with the Federal Aviation Administration, or of Uniform Commercial Code financing statements naming the Owner Trustee as a debtor in the filing offices of the Secretary of State of Minnesota, the Secretary of State of Utah or in any other filing office in the States of Minnesota or Utah, or in such other filing offices in such other jurisdictions as shall be identified in such counsel's opinion. (xii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from a counsel to the Manufacturer, with respect to the Manufacturer Documents and such other matters as such parties may reasonably request. - 11 - 12 (xiii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, to the effect that: (1) First Security Bank of Utah, National Association is a national banking association duly organized, validly existing and in good standing under the laws of the United States, is a Citizen of the United States and has under the laws of the State of Utah and federal banking law the power, authority and legal right to execute, deliver and carry out in its capacity as Owner Trustee or in its individual capacity, as the case may be, the terms of the Owner Trustee Documents, including the Secured Certificates; (2) each of the Owner Trustee Documents has been duly authorized, executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, and each of the Owner Trustee Documents constitutes the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations, and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (3) the execution, delivery and performance by the Owner Trustee and by First Security Bank of Utah, National Association, in its individual capacity, or both, as the case may be, of the Owner Trustee Documents and the consummation of the transactions by the Owner Trustee and by First Security Bank of Utah, National Association in its individual capacity contemplated thereby are not and will not be in violation of the articles of association or By-Laws of First Security Bank of Utah, National Association or of any indenture, mortgage, credit agreement, license or other agreement or instrument known to such counsel after due inquiry to which First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee is a party or by which it is bound, or of any Federal or Utah law, governmental rule or - 12 - 13 regulation applicable to First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee or any judgment or order applicable to it and known to such counsel after due inquiry; (4) neither the execution and delivery by the Owner Trustee and, where appropriate, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, of the Owner Trustee's Documents nor the consummation of any of the transactions by the Owner Trustee, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing Federal laws governing the banking and trust powers of First Security Bank of Utah, National Association, or Utah law (except for filings pursuant to the Uniform Commercial Code, and except for compliance with requirements of the Federal Aviation Act as to which such counsel may express no opinion); (5) the Trust Agreement, as supplemented by the Trust Supplement, duly creates for the benefit of the Owner Participant the trust interest in the Trust Estate which the Trust Agreement by its terms purports to create; (6) assuming that Utah law were to govern the perfection of the security interests in the Trust Indenture Estate under the Trust Indenture, except for (i) the Indenture Trustee's taking of possession of the original counterparts of the Lease and the Lease Supplement covering the Aircraft (insofar as the Lease and the Lease Supplement covering the Aircraft may constitute chattel paper (as such term is defined in the Uniform Commercial Code as in effect in Utah)) and all monies and securities (including instruments) required to be deposited with the Indenture Trustee, and (ii) the filing of Uniform Commercial Code financing statements with the office of the Division of Corporations and Commercial Code of the State of Utah with respect to the security interests created in the Trust Indenture Estate under the Trust Indenture, naming the Owner Trustee as debtor and the Indenture Trustee as secured party, which filing has been duly effected, no other filing or recording or refiling or rerecording is necessary in the State of Utah to create, perfect or maintain the perfected status of such security interest (except for the timely filing of continuation statements in respect of such financing statements); (7) assuming that the Operative Documents were negotiated in substantial part in the State of New York, and that the closing of a substantial portion of the transactions contemplated by the Operative Documents occurred in the State of New York, the choice of New York law to govern the Participation Agreement, the Lease, and each other Operative Document (other than the Trust Agreement) to which the Owner Trustee or First Security Bank - 13 - 14 of Utah, National Association in its individual capacity, or both, is a party is, under the laws of the State of Utah, a valid choice of law and should, in a properly presented case, be honored by the courts of the State of Utah; (8) the Owner Trustee has received from Lessee such title to the Aircraft as Lessee had immediately prior to the conveyance to the Owner Trustee, subject to the rights of the Owner Trustee and Lessee under the Lease and the security interest created pursuant to the Trust Indenture and the Trust Supplement; (9) no taxes, fees or other charges, except taxes imposed on fees payable to the Owner Trustee, will be imposed by Salt Lake City or the State of Utah or any political subdivision or taxing authority thereof on or with respect to the execution, delivery or performance of any of the Operative Documents and the trust created pursuant to the Trust Agreement will not be subject to any such taxes, fees or other charges on, based on or measured by the net income of the Trust Estate (as distinguished from the net income of the Owner Participant) solely by reason of the Owner Trustee's location in Salt Lake City or the State of Utah (assuming for purposes of this opinion that the Owner Participant, the Owner Trustee and the Trust Estate would not be subject to any such tax, fee or other charge if the Owner Trustee performed its duties under the Trust Agreement and the Trust Indenture from an office located outside Utah); and (10) to the knowledge of such counsel, there are no pending or threatened proceedings against or affecting the Owner Trustee before any court or administrative agency, individually or in the aggregate, which, if determined adversely to it, would materially adversely affect the power or ability of the Owner Trustee to perform its obligations under the Owner Trustee Documents. Such opinion shall be to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Indenture Trustee or Lessee may reasonably request. Such opinion may state that (A) no opinion is expressed as to laws other than the laws of the State of Utah, the Federal laws of the United States governing the banking and trust powers of First Security Bank of Utah, National Association, and the Federal Aviation Act as it relates to paragraph (1) and (B) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. Such opinion may assume (M) the due authentication of the Secured Certificates by the Indenture Trustee, (N) that the Operative Documents (other than the Trust Agreement) are legal, valid and binding under the laws of the State of New York and (O) the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and of the other Operative Documents by each of the parties thereto other than First Security Bank of Utah, National Association in its individual capacity and as the Owner Trustee. - 14 - 15 (xiv) The Loan Participants shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Trustee and Lessee, from [______________________________], special counsel for the Owner Participant, as to New York and certain Federal law matters, and the Owner Participant's in-house counsel, as to New York and certain Federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) the Owner Participant is a duly incorporated and validly existing corporation in good standing under the laws of the State of [___________] and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Documents; (2) the Owner Participant Documents have been duly authorized, executed and delivered by the Owner Participant and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitute legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations; (3) neither the execution and delivery by the Owner Participant of the Owner Participant Documents nor the consummation of any of the transactions by the Owner Participant contemplated thereby (A) requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency of the United States or of the State in which the principal office of the Owner Participant is located (or any governmental subdivision thereof) (except as shall have been duly obtained or given, specifying the same), or (B) violates any law, governmental rule or regulation of the United States or the State in which the principal office of the Owner Participant is located (or any governmental subdivision thereof); (4) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the other parties, if any, thereto (other than the Owner Participant in the case of this Agreement), and the due authentication of the Secured Certificates by the Indenture Trustee, the Owner Trustee Documents (other than the Trust Agreement) constitute legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their respective terms, except as limited by general equitable principles - 15 - 16 (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; (5) assuming the due authorization, execution and delivery thereof by the Owner Trustee as aforesaid and the Indenture Trustee, the Trust Indenture duly creates for the benefit of the Indenture Trustee the security interests which the Trust Indenture purports to create and the Indenture Trustee is entitled to the benefits and security afforded by the Trust Indenture; (6) assuming the due authorization, execution and delivery by the Owner Trustee of the Secured Certificates being issued and delivered on the Delivery Date, and the due authentication thereof by the Indenture Trustee, such Secured Certificates are legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; (7) the execution, delivery and performance of the Owner Participant Documents by the Owner Participant does not require any approval of stockholders of the Owner Participant, or, to the knowledge of such counsel, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Documents by the Owner Participant, nor the performance by the Owner Participant of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel, judgment or order applicable to or binding on the Owner Participant or (B) to the knowledge of such counsel, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any Delaware or United States governmental authority to which the Owner Participant is a party or by which it or its properties may be bound or affected; and (8) to the knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting the Owner Participant before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant, would have a material - 16 - 17 adverse effect on the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; and to such further effect with respect to such other matters or documents relating to the Owner Participant's obligations in connection with this Agreement as the Documentation Agent, the Indenture Trustee, the Owner Trustee or Lessee may reasonably request. Such opinion may rely upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, as to matters of fact. Such opinion may state that (M) no opinion is expressed as to laws other than the laws of the State of New York (in the case of such special counsel's opinion), the laws of the State of New York and the General Corporation Law of the State of Delaware (in the case of the Owner Participant's in-house or other counsel), and the Federal laws of the United States, and (N) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. (xv) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to the effect that: (1) the FAA Bill of Sale, the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and the Trust Indenture, with the Trust Supplement attached thereto are in due form for recording by and have been duly filed for recordation with the Federal Aviation Administration in accordance with the provisions of Section 44107 of Title 49 of the United States Code; (2) proper application for registration of the Aircraft in the name of the Owner Trustee together with the affidavits of the Owner Trustee and the Owner Participant required by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations and the Trust Agreement have been duly filed with the Federal Aviation Administration in accordance with the Federal Aviation Act, and such counsel is of the opinion that the Federal Aviation Administration will issue a Certificate of Aircraft Registration (AC Form 8050-3) in response to said application; (3) the Owner Trustee is the owner of the legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interests created by the Trust Indenture and such other Liens as are permitted by the Lease or this Agreement; (4) the Aircraft is eligible for registration in the name of the Owner Trustee and will be duly registered in due course in the name of the Owner - 17 - 18 Trustee pursuant to and in accordance with the provisions of Sections 44102 and 44103 of Title 49 of the United States Code; (5) the Trust Indenture as supplemented by the Trust Supplement creates a duly and validly perfected first priority security interest in the Aircraft and a duly perfected assignment of all the right, title and interest of the Owner Trustee in, to and under the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), subject only to the Lease and to Liens permitted by the Lease and the Trust Indenture, it being understood that no opinion need be expressed as to the validity or enforceability of such security interest under local law or as against third parties in respect of the Aircraft when the same is outside the United States; (6) none of the Trust Indenture, the Trust Agreement, the Trust Supplement, the Lease or the Lease Supplement is required to be filed or recorded in any other place within the United States in order to perfect the security interest in the Aircraft and the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), under the applicable laws of any jurisdiction within the United States; and (7) no authorization, approval, consent, license or order of, or registration with, or giving of notice to, the FAA Aircraft Registry is required for the valid authorization, delivery or performance of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture and the Trust Supplement except for such authorizations, approvals, consents, licenses, orders, registrations, and notices as have been effected. Such opinion may state that no opinion is expressed as to laws other than the Federal laws of the United States. Said opinion may also contain a statement to the effect that such opinion is limited to the records maintained by the Federal Aviation Administration Aircraft Registry and does not cover liens that are perfected without the filing of notice thereof with the Federal Aviation Administration, such as Federal tax liens, liens arising under Section 1368(a) of Title 29 of the United States Code and possessory artisans' liens, and is subject to the accuracy of FAA personnel in the filing, indexing and recording of instruments filed with the FAA and in the search for encumbrance cross-reference index cards for the Engines. Said opinion may also rely on the opinion obtained by such counsel from counsel for the Aeronautical Center of the FAA, satisfactory in form and scope to such counsel, and on past practice of the FAA which is consistent with such Aeronautical Center counsel's opinion. - 18 - 19 (xvi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana & Gould, special counsel for the Indenture Trustee, to the effect that: (1) State Street Bank and Trust Company is a Massachusetts trust company, duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the full corporate power, authority and legal right to enter into and perform its obligations under the Indenture Trustee Documents and, in its capacity as Indenture Trustee, to authenticate the Secured Certificates to be delivered on the Delivery Date; (2) the execution, delivery and performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the Indenture Trustee Documents and the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby and compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with the terms thereof including, without limitation, the authentication of the Secured Certificates to be delivered on the Delivery Date, have been duly authorized by all necessary corporate action on the part of State Street Bank and Trust Company, and neither the execution and delivery thereof nor the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby nor compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with any of the terms and provisions thereof (i) does or will contravene any law or governmental rule or regulation of the United States governing the banking or trust powers of State Street Bank and Trust Company or the Commonwealth of Massachusetts or any order or judgment known to such counsel and applicable to or binding on State Street Bank and Trust Company, or (ii) does or will contravene or result in any breach of, or constitute any default under, the charter documents or by-laws of State Street Bank and Trust Company or the provisions of any indenture, mortgage, contract or other agreement, in each case known to such counsel, to which State Street Bank and Trust Company is a party or by which it or any of its properties is or may be bound or affected; (3) neither the execution and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, of the Indenture Trustee Documents or the certificates of authentication on the Secured Certificates to be delivered on the Delivery Date, nor the performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the transactions contemplated thereby - 19 - 20 requires or required the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or Massachusetts governmental authority or agency governing the banking or trust powers of State Street Bank and Trust Company or under any Massachusetts law; (4) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; (5) the Secured Certificates to be issued and dated the Delivery Date have been duly authenticated and delivered by the Indenture Trustee pursuant to the terms of the Indenture Trustee Documents; (6) to the knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting State Street Bank and Trust Company before any court or administrative agency or arbitration board or tribunal which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of State Street Bank and Trust Company to perform its obligations under the Indenture Trustee Documents; and (7) there are no taxes, fees or other governmental charges ("TAXES") payable under the laws of the Commonwealth of Massachusetts with respect to the execution of and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the Indenture Trustee Documents (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts. Neither State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, the Owner Participant, the Owner Trustee, nor the trust created by the Trust Agreement will, as a result of the transactions contemplated thereby, be subject to any taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its - 20 - 21 individual capacity) which would have not been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts, and there are no taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) upon or with respect to the Aircraft or any Engine or any part of any interest therein, or the purchase, ownership, delivery, lease, sublease, possession, presence, use, operation, condition, storage, maintenance, modification, alteration, repair, sale, return, transfer or other disposition of the Aircraft or any Engine which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts; and to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee may reasonably request. Such opinion may state that no opinion is expressed as to laws other than the internal substantive laws of the Commonwealth of Massachusetts and the Federal laws of the United States. Such opinion may further state that with respect to paragraph (4) in connection with the opinion relating to legality, validity and binding effect of the documents there referred to, such counsel has assumed that the laws of the jurisdictions whose laws govern such documents are not materially different from the internal substantive laws of the Commonwealth of Massachusetts. (xvii) The Loan Participants shall have received from Vedder, Price, Kaufman & Kammholz, special counsel for the Loan Participants, a favorable opinion satisfactory in substance and form to the Documentation Agent, as to such matters incident to the transactions contemplated hereby as the Documentation Agent may reasonably request. (xviii) The Loan Participants and the Owner Participant shall have received a certificate signed by the President, any Executive Vice President, any Senior Vice President or any Vice President of Lessee, dated the Delivery Date, addressed to the Loan Participants and the Owner Participant and certifying as to the matters stated in paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this Section 4(a). Copies of the orders, permits, waivers, authorizations, exemptions and approvals referred to in Section 4(a)(viii) shall have been furnished to the Loan Participants and the Owner Participant. (xix) The Owner Participant shall, by making its Commitment available as provided in Section 1(b) of this Agreement, be deemed to have reaffirmed the representations and warranties made by it in Section 8 of this Agreement. - 21 - 22 (xx) [Intentionally omitted.] (xxi) The Loan Participants and Owner Participant shall have received an independent insurance broker's report, in form and substance satisfactory to the Documentation Agent 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. (xxii) On the Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to the Airframe or any Engine has occurred. (xxiii) Lessor's Cost for the Aircraft shall be $50,000,000. (xxiv) 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. (xxv) The representations and warranties of the Indenture Trustee and the Loan Participants contained in Section 8 shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and each Participant shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President of the Indenture Trustee addressed to such Participant and certifying as to the foregoing matters with respect to the Indenture Trustee. (xxvi) The Owner Participant shall have received from David, Hagner, Kuney & Krupin, P.C., special tax counsel to the Owner Participant, 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. (xxvii) In the opinion of the Owner Participant and its special counsel, there shall have been, since the date hereof, 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 hereof, 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 1 of the Tax Indemnity Agreement. - 22 - 23 (xxviii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants and the Owner Participant, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, 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. Section1110 with respect to the Aircraft. (xxix) The Loan Participants shall have received an opinion, in form and substance reasonably satisfactory to the Documentation Agent, from B.K. Associates, Inc., independent aircraft appraisers, to the effect that the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost. 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 Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to the due and valid registration of the Aircraft in the name of the Owner Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement, such Trust Supplement, the Lease and 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. It is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are all subject to the fulfillment to the satisfaction of Lessee 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 4(a)(ii), 4(a)(iii) and 4(a)(iv) hereof shall have been satisfied. (iii) Those documents described in Section 4(a)(v) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than - 23 - 24 Lessee and the Guarantor) in the manner specified in Section 4(a)(v), shall each be satisfactory in form and substance to Lessee, shall be in full force and effect on the Delivery Date, and an executed counterpart of each thereof (other than the Secured Certificates) shall have been delivered to Lessee or its special counsel. (iv) Lessee shall have received evidence of the approval by the Executive Committee of the Board of Directors of the Owner Participant, or other evidence of authority satisfactory to Lessee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing or evidencing authority for the execution, delivery and performance by the Owner Participant of all of the Owner Participant Documents, and a copy of the general authorizing resolutions of the boards of directors of the Indenture Trustee and the Owner Trustee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Indenture Trustee and the Owner Trustee, respectively, which authorize the execution, delivery and performance by the Indenture Trustee of the Indenture Trustee Documents and the Secured Certificates and by the Owner Trustee of the Owner Trustee Documents, together with such other documents and evidence with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee as Lessee or its special counsel may reasonably request in order to establish the 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) The representations and warranties of the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, contained in Section 8 hereof shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and Lessee shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President or other authorized representative of the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively, addressed to Lessee and certifying as to the foregoing matters with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively. (vi) Lessee shall have received the opinions set forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case addressed to Lessee and dated the Delivery Date and in each case in scope and substance reasonably satisfactory to Lessee and Lessee's special counsel. (vii) 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. - 24 - 25 (viii) No change shall have occurred after the date of the execution and delivery of this Agreement in applicable law or regulations thereunder or interpretations by appropriate regulatory authorities which would make it a violation of law or regulations for Lessee to enter into any transaction contemplated by the Operative Documents. (ix) 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. (x) Lessee shall have been paid Lessor's Cost for the Aircraft. SECTION 5. CONFIDENTIALITY OF PARTICIPATION AGREEMENT, LEASE AND GUARANTEE. The Owner Trustee, the Participants, the Administrative Agent, the Documentation Agent, the Certificate Holders and the Indenture Trustee shall keep this Agreement, the Lease and the Guarantee confidential and shall not disclose, or cause to be disclosed, the same to any Person, except (A) to prospective and permitted transferees of Owner Trustee's, a Loan Participant's, a Certificate Holder's, the Owner Participant's or the Indenture Trustee's interest who agree to hold such information confidential, (B) to the Owner Trustee's, a Loan Participant's, a Certificate Holder's, the Owner Participant's or the Indenture Trustee's counsel or special counsel, independent insurance brokers or other agents who agree to hold such information confidential, (C) as may be required by any statute, court or administrative order or decree or governmental ruling or regulation or to any regulatory authorities having jurisdiction over them or (D) such other Persons as reasonably deemed necessary by Owner Trustee, the Participants, the Certificate Holders or the Indenture Trustee in order to protect the interests of any of such parties or for the purposes of enforcing such documents by the Owner Trustee or the Indenture Trustee; provided, however, that any and all disclosures of all or any part of this Agreement, the Lease and the Guarantee which are permitted by (C) or (D) above shall be made only to the extent necessary to meet the specific requirements or needs of the Persons to whom such disclosures are hereby permitted, and provided further, that the Owner Participant may publish a tombstone or other advertisement disclosing information relating to this transaction with the prior approval of Lessee. SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate Holder (as defined in the Trust Indenture) shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Trust Indenture when and if the principal of and interest on all Secured Certificates held by such holder and all other sums payable to such holder hereunder, under the Trust Indenture and under such Secured Certificates shall have been paid in full. Each of the Loan Participants and, by its acceptance of a Secured Certificate, each Certificate Holder agrees that it will look solely to the income - 25 - 26 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 Loan Participants 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. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and the Owner Participant that as of the Delivery Date: (i) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires, other than failures to qualify which would not have a material adverse effect on the consolidated business, assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents; is a Certificated Air Carrier; has its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) located at Eagan, Minnesota; holds all licenses, certificates, permits and franchises from the appropriate agencies of the United States and/or all other governmental authorities having jurisdiction necessary to authorize Lessee to engage in air transport and to carry on scheduled passenger service as presently conducted (other than those licenses, certificates, permits and franchises which, if not obtained, would not have a material adverse effect on the consolidated business assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents); and has the corporate power and authority to own or hold under lease its properties wherever located or used and to enter into and perform its obligations under the Lessee Documents; (ii) the execution, delivery and performance by Lessee of the Lessee Documents will, on the Delivery Date, have been duly authorized by all necessary corporate action on the part of Lessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Lessee except such as have been duly obtained or by the Delivery Date will have been duly obtained, and none of such agreements contravenes any law, judgment, government rule, regulation or order binding on Lessee or the certificate of incorporation or by-laws of Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its properties may be bound or affected; (iii) neither the execution and delivery by Lessee of the Lessee Documents nor the performance by Lessee of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other - 26 - 27 action in respect of, any Federal, State or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee 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 will on the Delivery Date 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), (B) the registration of the Aircraft referred to in Section 4(a)(ix)(4) and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Delivery Date; (iv) on the Delivery Date the Lessee Documents will each constitute legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof (subject to the qualifications set forth in clause (4) of the form of opinion of special counsel to Lessee in Section 4(a)(xi)); (v) there are no pending or, to the best of Lessee's knowledge, threatened actions, suits or proceedings before any court or administrative agency which might materially adversely affect the business, condition (financial or otherwise), operations or properties of Lessee and its subsidiaries taken as a whole or Lessee's ability to perform its obligations under the Operative Documents; (vi) except for (A) the registration of the Aircraft pursuant to the Federal Aviation Act, (B) the filing for recording pursuant to said Act of the Trust Agreement, 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 Bill of Sale, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such documents under the Uniform Commercial Code of Minnesota and Utah and such other states as may be specified in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the taking of possession by the Indenture Trustee of the original counterpart of each of the Lease and the Lease Supplement covering the Aircraft, no further action, including any 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 in order to establish and perfect the Owner Trustee's title to and the Indenture Trustee's security interest in the Aircraft as against Lessee and any third parties in any applicable jurisdictions in the United States; (vii) there has not occurred any event which constitutes an Event of Default under the Lease (or any event which with the giving of notice or the passage of time or both would constitute an Event of Default under the Lease) which is presently continuing; - 27 - 28 (viii) 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; (ix)(a) The consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of December 31, 1994 and the related consolidated statements of operations, cash flows and common stockholders' equity of the Guarantor and its consolidated subsidiaries for the year then ended, which have been audited by independent certified public accountants, and (b) the consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of September 30, 1995 and the related consolidated statements of operations, cash flows and common stockholders' equity for the nine-month period then ended, copies of which have been furnished to the Owner Participant and each Loan Participant, fairly present the consolidated financial condition of the Guarantor and its consolidated subsidiaries as at such date and the results of operations and cash flow of the Guarantor and its consolidated subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied and since September 30, 1995 there has been no material adverse change in the consolidated financial condition, cash flow or results of operations of the Guarantor and its consolidated subsidiaries; (x) on the Delivery Date, the Owner Trustee will receive good title to the Aircraft free and clear of all Liens, except Liens permitted by clause (v) of Section 6 of the Lease, the rights of Lessee under the Lease and the Lease Supplement covering the Aircraft, the Lien of the Trust Indenture and the beneficial interest of the Owner Participant in the Aircraft; (xi) 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 or U of the Board of Governors of the Federal Reserve System; (xii) Lessee is not in default in the performance of any term or condition of the Purchase Agreement which materially adversely impairs the transactions contemplated hereby; (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; and - 28 - 29 (xiv) On the Delivery Date, the Aircraft will be duly certified by the FAA as to type and airworthiness, will be insured by Lessee in accordance with the terms of the Lease and will be in the condition and state of repair required under the terms of the Lease. (b) General Tax Indemnity. [Reserved] - 29 - 30 (c) General Indemnity. [Reserved] - 30 - 31 (d) Income Tax. For purposes of this Section 7, the term "INCOME TAX" means any Tax based on or measured by gross or net income or receipts (other than sales, use, license or property Taxes or Taxes in the nature thereof) (including, without limitation, capital gains taxes, minimum taxes, income taxes collected by withholding and taxes on tax - 31 - 32 preference items), and Taxes which are capital, doing business, excess profits or net worth taxes and interest, additions to tax, penalties, or other charges in respect thereof. SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner Participant represents that it is acquiring its interest in the Trust Estate for investment and not with a present intent as to any resale or distribution thereof (subject nonetheless to any requirement of law that the disposition of its properties shall at all times be and remain within its control) and that neither it nor anyone acting on its behalf has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended. (b) Lessee represents and warrants that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended. (c) Each of the Owner Participant and First Security Bank of Utah, National Association, in its individual capacity, represents and warrants to the other parties to this Agreement that it is, and on the Delivery Date will be, a Citizen of the United States without making use of any voting trust, voting powers agreement or similar arrangement. The Owner Participant agrees, solely for the benefit of Lessee and the Loan Participants, that if (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 hereto 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 in the first sentence of this Section 8(c) 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 Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). First Security Bank of Utah, 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 of Utah, National Association, shall obtain actual knowledge that First Security Bank of Utah, 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 - 32 - 33 as in effect at such time or, if it is not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Loan Participants, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or First Security Bank of Utah, National Association, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an event which would constitute an Event of Default but for lapse of time or the giving of notice or both) shall not have occurred and be continuing under the Lease due to non-compliance by Lessee with the registration requirements in the Lease. (d) First Security Bank of Utah, 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 of Utah, 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 of Utah, 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 of Utah, National Association, in its individual capacity, represents that it has not offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire the same from, anyone, and that no officer or responsible employee of the Corporate Trust Department of First Security Bank of Utah, 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 each of the Loan Participants 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 - 33 - 34 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 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 - 34 - 35 reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. (g) The Owner Participant represents and warrants to Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in its capacity as such and in its individual capacity, as follows: (i) the Owner Participant is a corporation duly organized and validly existing in good standing under the laws of its jurisdiction of organization, has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under the Owner Participant Documents, and has a tangible net worth (exclusive of goodwill) greater than $75,000,000; (ii) the Owner Participant Documents have been duly authorized by all necessary corporate action on the part of the Owner Participant, do not require any approval not already obtained of stockholders of the Owner Participant or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of the Owner Participant, and have been duly executed and delivered by the Owner Participant, and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by the Owner Participant with any of the terms and provisions thereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order 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 financing or the citizenship requirements of the Owner Participant under applicable aviation law) or contravene or result in any breach of or constitute any 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, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Owner Participant is a party or by which it or its properties may be bound or affected; (iii) each of the Owner Participant Documents constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant in accordance with the terms thereof (subject to the qualifications set forth in clause (2) of the opinion of special counsel to the Owner Participant in Section 4(a)(xiv)); (iv) there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which, if determined adversely to the Owner Participant, would materially adversely affect the financial condition of the Owner Participant or the - 35 - 36 ability of the Owner Participant to perform its obligations under the Owner Participant Documents; (v) upon the execution and delivery of the Trust Indenture, the Trust Indenture Estate will be free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Participant; and (vi) neither the execution and delivery of the Owner Participant Documents nor the performance by the Owner Participant of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, state or foreign government authority or agency except for those exceptions referred to in Section 7(a)(iii) applicable to the Owner Participant and the Owner Participant Documents. (h) Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to it. The Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from any Taxes or Expenses imposed on the Trust Estate against which Lessee is not required to indemnify the Trust Estate pursuant to Section 7 hereof. (i) State Street Bank and Trust Company, in its individual capacity, covenants and agrees that it shall not cause or permit to exist any Lien, arising as a result of (A) claims against the Indenture Trustee not related to its interest in the Aircraft or the administration of the Trust Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not permitted by, or failure of the Indenture Trustee to take any action required by, the Operative Documents to the extent such acts arise or such failure arises from or constitutes gross negligence or willful misconduct, (C) claims against the Indenture Trustee relating to Taxes or Expenses which are excluded from the indemnification provided by Section 7 pursuant to said Section 7, or (D) claims against the Indenture Trustee arising out of the transfer by the Indenture Trustee of all or any portion of its interest in the Aircraft, the Trust Estate, the Trust Indenture Estate or the Operative Documents other than a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9 hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of Default is continuing and prior to the time that the Indenture Trustee has received all amounts due pursuant to the Trust Indenture. - 36 - 37 (j) Each Loan Participant represents, warrants, covenants and agrees as to itself: (i) that this Agreement has been duly authorized, executed and delivered by such Loan Participant and this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of its jurisdiction of organization; and (iii) that such Loan Participant has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. (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, and which is consistent with the applicable provisions of the Credit Agreement. (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) - 37 - 38 of the Secured Certificates or the Indenture Trustee if the Owner Trustee (in its individual capacity) or the Owner Participant had not become subject to the recourse liability referred to in (ii) above. Nothing contained in this Section 8(l) shall prevent the holder of a Secured Certificate or the Indenture Trustee from enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Owner Trustee (in its individual capacity) or the Owner Participant under this Agreement or the Trust Indenture (and any exhibits or annexes thereto). (m) State Street Bank and Trust Company represents and warrants, in its individual capacity, to Lessee, the Owner Trustee and each Participant as follows: (i) it is a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other 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 trust agreement or other similar arrangement, is likely to change and that it will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other similar arrangement; (ii) it is a Massachusetts trust company duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the requisite corporate power and authority to enter into and perform its obligations under the Trust Indenture and this Agreement and to authenticate the Secured Certificates to be delivered on the Delivery Date; (iii) the Indenture Trustee Documents and the authentication of the Secured Certificates to be delivered on the Delivery Date have been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or state law or governmental rule or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its charter or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (iv) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. - 38 - 39 (n) The Owner Participant will not, directly or indirectly, sell, assign, convey or otherwise transfer any of its right, title or interest in and to this Agreement, the Trust Estate or the Trust Agreement or any proceeds therefrom to any person or entity, unless (i) the proposed transferee is a "Transferee" (as defined below), (ii) Lessee shall have (1) received an opinion (in form and substance reasonably satisfactory to Lessee) of counsel to the Owner Participant (who shall be reasonably satisfactory to Lessee) to the effect that such transfer will not result in any 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 Loan Participants, 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 Loan Participants, 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 Majority in Interest of Certificate Holders; provided, however, that any Transferee shall not be an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or other similar person or a corporation or other entity controlling, controlled by or under common control with such an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or other similar person. Each such transfer to a Transferee shall be subject to the conditions that (M) upon giving effect to such transfer, the Transferee is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or other similar arrangement unless approved by Lessee), and has full power and authority to enter into the transactions contemplated hereby, (N) the Transferee has the requisite power and authority to enter into and carry out the transactions contemplated hereby and such Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants 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, the Majority in Interest of Certificate Holders, 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 - 39 - 40 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 Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, specifying the name and address of the proposed Transferee. (o) Notwithstanding the provisions of Section 8(x) hereof, unless waived by the Loan Participants, Lessee shall not be entitled to assume the Secured Certificates on the date for purchase of the Aircraft pursuant to Section 19(d) of the Lease if on such date an Event of Default shall have occurred and be continuing or any condition or event shall exist which, with the passage of time or giving of notice or both, would become such an Event of Default. (p) First Security Bank of Utah, 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)(A) Each Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Secured Certificate or any interests represented thereby with the assets of any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1) of the Code. Each Loan Participant agrees that it will not transfer any Secured Certificate (or any part thereof) to any entity (except pursuant to Section 2.14 of the Trust Indenture) unless such entity makes (or is deemed to have made) a representation and warranty as of the date of transfer that either no part of the funds to be used by it for the purchase of such Secured Certificate (or any part thereof) constitutes assets of any - 40 - 41 "employee benefit plan" or that such transfer will not result in a non-exempt prohibited transaction (as defined in Section 4975 of the Code and ERISA). The Owner Participant agrees that it will not transfer any of its right, title or interest in and to this Agreement, the Trust Estate or the Trust Agreement or any proceeds therefrom to any entity unless such entity makes (or is deemed to have made) a representation and warranty as of the date of transfer that either no part of the funds to be used by it for the purchase of such right, title and interest (or any part thereof) constitutes assets of any "employee benefit plan" or that such transfer will not result in a prohibited transaction (as defined in Section 4975 of the Code and ERISA). (B) Lessee represents and warrants that: none of (i) the execution and delivery of this Agreement, (ii) the initial purchase by the Loan Participants of the Secured Certificates, and (iii) the initial acquisition by the Owner Participant of its beneficial interest in the Trust Estate will involve any prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation being made in reliance upon and subject to the accuracy of the representations contained in subparagraph (A) of this Section 8(q)). (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 and not specifically reserved to Lessee under Section 1 thereof, 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 Loan Participants 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. - 41 - 42 (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. Each Loan Participant agrees that Lessee may, on behalf of the Owner Trustee and upon notice to the affected Certificate Holder, arrange for another institution (which may be a Certificate Holder) to purchase the Secured Certificate of the affected Certificate Holder by paying the affected Certificate Holder an amount equal to the unpaid principal amount of the Secured Certificates held by the affected Certificate Holder plus accrued but unpaid interest thereon to the date of payment of such principal amount plus all other amounts owed to such affected Certificate Holder under the Operative Documents (including any Funding Loss Amount payable as a result of the applicable purchase occurring on a day other than the last day of an Interest Period). For purposes of this Section 8(t), "affected Certificate Holder" shall mean a Certificate Holder which has asserted claims against the Owner Trustee or Lessee under or sought rights or remedies provided by Section 7(b) hereof or Sections 11.01 or 11.02 of the Trust Indenture. (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) First Security Bank of Utah, National Association, in its individual capacity, represents and warrants that: (i) the Trust Agreement and, assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, each of the other Owner Trustee Documents has been duly executed and delivered by one of its officers who is duly authorized to execute and deliver such instruments on behalf of First Security Bank of Utah, National Association or the Owner Trustee, as the case may be; (ii) the Trust Estate is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to First Security Bank of Utah, National Association, in its individual capacity, and there are no Liens affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Trust Indenture Estate resulting from any act or claim against First Security Bank of Utah, National Association, in its individual capacity, arising out of any event or condition not related to the ownership, leasing, use or operation of the Aircraft or to any other transaction contemplated by - 42 - 43 this Agreement or any of the Operative Documents, including any such Lien resulting from the nonpayment by First Security Bank of Utah, National Association, in its individual capacity, of any Taxes imposed or measured by its net income; (iii) there has not occurred any event which constitutes (or to the best of its knowledge would, with the passage 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 First Security Bank of Utah, National Association, in its individual capacity, and which is presently continuing; (iv) it is a national banking association duly organized, validly existing and in good standing under the laws of the United States and has the full corporate power, authority and legal right to enter into and perform its obligations under each of the Owner Trustee Documents; (v) each of the Owner Trustee Documents has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal law governing the banking and trust powers of First Security Bank of Utah, National Association, or Utah law or regulation or contravene or result in any breach of the provisions of its articles of association or By-Laws or any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (vi) each of the Owner Trustee Documents has been duly executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, each thereof is the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with their respective terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (vii) there are no Taxes payable by it (either in its individual capacity or as Owner Trustee), the Trust Estate, the Owner Participant, Lessee, the Indenture Trustee or the Loan Participants to the State of Utah in connection with the execution, delivery and performance of the Operative Documents solely because First Security Bank of Utah, National Association is a national banking association with its principal office in the State of Utah and will perform its obligations under the Operative Documents in the State of Utah, other than franchise or other taxes based on or measured by any fees or compensation received or accrued by First Security Bank of Utah, National Association - 43 - 44 for services rendered in connection with the transactions contemplated by the Operative Documents. (w) The Owner Participant covenants and agrees that if (i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to Lessee written notice of Lessor's election to retain title to the Aircraft and (iii) the Owner Trustee has failed to make, on or before the Termination Date, any payment required to be made by the Owner Trustee pursuant to Section 9(c) in connection with its retention of title to the Aircraft, the Owner Participant will indemnify Lessee for any losses, damages, costs or expenses of any kind (including any additional rents paid by Lessee and any fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a consequence of such failure by the Owner Trustee. The Owner Participant further covenants and agrees to pay those costs and expenses specified to be paid by the Owner Participant pursuant to Exhibit E to the Lease. (x) Each of the Owner Participant, the Owner Trustee, the Indenture Trustee, each Loan Participant 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. (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 each Participant an agreement in form and substance - 44 - 45 reasonably satisfactory to such 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 each 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 Participants, each stating that such consolidation, merger, conveyance, transfer or lease and the assumption agreement mentioned in clause (ii) above comply with this subparagraph (A) of Section 8(y) and that all conditions precedent herein provided for relating to such transaction have been complied with. Upon any such consolidation or merger or any such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety in accordance with this subparagraph (A) of Section 8(y), the successor corporation or Person formed by such consolidation or into which Lessee is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, Lessee under this Agreement with the same effect as if such successor corporation or Person had been named as Lessee herein. No such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety shall have the effect of releasing Lessee or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this subparagraph (A) of Section 8(y) from its liability in respect of any Operative Document to which it is a party. (B) Lessee shall at all times maintain its corporate existence except as permitted by subparagraph (A) of this Section 8(y). (z) Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust Supplement and any financing statements or other instruments as are necessary to maintain, so long as the Trust Indenture or the Lease is in effect, the perfection of the security interests created by the Trust Indenture and any security interest that may be claimed to have been created by the Lease and the interest of the Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the Indenture Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable them to take such action. Lessee will notify the Owner Trustee, the Owner Participant and the Indenture Trustee of any change in the location of its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) promptly after making such change or in any event within the - 45 - 46 period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. (aa) Section 3 of the Lease contemplates that, under certain circumstances, the Owner Participant will make certain recalculations of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the Owner Participant hereby agrees to make such recalculations as and when contemplated by the Lease and subject to all the terms and conditions of the Lease and promptly to take such further actions as may be necessary or desirable to give effect to and to cause the Owner Trustee to give effect to the provisions of Section 3 of the Lease. (bb) The Owner Participant hereby agrees with Lessee, and only with Lessee, and not for the benefit of any other party to this Participation Agreement, that it will promptly pay in full to the Owner Trustee any funds necessary to enable the Owner Trustee promptly to pay to Lessee the full amount of any Reimbursement Amount owed to Lessee. (cc) The Owner Participant hereby agrees to notify Lessee or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York time on the third Business Day prior to the day for which an Excess Amount is indicated stating whether or not the Owner Participant intends to pay such Excess Amount in full by 10:30 A.M. (New York time) on the due date. (dd) [_______________] agrees to act as Administrative Agent hereunder. The Administrative Agent agrees to notify each of the Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual interest expected to accrue on the Secured Certificates during each Interest Period promptly after the commencement of such Interest Period and after the occurrence of any event that would cause such actual interest expected to accrue during such Interest Period to change from the amount previously notified. The Administrative Agent further agrees to perform all of the functions that are required to be performed by the Administrative Agent pursuant to the terms of the Trust Indenture. (ee) The Owner Participant hereby agrees with Lessee that it will pay, or cause to be paid, all costs and expenses that are for the account of the Owner Trustee pursuant to Section 5(d) of the Lease. (ff) 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(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture). - 46 - 47 (gg) [____________] agrees to act as Documentation Agent hereunder and to perform all of the functions that are required to be performed by the Documentation Agent hereunder. (hh) [____________], [____________] and [________________] each agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate (as defined in the Trust Indenture). SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall, pursuant to this Section 9 and in accordance with the requirements of Section 3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt payment structures. Within forty-five Business Days after the need for an adjustment to Rent has been established pursuant to Section 3 of the Lease, the Owner Participant shall deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of debt amortization and Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages. Within forty-five days of its receipt of the Reoptimization Certificate, Lessee may demand a verification, pursuant to Exhibit E of the Lease, of the information set forth in the Reoptimization Certificate. Upon the acceptance by Lessee of the accuracy of the information set forth in the Reoptimization Certificate or the determination pursuant to such verification procedures of such information, the Owner Participant will cause the Owner Trustee (M) to execute a Lease Supplement setting forth the reoptimized Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages, and (N) to exchange new Secured Certificates containing reoptimized amortization schedules for the Secured Certificates outstanding immediately prior to such reoptimization. (b) In connection with reoptimization adjustments of Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree to changes in the amortization schedule of the Secured Certificates, and (N) each Loan Participant will exchange the Secured Certificates held by it immediately prior to such reoptimization for new Secured Certificates containing reoptimized amortization schedules; provided that such changes do not (X) change the final maturity of any Secured Certificates to beyond twenty years from the Delivery Date or (Y) reduce Basic Rent, the Stipulated Loss Value or the Termination Value percentages below the amount necessary (together with the Excess Amount and all other amounts simultaneously payable by Lessee) to permit payment of all amounts payable pursuant to the Secured Certificates or (Z) increase the weighted average lives of the Secured Certificates as of the Delivery Date to more than 15 years. SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the Owner Trustee hereby (A) agrees with Lessee and the Loan Participants to comply with all of the terms of the Trust Agreement (as the same may hereafter be amended or supplemented from time to time in accordance with the terms thereof) applicable to it; (B) agrees with - 47 - 48 Lessee, the Loan Participants 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 Loan Participants. 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 10.05 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 Bill 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 Bill of Sale, second, the Lease, with the Lease Supplement covering the Aircraft, the Trust Indenture and - 48 - 49 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 attributed thereto in the Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set forth in the Trust Indenture. Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it may be amended from time to time. (b) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto or to the Guarantor shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 13(b). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 13(b), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the Administrative Agent, the Documentation 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, or (D) if to the Guarantor, addressed to the Guarantor at such address as the Guarantor shall have furnished by notice to the parties hereto. (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 - 49 - 50 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, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of Lessee in New York City as from time to time may be designated by Lessee in writing to the Owner Participant, the Owner Trustee and the Indenture Trustee. SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant agrees that if, at any time, the Trust Estate becomes subject to any Taxes for which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States from the state in which it is then located, the situs of the trust may be moved with the written consent of the Owner Participant (which consent shall not be unreasonably withheld) and the Owner Participant will take 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 Loan Participants may reasonably request, (B) the rights and obligations under the Operative Documents of the Owner Participant and the Loan Participants 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 Loan Participants shall have received an opinion or opinions of counsel (satisfactory to the Owner Participant and the Loan Participants), in scope, form and substance satisfactory to the Owner Participant and the Loan Participants 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 Loan Participants, 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 Loan Participants and to the Owner Participant covering the matters described in Section 4(a)(xiii) hereof and such other matters as the Loan Participants and the Owner Participant may reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner Participant, the Indenture Trustee and the Loan Participants 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 - 50 - 51 Participant, the Indenture Trustee and the Loan Participants in connection with such change of situs. SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, or the Indenture Trustee under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture Trustee. (b) The representations, warranties, indemnities and agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee, the Administrative Agent, the Documentation Agent and the Owner Participant provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan Participants', the Indenture Trustee's, the Administrative Agent's, the Documentation Agent's and the Owner Participant's obligations under any and all thereof, shall survive the making available of the respective Commitments by the Loan Participants and 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 its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and assigns, each Certificate Holder and its successors and registered assigns, the Indenture Trustee and its successors as Indenture Trustee under the Trust Indenture, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, the Administrative Agent and the Documentation Agent. 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 - 51 - 52 Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate. Therefore, anything contained in this Agreement or such other agreements to the contrary notwithstanding (except for any express provisions that the Owner Trustee is responsible for in its individual capacity), no recourse shall be had with respect to this Agreement or such other agreements against the Owner Trustee in its individual capacity or against any institution or person which becomes a successor trustee or co-trustee or any officer, director, trustee, servant or direct or indirect parent or controlling person or persons of any of them; provided, however, that this Section 15(d) shall not be construed to prohibit any action or proceeding against any party hereto for its own willful misconduct or grossly negligent conduct for which it would otherwise be liable; and provided, further, that nothing contained in this Section 15(d) shall be construed to limit the exercise and enforcement in accordance with the terms of this Agreement or such other agreements of rights and remedies against the Trust Estate. The foregoing provisions of this Section 15(d) shall survive the termination of this Agreement and the other Operative Documents. (e) It is the intention of the parties hereto that the Owner Trustee, as Lessor under the Lease, and the Indenture Trustee, as assignee of such Owner Trustee's rights under the Lease pursuant to the Trust Indenture, will be entitled to the benefits of 11 U.S.C. Section 1110 in the event of any reorganization of Lessee under such Section. SECTION 16. EXPENSES. (a) Invoices and Payment. Each of the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan Participants shall promptly submit to the Owner Trustee and Lessee for their prompt approval (which shall not be unreasonably withheld) copies of invoices in reasonable detail of the Transaction Expenses for which it is responsible for providing information as they are received (but in no event later than April 15, 1996). The Owner Participant agrees to transfer to the Owner Trustee promptly but in any event no later than April 30, 1996 such amount as shall be necessary in order to enable the Owner Trustee to pay Transaction Expenses. To the extent of funds received by it, the Owner Trustee agrees to pay all invoices of Transaction Expenses that have been approved by it and Lessee promptly upon receipt thereof. Notwithstanding the foregoing, to the extent that Transaction Expenses exceed 1.0% of Lessor's Cost, Lessee at its sole option shall have the right to pay directly any or all Transaction Expenses which are in excess of 1.0% of Lessor's Cost. (b) Payment of Other Expenses. In the event that the transaction contemplated by this Participation Agreement fails to close as a result of the Owner Participant's failure to negotiate in good faith or to comply with the terms and conditions upon which its participation in the transaction was predicated, the Owner Participant will be responsible for all of its fees and expenses, including but not limited to the fees, expenses and disbursements of its special counsel. 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 - 52 - 53 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. The Owner Participant understands and agrees that the debt to be issued in connection with such refinancing may be issued in several classes, each of which may have a different interest rate, final maturity date and priority of payment. The Owner Participant further understands and agrees that one or more of such classes may be entitled to the benefit of a liquidity facility, which will entitle the Indenture Trustee (or a collateral agent therefor) to make drawings thereunder to pay interest on a current basis on the enhanced classes of debt for up to three semi-annual interest payments following a payment default with respect to such enhanced classes. In such a structure the Owner Participant agrees that drawings of the entire amount available under the liquidity facility for any class (and the deposit of the proceeds thereof into a cash collateral account) will be required in the event of a ratings decline with respect to the related liquidity provider or in the event that the liquidity facility is not extended or replaced prior to its scheduled expiration. Amounts owed to the liquidity facility provider for both drawings and interest thereon will generally be senior to all Loan Participant claims. The Owner Participant understands and agrees that in any refinancing operation it will agree to these and any other conditions which do not impair the customary rights of an owner participant in a leveraged lease transaction. Upon such agreement: (1) within ten Business Days after the reaching of such agreement, the Owner Participant will deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REFINANCING CERTIFICATE") setting forth (i) the proposed date on which the outstanding Secured Certificates will be redeemed, any new debt will be issued and the other aspects of such refinancing will be consummated (such date, the "REFINANCING DATE") and (ii) the following information calculated pursuant to the provisions of paragraph (6) of this Section 17(a): (A) 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 - 53 - 54 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; (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), 4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc. - 54 - 55 75-28 Section 4.08(1) shall be applied on a prospective basis from the date of such adjustment) 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. AGENTS. (a) Each Loan Participant hereby appoints and authorizes each of the Administrative Agent and the Documentation Agent (each, an "AGENT") to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Operative Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. Each Agent shall have no duties or responsibilities except those expressly set forth in the Operative Documents. As to any matters not expressly provided for hereby or by the Trust Indenture, each Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority in Interest of Certificate Holders (as defined in the Trust Indenture), and such instructions shall be binding upon all Loan Participants and all Certificate Holders; provided, however, that such Agent shall not be required to take any action that exposes such Agent to personal liability or that is contrary to the Operative Documents or applicable law. Each Agent agrees to give to each Loan Participant prompt notice of each notice given to it by the Owner Trustee pursuant to the terms of the Operative Documents with respect to which such Loan Participant has not otherwise received such notice. (b) No Agent nor such Agent's directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the Trust Indenture, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Loan Participant and shall not be responsible to any Loan Participant for any statements, warranties or representations (whether written or oral) made in or in connection with the Operative Documents; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Operative Documents on the part of any party thereto or to inspect the property (including the books and records) of any such party; (iv) shall not be responsible to any Loan Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Operative Documents or any other instrument or document furnished pursuant thereto; and (v) shall incur no liability under or in respect of the Operative - 55 - 56 Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. (c) With respect to their Loans and any Secured Certificates issued to them, [____________] and [____________] shall have the same rights and powers under the Operative Documents as any other Loan Participant and may exercise the same as though they were not Agents and the term "Loan Participant" or "Certificate Holder" shall, unless otherwise expressly indicated, include [____________] and [____________] in their individual capacity. [____________] and its Affiliates and [____________] and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Owner Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any Person who may do business with or own securities of any of such Persons, all as if [____________] and [____________] were not Agents and without any duty to account therefor to the Loan Participants. (d) Each Loan Participant acknowledges that it has, independently and without reliance upon the Agents or any other Loan Participant and based on the financial statements referred to in Section 7(a)(ix) of this Agreement and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Loan Participant also acknowledges that it will, independently and without reliance upon the Agents or any other Loan Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. (e) Subject to the appointment and acceptance of a successor agent as provided below, any Agent may resign at any time by giving written notice thereof to the Loan Participants, the Owner Trustee and Lessee and may be removed at any time with or without cause by the Majority in Interest of Certificate Holders (as defined in the Trust Indenture). Upon any such resignation or removal, the Majority in Interest of Certificate Holders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority in Interest of Certificate Holders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or removal of the retiring Agent by the Majority in Interest of Certificate Holders, then the retiring Agent may, on behalf of the Loan Participants, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the Trust Indenture. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section 18 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the Trust Indenture. Notwithstanding anything contrary herein, the Administrative Agent and the Documentation Agent hereunder and under the Trust Indenture - 56 - 57 shall be the same institution, respectively, as the Administrative Agent and the Documentation Agent under (and as defined in) the Credit Agreement. - 57 - 58 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: --------------------------------------- Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 [_________________________], Owner Participant By: --------------------------------------- Title: Address: Attn: Telecopy No.: - Signature Page - 59 STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: ------------------------------------- Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: ------------------------------------- Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 - Signature Page - 60 [INSERT BRIDGE LENDERS] By: ---------------------------------- Title: By: ---------------------------------- Title: Address: Attn: Telecopy No.: - Signature Page - 61 SCHEDULE I NAMES AND ADDRESSES Lessee: Northwest Airlines, Inc. U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 Wire Transfer First Bank, N.A., Minneapolis ABA No. 091000022 Acct. No. 150250099440 Owner Participant: 62 Indenture Trustee: State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 Wire Transfer State Street Bank and Trust Company ABA No. 011-00-0028 for credit to State Street Bank and Trust Company Acct. No. 9903-943-0 Attn: Corporate Trust Department Reference: Northwest/NW 1996 A Owner Trustee: First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 Payments made to the Owner Trustee as provided in Section 3(f) of the Lease shall be made to: First Security Bank of Utah, National Association ABA No. 124-0000-12 Acct. No. 051-0922115 Attn: Corporate Trust Department Credit: Northwest/NW 1996 A SCHEDULE I - PAGE 2 63 SCHEDULE II COMMITMENTS
Percentage of Loan Participants: Lessor's Cost - ------------------ -------------
64
Owner Participant: -------------- Total Commitments: 100%
SCHEDULE II - PAGE 2 65 EXHIBIT A TO PARTICIPATION AGREEMENT [NW 1996 A] 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 EX-4.E7 41 FIRST AMENDMENT TO PARTICIPATION AGREEMENT-1996 A 1 FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 A] This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 A], dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) [ ], a [ ] corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (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 (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; W I T N E S S E T H: WHEREAS, Lessee, the Owner Participant, the Owner Trustee, [ ], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 A], dated as of February 27, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 A], dated as of February 27, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 A], dated February 2 29, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 A] relating to the Aircraft, dated as of February 27, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 A] dated February 29, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 A], dated as of February 27, 1996 (the "TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 A] relating to the Aircraft, dated as of February 27, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 A] dated as of February 27, 1996 (the "GUARANTEE"), pursuant to which the Guarantor guaranteed certain obligations of Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and Lessee has given its written notice to the Owner Participant and Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent have entered into the Refunding Agreement [NW 1996 A], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 A], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue -2- 3 new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1996 A], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 A] dated as of June 3, 1996 (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in Section 1 of the Refunding 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing 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 Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") entered into three revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of Certificates of each Pass Through Trust, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent entered into the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Participation Agreement is amended as follows: -3- 4 SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 2. AMENDMENT OF SECTION 5 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 5 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation Agreement is hereby amended by (i) deleting the words "other than a Loan Participant" from clauses (1), (3) and (10) thereof, (ii) deleting clauses (2) and (4) thereof in their entirety and substituting therefor "Intentionally Omitted", (iii) deleting the words "any Loan Participant or any Certificate Holder" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (iv) deleting clause (11)(B) thereof in its entirety, (v) deleting "(C)" from clause (11) thereof and substituting therefor "(B)", and (vi) deleting the parenthetical clause and the last proviso from clause (13) thereof. SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation Agreement is hereby amended by deleting the second sentence of the last paragraph thereof. SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL PARTICIPATION AGREEMENT . Section 7(b)(x) of the Original Participation Agreement is hereby amended by (i) deleting the second and third sentences thereof and (ii) deleting the words "other than a Loan Participant" in the first sentence thereof. SECTION 6. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL PARTICIPATION AGREEMENT . Section 7(c) of the Original Participation Agreement is hereby amended by (i) deleting the word "and" between the words "expenses" and "Transaction Expenses" in the second parenthetical phrase of the first paragraph thereof and substituting a comma therefor, (ii) inserting after the phrase "to Section 16 hereof" in such second parenthetical phrase the words "and Refinancing Expenses to the extent not required to be paid by the Owner Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement", (iii) adding the words and punctuation "and, only in the case of an Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words "in respect thereof" in the first clause (A) thereof, and (iv) adding the words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after the words "Operative Documents" in the second clause (A) thereof and in the second clause (B) thereof. SECTION 7. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby amended by deleting the words "each of the Loan Participants" and substituting therefor the words "the Indenture Trustee" in the first line thereof. -4- 5 SECTION 8. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation "the Loan Participants," each time they appear in the second sentence thereof, (ii) deleting the words "the Majority in Interest of the Certificate Holders" from the first proviso of the second sentence thereof and substituting therefor the words "Indenture Trustee"; (iii) deleting the "," between the words "Owner Trustee" and "the Indenture Trustee" in clause (N) of the third sentence thereof and substituting therefor "and", (iv) deleting the words "and the Loan Participants" each time they appear in the third sentence thereof other than in clause (R) thereof, (v) deleting the words and punctuation "the Majority in Interest of the Certificate Holders," from clause (O) of the third sentence thereof, and (vi) deleting the words and punctuation "to the Loan Participants," from the fifth sentence thereof. SECTION 9. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(q)(a) of the Original Participation Agreement is hereby amended by (i) deleting the word "Each" in the first sentence thereof and substituting therefor the words "The Owner" and (ii) adding a new sentence to the end thereof to read as follows: "The Pass Through Trustee agrees that it will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of the initial supplement (other than the initial supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust Agreement without the prior written consent of the Owner Participant.". SECTION 10. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is hereby amended by deleting the fourth and fifth sentences thereof. SECTION 11. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby amended by (i) deleting the words "each Loan Participant" therefrom and (ii) adding a new second paragraph thereto at the end thereof: 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. SECTION 12. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(y)(a) of the Original Participation Agreement is hereby amended by (i) deleting the words "each" the first time it appears in Section 8(y)(a)(ii) and substituting therefor the words "the Owner", (ii) deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Indenture Trustee and the Owner", -5- 6 (iii) inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement Assignment", the words and punctuation ", the Refunding Agreement", (iv) deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and substituting therefor the words "the Owner", and (v) deleting the word "Participants" from Section 8(y)(A)(iv) and substituting therefor the words "the Indenture Trustee and the Owner Participant". SECTION 13. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 14. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 15. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 16. AMENDMENT OF SECTION 9 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 17. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", the Loan Participants" from clause (B) thereof, (ii) deleting the words "Loan Participants" the second time they appear in clause (C) thereof and substituting therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05" from clause (iii) of the second sentence thereof. SECTION 18. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby amended by deleting the words "at the foot of this Agreement" in clause (A) of the second sentence thereof and substituting therefor the words "on the signature pages to the Refunding Agreement". SECTION 19. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is hereby amended by (i) deleting the words "Loan Participants" each time they appear in clauses (A), (B), and (D) thereof and substituting therefor the words "Indenture Trustee", (ii) deleting the "," both times it appears between the words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and substituting therefor "and", and (iii) deleting the words "and the Loan Participants" both times they appear in clause (E) thereof. SECTION 20. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement is hereby amended to read in its entirety as follows: -6- 7 Section 15. Miscellaneous. (a) The Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor. SECTION 21. AMENDMENT OF SECTION 18 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 22. RATIFICATION. Except as hereby modified, the Original Participation Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Participation Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Participation Agreement or any word or phrase referring to a section or provision of the Participation Agreement is deemed for all purposes to be a reference to the Participation Agreement or such section or provision as amended pursuant to this Amendment. SECTION 23. MISCELLANEOUS. (a) Each of the parties hereto agrees that the transactions contemplated hereby shall constitute one of the three refinancing operations permitted in Section 17 of the Participation Agreement. (b) Each party hereto acknowledges and agrees that the Purchaser is a Loan Participant under the Participation Agreement, the Lease and the other Operative Documents, and is entitled to the benefits of the covenants and other provisions therein running in favor of the Loan Participants, and to the security purported to be afforded by the Trust Indenture, but that (i) the Purchaser has no liability arising out of any actions or inactions of the Original Loan Participants or any prior Certificate Holder or any event or condition which occurred or existed prior to the Closing, (ii) the Purchaser is making no representations or warranties other than those set forth in the Refunding Agreement, and (iii) the Purchaser has no liability or obligation under any covenant in any of such agreements for any period prior to the Closing. (c) This Amendment 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 Amendment 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 Amendment shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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 -7- 8 under the Trust Agreement. THIS AMENDMENT 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 AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -8- 9 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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: ----------------------------------------- Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: ----------------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ----------------------------------------- Name: Title: [ ], as Owner Participant By: ----------------------------------------- Name: Title: -9- 10 STATE STREET BANK AND TRUST COMPANY, OF CONNECTICUT, NATIONAL ASSOCIATION as Subordination Agent By: ----------------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee By: ----------------------------------------- Name: Title: -10- 11 SCHEDULE I TO PARTICIPATION AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. EX-4.E8 42 REFUNDING AGREEMENT-1996 A 1 REFUNDING AGREEMENT [NW 1996 A] This REFUNDING AGREEMENT [NW 1996 A], dated as of June 3, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii) [__________], a [__________] corporation (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Participation Agreement (as defined below) as if the Closing Date had occurred. W I T N E S S E T H: WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, [Bridge Lenders], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 A], dated as of February 27, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust 2 Indenture and Security Agreement [NW 1996 A], dated as of February 27, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 A], dated February 29, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Lessee entered into the Lease Agreement [NW 1996 A] relating to the Aircraft, dated as of February 27, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 A] dated February 29, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 A], dated as of February 27, 1996 (the "TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 A] relating to the Aircraft, dated as of February 27, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 A] dated as of February 27, 1996 (the "GUARANTEE") pursuant to which the Guarantor guaranteed certain obligations of the Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and the Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 A], dated as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; -2- 3 WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Trustee and the Lessee entered into the First Amendment to Lease Agreement [NW 1996 A], dated as of the date hereof (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"), containing amendments, modifications and additions necessary to give effect to the transactions described herein; WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent will enter into the First Amendment to Participation Agreement [NW 1996 A], dated as of the Refinancing Date (the "PA AMENDMENT NO. 1"; the Original Participation Agreement, as amended by the PA Amendment No. 1, the "PARTICIPATION AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 A] dated as of the date hereof (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing Secured Certificates bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will enter 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 Refinancing Date (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; -3- 4 NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on June 12, 1996 or on such other date agreed to by the parties hereto (the "REFINANCING DATE"): (i) immediately prior to the Closing, the Owner Participant shall pay to the Indenture Trustee an amount equal to the unpaid interest on the Original Secured Certificates accrued up to but not including the Refinancing Date; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Refinancing Secured Certificates being issued to such Pass Through Trustee as set forth in clause (vii) below; (iii) the Owner Trustee shall pay to the Indenture Trustee for the benefit of the holders of the Original Secured Certificates an amount equal to the aggregate principal amount of Original Secured Certificates outstanding on the Refinancing Date, together with accrued and unpaid interest on the Original Secured Certificates up to but not including the Refinancing Date, and all other amounts payable to such holders under the Original Indenture and the Original Participation Agreement; (iv) pursuant to the Indenture, the Indenture Trustee shall disburse to the holders of the Original Secured Certificates the amounts of principal and interest, and other amounts, if any, described in clause (iii) above, owing to them on the Refinancing Date with respect to the Original Secured Certificates as a prepayment of the Original Secured Certificates; (v) simultaneously with the disbursement by the Indenture Trustee of amounts described in clause (iv) above to the holders of the Original Secured Certificates, the Indenture Trustee shall receive the Original Secured Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture; and (vii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Refinancing 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. -4- 5 (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) In case any Pass Through Trustee shall for any reason fail to purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on or prior to June 12, 1996 or such other date as shall be agreed in writing by the parties hereto, the written notice given by the Lessee pursuant to Section 17 of the Original Participation Agreement shall be deemed never to have been given, none of the Owner Participant, the Owner Trustee nor the Lessee shall have any obligation to pay to the holders of the Original Secured Certificates any amount in respect of the prepayment of the Original Secured Certificates, the Original Secured Certificates shall remain outstanding and in full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall not take place. (d) The closing (the "CLOSING") of the transactions described in this Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such other place as the parties hereto may agree. (e) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Refinancing Date. (f) In order to facilitate the transactions contemplated hereby, the Lessee and the Guarantor have entered into the Underwriting Agreement, dated the date hererof, among the Lessee, the Guarantor and the several underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to the terms and conditions hereof, the Lessee and the Guarantor will enter into each of the Pass Through Trust Agreements and will undertake to perform certain administrative and ministerial duties under such Pass Through Trust Agreements. SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured Certificates shall be payable as to principal in accordance with the terms of the Indenture, and the Refinancing Secured Certificates shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Refinancing Secured Certificates in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Refinancing Secured Certificates bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Refinancing Secured Certificates shall be dated and authenticated as of the Refinancing Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. -5- 6 SECTION 3. CONDITIONS PRECEDENT. The obligation of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee and the Owner Participant to make the payments and participate in the transactions contemplated by this Agreement on the Refinancing Date are subject to the fulfillment, prior to or on the Refinancing Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder, and paragraph (r) shall not be a condition precedent to the obligations of the Pass Through Trustee hereunder): (a) The Owner Trustee shall have tendered the Refinancing Secured Certificates to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Refinancing Secured Certificates and shall have tendered the Refinancing Secured Certificates to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts or conformed copies of the following documents: (1) this Agreement; (2) the Lease Amendment No. 1; (3) the Indenture; (4) the PA Amendment No. 1; (5) each of the Pass Through Trust Agreements; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts. (c) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Lessee and the Guarantor (as the case may be) as to the person or persons authorized to execute and deliver this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the TIA Amendment No. 1, the Guarantee Amendment No. 1 and any other documents to be executed on behalf of the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby and the signatures of such person or persons; -6- 7 (2) a copy of the resolutions of the board of directors of the Lessee and the Guarantor or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the 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 the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby; and (3) a copy of the certificate of incorporation of the Lessee and the Guarantor, certified by the Secretary of State of the State of Minnesota in the case of the 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 the Lessee and the Guarantor, certified by the Secretary or Assistant Secretary of the 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 the 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 Refinancing Date, as to the due incorporation and good standing of the Lessee or the Guarantor (as the case may be) in such state. (d) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received a certificate signed by an authorized officer of the Lessee (and, with respect to the matters set forth in clauses (4) and (5) below, of the Guarantor), dated the Refinancing Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Original Lease and has a current, valid certificate of airworthiness; (2) the FAA Bill of Sale, the Original Lease and the Original Indenture have been duly recorded, and the Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49, United States Code, relating to aviation (the "FEDERAL AVIATION ACT"); (3) the Aircraft has been registered with the FAA in the name of the Owner Trustee and the Lessee has authority to operate the Aircraft; (4) the representations and warranties contained herein of the Lessee and the Guarantor are correct as though made on and as of the Refinancing Date, except to the extent that such representations and warranties (other than those contained in clause (v) of Section 8(d)) -7- 8 relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (5) there has been no material adverse change in the financial condition of the Guarantor and its subsidiaries, taken as a whole, since December 31, 1995. (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement, the Indenture, the PA Amendment No. 1, 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 and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary or an Assistant Secretary of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Refinancing 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). (f) The Pass Through Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement, the PA Amendment No. 1 and any other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons; -8- 9 (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; (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 Refinancing Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Refinancing 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). (g) The Pass Through Trustee and the Owner Trustee each shall have received a certificate signed by an authorized officer of the Owner Participant, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Refinancing 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). (h) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an independent insurance broker's report as to the due compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (i) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for the Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal department, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee and the Owner Participant each shall have received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form and substance satisfactory to each of them. -9- 10 (l) The Pass Through Trustee and the Owner Trustee each shall have received an opinion addressed to it from Feltman, Karesh, Major & Farbman, special counsel for the Owner Participant, and an opinion addressed to it from corporate counsel to the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee shall have received an opinion of White & Case, special counsel for the Liquidity Provider, and in-house German counsel for the Liquidity Provider, each in form and substance satisfactory to the Pass Through Trustee. (n) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The 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 Refinancing Secured Certificates to be purchased from the Owner Trustee. (p) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustees to make the payments described in Section 1(a)(ii) or for the Owner Trustee or the Owner Participant to participate in the transactions contemplated by this Agreement on the Refinancing Date. (q) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee or the Guarantor which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Refinancing Date shall have been duly obtained. (r) The Lessee and the Owner Participant shall each have executed and delivered to the other the TIA Amendment No. 1. Promptly following the recording of the Lease Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of the Lease Amendment No. 1 and the Indenture. SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in the transactions contemplated by this Agreement and to execute and deliver each of the Pass Through Trust Agreements, the -10- 11 Guarantee Amendment No. 1 and the PA Amendment No. 1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion referred to in subsections (j) through (n) of Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter from counsel rendering such opinion authorizing the Lessee and the Guarantor to rely on such opinion as if it were addressed to the Lessee and the Guarantor, (ii) each certificate referred to in subsections (e) through (g) of Section 3, (iii) executed counterparts or conformed copies of the TIA Amendment No. 1, and (iv) such other documents and evidence with respect to each other party hereto as the Lessee, the Guarantor or their counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. (b) The respective obligations of each of the Lessee, the Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Pass Through Trustee are correct as though made on and as of the Refinancing 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), (ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) 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. SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Indenture. The Lessee and the Guarantor, by execution and delivery hereof, consent to such execution and delivery of the Indenture. The Indenture shall be effective as of the Refinancing Date. SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, by execution and delivery hereof, consent to the amendment to the Original Lease effected by, and request and instruct the Owner Trustee to execute and deliver, the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1 shall be effective as provided therein. SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner -11- 12 Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the execution and delivery of the PA Amendment No. 1 by each of the parties thereto, the Original Participation Agreement shall be amended as set forth in the PA Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall be a party thereto from and after the Refinancing Date to the extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing Date. SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) each of the 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 on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under (i) in the case of the Lessee, this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 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; (b) the 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; (c) the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, and the performance of the obligations of the Lessee or the Guarantor (as the case may be) under this Agreement, the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, have been duly authorized by all necessary corporate action on the part of the Lessee or the Guarantor, do not -12- 13 require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the 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 the Lessee or the Guarantor (as the case may be) or the certificate of incorporation or by-laws of the 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 the Lessee or the Guarantor (as the case may be) under, any indenture, mortgage, contract or other agreement to which the 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; (d) neither the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 or any other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, nor the performance of the obligations of the Lessee or the Guarantor (as the case may be) hereunder or under the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement or the other Operative Documents to which the Lessee or the Guarantor (as the case may be) is a party, nor the consummation by the Lessee or the Guarantor (as the case may be) 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 in respect of, the Department of Transportation, the FAA, or any other federal, state or foreign governmental authority having jurisdiction, other than (i) 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, (ii) 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, (iii) the consents, approvals, notices, registrations and other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement, (iv) the registrations and filings referred to in Section 8(f), and (v) 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; -13- 14 (e) this Agreement constitutes, and each of the Participation Agreement, the Pass Through Trust Agreements, the Guarantee, the Lease and the Tax Indemnity Agreement, when the PA Amendment No. 1, the Lease Amendment No. 1 and the TIA Amendment No. 1 shall have been executed and delivered by each of the parties thereto, will constitute, the legal, valid and binding obligations of the Lessee or the Guarantor (as the case may be) enforceable against the 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, 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; (f) except for the filings and registrations referred to in Section 7(a)(vi) of the Participation Agreement, such filings and registrations as shall have been made or effected subsequent thereto and the filing for recording pursuant to the Federal Aviation Act of the Indenture and the Lease Amendment No. 1, 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 the 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 other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease and the Lease Amendment No. 1 (to the extent the Lease constitutes chattel paper), and the filing of continuation statements at periodic intervals with respect to the Uniform Commercial Code financing statements in effect on the Refinancing Date covering the security interests created by the Original Indenture or describing the Lease as a lease; (g) neither the 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; (h) neither the Lessee nor the Guarantor is an "investment company" within the meaning of the Investment Company Act of 1940, as amended; -14- 15 (i) 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; and (j) 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. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the parties below represents, warrants and covenants to each of the other parties to this Agreement and to the Liquidity Provider as follows: (a) The Indenture Trustee in its individual capacity represents, warrants and covenants that: (1) 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 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 PA Amendment No. 1, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party; (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, the PA Amendment No. 1 and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party 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; (3) this Agreement constitutes, and the Participation Agreement, when the PA Amendment No. 1 has been executed and delivered by the Indenture Trustee, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the -15- 16 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; (4) 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 (5) there are no Indenture Trustee Liens on the Aircraft or any portion of the Trust Estate. (b) The Owner Trustee, in its individual capacity (except as provided in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7) and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and (11) below) as Owner Trustee, represents and warrants that: (1) 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, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver the Trust Agreement, has the corporate power and authority to carry out the terms of the Trust Agreement, and has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of the Trust Agreement by the Owner Participant), as Owner Trustee, and to the extent expressly provided herein or therein, in its individual capacity, the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Refinancing Secured Certificates, the Lease, the PA Amendment No. 1 and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) 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 and (assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant) this Agreement constitutes, and each of the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Indenture, when entered into, and the Lease, when the Lease Amendment No. 1 shall have been entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, -16- 17 in its individual capacity or as Owner Trustee, as the case may be, enforceable against it in its individual capacity or as Owner Trustee, as the case may be, in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, the Owner Trustee has duly authorized, and on the Refinancing Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Refinancing Secured Certificates pursuant to the terms and provisions hereof and of the Indenture, and each Refinancing Secured Certificate on the Refinancing Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Refinancing Secured Certificate and the Indenture; (4) neither the execution and delivery by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, the Original Participation Agreement, the PA Amendment No. 1, the Trust Agreement, the Original Indenture, the Indenture, the Original Lease, the Lease Amendment No. 1, the Refinancing Secured Certificates or any other Operative Document to which it is a party, 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 hereby or 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 hereof and 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; (5) 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, -17- 18 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 Indenture, the Lease or the Refinancing 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 8(d); (6) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (7) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (8) 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 redemption of the Original Secured Certificates or the issuance of the Refinancing 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 (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were -18- 19 not located in the State of Utah and First Security Bank of Utah, 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; (9) 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 (1), (2), (3) and (4) above; (10) 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; (11) the Owner Trustee has not, in its individual capacity or as Owner Trustee, directly or indirectly offered any Refinancing 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, the Original Loan Participants 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 Refinancing 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; and (12) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) 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, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Original Participation Agreement, the Tax Indemnity Agreement, the Trust Agreement, the PA Amendment No. 1, and the TIA Amendment No. 1; this Agreement has been duly authorized, executed and delivered by it; and this Agreement constitutes, and the -19- 20 Participation Agreement when the PA Amendment No. 1 shall have been entered into, and the Tax Indemnity Agreement when the TIA Amendment No. 1 shall have been entered into, will constitute, the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their 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; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or 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, 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; (3) 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 or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the PA Amendment No. 1 and the TIA Amendment No. 1; (4) there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or arbitrator which would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Participation Agreement, the Tax Indemnity Agreement and the Trust Agreement; (5) 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 refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Refinancing 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 -20- 21 the Trust Estate and the Trust Agreement was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Refinancing 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 that 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 Indenture, (D) which the Owner Participant 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). (d) The Pass Through Trustee represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements, the Intercreditor Agreement and the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1, and (upon execution and delivery of the PA Amendment No. 1), the Participation Agreement, will 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 -21- 22 affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the performance by the Pass Through Trustee of the Participation Agreement, the purchase by the Pass Through Trustee of the Refinancing 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; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby or by the Participation Agreement, 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; (5) 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, the Intercreditor Agreement or the Participation 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 Refinancing 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 as a grantor trust under -22- 23 subpart E, Part I of Subchapter J of the Code, such trusts will not be subject to any Taxes imposed by the Commonwealth of Massachusetts or any political subdivision thereof; (6) 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 Participation Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) 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, the Lessee or the Guarantor. (e) The Subordination Agent represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement and, when the PA Amendment No. 1 has been executed and delivered by each of the parties thereto, the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent each of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery by the Subordination Agent of the PA Amendment No. 1), the Participation Agreement, will constitute, the legal, valid and binding -23- 24 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; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the Participation Agreement, or the performance by the Subordination Agent of the Participation 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; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby or by the Participation Agreement requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement, the PA Amendment No. 1 or the Participation 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 Refinancing 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); -24- 25 (6) 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 PA Amendment No. 1, the Participation Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter, the Lessee or the Guarantor. SECTION 10. NOTICES. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and any such notice shall become effective upon being deposited in the United States mail, with proper postage for first-class registered or certified mail prepaid, or when delivered personally or, if promptly confirmed by mail as provided above, when dispatched by facsimile or other written telecommunication, addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement. SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Indenture Trustee and the Original Loan Participants in connection with the transactions contemplated by this 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) shall be paid promptly by the Owner Participant, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Refinancing Secured Certificates issued under the Indenture of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for the Underwriters, and -25- 26 (E) Vedder, Price, Kaufman & Kammholz, special counsel for the Original Loan Participants; (2) the reasonable fees, expenses and disbursements of Feltman, Karesh, Major & Farbman, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 11 and the agreements referred to herein are not consummated, the Lessee shall bear and pay all costs, expenses and fees referred to in this Section 11; provided that if the transactions fail to be consummated as a result of the failure of the Owner Participant to act in good faith in consummating the transactions, or to otherwise comply with the terms hereof, the Owner Participant shall bear and pay its own fees, costs and expenses (including, without limitation, the fees and expenses of its special counsel) and the Lessee shall pay all other reasonable fees, costs and expenses as aforesaid. SECTION 12. 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. SECTION 13. MISCELLANEOUS. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations, warranties and agreements herein of the Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee, and the Lessee's, the Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the Subordination Agent's and the Pass Through Trustee's obligations under any and all thereof, shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. (b) This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each -26- 27 counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only 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 each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and, subject to the terms of the Participation 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 Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject to the provisions of the Participation Agreement, its successors and permitted assigns. The terms of this Agreement shall insure to the benefit of the Liquidity Provider, its successors and permitted assigns. No purchaser or holder of any Refinancing Secured Certificates shall be deemed to be a successor or assign of any holder of the Original Secured Certificates. SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -27- 28 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. NORTHWEST AIRLINES, INC., Lessee By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -28- 29 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: _____________________________________ Title: Address: c/o State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -32- 30 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee, Indenture Trustee By: ____________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -33- 31 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: ___________________________________ Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Facsimile: (801) 246-5053 -34- 32 SCHEDULE I TO REFUNDING AGREEMENT PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement dated as of the Closing Date among Northwest Airlines Corporation, Northwest Airlines, Inc. and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1A dated as of the Closing Date. 2. Pass Through Trust Agreement dated as of the Closing Date among Northwest Airlines Corporation, Northwest Airlines, Inc. and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1B dated as of the Closing Date. 3. Pass Through Trust Agreement dated as of the Closing Date among Northwest Airlines Corporation, Northwest Airlines, Inc. and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1C dated as of the Closing Date. 33 SCHEDULE II TO REFUNDING AGREEMENT REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
Interest Rate Purchaser and Maturity --------- ------------- Northwest Airlines Principal Purchase Pass Through Trust Amount Price --------- -------- 1996-1A [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1B [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1C [ _ ]% Refinancing Secured Certificates due [ ] $[ ]
EX-4.F1 43 TRUST AGREEMENT - 1996 B 1 TRUST AGREEMENT [NW 1996 B] This TRUST AGREEMENT [NW 1996 B] dated as of April 24, 1996 between [ ] , a [ ] corporation (the "ORIGINAL OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); W I T N E S S E T H: ARTICLE I DEFINITIONS AND TERMS SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall otherwise require and except as contained in this Section 1.01, the capitalized terms used herein shall have the respective meanings assigned thereto in the Lease (as hereinafter defined) for all purposes hereof. All definitions contained in this Section 1.01 shall be equally applicable to both the singular and plural forms of the terms defined. For all purposes of this Trust Agreement the following terms shall have the following meanings: "Excluded Payments" has the meaning ascribed to such term in the Trust Indenture. "Indenture Event of Default" has the meaning which the term "Event of Default" has in the Trust Indenture. "Lease" means that certain Lease Agreement [NW 1996 B], to be dated as of the date hereof, and to be entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of this Trust Agreement, as said Lease Agreement may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Trust Agreement. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Event of Default" has the meaning which the term "Event of Default" has in the Lease. "Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns. 2 "Owner Participant" means the Original Owner Participant and each Subsequent Owner Participant to the extent that the same shall, at the relevant time, have an Ownership Interest. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by this Trust Agreement, which percentage shall be 100%. "Participation Agreement" has the meaning ascribed to such term in the Lease. "Replacement Airframe" has the meaning ascribed to such term in the Trust Indenture. "Replacement Engine" has the meaning ascribed to such term in the Trust Indenture. "Subsequent Owner Participant" means any Person to which the Original Owner Participant or any transferee from the Original Owner Participant or any Subsequent Owner Participant shall have transferred at any time after the Delivery Date all of the undivided right, title and interest originally held by the Original Owner Participant in this Trust Agreement, the Trust Estate and the Participation Agreement in accordance with, so long as the Lease is in effect or any Secured Certificates remain outstanding, Section 8 of the Participation Agreement. "Trust Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant, the Loan Participants or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its individual capacity, or to the Loan Participants or any other holder of a Secured Certificate, or to any of their respective directors, officers, employees, servants and agents, pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. "Trust Indenture Estate" has the meaning ascribed to such term in the Trust Indenture. "Trust Office" shall mean the principal corporate trust office of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or the principal corporate trust office of any successor Owner Trustee. "Trust Supplement" means a supplement to the Trust Indenture and to this Trust Agreement in substantially the form of Exhibit A to the Trust Indenture which shall -2- 3 particularly describe the Aircraft, and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Trust Agreement. ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS; DECLARATION OF TRUST SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. Subject to the satisfaction of the conditions set forth in Section 4 of the Participation Agreement, the Owner Participant hereby authorizes and directs the Owner Trustee to execute and deliver the Operative Documents and any other agreements, instruments or documents to which the Owner Trustee is a party in the respective forms thereof in which delivered from time to time by the Owner Participant to the Owner Trustee for execution and delivery and, subject to the terms hereof, to perform its duties and, upon instructions from the Owner Participant, exercise its rights under said Operative Documents in accordance with the terms thereof and to execute and deliver all such other instruments, documents or certificates and take all such other actions in accordance with the directions of the Owner Participant, as the Owner Participant may deem necessary or advisable in connection with the transactions contemplated hereby, the taking of any such action by the Owner Trustee in the presence of the Owner Participant or its counsel to evidence, conclusively, the direction of the Owner Participant. SECTION 2.02. DECLARATION OF TRUST. FSBU hereby declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the Owner Participant, subject, however, to the provisions of and the Lien created by the Trust Indenture. ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF SECURED CERTIFICATES SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, on the Delivery Date, subject to due compliance with the terms of Section 3.02 hereof: (a) purchase the Aircraft pursuant to the Participation Agreement and the Bill of Sale; (b) accept from Lessee the delivery of the Bill of Sale and the FAA Bill of Sale; (c) cause the Aircraft to be leased to Lessee under the Lease, and in furtherance thereof execute and deliver a Lease Supplement covering the Aircraft; -3- 4 (d) execute and deliver the Trust Supplement covering the Aircraft; (e) issue to the Loan Participants Secured Certificates in the amounts and otherwise as provided in Section 1(a) of the Participation Agreement; (f) execute and deliver the financing statements referred to in Section 4(a)(vi) of the Participation Agreement, together with all other agreements, documents and instruments referred to in Section 4 of the Participation Agreement to which the Owner Trustee is a party; and (g) effect the registration of the Aircraft in the name of the Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of Sale; (ii) an application for registration of the Aircraft in the name of the Owner Trustee (including without limitation an affidavit from the Owner Trustee in compliance with the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) the Trust Agreement. SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation of the Owner Trustee to take the action required by Section 3.01 hereof with respect to the Aircraft shall be subject to the following conditions precedent: (a) the Original Owner Participant shall have made the full amount of its Commitment set forth in Schedule II of the Participation Agreement available to the Owner Trustee, in immediately available funds, in accordance with Section 1 of the Participation Agreement; and (b) the terms and conditions of Section 4 of the Participation Agreement, insofar as they relate to the Aircraft, shall have been complied with in a manner satisfactory to the Original Owner Participant and the Owner Trustee. ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture Trustee. Until the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with the provisions of Article III of the Trust Indenture. (b) Payments to Owner Trustee; Other Parties. After the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, any payment of the type referred -4- 5 to in Section 4.01(a) hereof (other than Excluded Payments) received by the Owner Trustee, any payments received from the Indenture Trustee other than as specified in Section 4.01(d) hereof and any other amount received as part of the Trust Estate and for the application or distribution of which no provision is made herein, shall be distributed forthwith upon receipt by the Owner Trustee in the following order of priority: first, so much of such payment as shall be required to reimburse the Owner Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof shall be retained by the Owner Trustee; second, so much of the remainder for which provision as to the application thereof is contained in the Lease or any of the other Operative Documents shall be applied and distributed in accordance with the terms of the Lease or such other Operative Document; and third, the balance, if any, shall be paid to the Owner Participant. (c) Certain Distributions to Owner Participant. All amounts from time to time distributable by the Indenture Trustee to the Owner Participant pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be distributed by the Owner Trustee to the Owner Participant in accordance with the provisions of Article III of the Trust Indenture. (d) Excluded Payments. Any Excluded Payments received by the Owner Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded Payments are payable under the provisions of the Participation Agreement, the Tax Indemnity Agreement or the Lease. SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make distributions or cause distributions to be made to (i) the Owner Participant pursuant to this Article IV by transferring by wire transfer the amount to be distributed to such account or accounts of the Owner Participant as the Owner Participant may designate from time to time in writing to the Owner Trustee (and the Owner Trustee shall use best efforts to cause such funds to be transferred by wire transfer on the same day as received, but in any case not later than the next succeeding Business Day), and (ii) the Indenture Trustee pursuant to this Article IV by paying the amount to be distributed to the Indenture Trustee in the manner specified in the Indenture; provided that the Owner Trustee shall invest overnight, for the benefit of the Owner Participant, in investments that would be permitted by Section 22 of the Lease (but only to the extent funds are received on or prior to 1:00 P.M. (Eastern Time) and such investments are available and, if such investments are not available to the Owner Trustee in investments which, after consultation with the Owner Participant, the Owner Participant shall direct) all funds not transferred by wire transfer on the same day as they were received. Notwithstanding the foregoing but subject always to the provisions of, and the Lien created by the Indenture, the Owner Trustee will, if so requested by the Owner Participant by written notice, pay in immediately available funds any and all amounts payable by the Owner Trustee hereunder to the Owner Participant as directed by the Owner Participant. Notwithstanding the foregoing, the Owner Trustee will, if so requested by the Owner Participant in writing, pay any or all amounts payable to the Owner Participant pursuant to this Article IV either (i) by crediting such amount or amounts to an account or accounts maintained by the Owner Participant with the Owner Trustee in its individual capacity in immediately available funds, (ii) by payment at the Trust Office of the Owner Trustee, in immediately available funds, or -5- 6 (iii) by mailing an official bank check or checks in such amount or amounts payable to the Owner Participant at such address as the Owner Participant shall have designated in writing to the Owner Trustee. ARTICLE V DUTIES OF THE OWNER TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall have knowledge of a Lease Event of Default or Indenture Event of Default (or an event which with the passage of time or the giving of notice or both would constitute a Lease Event of Default or an Indenture Event of Default) the Owner Trustee shall give to the Owner Participant prompt telephonic or telecopy notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event. Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain from taking such action, not inconsistent with the provisions of the Trust Indenture, with respect to such Lease Event of Default, Indenture Event of Default or other event as the Owner Trustee shall be directed in writing by the Owner Participant, provided that the Owner Trustee shall have no duty to take any (and shall take no) action whatsoever in the absence of written instructions from the Owner Participant. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by an officer of FSBU in the Corporate Trust Department, the Owner Trustee shall not be deemed to have knowledge of a Lease Event of Default, Indenture Event of Default or other event referred to in this Section 5.01 unless notified in writing by the Indenture Trustee, the Owner Participant or Lessee. SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of Section 5.03 hereof, upon the written instructions at any time and from time to time of the Owner Participant, the Owner Trustee will take or refrain from taking such action, not inconsistent with the provisions of the Trust Indenture, as may be specified in such instructions: SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be required to take any action under Section 5.01 (other than the giving of the notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have been indemnified by the Owner Participant, in manner and form satisfactory to the Owner Trustee, against any liability, cost or expense (including reasonable counsel fees and disbursements) which may be incurred in connection therewith; and, if the Owner Participant shall have directed the Owner Trustee to -6- 7 take any such action or refrain from taking any action, the Owner Participant agrees to furnish such indemnity as shall be required and, in addition, to the extent not otherwise paid or payable pursuant to the provisions of the Lease or of the Participation Agreement, to pay the reasonable compensation of the Owner Trustee for the services performed or to be performed by it pursuant to such direction and any fees and disbursements of counsel or agents employed by the Owner Trustee in connection therewith. The Owner Trustee shall not be required to take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably determine, or shall have been advised by counsel, that such action is contrary to the terms of any of the Operative Documents to which the Owner Trustee is a party, or is otherwise contrary to law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with any of the Operative Documents to which the Owner Trustee is a party, except as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, or (to the extent not inconsistent with the provisions of the Trust Indenture) as expressly provided by the terms hereof or in written instructions from the Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or obligations shall be read into this Trust Agreement against the Owner Trustee. FSBU agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof) promptly take such action as may be necessary to duly discharge and satisfy in full all Lessor Liens which it is required to discharge pursuant to Section 8(h) of the Participation Agreement and otherwise comply with the terms of said Section binding on it. FSBU agrees to indemnify, protect, save and keep harmless the Owner Participant from and against any loss, cost or expense (including the legal fees and expenses) incurred by the Owner Participant, as a result of the imposition or enforcement of any such Lessor's Lien against the Aircraft, any interest therein or on the Trust Estate or the Trust Indenture Estate resulting from Lessor's Liens attributable to FSBU. Notwithstanding anything herein to the contrary, the Owner Trustee shall not be authorized and shall have no power to "vary the investment" of the Owner Participant within the meaning of Treasury Regulations Sections 301.7701-4(c)(1), it being understood that the Owner Trustee shall have the power and authority to fulfill its obligations under Section 4.02 hereof and Section 22 of the Lease. SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to the contrary notwithstanding, the Owner Trustee shall comply with the provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of special counsel for the Owner Trustee, of all the applicable conditions precedent specified in Section 3.02 hereof and in Section 4 of the Participation Agreement. SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to, and the -7- 8 Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate except (i) as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, (ii) as expressly provided by the terms hereof, or (iii) as expressly provided in written instructions from the Owner Participant pursuant to Section 5.01 or 5.02 hereof. ARTICLE VI THE OWNER TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts hereby created and agrees to perform the same but only upon the terms hereof applicable to it. The Owner Trustee also agrees to receive and disburse all monies received by it constituting part of the Trust Estate upon the terms hereof. FSBU shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence (in its individual capacity or as trustee), (b) for performance of the terms of the last sentence of Section 5.04 hereof, (c) for its or the Owner Trustee's failure to use ordinary care to receive, handle or disburse funds and (d) for liabilities that may result from the inaccuracy of any representation or warranty of it (or from the failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation Agreement. SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with written instructions furnished pursuant to Section 5.02 hereof and except as provided in, and without limiting the generality of, Section 5.04 hereof and the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU shall have any duty (i) to see to any recording or filing of any Operative Document or of any supplement to any thereof or to see to the maintenance of any such recording or filing or any other filing of reports with the Federal Aviation Administration or other governmental agencies, except that FSBU, in its individual capacity, shall comply with the reporting requirements set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall, to the extent that information for that purpose is supplied by Lessee pursuant to any of the Operative Documents, complete and timely submit (and furnish the Owner Participant with a copy of) any and all reports relating to the Aircraft which may from time to time be required by the Federal Aviation Administration or any government or governmental authority having jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, other than to forward to the Owner Participant copies of all reports and other written information which the Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against any part of the Trust Indenture Estate or the Trust Estate, except as provided in Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and records with respect to the Aircraft at any time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture Trustee and -8- 9 the Owner Participant, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease or any other Operative Document. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity warrants that on the Delivery Date the Owner Trustee shall have received whatever title was conveyed to it by Lessee and that the Aircraft shall during the Term be free of Lessor Liens attributable to it and that the Owner Trustee shall comply with the last sentence of Section 5.04, or (b) any representation or warranty as to the validity, legality or enforceability of this Trust Agreement or any Operative Document to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof except to the extent that any such statement is expressly made herein or therein as a representation by FSBU in its individual capacity or by the Owner Trustee and except that FSBU in its individual capacity hereby represents and warrants that this Trust Agreement has been, and (assuming due authorization, execution and delivery by the Original Owner Participant of this Trust Agreement) the Operative Documents to which it or the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by it or the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of itself or the Owner Trustee, as the case may be. SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as provided in Section 22 of the Lease, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law, and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. In the absence of bad faith on its part the Owner Trustee shall incur no liability to anyone in acting in reliance upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Unless other evidence in respect thereof is specifically prescribed herein, any request, direction, order or demand of the Owner Participant, Lessee or the Indenture Trustee mentioned herein or in any of the Operative Documents to which the Owner Trustee is a party shall be sufficiently evidenced by written instruments signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director and in the name of the Owner Participant or Lessee, as the case may be. -9- 10 The Owner Trustee may accept a copy of a resolution of the Board of Directors or Executive Committee of Lessee, certified by the secretary or any assistant secretary of such party as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or Committee and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Owner Trustee may for all purposes hereof rely on a certificate signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director of such party, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. Whenever in the administration of this Agreement the Owner Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder or under any of the other Operative Agreements, the Owner Trustee (unless other evidence be herein or therein specifically prescribed), absent actual knowledge of an officer of the Owner Trustee to the contrary, may rely in good faith upon a certificate in writing, delivered to the Owner Trustee and signed by any of the Chairman of the Board, the President, any Vice President, the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary of Lessee, the Owner Participant, or the Indenture Trustee and notice of such need for such proof or establishment shall be delivered to the Owner Participant, who may advise the Owner Trustee in respect of such matter and the Owner Trustee shall act in conformity with such advice. In the administration of trusts hereunder, the Owner Trustee may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may, at the expense of the Trust Estate, consult with counsel, accountants and other skilled persons to be selected and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such agent, attorney, counsel, accountant or other skilled person appointed by it with due care hereunder. SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder, the Owner Trustee acts solely as trustee and not in its individual capacity except as otherwise expressly provided herein; and, subject to the terms of the Participation Agreement and the Trust Indenture, all persons, other than the Owner Participant, as provided herein, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Trust Estate for payment or satisfaction thereof except to the extent provided in the last sentence of Section 6.01. SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the Owner Participant or (subject to the provisions of the Trust Indenture) the Trust Estate for any fee as compensation for its services hereunder. SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all monies under this Trust Agreement or any agreement contemplated hereby. The Owner -10- 11 Participant shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Owner Participant. The Owner Trustee, upon request, will furnish the Owner Participant with all such information as may be reasonably required or necessary from the Owner Trustee in connection with the preparation of such tax returns and in connection with any other filing or audit and related litigation obligations. The Owner Trustee shall be responsible for causing to be prepared, at the request and expense of the Owner Participant, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns; provided, however, that the Owner Trustee shall send a completed copy of each such return to the Owner Participant not more than 60 nor less than 30 days prior to the due date of such return; provided that the Owner Trustee shall have timely received all necessary information to complete and deliver to the Owner Participant such return. The Owner Participant or the Owner Trustee, as the case may be, upon request, will furnish the Owner Trustee or the Owner Participant, as the case may be, with all such information as may be reasonably required from the Owner Participant or the Owner Trustee, as the case may be, in connection with the preparation of such income tax returns. ARTICLE VII INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner Participant hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and hereby indemnify, protect, save and keep harmless FSBU in its individual capacity and its successors, assigns, legal representatives, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its individual capacity on or measured by any compensation received by FSBU in its individual capacity for its services hereunder or in connection with the transactions contemplated by the Operative Documents), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and including without limitation any liability of an owner, any strict liability and any liability without fault) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against FSBU in its individual capacity in any way relating to or arising out of this Trust Agreement or any of the Operative Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of the Owner Trustee or FSBU in its individual capacity hereunder, except (a) in the case of willful misconduct or gross negligence on the part of the Owner Trustee or FSBU in its individual capacity in the performance or non-performance of its duties hereunder or (b) those resulting from the inaccuracy of any representation or warranty of FSBU in its individual capacity (or from the failure of FSBU in its individual capacity to -11- 12 perform any covenant) hereunder, in Sections 4.01 and 6.03 of the Trust Indenture or, with respect to representations or warranties of FSBU in its individual capacity only, in Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the Participation Agreement or in any of the other Operative Documents or (c) as may result from a breach by FSBU in its individual capacity of its covenants in the second sentence of Section 5.04 hereof or (d) in the case of the failure to use ordinary care on the part of the Owner Trustee or FSBU in its individual capacity in the receiving, handling, investing and disbursing of funds or (e) Taxes, fees, or other charges on, based on, or measured by, any fees, commissions or compensation received by FSBU in connection with the transactions contemplated by the Lease, the Indenture and this Agreement or (f) Taxes excluded from indemnification pursuant to Section 7(b)(ii) of the Participation Agreement (disregarding for the purposes of this Section 7.01, subsection 8 of Section 7(b)(ii) of the Participation Agreement) or (g) Expenses excluded from indemnification pursuant to the proviso in Section 7(c) of the Participation Agreement (disregarding for the purposes of this Section 7.01, subsections I and J with respect to Section 7(c) of the Participation Agreement) or (h) any liability on the part of the Owner Trustee arising out of its negligence or willful or negligent misconduct in connection with its obligations under Sections 5.01, 5.02 and 9.02 hereof or Section 4.01(c) of the Indenture; provided that, before asserting any right to payment or indemnification hereunder, FSBU shall first demand (but need not exhaust or pursue any further its remedies with respect to) its corresponding right to payment or indemnification from the Lessee pursuant to the Participation Agreement. The indemnities contained in this Section 7.01 extend to FSBU only in its individual capacity and shall not be construed as indemnities of the Trust Indenture Estate or the Trust Estate (except to the extent, if any, that FSBU in its individual capacity has been reimbursed by the Trust Indenture Estate or the Trust Estate for amounts covered by the indemnities contained in this Section 7.01). The indemnities contained in this Section 7.01 shall survive the termination of this Trust Agreement. In addition, if necessary, FSBU in its individual capacity shall have a lien on the Trust Estate, subject to the Lien of the Trust Indenture, to secure the payment of any liability, obligation, loss, damage, penalty, tax, claim, action, suit, cost, fee, expense or disbursement indemnified against pursuant to this Section 7.01, which shall be prior to any interest therein of the Owner Participant. Except with respect to Transaction Costs referred to in Section 16 of the Participation Agreement, each of FSBU and the Owner Trustee (in its individual capacity or as trustee, as the case may be) agrees that it shall have no right against (except as provided in this Section 7.01) the Owner Participant or (subject to the provisions of the Indenture) the Trust Indenture Estate for any fee as compensation for its services hereunder. The payor of any indemnity under this Article VII shall be subrogated to any right of the person indemnified in respect of the matter as to which such indemnity was paid. ARTICLE VIII TRANSFER OF THE OWNER PARTICIPANT'S INTEREST SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n) of the Participation Agreement shall (with the same force and effect as if set forth in full, mutatis -12- 13 mutandis, in this Section 8.01) be applicable to any assignment, conveyance or other transfer by any Owner Participant of its right, title or interest in and to the Participation Agreement, the Trust Estate or this Trust Agreement. ARTICLE IX SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the Participation Agreement and (ii) may resign at any time without cause by giving at least sixty (60) days' prior written notice to the Owner Participant, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such resignation to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In addition, the Owner Participant may at any time remove the Owner Trustee without cause by a notice in writing delivered to the Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such removal to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or removal of the Owner Trustee, the Owner Participant may appoint a successor Owner Trustee by an instrument signed by the Owner Participant. If a successor Owner Trustee shall not have been appointed within thirty (30) days after such notice of resignation or removal, the Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor shall have been appointed as above provided. Any successor Owner Trustee so appointed by such court shall immediately and without further act be superseded by any successor Owner Trustee appointed as above provided. (b) Execution and Delivery of Documents, etc. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee and the Owner Participant an instrument accepting such appointment in form and substance acceptable to the Owner Participant, and thereupon such successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts hereunder with like effect as if originally named the Owner Trustee herein; but nevertheless, upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to such successor Owner Trustee all monies or other property then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will execute such documents as are provided to it by such successor Owner Trustee and will take such further actions as are requested of it by such -13- 14 successor Owner Trustee as are reasonably required to cause registration of the Aircraft included in the Trust Estate to be transferred upon the records of the Federal Aviation Administration, or other governmental authority having jurisdiction, into the name of the successor Owner Trustee. (c) Qualification. Any successor Owner Trustee, however appointed, shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement and shall also be a bank or trust company organized under the laws of the United States or any state thereof having a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. (d) Merger, etc. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee may be transferred, shall, subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without further act. SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee shall have been directed to do so by the Owner Participant, the Owner Trustee and the Owner Participant shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement) approved by the Owner Trustee and the Owner Participant, either to act as co-trustee, jointly with the Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as an "ADDITIONAL TRUSTEE"). Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the -14- 15 extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; (E) the Owner Participant, at any time, by an instrument in writing may remove any such additional trustee; and (F) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, the Trust Indenture or affect the interests of the Indenture Trustee or the holders of the Secured Certificates in the Trust Indenture Estate. ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS SECTION 10.01. SUPPLEMENTS AND AMENDMENTS. (a) Supplements and Amendments. This Trust Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Owner Trustee and the Owner Participant. Subject to Section 10.02 hereof and the first sentence of Section 10 of the Participation Agreement, the Owner Trustee will execute any amendment, supplement or other modification of this Trust Agreement or of any other Operative Document to which the Owner Trustee is a party which it is requested to execute by the Owner Participant, except that the Owner Trustee shall not execute any such amendment, supplement or other modification which, by the express provisions of any of the above documents, requires the consent of any other party unless such consent shall have been obtained. (b) Delivery of Amendments and Supplements to Certain Parties. A signed copy of each amendment or supplement referred to in Section 10.01(a) hereof shall be delivered by the Owner Trustee to the Owner Participant, Indenture Trustee and each holder of a Secured Certificate. SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to executing any document required to be executed by it pursuant to the terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its counsel to the effect -15- 16 that the execution of such document is authorized hereunder. If in the opinion of the Owner Trustee any such document adversely affects any right, duty, immunity or indemnity in favor of the Owner Trustee hereunder or under any other Operative Document to which the Owner Trustee is a party, the Owner Trustee may in its discretion decline to execute such document. SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be necessary for any written request furnished pursuant to Section 10.01 hereof to specify the particular form of the proposed documents to be executed pursuant to such Section, but it shall be sufficient if such request shall indicate the substance thereof. SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the execution by the Owner Trustee of any document entered into pursuant to Section 10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof to the Owner Participant, but the failure of the Owner Trustee to mail such conformed copy shall not impair or affect the validity of such document. SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be required to enable the Owner Trustee to enter into the Lease Supplement covering the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and Section 3.01 hereof. ARTICLE XI MISCELLANEOUS SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement and the trusts created hereby shall be of no further force or effect upon the earlier of (a) both the final discharge of the Trust Indenture pursuant to Section 10.01 thereof and the sale or other final disposition by the Owner Trustee of all property constituting part of the Trust Estate and the final distribution by the Owner Trustee of all monies or other property or proceeds constituting part of the Trust Estate in accordance with Article IV hereof, provided that at such time Lessee shall have fully complied with all of the terms of the Lease and the Participation Agreement or (b) twenty-one years less one day after the death of the last survivor of all of the descendants of the grandparents of David Rockefeller living on the date of the earliest execution of this Trust Agreement by any party hereto; otherwise this Trust Agreement and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 11.02. TERMINATION AT OPTION OF THE OWNER PARTICIPANT. Notwithstanding Section 11.01 hereof, this Agreement and trust created hereby shall terminate and the Trust Estate shall be distributed to the Owner Participant, and this Agreement shall be of no further force and effect, upon the election of the Owner Participant by notice to the Owner Trustee, if such notice shall be accompanied by the written agreement (in form and substance satisfactory to the Owner Trustee) of the Owner Participant assuming all obligations -16- 17 of the Owner Trustee under or contemplated by the Operative Documents or incurred by it as trustee hereunder and releasing the Owner Trustee therefrom; provided, however, that such notice may be given only after the time the Lien of the Trust Indenture is discharged under Section 10.01 of the Trust Indenture and after the Lease shall no longer be in effect. SECTION 11.03 DISTRIBUTION OF TRUST ESTATE UPON TERMINATION. Upon any termination of this trust pursuant to the provisions of Section 11.01 hereof, the Owner Trustee shall convey the Trust Estate (subject to all obligations, if any, of the Owner Trustee then existing under the Operative Documents to which the Owner Trustee is a party) to such purchaser or purchasers or the Owner Participant, as the case may be, and for such amount and on such terms as shall be specified in written instructions from the Owner Participant delivered to the Owner Trustee prior to the date of termination; provided that in the event such written instructions are not delivered to the Owner Trustee on or before the date of termination, the Owner Trustee shall transfer title to the Trust Estate to the Owner Participant. Upon making such transfer or sale accounting for all funds which have come into its hands, the Owner Trustee shall be entitled to receipt of any sums due and owing to the Owner Trustee for expenses incurred pursuant hereto as set forth in Section 4.01(b) hereof. SECTION 11.04. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE. The Owner Participant shall not have legal title to any part of the Trust Estate. No transfer, by operation of law or otherwise, of any right, title and interest of the Owner Participant in and to the Trust Estate hereunder shall operate to terminate this Trust Agreement or the trusts hereunder or entitle any successors or transferees of the Owner Participant to an accounting or to the transfer of legal title to any part of the Trust Estate. SECTION 11.05. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment, sale, transfer or other conveyance of its interest in the Aircraft by the Owner Trustee made pursuant to the terms hereof or of the Lease or the Participation Agreement shall bind the Owner Participant and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Owner Participant in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. SECTION 11.06. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY. Except for the terms of Section 8(n) of the Participation Agreement incorporated in Article VIII hereof and except as otherwise provided in Articles IX and X hereof, nothing herein, whether expressed or implied, shall be construed to give any Person other than the Owner Trustee and the Owner Participant any legal or equitable right, remedy or claim under or in respect of this Trust Agreement; but this Trust Agreement shall be held to be for the sole and exclusive benefit of the Owner Trustee and the Owner Participant. SECTION 11.07. NOTICES; CONSENT TO JURISDICTION. (a) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by -17- 18 registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 11.05(a). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.05(a), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the Owner Participant, to the respective addresses set forth below the signatures of such parties on the signature page of the Participation Agreement, or (B) if to a Subsequent 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. (b) Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Trust Agreement, the Participation Agreement, 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 the Participation 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. SECTION 11.08. SEVERABILITY. Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.09. WAIVERS, ETC. No term or provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing entered into in compliance with the terms of Article X hereof; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. SECTION 11.10. COUNTERPARTS. This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. -18- 19 SECTION 11.11. BINDING EFFECT, ETC. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII hereof, its assigns. Any request, notice, direction, consent, waiver or other instrument or action by the Owner Participant shall bind its successors and assigns. Any Owner Participant which shall cease to have any Ownership Interest shall thereupon cease to be a party hereto or an Owner Participant for any reason and shall have no further obligations hereunder. SECTION 11.12. HEADINGS; REFERENCES. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.13. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. -19- 20 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [OWNER PARTICIPANT] By ______________________________________ Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By ______________________________________ Title: -20- EX-4.F2 44 TRUST INDENTURE-1996 B 1 AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 B] AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 B], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Owner Trustee under the Trust Agreement referred to below (together with its successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity, except as expressly stated herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE"). W I T N E S S E T H WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and the Owner Trustee have entered into the Trust Agreement whereby, among other things, (i) the Owner Trustee has established a certain trust for the use and benefit of the Owner Participant subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of, and with the priority of payment to, the holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has been authorized and directed to execute and deliver this Trust Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 B] dated as of April 24, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the Trust Agreement and Indenture Supplement [NW 1996 B] (the "SUPPLEMENT") dated April 30, 1996 to the Original Indenture, (iii) the Original Indenture and the Supplement were recorded by the Federal Aviation Administration on May 3, 1996 and were assigned Conveyance No. E21284 and (iv) the Lease Agreement [NW 1996 B] dated as of even date with the Original Indenture between the Owner Trustee and Lessee and the Lease Supplement No. 1 [NW 1996 B] were recorded by the Federal Aviation Administration on May 3, 1996 and were assigned Conveyance No. E21283 and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Loan Participants Secured Certificates (as defined in the Original Indenture); WHEREAS, the parties have agreed that subject to certain conditions, Lessee shall have the right to cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Secured Certificates issued to the Loan Participant pursuant to the Original Indenture shall be redeemed and new Secured Certificates (the "REFINANCING SECURED CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Trust Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Refinancing Secured Certificates and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of all of the Owner Trustee's right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Certificate Holders, subject to Section 2.15 and Article III hereof; 2 WHEREAS, all things have been done to make the Secured Certificates, when executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid, binding and enforceable obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Trust Indenture the valid, binding and legal obligation of the Owner Trustee for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened: -2- 3 GRANTING CLAUSE NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Secured Certificates from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions herein and in the Participation Agreement and the Secured Certificates contained, for the benefit of the Certificate Holders and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Certificate Holders by the Owner Trustee and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Secured Certificates by the holders thereof, and for other good and valuable consideration the receipt and adequacy whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors in trust and assigns, for the security and benefit of the Certificate Holders, a first priority security interest in and mortgage lien on all right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges, other than Excluded Payments (which collectively, excluding Excluded Payments but including all property hereafter specifically subjected to the Lien of this Trust Indenture by the Trust Agreement and Indenture Supplement or any mortgage supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire title as provided herein and in the Lease), all as more particularly described in the Trust Agreement and Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture; (2) the Lease and any Lease Supplement and all Rent thereunder (including, without limitation, all amounts of Interim Rent, Basic Rent, Supplemental Rent and payments of any kind thereunder), and the Guarantee; (3) the Purchase Agreement (to the extent specified in the Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent and Agreement and the Bill of Sale; (4) all rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the lien of this Indenture; (5) all insurance and requisition proceeds with respect to the Aircraft, including but not limited to the insurance required under Section 11 of the Lease; -3- 4 (6) all rights of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under the Participation Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder; (7) all monies and securities from time to time deposited or required to be deposited with the Indenture Trustee pursuant to any terms of this Indenture or the Lease or required hereby or by the Lease to be held by the Indenture Trustee hereunder; and (8) all proceeds of the foregoing. BUT EXCLUDING from the foregoing and from the Trust Indenture Estate all Excluded Payments, and the right to enforce and collect the same, and SUBJECT TO all of the terms and conditions of this Trust Indenture and the rights of the Owner Trustee and the Owner Participant hereunder. Concurrently with the delivery of the Original Indenture, the Owner Trustee delivered to the Indenture Trustee the original executed counterpart of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt is attached), and executed copies of the Participation Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and its successors and assigns, in trust for the benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III hereof without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (8) inclusive above, subject to the terms and provisions set forth in this Trust Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Owner Trustee shall remain liable under each of the Indenture Agreements to which it is a party to perform all of the obligations assumed by it thereunder, except to the extent prohibited or excluded from doing so pursuant to the terms and provisions thereof, and the Indenture Trustee and the Certificate Holders shall have no obligation or liability under the Indenture Agreements, by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to any of the Indenture Agreements to which it is a party, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. The Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, and with full power (in the name of the Owner Trustee or otherwise) to ask for, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds but in all cases excluding Excluded Payments) due and to become due under or arising out of the Indenture Agreements, and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Without limiting the generality of the foregoing, but subject to the rights of the Owner Trustee and the Owner Participant hereunder, during the continuance of any Event of Default under this Trust Indenture, the Indenture Trustee shall have the right under such power of attorney to accept any offer in connection with the exercise of remedies as set forth herein of any purchaser to purchase the Airframe and Engines and upon such purchase to execute and deliver in the name of and on behalf of the Owner Trustee an appropriate bill of sale and other instruments of transfer relating to the Airframe and Engines, when purchased by such -4- 5 purchaser, and to perform all other necessary or appropriate acts with respect to any such purchase, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or appropriate to protect and preserve the right, title and interest of the Indenture Trustee in and to such Rents and other sums and the security intended to be afforded hereby; provided, however, that no action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or liabilities of the Owner Trustee to any Person beyond those obligations and liabilities specifically set forth in this Trust Indenture and in the other Operative Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture shall not have been fully discharged, to make all payments of Rent (other than Excluded Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to, or as directed by, the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Trust Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Trust Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem necessary or desirable to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be created hereby or to obtain for the Indenture Trustee the full benefits of the assignment hereunder and of the rights and powers herein granted. The parties hereto acknowledge that neither the Owner Trustee nor the Owner Participant shall have any obligation as to any recording, filing, refiling or re-recording of any documents or instruments in regard to maintaining the perfection of the security interests created hereunder, in the Trust Indenture Estate or any security interest that may be claimed to have been created by the Lease or the ownership interest of the Owner Trustee in the Aircraft. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants and agrees that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee and its predecessor(s) in this transaction, and that it will not, except as otherwise provided in this Trust Indenture and except with respect to Excluded Payments to which it is entitled, (i) accept any payment from Lessee under any Indenture Agreement, (ii) enter into any agreement amending or supplementing any Indenture Agreement, (iii) execute any waiver or modification of, or consent under, the terms of, or exercise any rights, powers or privileges under, any Indenture Agreement, (iv) settle or compromise any claim (other than those relating to an Excluded Payment) arising under any Indenture Agreement or (v) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any Indenture Agreement to arbitration thereunder. The Owner Trustee does hereby further agree that it will not without the written consent of the Indenture Trustee: (a) collect or agree to the receipt or collection of any payment of Rent (other than Excluded Payments), including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease prior to the date for the payment thereof provided for by the Lease or assign, transfer or hypothecate (other than to the Indenture Trustee hereunder) any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease, then due or to accrue in the future under the Lease in respect of the Airframe and Engines; or (b) except as contemplated by the Trust Agreement in connection with the appointment of a successor owner trustee, sell, mortgage, transfer, assign or hypothecate (other than to -5- 6 the Indenture Trustee hereunder) its interest in the Airframe and Engines or any part thereof or in any amount to be received by it from the use or disposition of the Airframe and Engines, other than amounts distributed to it pursuant to Article III hereof. It is hereby further agreed that any and all property described or referred to in the granting clauses hereof which is hereafter acquired by the Owner Trustee shall ipso facto, and without any further conveyance, assignment or act on the part of the Owner Trustee or the Indenture Trustee, become and be subject to the Lien herein granted as fully and completely as though specifically described herein, but nothing contained in this paragraph shall be deemed to modify or change the obligations of the Owner Trustee contained in the foregoing paragraphs. The Owner Trustee does hereby ratify and confirm the Lease and does hereby agree that it will not violate any covenant or agreement made by it therein, herein or in any of the other Owner Trustee Documents. Notwithstanding the Granting Clause or any of the foregoing paragraphs, there is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excluded Payments. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "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. "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 hereof. "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 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. "Cash Equivalents" shall mean the investments specified in Section 22(a) of the Lease. "Certificate Holder" shall mean any holder from time to time of one or more Secured Certificates. -6- 7 "Code" shall mean the Internal Revenue Code of 1986, as amended. "Continuous Stay Period" shall have the meaning specified in Section 4.04(a) hereof. "Corporate Trust Department" or "Trust Office" means the principal corporate trust office of the Owner Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, 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 Two International Place, 4th Floor, Boston, Massachusetts 02110, 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 and each Certificate Holder. "Debt" shall mean any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments or for the deferred purchase price of property, goods or services. "Debt 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" means any event or condition that with the giving of notice or the lapse of time or both would become an Event of Default or Lease Event of Default (excluding Lease Events of Default related to Excluded Payments). "Dollars" and "$" shall mean the lawful currency of the United States of America. "Enforcement Date" shall have meaning specified in Section 4.03 hereof. "Event of Default" shall have the meaning specified in Section 4.02 hereof. "Excess Amount" shall have the meaning specified in Section 2.03(b) hereof. "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 hereof, 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. "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 -7- 8 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 Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Guarantor" shall have the meaning specified in the Lease. "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 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. "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" shall mean that certain Lease Agreement [NW 1996 B], dated as of April 24, 1996, entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of the Original Trust Indenture, as said Lease Agreement has been, or may from time to time be, supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Indenture. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Default" shall mean any event or condition that with the giving of notice or the lapse of time or both would become a Lease Event of Default. "Lease Event of Default" shall mean an "Event of Default" as defined in the Lease. "Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Lessee Operative Documents" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. "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 hereof (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 (plus, in the case of Series C Secured Certificates, 75 basis points) 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 -8- 9 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. "Mortgaged Property" shall have the meaning specified in Section 3.03 hereof. "Owner Indemnitee" shall have the meaning specified in the definition of Excluded Payments herein. "Owner Participant" shall mean [ ] New York corporation, so long as such party shall have any interest in the Trust Estate, and transferees thereof as permitted by Section 8 of the Participation Agreement. "PA Amendment No. 1" shall mean the First Amendment to Participation Agreement [NW 1996 B], dated as of the Refinancing Date, among Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and State Street Bank and Trust Company, in its individual capacity and as Indenture Trustee. "Participants" shall mean and include the Loan Participants and the Owner Participant. "Participation Agreement" shall mean that certain Participation Agreement [NW 1996 B], dated as of April 24, 1996, among the Owner Trustee, the Indenture Trustee, Lessee and the Participants, as amended by the PA Amendment No. 1, as the same may from time to time be supplemented or further amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Past Due Rate" shall mean, with respect to the Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in effect from time to time. "Payment Date" shall mean each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Secured Certificates have been paid in full. "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. "QIB" shall have the meaning specified in Section 2.08 hereof. "Replacement Airframe" shall mean any airframe substituted for the Airframe pursuant to Section 5.06 hereof. -9- 10 "Replacement Engine" shall mean any engine substituted for an Engine pursuant to Section 5.06 hereof. "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. "Section 1110 Period" shall have the meaning specified in Section 4.04(a) hereof. "Secured Certificates" shall mean and include any Secured Certificates issued hereunder, and issued in exchange therefor or replacement thereof. "Secured Obligations" shall have the meaning specified in Section 2.06 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Holder" shall have the meaning specified in Section 2.15(c) hereof. "Series A" or "Series A Secured Certificates" means Secured Certificates issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A." "Series B" or "Series B Secured Certificates" means Secured Certificates issued and designated as "Series B" hereunder, 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" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series C." "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. "Transactions" means the transactions contemplated by the Participation Agreement and the other Operative Documents. "Trust Agreement and Indenture Supplement" shall mean a supplement to the Trust Agreement and to this Indenture, in substantially the form of Exhibit A hereto, 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. "Trust Indenture", "this Trust Indenture", "the Trust Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this Amended and Restated Trust Indenture and Security Agreement [NW 1996 B] as it may from time to time be supplemented or amended as herein provided, including supplementing by the Trust Agreement and Indenture Supplement pursuant hereto. "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 this Trust Indenture, excluding Excluded Payments. SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this Trust Indenture the terms used but not defined herein are used as defined in the Lease. -10- 11 ARTICLE II THE SECURED CERTIFICATES SECTION 2.01. FORM OF SECURED CERTIFICATES. The Secured Certificates shall be substantially in the form set forth below: THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [NW 1996 B] DATED AS OF APRIL 24, 1996. SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N538US. No. Date: [ ] ------- ------,--- $------------------ INTEREST RATE MATURITY DATE ------------- ------------- [ ] [ ] -------- --------,------- FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 B], dated as of April 24, 1996, between the Owner Participant named therein and the Owner Trustee (herein as such Trust Agreement may be supplemented or amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Interest Rate indicated above. The Principal Amount of this Secured Certificate shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Secured Certificate set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including _______, _____. Notwithstanding the foregoing, the final payment made on this Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Secured Certificate. Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "TRUST INDENTURE" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 B], dated as of the Refinancing Date, between the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Secured Certificate and not defined herein shall have the respective meanings assigned in the Trust Indenture. -11- 12 This Secured Certificate shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Trust Indenture or the Participation Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Trust Indenture and each holder hereof, by its acceptance of this Secured Certificate, agrees that it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the holder hereof as above provided and that none of the Owner Participant, the Owner Trustee or the Indenture Trustee is personally liable or liable in any manner extending to any assets other than the Trust Indenture Estate to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Trust Indenture or in the Participation Agreement, for any liability under the Trust Indenture or the Participation Agreement; provided, however, that nothing herein contained shall limit, restrict or impair the right of the Indenture Trustee, subject always to the terms and provisions of the Trust Indenture, to accelerate the maturity of this Secured Certificate upon occurrence of an Event of Default under the Trust Indenture in accordance with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment against the Owner Trustee on this Secured Certificate for purposes of realizing upon the Trust Indenture Estate and to exercise all rights and remedies provided under the Trust Indenture or otherwise realize upon the Trust Indenture Estate. There shall be maintained a Secured Certificate Register for the purpose of registering transfers and exchanges of Secured Certificates at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Trust Indenture. The Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Trust Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Secured Certificate, except that in the case of any final payment with respect to this Secured Certificate, the Secured Certificate shall be surrendered promptly thereafter by the Indenture Trustee to the Owner Trustee for cancellation. The holder hereof, by its acceptance of this Secured Certificate, agrees that, except as provided in the Trust Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts hereunder) to the date of such payment, second, to the payment of the Principal Amount of this Secured Certificate then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of Principal Amount of this Secured Certificate remaining unpaid in the inverse order of their normal maturity. This Secured Certificate is one of the Secured Certificates referred to in the Trust Indenture which have been or are to be issued by the Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Secured Certificates. The provisions of this Secured Certificate are subject to the Trust Indenture. Reference is hereby made to the Trust Indenture and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Secured Certificate and the rights and obligations of the holders of, and the nature and extent of the security for, any other Secured Certificates executed and delivered under the Trust Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust Indenture, to all -12- 13 of which terms and conditions in the Trust Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Secured Certificate. As provided in the Trust Indenture and subject to certain limitations therein set forth, this Secured Certificate is exchangeable for a like aggregate Principal Amount of Secured Certificates of different authorized denominations, as requested by the holder surrendering the same. Prior to due presentment for registration of transfer of this Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the person in whose name this Secured Certificate is registered as the owner hereof for all purposes whether or not this Secured Certificate be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Secured Certificate is subject to redemption as provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This Secured Certificate is also subject to assumption by Lessee as provided in Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.14 of the Trust Indenture but not otherwise. [The indebtedness evidenced by this Secured Certificate is, to the extent and in the manner provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Trust Indenture) in respect of [Series A Secured Certificates] P6Q this Secured Certificate is issued subject to such provisions. The Certificate Holder of this Secured Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]** Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Secured Certificate shall not be entitled to any benefit under the Trust Indenture or be valid or obligatory for any purpose. THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. * * * - -------- ** To be inserted for each Secured Certificate other than any Series A Secured Certificate. -13- 14 IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Certificate to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By ----------------------------------- Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Secured Certificates referred to in the within-mentioned Trust Indenture. STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By ----------------------------------- Name: Title: -14- 15 SCHEDULE I SECURED CERTIFICATES AMORTIZATION Percentage of Principal Amount Payment Date to be Paid --------------------------- ---------------------------- [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES. The Secured Certificates shall be dated the date of issuance thereof, shall be issued in three separate series consisting of Series A, Series B and Series C and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Agreements as set forth in Schedule II hereto in connection therewith and (ii) the Secured Certificates issued under the Original Indenture shall be concurrently redeemed. The Secured Certificates shall be issued in registered form only. The Secured Certificates shall be issued in denominations of $1,000 and integral multiples thereof, except that one Secured Certificate of each Series may be in an amount that is not an integral multiple of $1,000. Each Secured Certificate shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Secured Certificate shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Secured Certificates. Notwithstanding the foregoing, the final payment made under each Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Secured Certificate. Each Secured Certificate shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Certificate Holders, (iii) the Subordination Agent, (iv) the Liquidity Provider, or (v) the Pass Through Trustees, in each case pursuant to Section 7 of the Participation Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Advances (as -15- 16 defined in the Liquidity Facilities) under any Liquidity Facility except to the extent included in Net Interest and Related Charges, and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used in this Section, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes, plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Secured Certificate a fraction, the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes issued under Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any Series D Secured Certificates or Series D Equipment Notes. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to the Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount which would be payable if such drawings bore interest at the Designated Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding Liquidity Facility) which result from any Interest Drawing, Final Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities). As used in this Section "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) except with respect to that portion of any Final Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section, a Payment Default when used in connection with a Secured Certificate or Equipment Note means a default in the payment of principal thereof or interest thereon other than a default in the payment of principal or interest on a Series D Equipment Note which has not been cured other than solely because of acceleration. The following terms are used in this Section as defined in the Intercreditor Agreement without regard to any amendment, modification or supplement thereto after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and Series D Equipment Notes. The Secured Certificates shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Secured Certificates bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Secured Certificates or did not hold such offices at the respective dates of such Secured Certificates. The Owner Trustee may from time to time execute and deliver Secured Certificates with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Secured Certificates shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Secured Certificates to be authenticated hereunder on original issue with respect to the Aircraft. No Secured Certificate shall be secured by or entitled to any benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears on such Secured Certificate a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Secured Certificates shall be conclusive evidence, and the only evidence, that such Secured Certificate has been duly authenticated and delivered hereunder. -16- 17 SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY. (a) Without impairing any of the other rights, powers, remedies, privileges, liens or security interests of the Certificate Holders under this Trust Indenture, each Certificate Holder, by its acceptance of a Secured Certificate, agrees that as between it and the Owner Trustee, except as expressly provided in this Trust Indenture, the Participation Agreement or any other Operative Document, (i) the obligation to make all payments of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Secured Certificates, and the performance by the Owner Trustee of every obligation or covenant contained in this Trust Indenture and in the Participation Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Trust Indenture and any agreement referred to herein other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Trust Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Owner Trustee is responsible for, or is making, in its individual capacity, for which there would be personal liability of the Owner Trustee), no recourse shall be had with respect to this Trust Indenture 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, and (ii) none of the Owner Trustee, in its individual capacity, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable, or other obligation owed, hereunder, under the Participation Agreement or any of the other Operative Documents or under the Secured Certificates except as expressly provided herein or in the Participation Agreement; provided, however, that nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Trust Indenture or such other agreements of rights and remedies against the Trust Estate. These provisions are not intended as any release or discharge of the indebtedness represented by the Secured Certificates and the Trust Indenture, but are intended only as a covenant not to sue the Owner Participant, the Owner Trustee or the Indenture Trustee in their individual capacities, except as expressly provided herein or in the Participation Agreement, for a deficiency with respect to such indebtedness, the indebtedness represented by this Trust Indenture and the Secured Certificates to remain in full force and effect as fully as though these provisions were not contained in this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders have expressly reserved all their rights and remedies against the Trust Indenture Estate, including the right, in the event of a default in the payment of all or part of the Principal Amount of, interest on, Make-Whole Amount, if any, or any other amount due with respect to any Secured Certificate within the periods provided for in Section 4.02(b) hereof, or upon the occurrence and continuation of any other Event of Default under this Trust Indenture, to foreclose upon this Trust Indenture, and/or to receive the proceeds from the Trust Indenture Estate and otherwise to enforce any other right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner Participant from personal liability, or constitute a covenant not to sue the Owner Participant, for any breach by it of any of its covenants, representations or warranties contained in the Participation Agreement or for any of the payments it has agreed to make pursuant to the Participation Agreement or (y) release the Owner Trustee or constitute a covenant not to sue the Owner Trustee for any breach by it of any representations, warranties or covenants of the Owner Trustee contained in the Operative Documents or (z) release the Owner Trustee in its individual capacity from personal liability, or constitute a covenant not to sue the Owner Trustee in its individual capacity for any breach by it of any representations, warranties or covenants of the Owner Trustee made in its individual capacity in the Operative Documents. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, 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 any Certificate Holder or the Indenture Trustee, -17- 18 directly or indirectly (other than the recourse liability of the Owner Trustee (in its individual capacity), to make payment on account of any amount payable as principal, Make-Whole Amount, if any, interest or other amounts on the Secured Certificates or under this Indenture and (iii) any Certificate Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Owner Trustee (in its individual capacity) or the Owner Participant on account of clause (ii) above, then such Certificate Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Trustee (in its individual capacity) or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a Certificate Holder 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 clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Certificate Holder 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 the Participation Agreement or this Trust Indenture (and any exhibits or annexes hereto or thereto) or by separate agreement or from retaining any amount paid by Owner Participant under Section 2.14 or 4.03 hereof. SECTION 2.04. METHOD OF PAYMENT. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Secured Certificate or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Certificate Holders in the manner provided herein. The Owner Trustee shall not have any responsibility for the distribution of such payment to any Certificate Holder. Notwithstanding the foregoing or any provision in any Secured Certificate to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such holder's Secured Certificate or Secured Certificates to such holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such holder with a bank located in the continental United States the amount to be distributed to such holder, for credit to the account of such holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate such holders for loss of use of funds at the Debt Rate until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Secured Certificate, except that, in the case of the final payment in respect of any Secured Certificate, such Secured Certificate shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Secured Certificate is registered on the Secured Certificate Register as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable with respect to such Secured Certificate and for all other purposes, and none of the Owner Trustee or the Indenture Trustee shall be affected by any notice to the contrary. So long as any signatory to the Participation Agreement or nominee thereof shall be a registered Certificate Holder, all payments to it shall be made to the account of such Certificate Holder specified in Schedule I thereto and otherwise in the manner provided in or pursuant to the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. -18- 19 (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Secured Certificate (and such exclusion and withholding shall constitute payment in respect of such Secured Certificate) any and all United States withholding taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Secured Certificates, to withhold such amounts (and such withholding shall constitute payment in respect of such Secured Certificate) and timely pay the same to the appropriate authority in the name of and on behalf of the Certificate Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Certificate Holder (with a copy to the Owner Trustee and Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Certificate Holder may reasonably request from time to time. If a Certificate Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Secured Certificate(s) held by such holder is made (but prior to the making of such payment), or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by Law (after taking into account any applicable exemptions claimed by the Certificate Holder) to be withheld from payments hereunder or under the Secured Certificates held by such holder in respect of United States federal income tax (and such withholding shall constitute payment in respect of such Secured Certificate). If a Certificate Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Secured Certificates held by such holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Certificate Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Secured Certificates held by such holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Certificate Holder withholding taxes at the appropriate rate under Law and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. SECTION 2.05. APPLICATION OF PAYMENTS. In the case of each Secured Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; -19- 20 Second: to the payment of the Principal Amount of such Secured Certificate (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Secured Certificate; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Secured Certificate remaining unpaid (provided that such Secured Certificate shall not be subject to redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Secured Certificate in the inverse order of their normal maturity. SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE. A Certificate Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Secured Certificates held by such Certificate Holder and all other sums then payable to such Certificate Holder hereunder and under the other Operative Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall have been paid in full. SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED CERTIFICATES. The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the registration of Secured Certificates and the registration of transfers of Secured Certificates. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Secured Certificate Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the purpose of registering Secured Certificates and transfers of Secured Certificates as herein provided. A holder of any Secured Certificate intending to exchange such Secured Certificate shall surrender such Secured Certificate to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Secured Certificate, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Secured Certificate, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Secured Certificates of a like aggregate Principal Amount and of the same series. At the option of the Certificate Holder, Secured Certificates may be exchanged for other Secured Certificates of any authorized denominations of a like aggregate Principal Amount, upon surrender of the Secured Certificates to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Secured Certificates are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Secured Certificates which the Certificate Holder making the exchange is entitled to receive. All Secured Certificates issued upon any registration of transfer or exchange of Secured Certificates (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Trust Indenture, as the Secured Certificates surrendered upon such registration of transfer or exchange. Every Secured Certificate presented or surrendered for registration of transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Certificate Holder or such holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of any applicable state. The Indenture Trustee shall make a notation on each new Secured Certificate of the amount of all payments of Principal Amount previously made on the old Secured Certificate or Secured Certificates with respect to which such new Secured Certificate is issued and the date to which interest on such old Secured Certificate or Secured Certificates has been paid. Interest shall be deemed to have been paid on such new Secured Certificate to the date on which interest shall have been paid on such old Secured Certificate, and all payments of the Principal Amount marked on such new Secured Certificate, as provided above, shall be deemed to have been -20- 21 made thereon. The Owner Trustee shall not be required to exchange any surrendered Secured Certificates as provided above during the ten-day period preceding the due date of any payment on such Secured Certificate. The Owner Trustee shall in all cases deem the Person in whose name any Secured Certificate shall have been issued and registered as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable by the Owner Trustee with respect to such Secured Certificate and for all purposes until a notice stating otherwise is received from the Indenture Trustee and such change is reflected on the Secured Certificate Register. The Indenture Trustee will promptly notify the Owner Trustee, the Owner Participant and Lessee of each registration of a transfer of a Secured Certificate. Any such transferee of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to the provisions of the Participation Agreement applicable to Certificate Holders, including Sections 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(ff), 13(b), 13(c), 15(b), 15(c) and 16, and shall be deemed to have represented and warranted (except as provided above), and covenanted, to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by the original Loan Participant in the Participation Agreement. Subject to compliance by the Certificate Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates upon transfer or exchange within 10 Business Days of the date a Secured Certificate is surrendered for transfer or exchange. SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED CERTIFICATES. If any Secured Certificate shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the holder of such Secured Certificate, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Secured Certificate, payable in the same Principal Amount dated the same date and captioned as issued in connection with the Aircraft. If the Secured Certificate being replaced has become mutilated, such Secured Certificate shall be surrendered to the Indenture Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the Secured Certificate being replaced has been destroyed, lost or stolen, the holder of such Secured Certificate shall furnish to the Owner Trustee, the Owner Participant and the Indenture Trustee such security or indemnity as may be required by them to save the Owner Trustee, the Owner Participant and the Indenture Trustee harmless and evidence satisfactory to the Owner Trustee, the Owner Participant and the Indenture Trustee of the destruction, loss or theft of such Secured Certificate and of the ownership thereof. If a "qualified institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen Secured Certificate, then the written indemnity of such QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Lessee, the Owner Participant, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Secured Certificate. Subject to compliance by the Certificate Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates within 10 Business Days of the date of the written request therefor from the Certificate Holder. SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION. (a) No service charge shall be made to a Certificate Holder for any registration of transfer or exchange of Secured Certificates, but the Indenture Trustee, as Secured Certificate Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Secured Certificates; provided, however, that neither the Owner Trustee nor the Owner Participant shall bear costs of registration, transfer or exchange in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Secured Certificates surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Secured Certificates. -21- 22 SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES. (a) On the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders but without Make-Whole Amount. (b) If the Lease is terminated with respect to the Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13 and to Section 8(x) of the Participation Agreement, on the date the Lease is so terminated all the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES. Any or all of the Secured Certificates may be redeemed by the Owner Trustee in connection with a transaction described in, and subject to the terms and conditions of, Section 17 of the Participation Agreement upon at least 30 days' revocable prior written notice to the Indenture Trustee and the Certificate Holders, and the Secured Certificates shall, as provided in Section 17 of the Participation Agreement, be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION. (a) Neither any redemption of any Secured Certificate nor any purchase by the Owner Trustee of any Secured Certificate may be made except to the extent and in the manner expressly permitted by this Trust Indenture. No purchase of any Secured Certificate may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Secured Certificates shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Certificate Holder of such Secured Certificates to be redeemed or purchased, at such Certificate Holder's address appearing in the Secured Certificate Register; provided that, in the case of a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be deemed revoked in the event that the Lease does not in fact terminate on the specified termination date or if notice of such redemption shall have been given in connection with a refinancing of Secured Certificates and the Indenture Trustee receives written notice of such revocation from Lessee or the Owner Trustee not later than three days prior to the redemption date. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and payable upon each such Secured Certificate, and that, if any such Secured Certificates are then outstanding, interest on such Secured Certificates shall cease to accrue on and after such redemption date, and (4) the place or places where such Secured Certificates are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Secured Certificates to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption date in immediately available funds the redemption price of the Secured Certificates to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid (and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee or at any office -22- 23 or agency maintained for such purposes pursuant to Section 2.07, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Secured Certificates then outstanding shall cease to bear interest. Upon surrender of any such Secured Certificate for redemption or purchase in accordance with said notice, such Secured Certificate shall be redeemed at the redemption price. If any Secured Certificate called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Secured Certificate as of such redemption date. SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE. If, in accordance with Section 8(x) of the Participation Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a full recourse basis) all of the obligations of the Owner Trustee hereunder, under the Secured Certificates and all other Operative Documents by supplemental indenture satisfactory to the Indenture Trustee (which shall contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease and (ii) other provisions necessary or advisable to effectuate such assumption), then upon delivery of such supplemental indenture, payment by Lessee of all expenses (including reasonable fees and expenses of counsel) for the Owner Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of the Secured Certificates and other amounts owing to the Certificate Holders substantially in the form of the Guarantee, and delivery of an opinion of counsel for Lessee that such assumption has been duly and validly effected, the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Secured Certificates and all other Operative Documents and the Owner Participant shall be released and discharged from any further obligations under the Participation Agreement and any other Operative Document to which it is a party, except with respect to any such obligations that accrued prior thereto. SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES. Either the Owner Trustee or the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.14, purchase all but not less than all of the Secured Certificates outstanding hereunder, and each Certificate Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind except as to its title to the Secured Certificates and except against Liens on such Secured Certificates arising by, through or under such holder), all of the right, title and interest of such Certificate Holder in and to the Trust Indenture Estate, this Trust Indenture and the Secured Certificates held by it, and such purchaser or its nominee shall assume all of such holder's obligations under the Participation Agreement and hereunder. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Participation Agreement to the holder thereof. Such option to purchase the Secured Certificates may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default, the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Secured Certificates shall -23- 24 become irrevocable upon the sixteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Certificate Holders will comply with all the provisions of Section 2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes, charges and expenses required pursuant to Section 2.09 in connection with the issuance of such new Secured Certificate shall be borne by the Owner Participant. SECTION 2.15. SUBORDINATION. (a) The Owner Trustee and, by acceptance of its Secured Certificates of any Series, each Certificate Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g) hereof, except as expressly provided in Article III hereof. (b) By the acceptance of its Secured Certificates of any Series (other than Series A), each Certificate Holder of such Series agrees that in the event that such Certificate Holder, in its capacity as a Certificate Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.15 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article III hereof. (c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured Obligations in respect of Series A Secured Certificates have been paid in full and (ii) after the Secured Obligations in respect of Series A Secured Certificates have been paid in full, the Certificate Holders of Series B until the Secured Obligations in respect of Series B Secured Certificates have been paid in full. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. BASIC RENT DISTRIBUTION. Except as otherwise provided in Section 3.03 hereof, each installment of Basic Rent or Interim Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly distributed in the following order of priority: FIRST, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Secured Certificates shall be distributed to the Certificate Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Secured Certificate bears to the aggregate amount of the payments then due under all Series A Secured Certificates; -24- 25 (ii) after giving effect to paragraph (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Secured Certificates shall be distributed to the Certificate Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Secured Certificate bears to the aggregate amount of the payments then due under all Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series C Secured Certificates shall be distributed to the Certificate Holders of Series C ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Secured Certificate bears to the aggregate amount of the payments then due under all Series C Secured Certificates; and SECOND, the balance, if any, of such installment remaining thereafter shall be distributed to the Owner Trustee; provided, however, that if an Event of Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "Second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 5.09 hereof until whichever of the following shall first occur: (i) all Events of Default shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "Second" without reference to this proviso, (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of such Section 3.03, or (iii) the 120th day after the receipt of such payment in which case such payment shall be distributed as provided in this clause "Second" without reference to this proviso. SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION; REFINANCING. Except as otherwise provided in Section 3.03 hereof, any payments received by the Indenture Trustee (i) with respect to the Aircraft as the result of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a refinancing of the Secured Certificates pursuant to Section 17 of the Participation Agreement shall be applied to redemption of the Secured Certificates and to all other amounts payable hereunder or to the Indenture Trustee or any Certificate Holder under the Participation Agreement by applying such funds in the following order of priority: FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for any reasonable costs or expenses incurred in connection with such redemption for which they are entitled to reimbursement, or indemnity by Lessee, under the Operative Documents and then (b) to pay any other amounts then due to the Indenture Trustee and the Certificate Holders under this Trust Indenture, the Participation Agreement or the Secured Certificates; SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series A Secured Certificates; -25- 26 (ii) after giving effect to paragraph (i) above, to pay the amounts specified in paragraph (ii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, to pay the amounts specified in paragraph (iii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series C Secured Certificates; and THIRD, as provided in clause "Fourth" of Section 3.03 hereof; provided, however, that if a Replacement Airframe or Replacement Engine shall be substituted for the Airframe or Engine subject to such Event of Loss as provided in Section 10 of the Lease and in accordance with Section 5.06 hereof, any insurance, condemnation or similar proceeds which result from such Event of Loss and are paid over to the Indenture Trustee shall be held by the Indenture Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be invested as provided in Section 5.09 hereof) as additional security for the obligations of Lessee under the Lessee Operative Documents and, unless otherwise applied pursuant to the Lease, such proceeds (and such investment earnings) shall be released to Lessee at Lessee's written request upon the release of such damaged Airframe or Engine and the replacement thereof as provided in the Lease. SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT. Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Section 15 of the Lease or Article IV hereof) after both an Event of Default shall have occurred and be continuing and the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, as well as all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly distributed by the Indenture Trustee in the following order of priority: FIRST, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate (all such property being herein called the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) incurred by the Indenture Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Certificate Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or any Certificate Holder, liquidated or otherwise, upon such Event of Default shall be applied by the Indenture Trustee as between itself and the Certificate Holders in reimbursement of such expenses and any other expenses for which the Indenture Trustee or the Certificate Holders are entitled to reimbursement under any Operative Document and in the case the aggregate amount to be so distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as shall be required to reimburse the then existing or prior Certificate Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to such then existing or prior Certificate Holders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Certificate Holder pursuant to said Section 5.03 hereof; -26- 27 THIRD, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series A Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series B Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Secured Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations in respect of the Series C Secured Certificates to the date of distribution, shall be distributed to the Certificate Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon to the date of distribution; and FOURTH, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee. No Make-Whole Amount shall be due and payable on the Secured Certificates as a consequence of the acceleration of the Secured Certificates. SECTION 3.04. CERTAIN PAYMENTS. (a) Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in this Trust Indenture and for which such provision is made in the Lease, the Participation Agreement or any other Operative Document shall be applied forthwith to the purpose for which such -27- 28 payment was made in accordance with the terms of the Lease, the Participation Agreement or such other Operative Document, as the case may be. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of the Participation Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the third paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the third paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) [Intentionally Omitted] (d) Notwithstanding anything to the contrary contained in this Article III, any amounts received by the Indenture Trustee which constitute Excluded Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. (e) Notwithstanding any provision of this Trust Indenture to the contrary, any amounts held by the Indenture Trustee that would, but for the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall, notwithstanding the provisions of said Section, be distributed to Lessee unless and until a Lease Event of Default shall have occurred and be continuing. SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any other Operative Document shall be distributed by the Indenture Trustee to the extent received or realized at any time (i) prior to the payment in full of all Secured Obligations due the Certificate Holders, in the order of priority specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in full of all Secured Obligations due the Certificate Holders, in the following order of priority: FIRST, to the extent payments or amounts described in clause "First" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "First" of Section 3.03 hereof, and SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof. Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04 hereof, all payments received and amounts realized by the Indenture Trustee under the Lease or otherwise with respect to the Aircraft (including, without limitation, all amounts realized upon the sale or release of the Aircraft after the termination of the Lease with respect thereto), to the extent received or realized at any time after payment in full of all Secured Obligations due the Certificate Holders, shall be distributed by the Indenture Trustee in the order of priority specified in clause (ii) of the immediately preceding sentence of this Section 3.05. SECTION 3.06. PAYMENTS TO OWNER TRUSTEE. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be -28- 29 designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account (within the time limits contemplated by Section 2.04(a)) specified in Schedule I to the Participation Agreement. SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE. All payments received by the Indenture Trustee pursuant to the Guarantee shall be distributed forthwith by the Indenture Trustee in the same order of priority, and in the same manner, as it would have distributed the payment in respect of which such payment under the Guarantee was received. ARTICLE IV COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. COVENANTS OF OWNER TRUSTEE. The Owner Trustee hereby covenants and agrees (the covenants and agreements only in clause (b) below being made by the Owner Trustee in its individual capacity) as follows: (a) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Secured Certificates and hereunder in accordance with the terms of the Secured Certificates and this Trust Indenture and all amounts, if any, payable by it to the Certificate Holders under the Participation Agreement; (b) the Owner Trustee in its individual capacity covenants and agrees that it shall not, directly or indirectly, cause or permit to exist a Lessor Lien attributable to it in its individual capacity with respect to the Aircraft or any other portion of the Trust Estate; that it will promptly, at its own expense, take such action as may be necessary to duly discharge such Lessor Lien attributable to it in its individual capacity; and that it will make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Lessor Liens attributable to it in its individual capacity; (c) in the event the Owner Trustee shall have Actual Knowledge of an Event of Default, a Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Event of Default, Default or Event of Loss to the Indenture Trustee, each Certificate Holder, Lessee and the Owner Participant; (d) the Owner Trustee will furnish to the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of any Termination Notice and a copy of each report or notice received pursuant to Section 9(a) and 11(c) of the Lease to the extent that the same shall not have been furnished to the Indenture Trustee pursuant to the Lease; (e) except pursuant to the Operative Documents or with the consent of the Indenture Trustee (acting pursuant to instructions given in accordance with Section 9.01 hereof), the Owner Trustee will not contract for, create, incur, assume or suffer to exist any Debt, and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the Debt of any other person; and -29- 30 (f) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. EVENT OF DEFAULT. "EVENT OF DEFAULT" means any of the following events (whatever the reason for such Event of Default and whether 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): (a) any Lease Event of Default (provided that any such Lease Event of Default caused solely by a failure of Lessee to pay to the Owner Trustee or the Owner Participant when due any amount that is included in the definition of Excluded Payments shall not constitute an Event of Default unless notice is given by the Owner Trustee to the Indenture Trustee that such failure shall constitute an Event of Default); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due and payable under any Secured Certificate or hereunder (other than any such failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof or as a result of a Lease Event of Default or a Lease Default) and such failure shall have continued unremedied for ten Business Days in the case of any payment of Principal Amount or interest or Make-Whole Amount, if any, thereon and, in the case of any other amount, for ten Business Days after the Owner Trustee or the Owner Participant receives written demand from the Indenture Trustee or any Certificate Holder; or (c) any Lien required to be discharged by the Owner Trustee, in its trust capacity pursuant to Section 8(h) of the Participation Agreement, or by the Owner Participant pursuant to Section 8(h) of the Participation Agreement shall remain undischarged for a period of 30 days after the Owner Trustee and the Owner Participant shall have received written notice from the Indenture Trustee or any Certificate Holder of such Lien; or (d) any representation or warranty made by the Owner Participant or the Owner Trustee (but not in any manner relating to its individual capacity) herein, in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in any certificate furnished by the Owner Participant or the Owner Trustee to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents shall prove to have been false or incorrect when made in any material respect and continues to be material; and if such misrepresentation is capable of being corrected and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 60 days (or, without affecting Section 4.02(f) hereof, in the case of the representations made in Section 8(c) of the Participation Agreement as to the citizenship of the Owner Participant as soon as is reasonably practicable but in any event within 60 days) following notice thereof from the Indenture Trustee or any Certificate Holder to the Owner Trustee or the Owner Participant, as the case may be; or (e) other than as provided in (c) above or (f) below, any failure by the Owner Trustee or Owner Participant to observe or perform any other covenant or obligation of the Owner Trustee or Owner Participant, as the case may be, for the benefit of the Indenture Trustee or the Certificate Holders contained in the Participation Agreement, the Secured Certificates or this Trust Indenture which is not remedied within a period of 60 days after notice thereof has been given to the Owner Trustee and the Owner Participant; or -30- 31 (f) if at any time when the Aircraft is registered under the laws of the United States, the Owner Participant shall not be a Citizen of the United States, and as the result thereof the registration of the Aircraft under the Federal Aviation Act, and regulations then applicable thereunder, shall cease to be effective; provided that no Event of Default shall be deemed to have occurred under this paragraph (f) unless such circumstances continue unremedied for more than 60 days after the Owner Participant has Actual Knowledge of the state of facts that resulted in such ineffectiveness and of such loss of citizenship; or (g) at any time either (i) the commencement of an involuntary case or other proceeding in respect of the Owner Participant, the Owner Trustee or the Trust Estate 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 seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii) the commencement by the Owner Participant, the Owner Trustee or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee or the Trust Estate to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or the making by the Owner Participant, the Owner Trustee or the Trust Estate of any assignment for the benefit of creditors or the Owner Participant or the Owner Trustee shall take any action to authorize any of the foregoing; provided, however, that an event referred to in this Section 4.02(g) with respect to the Owner Participant shall not constitute an Event of Default if within 30 days of the commencement of the case or proceeding a final non-appealable order, judgment or decree shall be entered in such case or proceeding by a court or a trustee, custodian, receiver or liquidator, to the effect that, no part of the Trust Estate (except for the Owner Participant's beneficial interest therein) and no right, title or interest under the Trust Indenture Estate shall be included in, or be subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 4.02(g). SECTION 4.03. CERTAIN RIGHTS. The Indenture Trustee shall give the Certificate Holders, the Owner Trustee and the Owner Participant prompt written notice of any Event of Default of which the Indenture Trustee has Actual Knowledge and, if any such Event of Default results from a Lease Event of Default, shall give the Certificate Holders, the Owner Trustee and the Owner Participant not less than ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence and consummate the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the provisions of Section 15 of the Lease. If an Event of Default shall have occurred and be continuing, the Owner Trustee shall have the following rights hereunder, any of which may be exercised directly by the Owner Participant. If as a result of the occurrence of an Event of Default in respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease, the Indenture Trustee shall have insufficient funds to make any payment of Principal Amount and interest on any Secured Certificate on the day it becomes due and payable, the Owner Trustee or the Owner Participant may, but shall not be obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the manner provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an amount equal to the portion of the Principal Amount and interest (including interest, if any, on any overdue payments of such portion of Principal Amount and interest) then due and payable on the Secured Certificates, and, unless the Owner Trustee has cured Events of Default in respect of payments of Basic Rent on each of the three immediately preceding Basic Rent payment dates, or on the Commencement Date and each of the two immediately succeeding Basic Rent payment dates in respect of payment of Interim Rent, or the Owner Trustee -31- 32 has cured six previous Events of Default in respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any Event of Default which would otherwise have arisen on account of the nonpayment by Lessee of such installment of Interim Rent or Basic Rent (but not any other Default or Event of Default which shall have occurred and be continuing). If any Event of Default (other than in respect of the nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured has occurred, the Owner Trustee or the Owner Participant may, but shall not be obligated to, cure such Event of Default prior to the Enforcement Date as is necessary to accomplish the observance or performance of the defaulted covenant, condition or agreement. Except as hereinafter in this Section 4.03 provided, the Owner Trustee shall not, as a result of exercising the right to cure any such Event of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable under the Lease for or on account of costs or expenses incurred in connection with the exercise of such right, nor shall any claim of the Owner Trustee against Lessee or any other party for the repayment of such costs or expenses impair the prior right and security interest of the Indenture Trustee in and to the Mortgaged Property. Upon any payment by the Owner Trustee or the Owner Participant pursuant to the first or second preceding paragraphs of this Section 4.03, the Owner Trustee or the Owner Participant, as the case may be, shall be subrogated to the rights of the Indenture Trustee and the Certificate Holders in respect of the Interim Rent or Basic Rent which was overdue at the time of such payment and interest payable by Lessee on account of its being overdue and any Supplemental Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant to the immediately preceding paragraph (but in either case shall have no rights as a secured party hereunder), and thereafter, the Owner Trustee or the Owner Participant, as the case may be, shall be entitled to receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt thereof by the Indenture Trustee (and shall be entitled to bring an action against Lessee to enforce such payment); provided, however, that (i) if the Principal Amount and interest on the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to all Secured Certificates shall have been paid in full, be subordinate to the rights of the Indenture Trustee and the Certificate Holders in respect of such payment of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and (ii) the Owner Trustee shall not be entitled to seek to recover any such payment (or any payment in lieu thereof) except pursuant to the foregoing right of subrogation by demand or suit for damages. SECTION 4.04. REMEDIES. (a) Subject to the provisions of Section 2.14 hereof, if an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, then and in every such case the Indenture Trustee may, subject to the second paragraph of this Section 4.04(a), on and after the Enforcement Date if such Event of Default results from a Lease Event of Default, exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article IV and shall have and may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and, in the event such Event of Default is also a Lease Event of Default, any and all of the remedies pursuant to Section 15 of the Lease and may take possession of all or any part of the properties covered or intended to be covered by the Lien created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee and Lessee and all persons claiming under any of them wholly or partly therefrom, provided, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft or to foreclose the Lien of this Indenture. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Trust Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder as a result of an Event of Default which arises solely by reason of one or more events or circumstances which constitute a Lease Event of Default unless the Indenture Trustee as security assignee of the Owner Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 15 of the Lease to terminate the Lease or take possession and/or sell the Aircraft; provided, -32- 33 however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any Person. In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any rights or remedy of the Indenture Trustee hereunder) to participate in such proceedings. It is expressly understood and agreed that, subject only to the immediately preceding paragraph, the inability, described in such paragraphs, of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising any or all of its rights, powers and remedies under this Trust Indenture, including, without limitation, this Article IV. (b) If an Event of Default shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery of written notice or notices to the Owner Trustee and the Owner Participant, declare all the Secured Certificates to be due and payable, whereupon the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued but unpaid interest thereon (without Make-Whole Amount) and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. This Section 4.04(b), however, is subject to the condition that, if at any time after the Principal Amount of the Secured Certificates shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Secured Certificates and all other amounts payable under the Secured Certificates (except the Principal Amount of the Secured Certificates which by such declaration shall have become payable) shall have been duly paid, and every other Default and Event of Default with respect to any covenant or provision of this Trust Indenture shall have been cured, then and in every such case a Majority in Interest of Certificate Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. (c) Any Certificate Holder shall be entitled, at any sale pursuant to Section 15 of the Lease or this Section 4.04, to credit against any purchase price bid at such sale by such holder all or any part of the unpaid obligations owing to such Certificate Holder and secured by the Lien of this Trust Indenture (but only to the extent that such purchase price would have been paid to such Certificate Holder pursuant to Article III hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c) were not given effect). (d) In the event of any sale of the Trust Indenture Estate, or any part thereof, pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Trust Indenture, the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued interest thereon, and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. -33- 34 (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement or the Subordination Agent on its behalf is a Certificate Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any Mortgaged Property or take any action with respect to any Mortgaged Property so acquired by it if such acquisition or action would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. RETURN OF AIRCRAFT, ETC. (a) If an Event of Default shall have occurred and be continuing, subject to Sections 4.03 and 4.04 hereof, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Mortgaged Property included in the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents to the fullest extent permitted by applicable law, and (ii) pursue all or part of such Mortgaged Property wherever it may be found and, in the event that a Lease Event of Default has occurred and is continuing, may enter any of the premises of Lessee wherever such Mortgaged Property may be or be supposed to be and search for such Mortgaged Property and take possession of and remove such Mortgaged Property. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Trust Indenture. (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Mortgaged Property, make all such expenditures for maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modifications or alterations to and of the Mortgaged Property, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the Mortgaged Property and to carry on the business and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Mortgaged Property, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modification or alteration of the Mortgaged Property or any part thereof as the Indenture Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Mortgaged Property and every part thereof, except Excluded Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Trust Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, improvement, modification or alteration of the Mortgaged Property and of conducting the business thereof, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Mortgaged Property or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Trust Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee with respect hereto. SECTION 4.06. REMEDIES CUMULATIVE. Each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and -34- 35 in such order as may be deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or Lessee or to be an acquiescence therein. SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS. In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Trust Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Owner Trustee, the Indenture Trustee and Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Mortgaged Property, and all rights, remedies and powers of the Owner Trustee, the Indenture Trustee or Lessee shall continue as if no such proceedings had been instituted. SECTION 4.08. WAIVER OF PAST DEFAULTS. Upon written instruction from a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Default hereunder and its consequences and upon any such waiver such Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon; provided, that in the absence of written instructions from all the Certificate Holders, the Indenture Trustee shall not waive any Default (i) in the payment of the Principal Amount, Make-Whole Amount, if any, and interest and other amounts due under any Secured Certificate then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Certificate Holder. SECTION 4.09. APPOINTMENT OF RECEIVER. The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee thereof) for all or any part of the Mortgaged Property, whether such receivership be incidental to a proposed sale of the Mortgaged Property or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Mortgaged Property shall be entitled to exercise all the rights and powers of the Indenture Trustee with respect to the Mortgaged Property. SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC. The Owner Trustee irrevocably appoints the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture, whether pursuant to foreclosure or power of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Owner Trustee hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Trust Indenture, the right of any Certificate Holder to receive payment of principal of, and premium, if any, and interest on a Secured Certificate on or after the respective due dates expressed in such Secured Certificate, or to bring suit for the enforcement of any such payment on or after -35- 36 such respective dates in accordance with the terms hereof, shall not be impaired or affected without the consent of such Certificate Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default arising from a failure to pay Rent, the Indenture Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms of Sections 4.03, 4.04, 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default or Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture Trustee shall not have received instructions as above provided within 20 days after mailing notice of such Event of Default to the Certificate Holders, the Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default or Default as it shall determine advisable in the best interests of the Certificate Holders. If the Indenture Trustee shall at any time declare the Lease to be in default pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall forthwith notify the Owner Participant, the Certificate Holders, the Owner Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall not be deemed to have knowledge of a Default or an Event of Default (except, in the case of the Indenture Trustee, the failure of Lessee to pay any installment of Interim Rent or Basic Rent within one Business Day after the same shall become due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee, the Owner Participant or one or more Certificate Holders. SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, subject to the terms of this Section 5.02, take such of the following actions as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder as shall be specified in such instructions; (ii) give such notice or direction or exercise such right, remedy or power under the Lease, the Participation Agreement, the Purchase Agreement, or any other part of the Trust Indenture Estate as shall be specified in such instructions; and (iii) after the occurrence and during the continuance of an Event of Default, approve as satisfactory to the Indenture Trustee all matters required by the terms of the Lease to be satisfactory to the Owner Trustee, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall not approve any such matter as satisfactory to the Indenture Trustee; provided, that anything contained in this Trust Indenture, the Lease or the other Operative Documents to the contrary notwithstanding: (1) the Owner Trustee or the Owner Participant may, without the consent of the Indenture Trustee, demand, collect, sue for or otherwise obtain all amounts included in Excluded Payments from Lessee or the Guarantor, exercise any election or option or make any decision or determination or to give or receive any notice, consent, waiver or approval in respect of any Excluded Payment and seek legal or equitable remedies to require Lessee or the Guarantor to maintain the insurance coverage referred to in Section 11 of the Lease; provided, that the rights referred to in this clause (1) shall not be deemed to -36- 37 include the exercise of any remedies provided for in Section 15 of the Lease other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by Lessee or the Guarantor of such amounts included in Excluded Payments or performance by Lessee or the Guarantor of such insurance covenant, or to recover damages for the breach thereof or for specific performance of any covenant of Lessee or the Guarantor; (2) unless an Event of Default and an Indenture Trustee Event shall have occurred and be continuing and subject to the provisions of clauses (4) and (6) below, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be withheld if no right or interest of the Owner Trustee or the Owner Participant shall be diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; provided that, subject to the Indenture Trustee's right to exercise remedies under Section 15 of the Lease without the consent of the Owner Trustee, whether or not an Event of Default shall have occurred and be continuing, no amendment, modification, waiver or consent in respect of the Lease shall materially adversely affect the Owner Participant or the Owner Trustee; (3) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee and the Owner Participant shall have the right, together with the Indenture Trustee, (i) to receive from Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which any thereof is permitted or required to give or furnish to the Owner Trustee or Lessor pursuant to any Operative Document (including pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 11(e) of the Lease specifically confers on Lessor or the Owner Participant, (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of Lessor under Section 21 of the Lease and (v) to give notices of default under Section 14 of the Lease; (4) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee shall have the right to the exclusion of the Indenture Trustee to adjust Rent, Stipulated Loss Values and Termination Values as provided in Section 3(d) of the Lease and to select counsel with respect to any opinion relating to tax matters to be delivered solely to the Owner Participant; (5) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee may, without the consent of the Indenture Trustee, (i) solicit and make bids with respect to the Aircraft under Section 9 of the Lease in respect of a termination of the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales value" and "fair market rental value" under Section 19 of the Lease for all purposes except following an Event of Default pursuant to Section 15 of the Lease, and (iii) make an election pursuant to and in accordance with the provisions of Section 9(c) of the Lease; and (6) so long as no Event of Default shall have occurred and be continuing, all rights of the "Lessor" under the Lease shall be exercised by the Owner Trustee to the exclusion of the Indenture Trustee including, without limitation, the right to (i) exercise all rights with respect to Lessee's use and operation, modification or maintenance of the Aircraft and any Engine which the Lease specifically confers on Lessor, and (ii) consent to and approve any assignment pursuant to Section 13 of the Lease; provided that the foregoing shall not limit (A) any rights separately granted to the Indenture Trustee under the Operative Documents or (B) the right of the Indenture Trustee to receive any funds to be delivered to the "Lessor" under the Lease (except with respect to Excluded Payments) and under the Purchase Agreement. -37- 38 Notwithstanding anything to the contrary contained herein, the Indenture Trustee shall have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) declare the Lease to be in default under Section 15 thereof and (B) subject only to the provisions of Sections 4.03, 4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15 (other than in connection with Excluded Payments) at any time that a Lease Event of Default shall have occurred and be continuing. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as specified by Lessee pursuant to Section 8(e) of the Participation Agreement or as may be specified from time to time in written instructions of a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee will furnish to each Certificate Holder (and, during the continuation of an Indenture Trustee Event, to the Owner Trustee and Owner Participant), promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder, including, without limitation, a copy of any Termination Notice (as defined in the Lease) and a copy of each report or notice received pursuant to Sections 9(a) and 11(c) of the Lease, respectively, to the extent that the same shall not have been furnished to such Certificate Holder pursuant hereto or to the Lease. (b) If any Lease Event of Default shall have occurred and be continuing and the Owner Trustee shall not have cured fully such Lease Event of Default under and in accordance with Section 4.03 hereof, on request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall declare the Lease to be in default pursuant to Section 15 thereof and exercise those remedies specified by such Certificate Holders. The Indenture Trustee agrees to provide to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with such declaration by the Indenture Trustee, notice of such declaration by the Indenture Trustee. SECTION 5.03. INDEMNIFICATION. The Indenture Trustee shall not be under any obligation to take any action under this Trust Indenture and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds or otherwise incur the risk of any financial liability in the performance of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (the written indemnity of any Certificate Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Indenture Trustee shall be accepted as reasonable assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture or any other Operative Document be deemed to impose a duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or of the Lease or is otherwise contrary to Law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR INSTRUCTIONS. The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Trust Indenture or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Trust Indenture or as expressly provided in written instructions from Certificate Holders as provided in this Trust Indenture; and no implied duties or obligations shall be read into this Trust Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof), promptly take such action as may be necessary duly to discharge all liens and encumbrances on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the ownership of the Aircraft or the administration of the Trust Indenture Estate or any other transaction pursuant to this Trust Indenture or any document included in the Trust Indenture Estate. -38- 39 SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR INSTRUCTIONS. The Owner Trustee and the Indenture Trustee agree that they will not use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate except (i) as required by the terms of the Lease or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Trust Indenture and in accordance with the express terms hereof. SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES. At any time an Airframe or Engine is to be replaced under or pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of Default is continuing, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid, but only upon compliance by Lessee with the applicable provisions of Section 10 of the Lease and upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee, requesting such release specifically describing the Airframe and/or Engine(s) so to be released. (2) A certificate signed by a duly authorized officer of Lessee stating the following: A. With respect to the Replacement of any Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe to be received (including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number) as consideration for the Airframe to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of such Replacement Airframe free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Airframe will on such date be in good working order and condition, and that such Replacement Airframe has been or, substantially concurrently with such withdrawal, will be duly registered in the name of the Owner Trustee under the Federal Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate -39- 40 is in full force and effect, and that Lessee will have the full right and authority to use such Replacement Airframe; (iv) the existence of the insurance required by Section 11 of the Lease with respect to such Replacement Airframe and the payment of all premiums then due thereon; (v) that the Replacement Airframe is of the same or an improved model as the Airframe requested to be released from this Indenture; (vi) the fair market value of the Replacement Airframe as of the date of such certificate (which in the judgment of Lessee shall be not less than the then fair market value of the Airframe requested to be released (assuming such Airframe was in the condition and repair required to be maintained under the Lease)); (vii) the fair market value of the Airframe immediately prior to the date the Airframe suffered an Event of Loss (assuming such Airframe was in the condition and repair required to be maintained under the Lease); (viii) that no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default, has occurred which has not been remedied or waived, and that Lessee will not be in default, by the making and granting of the request for release and the addition of a Replacement Airframe, in the performance of any of the terms and covenants of the Lease; and (ix) that the release of the Airframe so to be released will not be in contravention of any of the provisions of this Indenture; or B. with respect to the replacement of any Engine: (i) a description of the Engine which shall be identified by manufacturer's serial number; (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) as consideration for the Engine to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except as are permitted by Section 6 of the -40- 41 Lease, that such Replacement Engine will on such date be in good working order and condition and that such Replacement Engine is substantially the same as the Engine to be released (or as improved model); (iv) the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then fair market value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease)); (v) the fair market value of the Engine to be released (immediately prior to any Event of Loss suffered by such Engine and assuming that such Engine was in the condition and repair required to be maintained under the Lease); (vi) that each of the conditions specified in Section 10(b) of the Lease with respect to such Replacement Engine have been satisfied and that Lessee will not be in default, by the making and granting of the request for release and the addition of the Replacement Engine, in the performance of any of the terms and covenants of the Lease; (vii) that, with respect to the replacement of an Engine pursuant to Section 9(d) of the Lease, no Lease Event of Default and no Lease Default has occurred which has not been remedied or waived; and (viii) that the release of the Engine so to be released will not be in contravention of any of the provisions of this Indenture. (3) (a) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting such Replacement Airframe or Replacement Engine and any related warranty rights to the Lien of this Indenture. (b) With respect to the replacement of any Engine, such Uniform Commercial Code financing statements covering the lien created by this Indenture as deemed necessary or desirable by counsel for the Indenture Trustee to protect the lien under the Indenture in the Replacement Engine. -41- 42 (4) A certificate from either an aircraft engineer (who may be an employee of Lessee) or a firm of independent aircraft appraisers selected by Lessee confirming the accuracy of the information set forth in clause (2)A(vi) of this Section 5.06. (5) The opinion of in-house counsel to Lessee, or other counsel satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be lawfully released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Indenture, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate and interest of the Owner Trustee to and the Lien of this Indenture on such Replacement Aircraft or Replacement Engine. SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS. If a Replacement Airframe or Replacement Engine is being substituted as contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Certificate Holders and Lessee, subject to fulfillment of the conditions precedent and compliance by Lessee with its obligations set forth in Section 10 of the Lease and the requirements of Section 5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to execute and deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease. SECTION 5.08. EFFECT OF REPLACEMENT. In the event of the substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced, and (b) the provisions of this Trust Indenture shall no longer be applicable to the Airframe or Engine or Engines being replaced, which shall be released from the Lien of this Indenture. -42- 43 SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of the Lease shall be held in accordance with the terms of such Section and the Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of the Owner Trustee under such Section. Any amounts held by the Indenture Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee may acquire the same using its best efforts. Unless otherwise expressly provided in this Trust Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Trust Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever such sale is necessary to make a distribution required by this Trust Indenture. (6) ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse all monies constituting part of the Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its individual capacity, and the Indenture Trustee, in its individual capacity, shall not be answerable or accountable under any circumstances, except (i) for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be willful misconduct or negligence), (ii) in the case of the Indenture Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii) for liabilities that may result, in the case of the Owner Trustee, from the inaccuracy of any representation or warranty of the Owner Trustee expressly made in its individual capacity in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents) or, in the case of the Indenture Trustee (in its individual capacity), from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable for any action or inaction of the other or of the Owner Participant. SECTION 6.02. ABSENCE OF DUTIES. In the case of the Indenture Trustee, except in accordance with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the Lease or of this Trust Indenture or any other document, or to see to the maintenance of any such registration, recording or filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to -43- 44 confirm, verify or inquire into the failure to receive any financial statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Lessee's covenants under the Lease with respect to the Aircraft. The Owner Participant shall not have any duty or responsibility hereunder, including, without limitation, any of the duties mentioned in clauses (i) through (v) above; provided, that nothing contained in this sentence shall limit any obligations of the Owner Participant under the Participation Agreement or relieve the Owner Participant from any restriction under Section 4.03 hereof. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR DOCUMENTS. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT, NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its individual capacity warrants that (i) the Owner Trustee has received on the Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Trustee in its individual capacity. Neither the Owner Trustee, in its individual capacity or as Owner Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual or trust capacities, makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Trust Indenture, the Trust Agreement, the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Owner Trustee made in its individual capacity and the representations and warranties of the Indenture Trustee, in each case expressly made in this Trust Indenture or in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement). The Loan Participants, the Certificate Holders and the Owner Participant make no representation or warranty hereunder whatsoever. SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the Certificate Holders, Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by Law or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under such general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for any interest thereon (except that the Indenture Trustee shall invest all monies held as directed by Lessee so long as no Lease Event of Default or Lease Default has occurred and is continuing (or in the absence of such direction, by the Majority In Interest of Certificate Holders) in Cash Equivalents; provided, however, that any payments received, or applied hereunder, by the Indenture Trustee shall be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL. Neither the Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors (or Executive Committee thereof) of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary -44- 45 thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Secured Certificates outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to Lessee the manner of ascertainment of which is not specifically described herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee and the Indenture Trustee for any action taken or omitted to be taken by them in good faith in reliance thereon. The Indenture Trustee shall assume, and shall be fully protected in assuming, that the Owner Trustee is authorized by the Trust Agreement to enter into this Trust Indenture and to take all action to be taken by it pursuant to the provisions hereof, and shall not inquire into the authorization of the Owner Trustee with respect thereto. In the administration of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled persons. SECTION 6.06. CAPACITY IN WHICH ACTING. The Owner Trustee acts hereunder solely as trustee as herein and in the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein, in the Trust Agreement and in the Participation Agreement. SECTION 6.07. COMPENSATION. The Indenture Trustee shall be entitled to reasonable compensation, including expenses and disbursements (including the reasonable fees and expenses of counsel), for all services rendered hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by Lessee, and shall have the right, on and subsequent to an Event of Default hereunder, to use or apply any monies held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against the Loan Participants, the Certificate Holders, the Owner Trustee or the Owner Participant for any fee as compensation for its services as trustee under this Trust Indenture. SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS. In the administration of the trusts created hereunder, the Indenture Trustee shall have the right to seek instructions from a Majority in Interest of Certificate Holders should any provision of this Trust Indenture appear to conflict with any other provision herein or should the Indenture Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no liability in refraining from acting until it receives such instructions. The Indenture Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.08. ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. SCOPE OF INDEMNIFICATION. The Owner Trustee, not in its individual capacity, but solely as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its individual and trust capacities), and its successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding -45- 46 any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Trust Indenture), claims, actions, suits, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever, which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also indemnified against by any other Person under any other document) in any way relating to or arising out of this Trust Indenture or any other Operative Document to which it is a party or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, to the extent not reimbursed by Lessee. Without limiting the foregoing, the Indenture Trustee agrees that, prior to seeking indemnification from the Trust Indenture Estate, it will demand, and take such action as it may in its discretion determine to be reasonable to pursue, indemnification available to the Indenture Trustee under the Lease or the Participation Agreement. Notwithstanding the foregoing, the Indenture Trustee shall not be entitled to any indemnification for any Expenses to the extent relating to or arising from the willful misconduct or gross negligence (or negligence in the case of handling funds) of the Indenture Trustee in the performance of its duties hereunder or resulting from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) referred to in Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities under such Sections. In addition, if necessary, the Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. The Owner Trustee shall be subrogated to any right of the Indenture Trustee in respect of any matter as to which such indemnity is paid by the Owner Trustee. ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement including upon any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee, Lessee and the Certificate Holders. SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Certificate Holders may at any time (but only with the consent of Lessee, which consent shall not be unreasonably withheld, except that such consent shall not be necessary if a Lease Event of Default is continuing) remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Certificate Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so long as no Lease Event of Default shall have occurred and be continuing, shall be subject to Lessee's reasonable approval. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act -46- 47 until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as above provided. (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee an instrument accepting such appointment and assuming the obligations of the Indenture Trustee under the Participation Agreement arising from and after the time of such appointment, and thereupon such successor Indenture Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee herein; but nevertheless upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all monies or other property then held by such predecessor Indenture Trustee hereunder. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having its principal place of business in the Borough of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations under the Operative Documents are guaranteed by an affiliated entity having) a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. (d) Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Indenture Trustee may be transferred, shall, subject to the terms of paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the Indenture Trustee under this Trust Indenture without further act. SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Trust Indenture Estate shall be situated or to make any claim or bring any suit with respect to or in connection with the Trust Indenture Estate, this Trust Indenture, any other Indenture Agreement, the Secured Certificates or any of the transactions contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interests of the Certificate Holders (and the Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture Trustee shall have been requested to do so by a Majority in Interest of Certificate Holders, then in any such case, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and such other instruments as may from time to time be necessary or advisable either (1) to constitute one or more bank or trust companies or one or more persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as additional trustee or trustees of all or any part of the Trust Indenture Estate, or to act as separate trustee or trustees of all or any part of the Trust Indenture Estate, in each case with such rights, powers, duties and obligations consistent with this Trust Indenture as may be provided in such supplemental indenture or other instruments as the Indenture Trustee or a Majority in Interest of Certificate Holders may deem necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional and separate trustee, subject in each case to the remaining provisions of this Section 8.03. If the Owner Trustee shall not have taken any action requested of it under this Section 8.03(a) that is permitted or required by its terms within 15 days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing provisions of this Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and perform -47- 48 any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee. In case any additional or separate trustee appointed under this Section 8.03(a) shall die, become incapable of acting, resign or be removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to the Indenture Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.03(a). (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Trust Indenture Estate or otherwise payable under any Operative Document to the Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights, powers, duties and obligations conferred or imposed upon any additional or separate trustee shall be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly except to the extent that applicable Law of any jurisdiction in which any particular act is to be performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of the Indenture Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Indenture Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.03 shall be subject to, and shall have the benefit of Articles IV through VIII and Article X hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. (c) If at any time the Indenture Trustee shall deem it no longer necessary or desirable in order to conform to any such law or take any such action or shall be advised by such counsel that it is no longer so necessary or desirable in the interest of the Certificate Holders, or in the event that the Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Certificate Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when and to the extent it could so act under Section 8.03(a) hereof. ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS. (a) Except as provided in Section 5.02 hereof, and except with respect to Excluded Payments, the Owner Trustee agrees it shall not enter into any amendment of or supplement to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee and a Majority in Interest of Certificate Holders. Anything to the contrary contained herein notwithstanding, without the necessity of the consent of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter into amendments of or additions to the Lease to modify Section 5 (except to the extent that such amendment would affect the rights or exercise of remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such amendments, -48- 49 modifications and changes do not and would not affect the time of, or reduce the amount of, Rent payments until after the payment in full of all Secured Obligations or otherwise adversely affect the Certificate Holders. (b) Without limiting the provisions of Section 9.01(a) hereof and subject to Section 5.02(a)(2) hereof, the Indenture Trustee agrees with the Certificate Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Certificate Holders, or does not adversely effect the Certificate Holders, but subject to Section 5.02(a)(2), upon the written request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each holder of an affected Secured Certificate then outstanding, no such amendment of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11, 2.15, 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an Event of Default) of the Lease, the definitions of "Event of Default", "Default", "Lease Event of Default", "Lease Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Secured Certificate, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in favor of the Certificate Holders, (iv) consent to any change in the Trust Indenture or the Lease which would permit redemption of Secured Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as permitted by Section 2.14 hereof, (v) modify any of the provisions of Section 3(d)(v) of the Lease, or modify, amend or supplement the Lease or consent to any assignment of the Lease, in either case releasing Lessee from its obligations in respect of the payment of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections 3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. So long as no Lease Event of Default has occurred and is continuing, without the consent of Lessee no amendment or supplement to this Trust Indenture or waiver or modification of the terms hereof shall adversely affect Lessee. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Certificate Holder for any of the following purposes: (i) (a) to cure any defect or inconsistency herein or in the Secured Certificates, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Certificate Holders in its capacity solely as Certificate Holder; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Trust Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Certificate Holders, or to surrender any rights or power herein conferred upon the Owner Trustee, the Owner Participant or Lessee; (vi) to -49- 50 add to the rights of the Certificate Holders; and (vii) to include on the Secured Certificates any legend as may be required by law. SECTION 9.02. TRUSTEES PROTECTED. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of Section 9.01 hereof adversely affects any right, duty, immunity or indemnity with respect to such institution under this Trust Indenture or the Lease, such institution may in its discretion decline to execute such document. SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to Section 9.01 hereof, the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each Certificate Holder at its address last set forth in the Secured Certificate Register, but the failure of the Indenture Trustee to mail such copies shall not impair or affect the validity of such document. SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST AGREEMENT AND INDENTURE SUPPLEMENT. No written request or consent of the Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof shall be required to enable the Owner Trustee to enter into any Lease Supplement specifically required by the terms of the Lease or to execute and deliver a Trust Agreement and Indenture Supplement specifically required by the terms hereof. ARTICLE X MISCELLANEOUS SECTION 10.01. TERMINATION OF TRUST INDENTURE. Upon (or at any time after) payment in full of the Principal Amount of, Make-Whole Amount, if any, and interest on and all other amounts due under all Secured Certificates and provided that there shall then be no other Secured Obligations due to the Certificate Holders and the Indenture Trustee hereunder or under the Participation Agreement, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft and the Engines from the Lien of this Trust Indenture and releasing the Lease, the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto from the assignment and pledge thereof hereunder and the Indenture Trustee shall execute and deliver such instrument as aforesaid and give written notice thereof to Lessee; provided, however, that this Trust Indenture and the trusts created hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property constituting part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all monies or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE HOLDERS. No holder of a Secured Certificate shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Secured Certificate or other right, title and interest of any Certificate Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Trust Indenture or entitle such holder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Trust Indenture Estate. -50- 51 SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING. Any sale or other conveyance of the Trust Indenture Estate, or any part thereof (including any part thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind the Certificate Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders in and to such Trust Indenture Estate or part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS. Nothing in this Trust Indenture, whether express or implied, shall be construed to give any person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or equitable right, remedy or claim under or in respect of this Trust Indenture. SECTION 10.05. NOTICES. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), with a copy to the Owner Participant addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee, addressed to it at its office at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to any Participant, Lessee or any Certificate Holder, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party (if any) set forth on the signature pages to the Refunding Agreement or in the Secured Certificate Register. Whenever any notice in writing is required to be given by the Owner Trustee, any Participant or the Indenture Trustee or any Certificate Holder or Lessee to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after being mailed, addressed as provided above. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Trust Indenture. SECTION 10.06. SEVERABILITY. Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS. No term or provision of this Trust Indenture or the Secured Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Owner Trustee and the Indenture Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any Secured Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 10.08. SUCCESSORS AND ASSIGNS. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the permitted successors and assigns of each, all as herein provided. Any request, -51- 52 notice, direction, consent, waiver or other instrument or action by any Certificate Holder shall bind the successors and assigns of such holder. This Trust Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby, thereby and by the Participation Agreement. Each Certificate Holder by its acceptance of a Secured Certificate agrees to be bound by this Trust Indenture and all provisions of the Participation Agreement applicable to a Loan Participant or a Certificate Holder. SECTION 10.09. HEADINGS. The headings of the various Articles and sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.10. NORMAL COMMERCIAL RELATIONS. Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or any bank or other Affiliate of such Participant may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Lessee, fully to the same extent as if this Trust Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. SECTION 10.11. GOVERNING LAW; COUNTERPART FORM. THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the parties hereto in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.12. VOTING BY CERTIFICATE HOLDERS. All votes of the Certificate Holders shall be governed by a vote of a Majority in Interest of Certificate Holders, except as otherwise provided herein. SECTION 10.13. BANKRUPTCY. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee hereunder), shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14. NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any of the provisions of this Trust Indenture or the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner Trustee will take any action contrary to Lessee's rights under -52- 53 the Lease, including the right to possession and use of, and the quiet enjoyment of, the Aircraft, except in accordance with provisions of the Lease. -53- 54 IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to be duly executed by their respective officers thereof duly authorized as of the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, as Owner Trustee By: ----------------------------------- Name: ----------------------------------- Title: STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By: ----------------------------------- Name: ----------------------------------- Title: -54- 55 --------------------------------------------- EXHIBIT A TO TRUST INDENTURE AND MORTGAGE --------------------------------------------- TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 B] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 B], dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 B] dated as of April 24, 1996 (the "TRUST AGREEMENT"), between the Owner Trustee and the Owner Participant named therein. W I T N E S S E T H: WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 B], dated as of June 12, 1996 (as amended and supplemented to the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft, and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for recordation on the date hereof with the FAA as one document; NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust Indenture Estate covers all of Owner Trustee's right, title and interest in and to the following described property: 56 AIRFRAME One airframe identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number ----------------- ------- -------------- ---------------- together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Two aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows: Manufacturer Manufacturer's Model Serial Number ----------------- -------------------- ---------------- together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to any of such engines. Together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts). As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Certificate Holders, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under the Lease Supplement [of even date herewith] covering the property described above. Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Certificate Holders, except as provided in Section 2.15 and Article III of the Trust Indenture without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity EXHIBIT A-2 57 thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Trust Indenture Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. EXHIBIT A-3 58 IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, Owner Trustee By: ----------------------------------- Name: Title: EXHIBIT A-4 59 SCHEDULE I
PRINCIPAL AMOUNT INTEREST RATE ------------------ --------------- Series A . . . . . . $25,335,450 7.67% Series B . . . . . . $ 8,272,800 8.07% Series C . . . . . . $ 4,150,365 8.97%
60 SECURED CERTIFICATES AMORTIZATION SERIES A AIRCRAFT: N538US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ---------------- ------------------------ Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 2.04081633% Jul 2, 1998 0.00000000% Jan 2, 1999 2.04081633% Jul 2, 1999 0.00000000% Jan 2, 2000 2.04081633% Jul 2, 2000 0.00000000% Jan 2, 2001 2.04081633% Jul 2, 2001 0.00000000% Jan 2, 2002 2.04081633% Jul 2, 2002 0.00000000% Jan 2, 2003 2.04081633% Jul 2, 2003 0.00000000% Jan 2, 2004 2.04081633% Jul 2, 2004 0.00000000% Jan 2, 2005 2.04081633% Jul 2, 2005 0.00000000% Jan 2, 2006 2.04081633% Jul 2, 2006 0.00000000% Jan 2, 2007 2.04081633% Jul 2, 2007 0.00000000% Jan 2, 2008 2.04081633% Jul 2, 2008 0.00000000% Jan 2, 2009 2.04081633% Jul 2, 2009 0.00000000% Jan 2, 2010 4.83155026% Jul 2, 2010 0.00000000% Jan 2, 2011 25.94002475% Jul 2, 2011 0.00000000% Jan 2, 2012 17.29802313% Jul 2, 2012 0.00000000% Jan 2, 2013 16.67037688% Jul 2, 2013 0.00000000% Jan 2, 2014 10.77022907%
61 SERIES B AIRCRAFT: N538US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.08333333% Jul 2, 1999 0.00000000% Jan 2, 2000 2.08333333% Jul 2, 2000 0.00000000% Jan 2, 2001 2.08333333% Jul 2, 2001 0.00000000% Jan 2, 2002 2.08333333% Jul 2, 2002 0.00000000% Jan 2, 2003 2.08333333% Jul 2, 2003 0.00000000% Jan 2, 2004 2.08333333% Jul 2, 2004 0.00000000% Jan 2, 2005 2.08333333% Jul 2, 2005 0.00000000% Jan 2, 2006 7.96189924% Jul 2, 2006 0.00000000% Jan 2, 2007 6.30140944% Jul 2, 2007 0.00000000% Jan 2, 2008 12.96235857% Jul 2, 2008 0.00000000% Jan 2, 2009 14.06979499% Jul 2, 2009 0.00000000% Jan 2, 2010 22.14449763% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 16.96840248% Jul 2, 2014 5.00830432%
62 SERIES C AIRCRAFT: N538US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 7.00837155% Jul 2, 1999 0.00000000% Jan 2, 2000 7.84726163% Jul 2, 2000 0.00000000% Jan 2, 2001 9.96603913% Jul 2, 2001 0.00000000% Jan 2, 2002 12.14736535% Jul 2, 2002 0.00000000% Jan 2, 2003 14.53888995% Jul 2, 2003 0.00000000% Jan 2, 2004 17.14432345% Jul 2, 2004 0.00000000% Jan 2, 2005 19.98460376% Jul 2, 2005 0.00000000% Jan 2, 2006 11.36314517%
63 SCHEDULE II 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. EX-4.F3 45 LEASE AGREEMENT-1996 B 1 LEASE AGREEMENT [NW 1996 B] This LEASE AGREEMENT [NW 1996 B], dated as of April 24, 1996, between FIRST SECURITY BANK OF UTAH, 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 1996 B] and shall be equally applicable to both the singular and the plural forms of the terms herein defined: "Administrative Agent" means [___________], a [____________] banking corporation, as administrative agent pursuant to the Participation Agreement, and any successor acting as administrative agent. "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. "After-Tax Basis" means an amount, which, after deduction of all Federal, state, local and foreign taxes required to be paid by or on behalf of the recipient in respect of the receipt or realization of such amount, is equal to the payment required under the provisions of any Operative Document that requires payments to be made on an After-Tax Basis. "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 two 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. 2 "Airframe" means: (i) the Boeing 757-251 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. "Assumed Interest Rate" has the meaning set forth in Section 3(c) hereof. "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 The Bank of New York in New York, New York from time to time as its prime 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 Commencement Date and ending on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. "Bill of Sale" means a full warranty bill 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 Bill of Sale shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good title to the Airframe and each Engine described in - 2 - 3 such Bill 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 New York, New York; Boston, Massachusetts; Salt Lake City, Utah; or Minneapolis, Minnesota and, in connection with any payment of Rent and so long as any Secured Certificate is a Eurodollar Loan (as defined in the Trust Indenture), such day is also a day for trading by and between banks in the interbank Eurodollar market. "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. "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. "Commencement Date" means January 2, 1997. "Commitment" means the commitment of a Loan Participant 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 1996 B], 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. "Credit Agreement" means the Credit Agreement, dated as of November 2, 1995, among Lessee, the banks, financial institutions and other institutional - 3 - 4 lenders listed on the signature pages thereof, [_______________], as documentation agent, [_______________], as administrative agent, and [______________], as syndication agent, as the same may be amended, supplemented or otherwise modified from time to time. "Debt Rate" has the meaning set forth in the Trust Indenture. "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, 2003. "Documentation Agent" means [_______________], a bank organized under the laws of [____________], as documentation agent pursuant to the Participation Agreement, and any successor acting as documentation agent. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of the two Pratt & Whitney Model PW2037 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 two 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 hereunder. The term "Engines" means, as of any date of determination, all Engines then leased hereunder. "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 - 4 - 5 permanently unfit for normal use by Lessee 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 which is a member of OECD, 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 for a period in excess of 180 consecutive days or, if earlier, at the end of the Term or, in the case of a requisition of title, the requisition of title shall not have been reversed within 90 days from the date of such requisition of title or, if earlier, at the end of the Term; (iv) as a result of any law, rule, 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, 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, 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 Lessee's entire U.S. registered fleet of Boeing Model 757-200 aircraft and Lessee, 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, 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 which is a member of OECD or any instrumentality or agency of any thereof, which shall have occurred during the Basic Term (or the Interim 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. - 5 - 6 "Excess Amount" for the Transition 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 the Transition Date; provided, however, that, to the extent that the aggregate amount of interest due and payable on the Transition Date on the Secured Certificates relating to the period from and including the Delivery Date to but excluding the Transition Date is less than the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Transition Date if such Secured Certificates had borne interest at the Assumed Interest Rate for such period, the corresponding percentage set forth in Exhibit B shall be decreased by the amount which when multiplied by Lessor's Cost will equal such differential. "Expenses" has the meaning specified in Section 7(c) of the Participation Agreement. "FAA Bill of Sale" means a bill 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. "Funding Loss Amount" has the meaning assigned to that term in the Trust Indenture. "Guarantee" means the Guarantee [NW 1996 B], dated as of the date hereof, made by the Guarantor in favor of the Parties, 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 the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Administrative Agent, the Documentation Agent, the Loan Participants and each other Certificate Holder, and each of their respective - 6 - 7 Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents. "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 Installment" has the meaning set forth in Section 19(d) hereof. "Interest Period" means Interest Period as defined in the Trust Indenture. "Interim Rent" means the rent payable for the Aircraft for the Interim Term pursuant to Section 3(b) hereof. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions hereof. "Lease Agreement", "this Lease Agreement", "this Lease", "this Agreement", "herein", "hereof", "hereunder", "hereby" or other like words mean this Lease Agreement [NW 1996 B] 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. - 7 - 8 "Lease Period" means each of the consecutive semi-annual periods throughout the Basic Term and any Renewal Term ending on a Lease Period Date, the first such period commencing on and including the Commencement Date. "Lease Period Date" means July 2, 1997 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 Bill of Sale, the Bill of Sale, the Purchase Agreement Assignment and the Tax Indemnity Agreement. "Lessor Liens" means any Lien or disposition of title or interest affecting or in respect of the Aircraft, the Airframe, any Engine, this Lease or the Trust Estate arising as a result of (i) claims against Lessor, First Security Bank of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 - 8 - 9 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 of Utah, 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 of Utah, 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, lease, sublease, sub-sublease, security interest, or encumbrance of any kind. "Loan Participant" means each institution executing the Participation Agreement as a Loan Participant, and its respective successors and assigns, and any Certificate Holder; at any time when there is only one Certificate Holder, "each Loan Participant" shall mean such 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 assigned to that term in the Trust Indenture. "Manufacturer" means The Boeing Company, a Delaware corporation. "Manufacturer Documents" means the Purchase Agreement and the Consent and Agreement. "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, Special Purchase Price and Remaining Installments, discounted at an annual interest rate of 12.0 percent on a semi-annual basis. "OECD" means the Organization for Economic Cooperation and Development. - 9 - 10 "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 Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Guarantee, the Purchase Agreement Assignment and the Consent and Agreement. "Overall Transaction" means all the transactions contemplated by the Operative Documents. "Owner Participant" means the corporation executing the Participation Agreement as the Owner Participant and 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 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 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 1996 B], dated as of the date hereof, among Lessee, the Loan Participants, the Indenture Trustee, the 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. - 10 - 11 "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. "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 manufacturer of airframes or aircraft engines, any Affiliate of a manufacturer of airframes or aircraft engines, or any foreign air carrier domiciled in a country listed in Exhibit B to the Participation Agreement and regularly engaged in the transportation of passengers or property by aircraft or the transportation of mail by aircraft. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Prepaid Rent" has the meaning assigned in Section 3(g) hereof. "Purchase Agreement" means the Purchase Agreement No. 1631, dated December 1, 1989, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1996 B], 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. "Reimbursement Amount" has the meaning set forth in Section 3(g) hereof. - 11 - 12 "Remaining Installments" has the meaning set forth in Section 19(d) hereof. "Renewal Term" means any Fixed Renewal Term or Fair Market Renewal Term as those terms are defined in Section 19 hereof. "Rent" means Interim Rent, Basic Rent and Supplemental Rent, collectively. "Rent Differential Amount" has the meaning set forth in Section 3(c) hereof. "Secured Certificates" has the meaning assigned to that term in the Trust Indenture. "Special Purchase Price" shall mean the amount denominated as such in Exhibit B hereto. "Stipulated Loss Value" with respect to the Aircraft as of any date through and including January 2, 2019, 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). To the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Interim Term or the Lease Period in which such Stipulated Loss Value Date occurs up to and including such Stipulated Loss Value Date is greater or less than the amount included in calculating the percentage set forth in Exhibit C with respect to such Stipulated Loss Value Date on account of such interest, the corresponding percentage set forth in Exhibit C shall be adjusted appropriately to compensate for such differential. "Stipulated Loss Value" as of any date after January 2, 2019 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 Interim Term, 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. - 12 - 13 "Supplemental Rent" means all amounts, liabilities and obligations (other than Interim Rent and Basic Rent) which Lessee assumes or agrees to pay to Lessor or others hereunder, under the Participation Agreement, under the Tax Indemnity Agreement or under any of the other Operative Documents. The parties acknowledge that Supplemental Rent is a general category and, accordingly, agree that any provision of any Operative Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment. "Tax Indemnitee" means the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors and permitted assigns and, in the case of the Owner Participant, directors, officers, employees, servants and agents of the Owner Participant. "Tax Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1996 B], dated as of the date hereof, 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, net income, gross 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 Interim Term, 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 January 2, 2019, 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). In the event that the Termination Date with respect to which Termination Value is determined is a date on which Basic Rent is payable in advance as indicated on Exhibit B, to the extent that the actual amount of interest paid and to be paid on the Secured - 13 - 14 Certificates during the Lease Period ending on such Termination Date is greater or less than the amount included in calculating the corresponding percentage set forth in Exhibit D with respect to such Termination Date on account of such interest, the corresponding percentage set forth in Exhibit D shall be adjusted appropriately to compensate for such differential. "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker, special counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Vedder, Price, Kaufman & Kammholz, special counsel to the Loan Participants, such information to be furnished by the Documentation Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee and Guarantor, such information to be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust Indenture, such information to be furnished by the Indenture Trustee, (v) the fee of BK Associates, Inc. (or of such other appraiser as shall be acceptable to Lessee and the Owner Participant) with respect to the appraisals of the Aircraft pursuant to Sections 4(a)(xx) and 4(a)(xxix) of the Participation Agreement, such information to be furnished by the Owner Participant, (vi) the reasonable and actual fees, expenses and disbursements of Fulbright & Jaworski L.L.P., special counsel to the Owner Participant, such information to be furnished by the Owner Participant, (vii) the equity placement fee and reasonable disbursements of Babcock and Brown Financial Corporation, such information to be furnished by Lessee, and (viii) the fee payable to the Loan Participants on the Delivery Date. "Transition Date" means the date designated as such in Exhibit B hereto. "Trust Agreement" means that certain Trust Agreement [NW 1996 B], dated as of the date hereof, between the Owner Participant and First Security Bank of Utah, 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. - 14 - 15 "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 1996 B], dated as of the date hereof, between Lessor and the Indenture Trustee, as originally executed or as modified, amended or supplemented in accordance with the provisions thereof. "Trust Supplement" means a supplement to the Trust Agreement and the Trust Indenture, substantially in the form of Exhibit A to the Trust Indenture. "U.S. Air Carrier" means any Certificated Air Carrier as to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the regulations under the Federal Aviation Act, or which may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof. "Wet Lease" means any arrangement whereby the Lessee (or any Sublessee) agrees to furnish the Airframe and Engines or engines installed thereon to a third party pursuant to which such Airframe and Engines or engines (i) shall be operated solely by regular employees of Lessee (or any Sublessee) possessing all current certificates and licenses that would be required under the Federal Aviation Act or, if the Aircraft is not registered in the United States, all certificates and licenses required by the laws of the jurisdiction of registry, for the performance by such employees of similar functions within the United States of America or such other jurisdiction of registry (it is understood that cabin attendants need not be regular employees of Lessee (or any Sublessee)) and (ii) shall be maintained by Lessee (or any Sublessee) in accordance with its normal maintenance practices. SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to satisfaction of the conditions set forth in Section 4(a) of the Participation Agreemen to accept the transfer of title from and simultaneously to lease to Lessee henderunder, and Lessee hereby agrees (subject to satisfaction of the condition set forth in Section 4(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) Interim Term and Basic Term. The Interim Term shall commence on the Delivery Date and end on and include the day immediately preceding the Commencement Date unless earlier terminated pursuant to the provisions hereof. The Basic Term shall commence on the Commencement Date and on January 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. - 15 - 16 (b) Interim Rent. Lessee shall pay Interim Rent on the Commencement Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for Interim Rent on the Commencement Date. Although the Interim Rent percentage set forth in Exhibit B hereto has been compd on the assumption that the rate of interest on the Secured Certifica will be the Assumed Interest Rate, Lessor and Lessee recognize that the ual rate of interest on the Secured Certificates may be a rate from time to t which may be greater or less than the Assumed Interest Rate and that the ated basis upon which interest on the Secured Certificates will be computed l be as provided in the Trust Indenture. Accordingly, the Interim Rent paya on the Commencement Date shall be increased or decreased (but not below zerby the difference between (i) the aggregate amount of interest due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to but excluding the Commencement Date and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Secured Certificates on the Commencement Date relating the period from the Transition Date to the Commencement Date if such Secured Certificates had borne interest at the Assumed Interest Rate. If the amount determined in accordance with clause (i) of the preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be increased by such difference. If the amount determined in accordance with clause (i) of the preceding sentence shall be less than the amount determined accordance with clause (ii) of such sentence, the amount of Interim Rent pay- able on the Commencement Date shall be decreased (but not below zero) by such difference. (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 applicable Lease Period Date specified in Exhibit B hereto. Although the Basic Rent percentages set forth in Exhibit B hereto have been computed on the assumption that the rate of interest on the Secured Certificates throughout the Term will be 6.50% per annum, computed on the basis of a 360-day year of twelve 30-day months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, each installment of Basic Rent shall be increased or decreased (but not below zero), as the case may be, by the Rent Differential Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with respect to the Basic Term, the difference between (i) the aggregate amount of interest due and payable on such Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on such Lease Period Date if - 16 - 17 such Secured Certificates had borne interest at the Assumed Interest Rate, in each case for the period from and including the Lease Period Date (or the Commencement Date in the case of the first Lease Period) next preceding such Lease Period Date to but excluding such Lease Period Date. If, as of any Lease Period Date, the amount determined in accordance with clause (i) of the immediately preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Basic Rent payable on such Lease Period Date shall be increased by the Rent Differential Amount. If, as of any Lease Period Date, the amount determined in accordance with such clause (ii) shall exceed the amount determined in accordance with such clause (i), the amount of Basic Rent due on such Lease Period Date shall be decreased (but not below zero) by the Rent Differential Amount. (d) Adjustments to Basic Rent. (i) In the event that (A) the Delivery Date occurs other than on April 30, 1996, or (B) Transaction Expenses paid by Lessor pursuant to Section 16(a) of the Participation Agreement are determined to be other than 1.0% 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, the Termination Value percentages set forth in Exhibit D, the Special Purchase Price (subject to clause (vii) below), the Initial Installment and the Remaining Installments shall be recalculated by the Owner Participant, on or prior to November 15, 1996 using the same methods and assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages, the Special Purchase Price, the Initial Installment and the Remaining Installments, 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. (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, the Termination Value percentages set forth in Exhibit D, the Special Purchase Price, the Initial Installment and the Remaining Installments shall be recalculated (upwards or, subject to clause (vii) below, 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(e)(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, the Termination Value percentages set forth in Exhibit D, the Special Purchase Price, the Initial Installment and the Remaining Installments shall be recalculated (upwards or, subject to clause (vii) below, downwards) by Owner Participant, using the same methods and assumptions (except to the extent such assumptions shall be varied - 17 - 18 to take into account the Loss or Foreign Tax Credit Loss (as each such term is defined in the Tax Indemnity Agreement) that is the subject of such indemnification and any prior or contemporaneous Loss or Foreign Tax Credit Loss) used to calculate the Basic Rent percentages, the Stipulated Loss Value percentages and the Termination Value percentages, the Special Purchase Price, the Initial Installment and the Remaining Installments 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 Amount set forth in Exhibit B in a manner consistent with such recalculation. In addition, (X) any recalculation of Basic Rent, Stipulated Loss Value or Termination Value percentages made pursuant to this Section 3(d) shall take into account any decrease in the Excess Amount with respect to the Transition Date required by the proviso to the definition of "Excess Amount", (Y) after January 2, 1997 but prior to July 2, 1997, the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C and the Termination Value percentages set forth in Exhibit D shall be recalculated to take into account any decrease in Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) of this sentence, and (Z) at the time of any payment of Stipulated Loss Value or Termination Value, the Stipulated Loss Value percentage set forth in Exhibit C or the Termination Value percentage set forth in Exhibit D, by reference to which the amount of such payment is determined shall be recalculated to take into account any decrease in the Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) or clause (Y) of this sentence. (iv) Any recalculation of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value percentages, Special Purchase Price, Initial Installment and Remaining Installments 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 Amount, Stipulated Loss Value and Termination Value percentages, Special Purchase Price, Initial Installment and Remaining Installments 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 Interim Rent and 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 - 18 - 19 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 Interim Rent, 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 Lessor Liens, (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 tax law as then in effect, including, without limitation, Rev. Proc. 75-28 as amended and then in effect (or any successor thereto) 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 Internal Revenue Code of 1986, as amended, and any regulations thereunder, except to the extent that on the Delivery Date the Lease constituted a "disqualified leaseback or long-term agreement" under Section 467 of the Code on the Delivery Date or was not in compliance with Rev. Proc. 75-28 and without regard to any adjustments to Basic Rent occurring after such date and (B) subject to verification pursuant to Exhibit E. (vii) Notwithstanding the foregoing, no adjustment effected pursuant to this Section 3(d) shall result in the Special Purchase Price being decreased below $27,536,250.00. (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, Termination Value or Special Purchase Price 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 when due any amount of premium payable when due under the Trust Indenture and shall pay amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when the same shall become due and payable. 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 Interim Rent and Basic Rent not paid when due for any period - 19 - 20 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 of Utah, National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW 1996 B (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, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1996 B (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 10 Business Days prior to the date such payment of Rent is due). 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 the Transition Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall on the Transition Date, prepay on the Transition Date a portion of Basic Rent equal to the Excess Amount not - 20 - 21 so paid (the amount of such Basic Rent to be prepaid by Lessee being herein called "PREPAID RENT"); provided that Lessee shall, under all circumstances and whether or not an Event of Default shall be continuing on the Transition Date, pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount equal to the excess, if any, of the interest on the Secured Certificates relating to the period from and including the Delivery Date to but excluding the Transition Date over the Excess Amount payable on the Transition Date; provided, further, 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 equal to the Base Rate as in effect from time to time plus 5% per annum 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 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 Interim Rent or 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." LESSEE HAS SELECTED THE AIRCRAFT AND THE MANUFACTURER THEREOF AND 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 - 21 - 22 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 of Utah, 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 that 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 (or deemed to be declared) in default pursuant to Section 15 hereof) it will not, through its own actions or inactions, interfere in the quiet enjoyment of the Aircraft in accordance with the terms hereof 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 reasonably acceptable to Lessor, and Lessee will give Lessor at least fifteen (15) 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, provided that the return conditions shall be satisfied on the date the Aircraft is placed in storage. At the time of such return, Lessee will, unless otherwise - 22 - 23 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 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; the Airframe will be fully equipped with the Engines (or other Pratt & Whitney Model PW2037 engines or two 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 both 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 consistent with use in domestic passenger service in the United States, (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)) 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 Exhibit F. 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 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) bill of sale including as to the absence of Liens other than Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) 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 bill 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 bill of sale or other instrument evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose - 23 - 24 Liens that 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. (d) Storage Upon Return. If, at least thirty (30) 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 (i) 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 and (ii) parking facilities for the Aircraft (maintenance costs, other out-of-pocket costs and parking fees to be for the account of Lessor) for a period not exceeding an additional thirty (30) days commencing at the end of such initial thirty (30) day period, in each case at a location in the continental United States selected by Lessee used as a location for the parking or storage of aircraft; provided that Lessee shall have no obligation to move the Aircraft from such location during the storage periods. Lessee will maintain insurance for the Aircraft during such period not exceeding sixty (60) 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 that 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 Sublessee) either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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, the 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 - 24 - 25 forty-five (45) days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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 forty-five (45) 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 forty-five (45) days after the expiration of such stay so long as such judgment does not involve any material risk of the sale, forfeiture or loss of the Aircraft, or any Engine or any interest therein, and (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. 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 Lessee 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 Boeing 757-200 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 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 and without in any case discriminating against the Aircraft by reason of its leased status; provided, however, that in all circumstances the Aircraft shall be - 25 - 26 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 (which records, logs and other materials, as between Lessor and Lessee and all parties claiming through Lessee, shall be the property of Lessor but shall be maintained by Lessee during the Term and shall become the property of Lessee upon Lessee's purchase of the Aircraft pursuant to the terms of this Lease or upon the occurrence of an Event of Loss and Lessee's compliance with Section 10 hereof); 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 its right, title and interest in the Aircraft 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 or any material risk of civil liability or any risk of criminal liability being imposed on Lessor or the Owner Participant. 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 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 - 26 - 27 possession or installation or such Wet Lease and no Default of the type referred to in Section 14(b) shall have occurred and be continuing at the time of such sublease, 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 Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee 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 any Sublessee) in the ordinary course of its business; provided that (A) no such agreement or arrangement contemplates, requires or results in 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 domiciled in a country listed on Exhibit B to the Participation Agreement, in either case not subject to a proceeding or final order under applicable bankruptcy, insolvency or reorganization laws on the date such interchange agreement is entered into; (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; - 27 - 28 (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; (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 - 28 - 29 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 the Owner Participant and the Indenture Trustee, in their sole discretion, 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 the Sublessee under such sublease is a foreign air carrier or Person based in a country other than the United States (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 or Person based in a country other than the United States, prior to the effectiveness of such sublease Lessor and the Indenture Trustee shall have received an opinion (in form and substance reasonably acceptable to Lessor) of counsel to Lessee (reasonably acceptable to Lessor) to the effect that (I) the terms of the proposed sublease will be legal, valid, binding and (subject to customary exceptions) 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, (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 Lessor (or Lessee, as "lessee", or the proposed Sublessee, as "sublessee", as appropriate) and to the Lien of the Trustee Indenture, and (V) all filings, if any, required to be made in such jurisdiction in connection with the execution of such sublease in order to protect the interest of Lessor in the Aircraft have been made, provided, however, that no sublease entered into pursuant to this clause (x) shall extend beyond the expiration of the Basic Term - 29 - 30 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 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 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 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 to a U.S. Air Carrier 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 written notice of any Sublease to a Permitted Sublessee hereunder (such notice to be given not later than ten (10) days prior to entering into such Sublease) and (ii) a copy of each Sublease which has a term of more than three months. Lessee shall pay all reasonable fees and expenses of Lessor and the Owner Participant (including its counsel) in connection with any sublease or proposed sublease under Section 7(b)(x). - 30 - 31 (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 of Utah, 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 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 - 31 - 32 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. Lessee represents and warrants that on the Delivery Date no appliance, part, instrument, appurtenance, accessory, furnishing or other equipment on the Aircraft which is necessary for navigation of the Aircraft has been leased from any Person other than Lessor. (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) 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 regardless of upon whom nominally imposed; 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 materially adversely affect Lessor or its right, title and interest in the Aircraft or, so long as any Secured Certificates are outstanding, the Indenture Trustee and does not involve any material risk of - 32 - 33 sale, forfeiture or loss of the Aircraft or any material risk of civil liability or any risk of criminal liability being imposed on Lessor; provided further, that no appliance, part, instrument, appurtenance, accessory, furnishing or other equipment of whatever nature relating to such alteration, modification or addition may be leased from any Person other than Lessor. 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 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 original cost of all Obsolete Parts which shall have been removed and not replaced shall not exceed $400,000. 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]. (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. - 33 - 34 (3) Lessee shall give to Lessor at least ninety (90) days' and no more than 365 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 ten (10) 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 its best 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 relating to the release of the Aircraft from the Lien of the Trust Indenture and shall, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 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 - 34 - 35 net sale price of the Aircraft sold by Lessor after deducting the reasonable expenses incurred by Lessor and the Owner Participant in connection with such sale, and (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, including, without limitation, the premium and Funding Loss 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 that 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. Without duplication of any amounts otherwise paid or withheld pursuant to the preceding sentence in the event of a sale, Lessee agrees to pay all reasonable out-of-pocket costs and expenses (including, without limitation, reasonable counsel fees and disbursements) of Lessor and the Owner Participant in connection therewith. Notwithstanding the second 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 and, without affecting the obligations of Lessee in respect of such amounts under the second following sentence, together with the premium and Funding Loss Amount, if any, due on the Secured Certificates. 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 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 premium and Funding Loss 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 Termination Value) due on or prior to the Termination Date, including Supplemental Rent of the type described in the second sentence of Section 3(e). 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 (including reasonable counsel fees and disbursements) incurred by the Owner Participant, the Indenture Trustee 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, in which case Lessee shall pay only the reasonable costs and expenses of the Indenture Trustee), 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 - 35 - 36 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 (but without affecting the provisions of Section 7(b), 7(c) or 15(b) of the Participation Agreement) 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 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 shall indemnify the Owner Participant for any adverse tax consequences resulting from such substitution, 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 Interim Rent or 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) the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence) (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 the Commencement Date or 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 the Commencement Date or such Lease Period Date an amount equal to the Interim Rent or Basic Rent that would have been due on the - 36 - 37 Commencement Date or such Lease Period Date if such Event of Loss had not occurred, or (ii) so long as no Default of the type referred to in Section 14(a), 14(b) or 14(e) or Event of Default shall have occurred and be continuing, 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. 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 on or before the Stipulated Loss Value Date by reference to which the Stipulated Loss Value is calculated for the Loss Payment Date (excluding Basic Rent payable in advance on such Stipulated Loss Value Date) and all Supplemental Rent, including of the type described in the second sentence of Section 3(e)), 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 shall cease to accrue (but without affecting the provisions of Section 7(b), 7(c) or 15(b) of the Participation Agreement), (2) this Lease shall terminate, (3) Lessor will comply with the terms of the Trust Indenture relating to the release of the Aircraft from the Lien 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 that 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 bill 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, a Boeing model aircraft (or a Boeing model airframe or a Boeing model 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 - 37 - 38 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 bill of sale and a Federal Aviation Administration bill 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 in form and substance reasonably satisfactory to Lessor, and Lessor simultaneously will comply with the terms of the Trust Indenture relating to the release of the Aircraft from the Lien 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 that 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 bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft 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, (7) furnish Lessor with an opinion of counsel (which may be the General Counsel or an Associate General Counsel of Lessee, or other counsel chosen by Lessee and reasonably acceptable to Lessor) to the effect that the full warranty bill of sale referred to in clause (1) constitutes an effective instrument for the conveyance of title to the replacement aircraft, airframe, engine or engines, (8) furnish Lessor (at Lessor's sole cost and expense) with a certificate of an independent aircraft appraiser reasonably acceptable to Lessor certifying that such replacement aircraft, airframe, engine or engines complies with the value, utility and remaining useful life requirements set forth above in this sentence, (9) furnish Lessor with an opinion of tax counsel chosen by the Owner Participant and reasonably acceptable to Lessee as to the federal income tax consequences (without any requirement as to the nature of such federal income tax consequences) to Lessor and the Owner Participant of such substitution, and shall indemnify the Owner Participant for any adverse tax consequences resulting from such substitution, and (10) 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 - 38 - 39 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 Interim Rent or 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 Pratt & Whitney Model PW2037 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 both 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) bill 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 in form and substance reasonably acceptable to Lessor and (iv) furnish Lessor with an opinion of counsel (which may be the General Counsel or an Associate General Counsel of Lessee, or other counsel chosen by Lessee and reasonably acceptable to Lessor) to the effect that the bill of sale referred to in clause (i) above constitutes an effective instrument for the conveyance of title to the replacement engine, and Lessor will comply with the terms of the Trust Indenture relating to the release of the Aircraft from the Lien 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 that 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 bill 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 - 39 - 40 "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 Interim Rent or 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 Which is a Member of OECD . 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 which is a member of OECD or any instrumentality or agency 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 - 40 - 41 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. Unless an Event of Loss shall be deemed to have occurred pursuant to the next sentence or Lessor shall have given Lessee the written notice specified in the next sentence, Lessee shall pay to Lessor for each day (but not to exceed 30 days) beyond the scheduled expiration of the Term during which the Aircraft is not returned to Lessor by reason of such requisition an amount equal to the average daily Basic Rent payable by Lessee during the Term. 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 Exhibit F) (except that Lessee shall deliver to Lessor all logs, manuals and data and inspection, modification and overhaul records in regard to the Aircraft then in its possession) 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) bill of sale including as to the absence of Liens other than Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) 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 bill 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 that 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 bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 Which is a Member of OECD. In the event of the - 41 - 42 requisition for use of an Engine by the United States Government or any other government of registry of the Aircraft which is a member of OECD 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. (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 a Default of the type specified in Section 14(a), 14(b) or 14(e) or 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 Default or 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 any 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 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 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 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 - 42 - 43 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 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 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 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, any Sublessee) with respect to other aircraft owned or operated by Lessee (or such - 43 - 44 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 by Lessee 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 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 a Default of the type specified in Section 14(a), 14(b) or 14(e) or 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 - 44 - 45 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 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 - 45 - 46 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). (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 by Lessee 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, 1996, a report, signed by Marsh & McLennan, Incorporated 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 prospective and 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, (C) as may be required by any statute, court or administrative order or decree or governmental ruling or regulation or as may be requested by any regulatory agency or body having authority or (D) as may be necessary for purposes of protecting the interests of any such Person or for the enforcement of this Lease by Lessor. 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 - 46 - 47 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. (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. (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 the obligations of which are backed by the full faith and credit of the United States or, upon the written consent of Lessor (such consent to be given or withheld in its sole discretion), other - 47 - 48 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 a Default of the type described in Section 14(a), 14(b) or 14(e) or 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 Default or 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 12 months (unless during the circumstances set forth in the last paragraph of Section 5(a) or an 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 (unless already open); 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). In addition, 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 18 month period 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 - 48 - 49 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 Interim Rent, Basic Rent or Stipulated Loss Value within ten (10) 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 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 and in clauses (i)(B) and (ii) of the first sentence of second paragraph of Exhibit F) 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 one hundred eighty (180) 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 - 49 - 50 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 the representations and warranties in, or in connection with, the Credit Agreement) 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 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 Section 14(c) or (d) hereof, 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 - 50 - 51 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 (provided that this Lease shall be deemed to be declared in default without the necessity of such written declaration upon the occurrence of any Event of Default described in Section 14(e) or Section 14(f)); 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 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, without the necessity of first instituting proceedings, or 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 or any Sublessee and without any duty to account to Lessee with respect to such action or inaction or for any proceeds with respect thereto, except as hereinafter set forth in this Section 15; - 51 - 52 (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 Stipulated Loss Value Date not earlier than ten days from the date of such notice, may demand that the 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 Interim Rent or Basic Rent for the Aircraft due on the Commencement Date or for Lease Periods commencing on or after the payment date in such notice), any unpaid Interim Rent or Basic Rent due on the payment date so specified (unless Basic Rent is payable in advance but 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 Stipulated Loss Value 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 Stipulated Loss Value 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 hereafter in this Section provided) as of the Stipulated Loss Value Date specified as the payment date in such notice, plus in the case of each such amount, interest thereon at the Past Due Rate from such specified payment date until the actual date of payment of such amount; (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 Interim Rent or Basic Rent for the Aircraft due on or after such date), any unpaid Interim Rent or Basic Rent with respect to the Aircraft due on (unless such Basic Rent is payable in advance) or 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 preceding 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 - 52 - 53 (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 lease or 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 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 - 53 - 54 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 by reason of the occurrence of any Event or Default or the exercise of Lessor's remedies with respect thereto, including all costs and expenses incurred 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) 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. 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 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 - 54 - 55 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 1997, 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; (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; and (iii) once each calendar quarter, any other Securities and Exchange Commission filings of the Guarantor during the preceding calendar quarter. In addition, Lessee will deliver to Lessor and the Owner Participant (i) within 60 days after the end of the first three quarterly periods of each fiscal year of Lessee, a balance sheet of Lessee as of the close of such period, together with the related statements of operations and cash flows for such period; and (ii) within one hundred and twenty (120) days after the close of such fiscal year, a balance sheet of Lessee as of the close of such fiscal year, together with the related statements of operations and cash flows for such fiscal year prepared in the case of clause (i) and (ii) in accordance with generally accepted accounting principles, consistently applied. SECTION 17. NOTICES. All notices required under the terms and provisions hereof shall be by telecopy 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President-Finance and Treasurer (Telecopy No. (612) 726-0665), or to such other address - 55 - 56 or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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. This Lease is a net lease. 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. - 56 - 57 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 three 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 one hundred eighty (180) 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. At the expiration of the third Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have the option to renew this Lease for a renewal term of not less than one year and not more than four 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"). Each such option to renew shall be exercised by Lessee delivering to Lessor, at least one hundred eighty (180) days prior to the commencement of such Fair Market Renewal Term, a written notice irrevocably electing to renew this Lease for a Fair Market Renewal Term (which notice shall also specify the length of the Fair Market Renewal Term). The aggregate length of all Fair Market Renewal Terms pursuant to this Section 19(a)(2) may not exceed four years. (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), 14(e) or 14(f) 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 the higher of (i) 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) and (ii) 2.092% multiplied by Lessor's Cost, which Basic Rent shall be payable in semi-annual installments in arrears, 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 - 57 - 58 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 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 no 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 one hundred eighty (180) 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 50% 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 that 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 (subject to the requirements as to irrevocable notice set forth in Sections 19(a)(1), 19(a)(2) and 19(b) hereof) 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, (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 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 - 58 - 59 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, 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 January 2, 2012 (or, if January 2, 2012 is not a Business Day, the Business Day immediately succeeding January 2, 2012), 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, at Lessee's option, either (a) the Special Purchase Price or (b) the Initial Installment (payable on such date) plus the Remaining Installments (payable thereafter). In the event Lessee elects to purchase the Aircraft for a purchase price equal to the Special Purchase Price, on such date Lessee shall pay Lessor the Special Purchase Price. In addition, if in the case of clause (a) on such date there shall be any Secured Certificates outstanding, Lessee shall also have the option to assume, pursuant to Section 8(x) of the Participation Agreement and Section 2.15 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, including Supplemental Rent payable pursuant to the second sentence of Section 3(e)), Lessor will transfer to Lessee, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that would be Lessor Liens - 59 - 60 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. In the event Lessee elects to purchase the Aircraft for a purchase price equal to the Initial Installment plus the Remaining Installments, on such date Lessee shall pay Lessor an amount equal to the amount set forth under the heading "Initial Installment" on Exhibit B (the "INITIAL INSTALLMENT"). Upon such payment 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, including Supplemental Rent payable pursuant to the second sentence of Section 3(e)), and after Lessee shall have provided Lessor with its undertaking to pay the amounts due on the dates set forth under the heading "Remaining Installments" on Exhibit B (the "REMAINING INSTALLMENTS") and with collateral security for such undertaking reasonably acceptable to the Owner Participant, Lessor will transfer to Lessee, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 shall 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 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. - 60 - 61 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 Moody's 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 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 - 61 - 62 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. 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. - 62 - 63 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 continued possession, use and operation of, and quiet enjoyment of, the Aircraft pursuant to the terms of this Lease 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. - 63 - 64 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 OF UTAH, 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 - 65 EXHIBIT A TO LEASE AGREEMENT [NW 1996 B] LEASE SUPPLEMENT NO. [NW 1996 B] LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement [NW 1996 B], dated as of _______ __, 199_, 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 1996 B], dated as of April 24, 1996, relating to one Boeing 757-251 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 Boeing 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the date hereof consists of the following components: __________________ (1) This language for Lease Supplement No. 1. (2) This language for other Lease Supplements. 66 (i) Airframe: FAA Registration No. ______; manufacturer's serial no. _____; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P______ and P______ (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 January 2, 2019. 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 The Boeing Company, or any subcontractor or supplier of The Boeing Company, 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 67 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 OF UTAH, NATIONAL ASSOCIATION, Not in its Individual Capacity, but Solely as Owner Trustee, Lessor By____________________________________ Title: NORTHWEST AIRLINES, INC., Lessee By____________________________________ Title: 3Receipt 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 68 EXHIBIT B TO LEASE AGREEMENT [NW 1996 B] INTERIM RENT, BASIC RENT, EXCESS AMOUNT, LESSOR'S COST, SPECIAL PURCHASE PRICE, INITIAL INSTALLMENT AND REMAINING INSTALLMENTS 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. Interim Rent, Basic Rent and Excess Amount: Transition (Percentage of Date Lessor's Cost) - -------------------------------- -------------------------------------- Commencement Date Interim Rent (Percentage of Lessor's Cost) - -------------------------------- -------------------------------------- Basic Rent (Percentage of Lease Period Date Lessor's Cost) - -------------------------------- -------------------------------------- 69 * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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 70 INTERIM RENT, BASIC RENT, EXCESS AMOUNT, LESSOR'S COST, SPECIAL PURCHASE PRICE, INITIAL INSTALLMENT AND REMAINING INSTALLMENTS 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 (Percentage of Lease Period Date Lessor's Cost) ------------------------------- --------------------------- * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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 3 71 Lessor's Cost for the Aircraft: Special Purchase Price: Initial Installment: Remaining Installments: Date Amount ---- ------ Transition Date: EXHIBIT B - PAGE 4 72 EXHIBIT C TO LEASE AGREEMENT [NW 1996 B] 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 ---------------------- --------------------- 73 EXHIBIT D TO LEASE AGREEMENT [NW 1996 B] 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 --------------- --------------- 74 EXHIBIT E TO LEASE AGREEMENT [NW 1996 B] RENT RECALCULATION 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. 75 EXHIBIT F TO LEASE AGREEMENT [NW 1996 B] 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. EX-4.F4 46 FIRST AMENDMENT TO LEASE AGREEMENT -1996 B 1 FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 B] This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 B], dated as of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee under the Trust Agreement [NW 1996 B], dated as of April 24, 1996 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a certain Lease Agreement [NW 1996 B], dated as of April 24, 1996 (the "ORIGINAL Lease"), between Lessee and Lessor (the Original Lease, as supplemented by Lease Supplement No. 1 [NW 1996 B] ("LEASE SUPPLEMENT NO. 1") between Lessor and Lessee, dated April 30, 1996, herein called the "LEASE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; WITNESSETH: WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the Aircraft, which consists of the following components: (i) Airframe: FAA Registration No. N538US; manufacturer's serial No. 26485; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P727166 and P727167; WHEREAS, Section 17 of the Participation Agreement [NW 1996 B], dated as of April 24, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee, [ ] (the "OWNER PARTICIPANT"), the loan participants named therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured Certificates issued by the Owner Trustee under the Trust Indenture and Security Agreement [NW 1996 B], dated as of April 24, 1996, between Lessor (in its individual capacity as expressly provided therein and as trustee) and the Indenture Trustee may be refinanced under certain circumstances; WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW 1996 B], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State Street Bank and Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines Corporation (the "GUARANTOR"); WHEREAS, Lessor and Lessee desire to recalculate the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages, the Special Purchase Price and the Remaining Installments in order to reflect, among other things, the interest rate of the refinanced Secured Certificates; 2 WHEREAS, in connection with the recalculation of the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages, the Special Purchase Price and the Remaining Installments, Lessor and Lessee desire to amend the Lease; WHEREAS, a counterpart of the Original Lease, to which were attached and made a part thereof counterparts of Lease Supplement No. 1, the Trust Indenture and Security Agreement [NW 1996 B], dated as of April 24, 1996, and the Trust Agreement and Indenture Supplement [NW 1996 B], dated April 30, 1996, was recorded by the Federal Aviation Administration (the "FAA") on May 3, 1996, and assigned Conveyance No. E21283; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE.LEASE (a) The definitions of "Business Day", "Excess Amount", "Indemnitee", "Loan Participant", "Net Present Value of Rents", "Operative Documents", "Stipulated Loss Value", "Supplemental Rent", "Tax Indemnitee", and "Termination Value" in Section 1 of the Lease are hereby amended applicable on and after the Closing Date to read as follows: "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. "EXCESS AMOUNT" for the Closing Date or the Commencement 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 the Closing Date or the Commencement Date. "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) 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). "LOAN PARTICIPANT" means for any period prior to the Closing, the Original Loan Participants and their successors and assigns, and from and after the Closing, the Purchasers and their successors and registered assigns, including any Certificate Holder. -2- 3 "NET PRESENT VALUE OF RENTS" means the net present value, as of the Commencement Date, of Basic Rent set forth in Exhibit B hereto, Special Purchase Price and Remaining Installments discounted at an annual interest rate of 12.0% on a semi-annual basis. "OPERATIVE DOCUMENTS" means each of the Participation Agreement, the documents referred to in Section 4(a)(v) of the Participation Agreement (including any amendments, modifications or supplements thereto), the Refunding Agreement, the Trust Indenture Amendment and the Refinancing Secured Certificates, collectively, and "Operative Document" shall mean each of the Operative Documents, individually. "STIPULATED LOSS VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v) hereof, the amount determined by multiplying Lessor's Cost 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 January 2, 2019 shall be the amount determined as provided in Section 19(a) hereof. "SUPPLEMENTAL RENT" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Interim Rent or 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 the Other Pass Through Trust Agreement, 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, and each of their respective Affiliates, successors and permitted assigns, (ii) in the case of the Owner Participant, directors, -3- 4 officers, employees, servants and agents of the Owner Participant and (iii) the Trust Indenture Estate. "TERMINATION VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v), the amount determined by multiplying Lessor's Cost 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). (b) The following definitions are hereby inserted in Section 1 of the Lease in alphabetical order: "CLOSING" means the consummation of the refinancing operation contemplated by Section 1 of the Refunding Agreement. "CLOSING DATE" means the date on which the Closing shall occur. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Provider and the Subordination Agent. "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 Westdeutsche Landesbank Girozentrale, acting through its New York branch, as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider under the Liquidity Facilities, or any successor thereto. "MAKE-WHOLE AMOUNT" has the meaning assigned to that term in the Trust Indenture. "ORIGINAL LOAN PARTICIPANTS" means each institution executing the Participation Agreement as a Loan Participant. "ORIGINAL TRUST INDENTURE" means the Trust Indenture and Security Agreement [NW 1996 B], dated as of April 24, 1996, between the Owner Trustee and State Street Bank and Trust Company, as amended, modified and supplemented prior to the Closing Date. -4- 5 "OTHER PASS THROUGH TRUST AGREEMENT" means the pass through trust agreement and supplement pursuant to which the Class D pass through trust certificates are issued. "PASS THROUGH CERTIFICATES" means the pass through certificates to be issued by the Pass Through Trustee in connection with the Refinancing 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 Refunding Agreement to be entered into by and between Lessee and the Pass Through Trustee in connection with the Refinancing Transaction. "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. "PURCHASERS" means the Pass Through Trustees under each Pass Through Trust Agreement. "REFINANCING CERTIFICATE" means a certificate of an authorized representative of the Owner Participant delivered pursuant to Section 17(a)(1) of the Participation Agreement, setting forth, among other things, the Refinancing Date, the principal amount of debt to be issued by the Owner Trustee on the Refinancing Date, and the proposed revised schedules of Excess Amount, Basic Rent, Special Purchase Price, Initial Installment, Remaining Installments, Stipulated Loss Value and Termination Value percentages, and the proposed Amortization Schedules. "REFINANCING DATE" means the proposed date on which the outstanding Secured Certificates will be redeemed and refinanced pursuant to Section 17 of the Participation Agreement. "REFINANCING EXPENSES" means the costs, fees, commissions and other expenses payable by the Owner Participant pursuant to Section 11(a) of the Refunding Agreement. "REFINANCING SECURED CERTIFICATES" means the Secured Certificates to be issued by Lessor to the Purchasers pursuant to the Trust Indenture Amendment and the Refunding Agreement on the Closing Date. "REFINANCING TRANSACTION" means a refinancing transaction pursuant to Section 17 of the Participation Agreement involving, among other things, (i) the redemption of the -5- 6 Secured Certificates issued on the Refinancing Date and the concurrent issuance and sale of the Refinancing Secured Certificates to the Pass Through Trustees (or their designee) and (ii) the issuance and sale of the Pass Through Certificates by the Pass Through Trustees. "REFUNDING AGREEMENT" means that certain Refunding Agreement [NW 1996 B], dated as of June 3, 1996, among Lessor, Lessee, the Owner Participant, the Purchasers, the Indenture Trustee, the Subordination Agent and the Guarantor, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "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. "TRUST INDENTURE AMENDMENT" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 B], dated as of the Closing Date, between Lessor and State Street Bank and Trust Company, as Indenture Trustee. "TRUST INDENTURE ESTATE" has the meaning assigned to that term in the Trust Indenture. (c) The definitions of "Administrative Agent", "Assumed Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in Section 1 of the Lease are hereby deleted on and after the Closing Date. Section 2. Amendment of Sections 3(b), 3(c), 3(d), 3(e) and 3(g) of the Lease.F THE LEASE (a) Section 3(b) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (b) Section 3(c) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: Lessee shall pay Basic Rent with respect to each Lease Period during the Basic Term on the Commencement Date and on each Lease Period 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 Commencement Date or the applicable Lease Period Date specified in Exhibit B hereto. -6- 7 (c) Section 3(d)(i) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (i) In the event that (A) the Closing Date occurs other than on June 12, 1996, (B) Transaction Expenses paid by Lessor pursuant to Section 16 of the Participation Agreement are determined to be other than 1.0% of Lessor's Cost, or (C) Refinancing Expenses paid by Lessor or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement are determined to be other than 1.4854% of Lessor's Cost, then in each case, the Basic Rent percentages set forth in Exhibit B and the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D, the Special Purchase Price and the Remaining Installments shall be recalculated by the Owner Participant, on or prior to November 15, 1996 using the same methods and assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages, the Special Purchase Price, the Initial Installment and the Remaining Installments, 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. (d) Section 3(d)(iii) of the Lease is hereby amended by deleting on and after the Closing Date the second sentence thereof. (e) The second sentence of Section 3(e) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "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 such Section 2.10(b) or Section 2.11." (f) Section 3(f) of the Lease is hereby amended by deleting on and after the Closing Date the numbers and punctuation "124-000-12" in the first sentence thereof and substituting therefor the numbers and punctuation "124-0000-12". (g) Section 3(g) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (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 the Commencement Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall, on the Commencement Date, prepay on the Commencement Date a portion of Basic Rent equal to the Excess Amount not so -7- 8 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 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 the Base Rate as in effect from time to time plus 5% per annum 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 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 to 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 Interim Rent or 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 Make-Whole Amount, if any, due with respect to) the Secured Certificates then outstanding. SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE. Section 7(b)(x)(2) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the Owner Participant and the Indenture Trustee" and substituting therefor the word "Lessor" and (ii) deleting on and after the Closing Date the word "their" and substituting therefor the word "its". -8- 9 SECTION 4. AMENDMENT OF SECTIONS 9(A)(3) AND 9(C) OF THE LEASE. (a) Section 9(a)(3) of the Lease is hereby amended by deleting on and after the Closing Date the word, punctuation and number "ten (10)" in the second sentence thereof and substituting therefor the word, punctuation and number "fifteen (15)". (b) Section 9(c) of the Lease is hereby amended by deleting on and after the Closing Date the word "premium" each time it appears therein and substituting therefor the words "Make-Whole Amount" and by deleting on and after the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount" each time such words and such words and punctuation appear. SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE. Section 10(a) of the Lease is hereby amended by deleting on and after the Closing Date the words "the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence)" in clause (i)(y) thereof and substituting therefor the words "an earlier Business Day irrevocably specified fifteen days in advance by notice from Lessee to Lessor and the Indenture Trustee". SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE. Section 14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date the words and punctuation ", the Refunding Agreement" after the words "Participation Agreement" and (ii) adding on and after the Closing Date the words "and except for representations or warranties contained in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in the Refunding Agreement) or any document or instrument furnished pursuant to either thereof" after the word "Agreement" at the end of the first parenthetical phrase therein. SECTION 7. AMENDMENT OF SECTION 15(C) OF THE LEASE. Section 15(c) of the Lease is hereby amended by (i) deleting on and after the Closing Date the word "the" from the fourth line thereof and substituting therefor the word "a" and (ii) inserting on and after the Closing Date the words "or prior to" after the word "on" in the tenth line thereof. SECTION 8. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "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 -9- 10 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President - Finance and Treasurer, (Telecopy No. (612) 726-0665), or to such other address, telex number or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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 on the signature pages of the Refunding Agreement." SECTION 9. AMENDMENT OF SECTION 19 OF THE LEASE. (a) Section 19(a)(2) of the Lease is hereby amended by deleting on and after the Closing Date the word "third" in the first sentence thereof and substituting the words and punctuation "Basic Term, any" therefor. (b) The third sentence of Section 19(d) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: In addition, if on such date Lessee has otherwise elected to pay the Special Purchase Price and 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. SECTION 10. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the Lease is hereby amended by (i) deleting on and after the Closing Date the word "or" between the words "Trust Agreement" and the words "the Trust Indenture" and substituting a comma therefor and (ii) inserting on and after the Closing Date the words "or the Refunding Agreement" after the words "Trust Indenture". -10- 11 SECTION 11. AMENDMENT OF EXHIBITS. (a) Exhibits B, C and D to the Lease attached hereto are applicable to and after the Closing Date. Exhibits B, C and D to the Lease are applicable until the Closing Date. (b) The parties hereto agree that Exhibits B, C and D attached hereto reflect the recalculation of Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price and the Remaining Installments to take into account the interest rates borne by the Secured Certificates as of the Closing Date. SECTION 12. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease set forth in Sections 1 through 11 hereof shall be effective as of the date hereof. SECTION 13. RATIFICATION. Except as amended hereby, the Lease as heretofore supplemented continues and shall remain in full force and effect in all respects. SECTION 14. MISCELLANEOUS. Any provision of this Amendment 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 Amendment 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. Nothing contained herein shall be construed as conveying to Lessee any right, title or interest in the Aircraft except as a lessee. The section and paragraph headings in this Amendment 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 Amendment. THIS AMENDMENT 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 Amendment 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. To the extent, if any, that this Amendment 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 Amendment 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 -11- 12 therefor executed by the Indenture Trustee as mortgagee under the Trust Indenture on the signature page thereof. -12- 13 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment to be duly executed on the day and year first above written. FIRST SECURITY BANK OF UTAH, 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: (1)Receipt of this original counterpart of the foregoing Amendment is hereby acknowledged this _____ day of ______________, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: ___________________________________________ Title: - ------------------ (1) This language contained in the original counterpart only. EX-4.F5 47 GUARANTEE - 1996 B 1 GUARANTEE [NW 1996 B] This GUARANTEE [NW 1996 B], dated as of April 24, 1996 (as amended, modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I hereto (collectively, together with their successors and permitted assigns, the "PARTIES", and, individually, a "PARTY"). WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to enter into a Lease Agreement [NW 1996 B], dated as of the date hereof (as amended, modified or supplemented from time to time, the "LEASE"), between the Lessee and First Security Bank of Utah, National Association, not in its individual capacity but solely as Owner Trustee (as defined therein), except as expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing 757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines (such aircraft and engines, and any substitute Airframe and Engines under the Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation Agreement [NW 1996 B], dated as of the date hereof (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), among the Lessee and the Parties; and WHEREAS, it is a condition precedent to the obligations of the Parties to consummate the transactions contemplated by the Participation Agreement that the Guarantor execute and deliver this Guarantee; and WHEREAS, the Lessor will assign by way of collateral security certain of its right, title and interest in and to this Guarantee to the Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and Security Agreement [NW 1996 B], dated as of the date hereof, between the Lessor and the Indenture Trustee (as amended, modified or supplemented from time to time, the "TRUST INDENTURE"), as security for the obligations of the Lessor referred to therein; and WHEREAS, the capitalized terms used herein that are not defined herein are used herein as defined in the Lease; NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and to induce the other Parties referred to above to enter into the Participation Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. GUARANTEE. (a) The Guarantor does hereby acknowledge that it is fully aware of the terms and conditions of the Lease, the Participation Agreement and the other Operative 2 Documents and the transactions and the other documents contemplated thereby, and does hereby irrevocably and fully and unconditionally guarantee, as primary obligor and not as surety merely, to the Parties, as their respective interests may appear, the payment by the Lessee of all payment obligations when due under the Lease (including, without limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement and the other Operative Documents to which the Lessee is a party (such obligations of the Lessee guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative Documents, and the timely performance of all other obligations of the Lessee thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby agree that in the event that the Lessee fails to pay any Financial Obligation when due for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within five days after the date on which such Financial Obligation became due and payable and the applicable grace period has expired, the Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Financial Obligation was not paid when due and for five days after the applicable grace period has expired, the amount of such Financial Obligation. The Guarantor hereby agrees that in the event the Lessee fails to perform any Nonfinancial Obligation for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within 10 Business Days after the date on which such Nonfinancial Obligation is required to be performed (for avoidance of doubt, to include any applicable grace period), the Guarantor shall cause such Nonfinancial Obligation to be performed within 10 Business Days following the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Nonfinancial Obligation was not performed when so required and that any applicable grace period has expired. (b) The obligations of the Guarantor hereunder shall not be, to the fullest extent permitted by law, affected by: the genuineness, validity, regularity or enforceability (or lack thereof) of any of the Lessee's obligations under the Lease or any other Operative Document to which the Lessee is a party, any amendment, waiver or other modification of the Lease or such other Operative Document (except that any such amendment or other modification shall be given effect in determining the obligations of the Guarantor hereunder), or by any substitution, release or exchange of collateral for or other guaranty of any of the Obligations (except to the extent that such substitution, release or exchange is undertaken in - 2 - 3 accordance with the terms of the Operative Documents) without the consent of the Guarantor, or by any priority or preference to which any other obligations of the Lessee may be entitled over the Lessee's obligations under the Lease and the other Operative Documents to which the Lessee is a party, or by any other circumstance that might otherwise constitute a legal or equitable defense to or discharge of the obligations of a surety or guarantor including, without limitation, any defense arising out of any laws of the United States of America or any State thereof which would excuse, discharge, exempt, modify or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not, to the fullest extent permitted by law, affect the liability of the Guarantor hereunder: (a) the extension of the time for or waiver of, at any time or from time to time, without notice to the Guarantor, the Lessee's performance of or compliance with any of its obligations under the Operative Documents (except that such extension or waiver shall be given effect in determining the obligations of the Guarantor hereunder)), (b) any assignment, transfer, sublease or other arrangement by which the Lessee transfers possession or loses control of the use of the Aircraft, (c) any defect in the title, condition, design, operation or fitness for use of, or damage to or loss or destruction of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or with any other Person, or any sale, transfer, lease or disposal of any of its assets or (e) any change in the ownership of any shares of capital stock of the Lessee. (c) This Guarantee is an absolute, present and continuing guaranty of payment and performance and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Lessee any unpaid amounts due or otherwise to enforce performance by the Lessee. The Guarantor specifically agrees, to the fullest extent permitted by law, that it shall not be necessary or required, and that the Guarantor shall not be entitled to require, that any Party (i) file suit or proceed to obtain or assert a claim for personal judgment against the Lessee for the Obligations, or (ii) make any effort at collection of the Obligations from the Lessee, or (iii) foreclose against or seek to realize upon any security now or hereafter existing for the Obligations, including the Trust Estate or the Trust Indenture Estate (as such term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations, or make any effort at collection of the Obligations from any such other Person, or exercise or assert any other right or remedy to which any Party is or may be entitled in connection with the Obligations or any security or other guaranty therefor, or (v) assert or file any claim against the assets of the Lessee or any other guarantor or other Person liable for the Obligations, or any part thereof, before or as a condition of enforcing the liability of the Guarantor under this Guarantee or requiring payment of said Obligations by the Guarantor hereunder, or at any time thereafter. (d) The Guarantor agrees, to the fullest extent permitted by law, that, without limiting the generality of this Guarantee, if an Event of Default shall have occurred and be continuing and the Lessor (or any assignee thereof including, without limitation, the Indenture Trustee) shall be prevented by applicable law from exercising its remedies (or any of them) under Section 15 of the Lease, the Lessor (or any assignee thereof, including, without - 3 - 4 limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive hereunder from the Guarantor, upon demand therefor the sums that would otherwise have been due from the Lessee under the Lease had such remedies been able to be exercised. The Guarantor hereby unconditionally waives, to the fullest extent permitted by law, any requirement that, as a condition precedent to the enforcement of the obligations of the Guarantor hereunder, the Lessee or all or any one or more of any other guarantors of any of the Obligations be joined as parties to any proceedings for the enforcement of any provision of this Guarantee. 2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be deemed to create any right in any Person except a Party and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person. 3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives notice of the acceptance of this Guarantee and of the performance or nonperformance by the Lessee, demand for payment from the Lessee or any other Person, notice of nonpayment or failure to perform on the part of the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent permitted by law, all other demands or notices whatsoever, other than the request for payment hereunder and notice provided for in Section 1 hereof. The obligations of the Guarantor shall be absolute and unconditional and shall remain in full force and effect until satisfaction of all Obligations hereunder and, without limiting the generality of the foregoing, to the extent not prohibited by applicable law, shall not be released, discharged or otherwise affected by the existence of any claims, set-off, defense or other rights that the Guarantor may have at any time and from time to time against any Party, whether in connection herewith or any unrelated transactions. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Financial Obligation is rescinded or must otherwise be returned by any Party upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding with respect to the Lessee or otherwise, all as though such payment had not been made. The Guarantor, by virtue of any payment or performance hereunder to a Party, shall be subrogated to such Party's claim against the Lessee or any other Person relating thereto; provided, however, that the Guarantor shall not be entitled to receive payment from the Lessee in respect of any claim against the Lessee arising from a payment by the Guarantor: (a) while an Event of Default shall have occurred and be continuing, in which case no such payment in respect of such a claim by the Guarantor may be made by the Lessee; or (b) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings relating to the Lessee, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Lessee, whether or not involving insolvency or bankruptcy proceedings, in which case the Obligations shall be paid and performed in full before any payment in respect of a claim by the Guarantor shall be made by or on behalf of the Lessee. - 4 - 5 4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or waiver or modification of, or consent under, the terms hereof, shall be effective unless evidenced by an instrument in writing signed by the Guarantor and each Party against whom such amendment, supplement, waiver, modification or consent is to be enforced. 5. PAYMENTS. All payments by the Guarantor hereunder in respect of any Obligation shall be made in Dollars and otherwise as provided in the Lease, the Participation Agreement or any other Operative Document in which such Obligation is contained; provided that the Guarantor consents to all the terms of the Trust Indenture and agrees to make all payments hereunder directly to the Indenture Trustee until such time as the Indenture Trustee shall give notice to the Guarantor that the Lien of the Trust Indenture has been fully discharged and thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay directly to the Lessor, in its individual capacity, or to the Owner Participant or another Party, as the case may be, any amount owing to such Person as Supplemental Rent for indemnities provided in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or otherwise not constituting part of the Trust Indenture Estate (as such term is defined in the Trust Indenture). 6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust Indenture, the Lessor will assign, and create a security interest in, certain of its rights hereunder to and for the benefit of the Indenture Trustee. From and after the execution and delivery of the Trust Indenture, and until receipt by the Guarantor of a written notice from the Indenture Trustee to the effect that the Trust Indenture has been fully satisfied and discharged, no remedy or election hereunder may be exercised by the Lessor or consent given by the Lessor, except by or with the prior written consent of the Indenture Trustee, and the Guarantor will make payment of all amounts hereunder that are assigned to the Indenture Trustee directly to the Indenture Trustee, and such payments shall discharge the obligations of the Guarantor to the Lessor to the extent of such payments. 7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Parties as follows: (a) It is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware. It has all requisite corporate power and authority to own and operate its properties, to carry on its business as presently conducted and to enter into and perform its obligations under this Guarantee. (b) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with or the taking of any other action in respect of, any Federal, state, municipal or other governmental department, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, is now, or under existing law in the future will be, required or necessary on its behalf to authorize the execution, delivery and performance (other than as contemplated by the Operative Documents in the case of the - 5 - 6 performance of the Non-Financial Obligations) by it of this Guarantee, or for the legality, validity, binding effect or enforceability hereof. (c) Neither the execution and delivery of this Guarantee, the performance of its obligations hereunder, nor its consummation of the transactions contemplated hereby, will conflict with or result in any breach of, or constitute a default under, or result in any creation or imposition of any Lien upon any of its property or assets under, any applicable laws or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject, or its Articles of Incorporation or by-laws. (d) The execution, delivery and performance by it of this Guarantee have been duly authorized by all necessary corporate action. This Guarantee has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 8. JURISDICTIONAL MATTERS. The Guarantor (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 Guarantee brought by any party, 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 Guarantee may not be enforced in or by such courts. The Guarantor hereby generally consents to service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of the Guarantor in New York City as from time to time may be designated by the Guarantor in writing to the Parties. 9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Parties, with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and (c) shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of, and shall be enforceable by, each of the Parties to the fullest extent permitted by applicable laws. The headings in this Guarantee are for purposes of reference only, and shall not limit or otherwise affect the meanings hereof. - 6 - 7 10. NOTICES. All requests, notices or other communications hereunder shall be in writing, addressed as follows: If to the Guarantor: Northwest Airlines Corporation for U.S. Mail: 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 for Overnight courier: 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President -- Finance and Treasurer Telecopy No.: (612) 726-0665 If to a Party: to the address or telecopy number set forth in the Participation Agreement All requests, notices or other communications shall be given in the manner, and shall be effective at the times and under the terms, set forth in Section 13(b) of the Participation Agreement. 11. NO WAIVERS. No failure on the part of any Party to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise of such right or remedy or the exercise of any other right or remedy. 12. SURVIVAL. All representations and warranties contained herein or made in writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee regardless of any investigation made by any Party or any other Person. 13. SEVERABILITY. To the fullest extent permitted by applicable law, any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or any provision in any other Operative Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES SHALL) IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING - 7 - 8 ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK. 15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by such Party in enforcing, or collecting under, this Guarantee. 16. TERMINATION. Subject to the provisions of Section 3 hereof, this Guarantee shall terminate upon the indefeasible payment and performance in full of all of the Obligations. 17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to the Obligations described in Section 1 and nothing in this Guarantee shall be deemed to constitute a guarantee of payment of any of the Secured Certificates or shall give rise to any inference that the Lessee or the Guarantor has so guaranteed such payment. - 8 - 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed as of the date first hereinabove set forth. NORTHWEST AIRLINES CORPORATION By: ____________________________________ Name: Title: Accepted as of the above date: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION in its individual capacity and as Owner Trustee By: _____________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY in its individual capacity and as Indenture Trustee By: _____________________________________ Name: Title: - 9 - 10 SCHEDULE I TO GUARANTEE [NW 1996 B] PARTIES First Security Bank of Utah, National Association, in its individual capacity and as Owner Trustee State Street Bank and Trust Company, as Indenture Trustee [Insert Owner Participant] [Bridge Lenders] EX-4.F6 48 PARTICIPATION AGREEMENT - 1996 B 1 PARTICIPATION AGREEMENT [NW 1996 B] THIS PARTICIPATION AGREEMENT [NW 1996 B] dated as of April 24, 1996, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of the State of Minnesota (herein called "LESSEE"), (ii) the institution listed on Schedule I hereto and identified therein as the "OWNER PARTICIPANT" which executes and delivers a counterpart of this Agreement and of the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date referred to below, (iii) the institutions listed on Schedule I and identified therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, 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"), and (v) State Street Bank and Trust Company, a Massachusetts trust company, in its individual capacity and as Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein, in such latter capacity together with any successor indenture trustee, called the "INDENTURE TRUSTEE"); W I T N E S S E T H: WHEREAS, pursuant to the Purchase Agreement (as such term is defined in the Lease hereinafter referred to) between Lessee and the Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things, certain Boeing 757-251 aircraft, including the Aircraft which has been delivered by the Manufacturer to Lessee and is the subject of this Agreement; WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Lessee and the Owner Trustee are entering into a Purchase Agreement Assignment [NW 1996 B], dated as of the date hereof (herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to the Owner Trustee certain rights and interests of Lessee under the Purchase Agreement with respect to the Aircraft; and (ii) the Manufacturer has executed the Consent and Agreement [NW 1996 B] (herein called the "CONSENT AND AGREEMENT"), substantially in the form attached to the Purchase Agreement Assignment (herein called the "CONSENT AND AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996 B], 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 2 Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE") for the use and benefit of the Owner Participant; WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with the execution and delivery of this Agreement are entering into the Trust Indenture and Security Agreement [NW 1996 B], 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 issues to each of the Loan Participants one or more secured certificates (herein called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan Participants arising from the Loan Participants' making secured loans to the Owner Trustee to finance a portion of the Owner Trustee's purchase of the Aircraft, which Secured Certificates are to be secured by the mortgage and security interests created by the Owner Trustee in favor of the Indenture Trustee, and 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; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1996 B], dated as of the date hereof (such Lease Agreement, as the same may be amended or supplemented from time to time to the extent permitted by the terms thereof and this Agreement, herein called the "LEASE", such term to include, unless the context otherwise requires, the Lease Supplement referred to below), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft is sold and delivered by Lessee to the Owner Trustee under the Bill 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; WHEREAS, certain terms are used herein as defined in Section 13(a) hereof; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and conditions of this Agreement, each Loan Participant agrees to finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule II opposite the name of such Loan Participant. Each Loan Participant shall make such Loan to the Owner Trustee on a date to be designated pursuant to Section 2 hereof, but in no event later than April 30, 1996, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, - 2 - 3 ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite such Loan Participant's name in Schedule II hereto. Upon the occurrence of the above transfers by the Loan Participants to the Owner Trustee, to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon, the Owner Trustee shall issue and the Indenture Trustee shall authenticate Secured Certificates which shall be delivered simultaneously to the Loan Participants under the Trust Indenture to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon. The Owner Trustee agrees to pay the Secured Certificates in installments in the amounts and on the dates provided in the Trust Indenture together with interest thereon and all other amounts payable with respect thereto, all as more fully provided in the Trust Indenture. (b) Participation by Owner Participant. Subject to the terms and conditions of this Agreement, the Owner Participant hereby agrees to participate in the payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft on a date to be designated pursuant to Section 2 hereof, but in no event later than April 30, 1996, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite the Owner Participant's name in Schedule II hereto. (c) General Provisions. The amount of the participation of each of the Loan Participants and the Owner Participant to be made as provided above in the payment of Lessor's Cost for the Aircraft is hereinafter called such party's "COMMITMENT" for the Aircraft. In case any of the Loan Participants or the Owner Participant shall default in its obligation under the provisions of this Section 1, no other such party shall have any obligation to make any portion of such defaulted amount available or to increase the amount of its Commitment and the obligation of such nondefaulting party shall remain subject to the terms and conditions set forth in this Agreement. Upon receipt by the Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant to this Section 1 and the satisfaction of the conditions set forth in Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take title to and accept delivery of the Aircraft. In consideration of the transfer of title to and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall, simultaneously with such transfer of title and delivery, pay to Lessee from the amounts so furnished it by the Participants, the Lessor's Cost of the Aircraft. (d) Determination of Interest Period. The length of each Interest Period shall be determined by Lessee on behalf of the Owner Trustee in accordance with Section 2.02 of the Trust Indenture. SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each Participant, the Owner Trustee and the Indenture Trustee at least two Business Days' telecopy - 3 - 4 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 and the amount of each Participant's Commitment for the Aircraft. As to each Participant, the making of its Commitment for the Aircraft available in the manner required by Section 1 shall constitute a waiver of such notice. SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant agrees that its releasing the amount of its Commitment for the Aircraft to the account of the Owner Trustee in accordance with the terms of Section 1 shall constitute, subject to satisfaction or waiver of the conditions set forth in Section 4(a), without further act, authorization and direction by the Owner Participant to the Owner Trustee: (i) to pay to Lessee the Lessor's Cost for the Aircraft; (ii) to the extent not previously accomplished by a prior authorization, to authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees, or an agent or agents, of Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant to the Acceptance Certificate; (iii) to accept from Lessee the Bill of Sale and the FAA Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9); (iv) to execute an Aircraft Registration Application, the Lease Supplement and the Trust Supplement, in each case covering the Aircraft; (v) to borrow from the Loan Participants to finance a portion of the Lessor's Cost for the Aircraft and to issue to the Loan Participants Secured Certificates in aggregate principal amount equal to the amount borrowed, pursuant hereto and to the Trust Indenture; and (vi) to take such other action as may be required to be taken by the Owner Trustee on the Delivery Date by the terms of any Operative Document. SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations in the Aircraft. It is agreed that the obligations of each of the Loan Participants and the Owner Participant to participate in the payment of Lessor's Cost and to make available the amount of its respective Commitment are subject to the satisfaction prior to or on the Delivery Date of the following conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it relates to representations and warranties only contained in the Tax Indemnity Agreement), (xx), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and (xxvii) shall not be a condition precedent to the obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a condition precedent to the obligation of the Owner Participant: - 4 - 5 (i) The Loan Participants 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 applicable law or regulations or guidelines or interpretations thereof by appropriate regulatory authorities shall be in effect which, in the opinion of such Loan Participant or the Owner Participant, as the case may be, or their respective counsel, would make it a violation of law or regulations or guidelines for such Loan Participant or the Owner Participant to make its Commitment available in accordance with Section 1 hereof or, in the case of such Loan Participant, to acquire a Secured Certificate or to realize the benefits of the security afforded by the Trust Indenture. (iii) In the case of the Owner Participant, the Loan Participants shall have made available the amount of their Commitments for the Aircraft in accordance with Section 1 hereof. (iv) In the case of the Loan Participants, 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 Documentation Agent and the Owner Participant and shall be in full force and effect and executed counterparts shall have been delivered to the Loan Participants and the Owner Participant, or their respective counsel, provided that only each Loan Participant shall receive an executed original of its respective Secured Certificate and provided, further, that an excerpted copy of the Purchase Agreement shall only be delivered to and retained by the Owner Trustee and the Owner Participant (but the Indenture Trustee shall also retain an excerpted copy of the Purchase Agreement which may be inspected by the Documentation Agent and its counsel before the Delivery Date and subsequent to the Delivery Date may be inspected and reviewed by the Indenture Trustee, any Loan Participant and their respective counsel if and only if there shall occur and be continuing an Event of Default), 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 shall only be delivered to Lessee and the Owner Participant and their respective counsel: (1) an excerpted copy of the Purchase Agreement (insofar as it relates to the Aircraft); (2) the Purchase Agreement Assignment; (3) the Lease; - 5 - 6 (4) a Lease Supplement covering the Aircraft dated the Delivery Date; (5) the Tax Indemnity Agreement; (6) the Trust Agreement; (7) a Trust Supplement covering the Aircraft dated the Delivery Date; (8) the Bill of Sale; (9) the FAA Bill of Sale; (10) an acceptance certificate covering the Aircraft in the form agreed to by the Documentation Agent, 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; (12) the Secured Certificates; (13) the Consent and Agreement; and (14) the Guarantee. All of the foregoing documents, together with this Agreement, are sometimes referred to herein, collectively, as the "OPERATIVE DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT". (vi) A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the Granting Clause of the Trust Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Owner 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 Owner Participant or the Documentation Agent shall have been executed and delivered by Lessee or the Owner Trustee and duly filed. (vii) The Loan Participants and the Owner Participant shall have received the following, in each case in form and substance satisfactory to the Documentation Agent and the Owner Participant: (1) a certified copy of the Certificate of Incorporation and By-Laws of Lessee and a copy of resolutions of the board of directors of Lessee, certified - 6 - 7 by a Vice President, the Secretary or an Assistant Secretary of Lessee, duly authorizing the sale of the Aircraft and the lease by Lessee of the Aircraft under the Lease and the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the Purchase Agreement Assignment, the Tax Indemnity Agreement and each other document required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof, and a certified copy of the Certificate of Incorporation and By-Laws of the Guarantor and a copy of resolutions of the Board of Directors of the Guarantor, certified by a Vice President, the Secretary or an Assistant Secretary of the Guarantor, duly authorizing the execution, delivery and performance by the Guarantor of the Guarantee; (2) such other documents and evidence with respect to Lessee, the Guarantor, the Manufacturer, the Owner Trustee, the Owner Participant, the Owner Participant Guarantor, the Indenture Trustee, and the Loan Participants as the Loan Participants or the Owner Participant, or the respective counsel for the Loan Participants or the Owner Participant, may reasonably request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; and (3) a certificate of Lessee as to the person or persons authorized to execute and deliver this Agreement, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft and any other documents to be executed on behalf of Lessee in connection with the transactions contemplated hereby and as to the signatures of such person or persons, and a certificate of the Guarantor as to the person or persons authorized to execute and deliver the Guarantee and as to the signatures of such person or persons. (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 following statements shall be true, and the Documentation Agent and the Owner Participant shall have received evidence satisfactory to it to the effect that: - 7 - 8 (1) the Owner Trustee has good title (subject to filing and recording the FAA Bill of Sale with the Federal Aviation Administration) to the Aircraft on such Delivery Date, free and clear of Liens other than the rights of Lessee under the Lease and Lease Supplement covering the Aircraft, the mortgage and security interests created by the Trust Indenture, the rights of the Owner Participant under the Trust Agreement and the Trust Supplement, and Liens permitted by clause (v) of Section 6 of the Lease; (2) the Aircraft has been duly certified by the Federal Aviation Administration (or there shall have been received adequate assurances from the Federal Aviation Administration that the certification will be issued as soon as the registration of the Aircraft is complete) as to type and airworthiness in accordance with the terms of the Lease; (3) the FAA Bill of Sale, the Lease, the Lease Supplement, the Trust Indenture and the Trust Supplement covering the Aircraft shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the Federal Aviation Administration, and the Trust Agreement shall have been filed (or shall be in the process of being so filed) with the Federal Aviation Administration; and (4) application for registration of the Aircraft in the name of the Owner Trustee has been duly made with the Federal Aviation Administration. (x) On the Delivery Date, (A) the representations and warranties of Lessee, the Owner Participant and the Owner Trustee contained in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing, or would result from the purchase, sale, lease or mortgage of the Aircraft, which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default. (xi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for Lessee and the Guarantor, as to New York and certain federal law matters, and Lessee's and the Guarantor's in-house or other counsel, as to Minnesota and certain federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota and has the corporate power and authority to carry on its business as now conducted and to enter into and - 8 - 9 perform its obligations under the Lessee Documents. Lessee is a Certificated Air Carrier. The Guarantor is a corporation duly organized and validly existing pursuant to the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under the Guarantee; (2) the execution, delivery and performance of the Lessee Documents by Lessee and of the Guarantee by the Guarantor have been duly authorized by all necessary corporate action on the part of Lessee and the Guarantor, as the case may be, do not require any approval of stockholders of Lessee or the Guarantor, as the case may be, or, to the knowledge of such counsel, any approval or consent of any trustee or holders of any indebtedness or obligations of Lessee or the Guarantor, as the case may be (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of any thereof by Lessee or the Guarantor, as the case may be, nor the performance by Lessee or the Guarantor, as the case may be, of its respective obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel, judgment or order applicable to or binding on Lessee or the Guarantor, as the case may be, or (B) to the knowledge of such counsel, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Permitted Liens) upon any property of Lessee or the Guarantor, as the case may be, under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter, by-law or permit issued by any Minnesota or United States governmental authority to which Lessee or the Guarantor, as the case may be, is a party or by which Lessee or the Guarantor, as the case may be, or its properties may be bound or affected; (3) neither the execution and delivery by Lessee of the Lessee Documents or by the Guarantor of the Guarantee nor the performance by Lessee or the Guarantor of their respective 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, except for (A) the registration of the Aircraft (including the placement on board of the owner's copy of the application for registration of the Aircraft and, if necessary, a flying time wire), recordations and other actions referred to in paragraph 5 below and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents or the Guarantee after the Delivery Date; (4) the Guarantee has been duly entered into and delivered by the Guarantor, the Purchase Agreement (insofar as it relates to the Aircraft) has been duly entered into and delivered by Lessee, and each of the other Lessee Documents has been duly entered into and delivered by Lessee and each of such other Lessee Documents and the Guarantee constitutes the legal, valid and - 9 - 10 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 its respective terms, except as limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally, (C) applicable laws which may affect the remedies provided in the Lease, which laws, however, do not in the opinion of such counsel make the remedies provided in the Lease inadequate for the practical realization of the benefits provided thereby, but no opinion is expressed as to the amount or priority of any recovery under any particular circumstances and, in particular, no opinion is expressed as to the effect on such remedies of Section 1-201(37) of the Uniform Commercial Code, as in effect in any jurisdiction, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations; (5) subject to the registration of the Aircraft with the Federal Aviation Administration in the name of the Owner Trustee, and assuming the due and timely filing for recordation in accordance with the provisions of the Federal Aviation Act of (A) the FAA Bill of Sale, (B) the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and made a part thereof and (C) the Trust Indenture with the Trust Supplement attached thereto and made a part thereof, with respect to such portion of the Aircraft as is covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code by virtue of the same constituting an "aircraft" or an "aircraft engine" as defined in the Federal Aviation Act, no further filing or recording of any document (including any financing statement with respect to the Lease under Article 9 of the Uniform Commercial Code of Minnesota or Utah), is necessary in any applicable jurisdiction within the United States in order (x) to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee or any third parties or (y) to create and perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee or any third parties. With respect to such portion of the Aircraft, if any, as may not be deemed to constitute an "aircraft" or "aircraft engine" as defined in the Federal Aviation Act, except for the filing of financing statements in appropriate filing offices in the States of Minnesota and Utah and such other states as may be specified in such counsel's opinion, and for the filings of periodic continuation statements with respect to such filings as and when required, (x) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary under Article 9 of the Uniform Commercial Code in order to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee and any third parties in any applicable jurisdiction within the United States, and (y) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document - 10 - 11 (including any financing statement) is necessary or advisable under Article 9 of the Uniform Commercial Code in order to create or perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee and any third parties in any applicable jurisdiction within the United States; and (6) there are no legal or governmental proceedings pending or, to the best knowledge of such in-house counsel, threatened to which Lessee or any of its subsidiaries is a party or to which any of the properties of Lessee or any of its subsidiaries is subject other than those proceedings summarized in the Guarantor's publicly filed annual, quarterly and other reports filed with the Securities and Exchange Commission, and proceedings which such in-house counsel believes would not reasonably be expected to have a material adverse effect on Lessee and its subsidiaries, taken as a whole, or on the power or ability of Lessee to perform its obligations under the Lessee Documents. The opinion contemplated by this paragraph (xi) shall be to such further effect with respect to such other matters as the Documentation Agent or the Owner Participant may reasonably request. Such opinion with respect to the matters specified in this paragraph (xi) may rely exclusively (A) upon the opinion of special counsel in Oklahoma City, Oklahoma, referred to in paragraph (xv) of this Section 4(a) with respect to the matters stated therein, and (B) upon the opinion of Ray, Quinney & Nebeker with respect to the opinion in paragraph (5) above insofar as it relates to the laws of the State of Utah and (C) upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, with respect to matters of fact, and may state that no opinion is expressed as to laws other than laws of the State of New York (in the case of such special counsel's opinion), the State of Minnesota and the Delaware General Corporation Law (in the case of Lessee's in-house or other counsel's opinion) and the Federal laws of the United States. Such counsel may assume that, except for the filings and recordations contemplated herein, there are no filings or recordations with respect to the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement or the Trust Indenture with the Federal Aviation Administration, or of Uniform Commercial Code financing statements naming the Owner Trustee as a debtor in the filing offices of the Secretary of State of Minnesota, the Secretary of State of Utah or in any other filing office in the States of Minnesota or Utah, or in such other filing offices in such other jurisdictions as shall be identified in such counsel's opinion. (xii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from a counsel to the Manufacturer, with respect to the Manufacturer Documents and such other matters as such parties may reasonably request. - 11 - 12 (xiii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, to the effect that: (1) First Security Bank of Utah, National Association is a national banking association duly organized, validly existing and in good standing under the laws of the United States, is a Citizen of the United States and has under the laws of the State of Utah and federal banking law the power, authority and legal right to execute, deliver and carry out in its capacity as Owner Trustee or in its individual capacity, as the case may be, the terms of the Owner Trustee Documents, including the Secured Certificates; (2) First Security Bank of Utah, National Association, is the duly appointed Owner Trustee under the Trust Agreement; (3) each of the Owner Trustee Documents has been duly authorized, executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, and each of the Owner Trustee Documents constitutes the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations, and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (4) the execution, delivery and performance by the Owner Trustee and by First Security Bank of Utah, National Association, in its individual capacity, or both, as the case may be, of the Owner Trustee Documents and the consummation of the transactions by the Owner Trustee and by First Security Bank of Utah, National Association in its individual capacity contemplated thereby are not and will not be in violation of the articles of association or By-Laws of First Security Bank of Utah, National Association or of any indenture, mortgage, credit agreement, license or other agreement or instrument known to - 12 - 13 such counsel after due inquiry to which First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee is a party or by which it is bound, or of any Federal or Utah law, governmental rule or regulation applicable to First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee or any judgment or order applicable to it and known to such counsel after due inquiry; (5) neither the execution and delivery by the Owner Trustee and, where appropriate, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, of the Owner Trustee's Documents nor the consummation of any of the transactions by the Owner Trustee, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing Federal law governing the banking and trust powers of First Security Bank of Utah, National Association or Utah law (except for filings pursuant to the Uniform Commercial Code, and except for compliance with requirements of the Federal Aviation Act as to which such counsel may express no opinion); (6) the Trust Agreement, as supplemented by the Trust Supplement, duly creates for the benefit of the Owner Participant the trust interest in the Trust Estate which the Trust Agreement by its terms purports to create; (7) assuming that Utah law were to govern the perfection of the security interests in the Trust Indenture Estate under the Trust Indenture, except for (i) the Indenture Trustee's taking of possession of the original counterparts of the Lease and the Lease Supplement covering the Aircraft (insofar as the Lease and the Lease Supplement covering the Aircraft may constitute chattel paper (as such term is defined in the Uniform Commercial Code as in effect in Utah)) and all monies and securities (including instruments) required to be deposited with the Indenture Trustee, and (ii) the filing of Uniform Commercial Code financing statements with the office of the Division of Corporations and Commercial Code of the State of Utah with respect to the security interests created in the Trust Indenture Estate under the Trust Indenture, naming the Owner Trustee as debtor and the Indenture Trustee as secured party, which filing has been duly effected, no other filing or recording or refiling or rerecording is necessary in the State of Utah to create, perfect or maintain the perfected status of such security interest (except for the timely filing of continuation statements in respect of such financing statements); (8) assuming that the Operative Documents were negotiated to a substantial degree in the State of New York and that the closing of a substantial portion of the transactions contemplated by the Operative Documents occurred - 13 - 14 in the State of New York, the choice of New York law to govern the Participation Agreement, the Lease, and each other Operative Document (other than the Trust Agreement) to which the Owner Trustee or First Security Bank of Utah, National Association in its individual capacity, or both, is a party is, under the laws of the State of Utah, a valid choice of law and should, in a properly presented case, be honored by the courts of the State of Utah; (9) the Owner Trustee has received from Lessee such title to the Aircraft as Lessee had immediately prior to the conveyance to the Owner Trustee, subject to the rights of the Owner Trustee and Lessee under the Lease and the security interest created pursuant to the Trust Indenture and the Trust Supplement; (10) no taxes, fees or other charges, except taxes imposed on fees payable to the Owner Trustee, will be imposed by Salt Lake City or the State of Utah or any political subdivision or taxing authority thereof on or with respect to the execution, delivery or performance of any of the Operative Documents and the trust created pursuant to the Trust Agreement will not be subject to any such taxes, fees or other charges on, based on or measured by the net income of the Trust Estate (as distinguished from the net income of the Owner Participant) solely by reason of the Owner Trustee's location in Salt Lake City or the State of Utah (assuming for purposes of this opinion that the Owner Participant, the Owner Trustee and the Trust Estate would not be subject to any such tax, fee or other charge if the Owner Trustee performed its duties under the Trust Agreement and the Trust Indenture from an office located outside Utah); and (11) there are no pending or, to the knowledge of such counsel, threatened proceedings against or affecting the Owner Trustee before any court or administrative agency, individually or in the aggregate, which, if determined adversely to it, would materially adversely affect the power or ability of the Owner Trustee to perform its obligations under the Owner Trustee Documents. Such opinion shall be to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Indenture Trustee or Lessee may reasonably request. Such opinion may state that (A) no opinion is expressed as to laws other than the laws of the State of Utah, the Federal laws of the United States governing the banking and trust powers of First Security Bank of Utah, National Association, and the Federal Aviation Act as it relates to paragraph (1) and (B) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. Such opinion may assume (M) the due authentication of the Secured Certificates by the Indenture Trustee, (N) that the Operative Documents (other than the Trust Agreement) are legal, valid and binding under the laws of the State of [ ] and (O) the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and of the other Operative - 14 - 15 Documents by each of the parties thereto other than First Security Bank of Utah, National Association in its individual capacity and as the Owner Trustee. (xiv) The Loan Participants shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Trustee and Lessee, from [ ], special counsel for the Owner Participant, to the effect that: (1) the Owner Participant is a duly incorporated and validly existing corporation in good standing under the laws of the State of [ ] and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Documents; (2) the Owner Participant Documents have been duly authorized, executed and delivered by the Owner Participant and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitute legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations; (3) neither the execution and delivery by the Owner Participant of the Owner Participant Documents nor the consummation of any of the transactions by the Owner Participant contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency of the United States or the State of [ ] or any governmental subdivision of either thereof) (except as shall have been duly obtained or given, specifying the same); (4) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the other parties, if any, thereto (other than the Owner Participant in the case of this Agreement), and the due authentication of the Secured Certificates by the Indenture Trustee, the Owner Trustee Documents (other than the Trust Agreement) constitute legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent - 15 - 16 conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; (5) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the Indenture Trustee as aforesaid, the Trust Indenture duly creates for the benefit of the Indenture Trustee the security interests which the Trust Indenture purports to create and the Indenture Trustee is entitled to the benefits and security afforded by the Trust Indenture; (6) the execution, delivery and performance of the Owner Participant Documents by the Owner Participant does not require any approval of stockholders of the Owner Participant, or, to the knowledge of such counsel, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Documents by the Owner Participant nor the performance by the Owner Participant of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel, judgment or order applicable to or binding on the Owner Participant or (B) to the knowledge of such counsel, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any [ ] or United States governmental authority to which the Owner Participant is a party or by which it or its properties may be bound or affected; and (7) there are no pending or, to the knowledge of such counsel, threatened actions or proceedings against or affecting the Owner Participant before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant, would have a material adverse effect on the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; and to such further effect with respect to such other matters or documents relating to the Owner Participant's obligations in connection with this Agreement as the Documentation Agent, the Indenture Trustee, the Owner Trustee or Lessee may reasonably request. Such opinion may rely upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, as to matters of fact. Such opinion may state that (M) no opinion is expressed as to laws other than the laws of the State of [ ], and the Federal laws of the United States, and (N) no opinion is expressed as to the perfection or priority of security interests or as to title to any part of the Trust Estate. - 16 - 17 (xv) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to the effect that: (1) the FAA Bill of Sale, the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and the Trust Indenture with the Trust Supplement attached thereto are in due form for recording by and have been duly filed for recordation with the Federal Aviation Administration in accordance with the provisions of Section 44107 of Title 49 of the United States Code; (2) proper application for registration of the Aircraft in the name of the Owner Trustee together with the affidavits of the Owner Trustee and the Owner Participant required by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations and the Trust Agreement have been duly filed with the Federal Aviation Administration in accordance with the Federal Aviation Act, and such counsel is of the opinion that the Federal Aviation Administration will issue a Certificate of Aircraft Registration (AC Form 8050-3) in response to said application; (3) the Owner Trustee is the owner of the legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interests created by the Trust Indenture and such other Liens as are permitted by the Lease or this Agreement; (4) the Aircraft is eligible for registration in the name of the Owner Trustee and will be duly registered in due course in the name of the Owner Trustee pursuant to and in accordance with the provisions of Sections 44102 and 44103 of Title 49 of the United States Code; (5) the Trust Indenture as supplemented by the Trust Supplement creates a duly and validly perfected first priority security interest in the Aircraft and a duly perfected assignment of all the right, title and interest of the Owner Trustee in, to and under the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), subject only to the Lease and to Liens permitted by the Lease and the Trust Indenture, it being understood that no opinion need be expressed as to the validity or enforceability of such security interest under local law or as against third parties in respect of the Aircraft when the same is outside the United States; - 17 - 18 (6) none of the Trust Indenture, the Trust Agreement, the Trust Supplement, the Lease or the Lease Supplement is required to be filed or recorded in any other place within the United States in order to perfect the security interest in the Aircraft and the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), under the applicable laws of any jurisdiction within the United States; and (7) no authorization, approval, consent, license or order of, or registration with, or giving of notice to, the FAA Aircraft Registry is required for the valid authorization, delivery or performance of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture and the Trust Supplement or to evidence the Owner Trustee's title to the Aircraft except for such authorizations, approvals, consents, licenses, orders, registrations, and notices as have been effected. Such opinion may state that no opinion is expressed as to laws other than the Federal laws of the United States. Said opinion may also contain a statement to the effect that such opinion is limited to the records maintained by the Federal Aviation Administration Aircraft Registry and does not cover liens that are perfected without the filing of notice thereof with the Federal Aviation Administration, such as Federal tax liens, liens arising under Section 1368(a) of Title 29 of the United States Code and possessory artisans' liens, and is subject to the accuracy of FAA personnel in the filing, indexing and recording of instruments filed with the FAA and in the search for encumbrance cross-reference index cards for the Engines. Said opinion may also rely on the opinion obtained by such counsel from counsel for the Aeronautical Center of the FAA, satisfactory in form and scope to such counsel, and on past practice of the FAA which is consistent with such Aeronautical Center counsel's opinion. (xvi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana & Gould, special counsel for the Indenture Trustee, to the effect that: (1) State Street Bank and Trust Company is a Massachusetts trust company, duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the full corporate power, authority and legal right to enter into and perform its obligations under the Indenture Trustee Documents and, in its capacity as Indenture Trustee, to authenticate the Secured Certificates to be delivered on the Delivery Date; (2) the execution, delivery and performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case - 18 - 19 may be, of the Indenture Trustee Documents and the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby and compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with the terms thereof including, without limitation, the authentication of the Secured Certificates to be delivered on the Delivery Date, have been duly authorized by all necessary corporate action on the part of State Street Bank and Trust Company, and neither the execution and delivery thereof nor the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby nor compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with any of the terms and provisions thereof (i) does or will contravene any law or governmental rule or regulation of the United States governing the banking or trust powers of State Street Bank and Trust Company or the Commonwealth of Massachusetts or any order or judgment known to such counsel and applicable to or binding on State Street Bank and Trust Company, or (ii) does or will contravene or result in any breach of, or constitute any default under, the charter documents or by-laws of State Street Bank and Trust Company or the provisions of any indenture, mortgage, contract or other agreement, in each case known to such counsel, to which State Street Bank and Trust Company is a party or by which it or any of its properties is or may be bound or affected; (3) neither the execution and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, of the Indenture Trustee Documents or the certificates of authentication on the Secured Certificates to be delivered on the Delivery Date, nor the performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the transactions contemplated thereby requires or required the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or Massachusetts governmental authority or agency governing the banking or trust powers of State Street Bank and Trust Company or under any Massachusetts law; (4) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable - 19 - 20 principles of general application to or affecting the enforcement of creditors' rights; (5) the Secured Certificates to be issued and dated the Delivery Date have been duly authenticated and delivered by the Indenture Trustee pursuant to the terms of the Indenture Trustee Documents; (6) to the knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting State Street Bank and Trust Company before any court or administrative agency or arbitration board or tribunal which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of State Street Bank and Trust Company to perform its obligations under the Indenture Trustee Documents; and (7) there are no taxes, fees or other governmental charges ("TAXES") payable under the laws of the Commonwealth of Massachusetts with respect to the execution of and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the Indenture Trustee Documents (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts. Neither State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, the Owner Participant, the Owner Trustee, nor the trust created by the Trust Agreement will, as a result of the transactions contemplated thereby, be subject to any taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would have not been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts, and there are no taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) upon or with respect to the Aircraft or any Engine or any part of any interest therein, or the purchase, ownership, delivery, lease, sublease, possession, presence, use, operation, condition, storage, maintenance, modification, alteration, repair, sale, return, transfer or other disposition of the Aircraft or any Engine which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts; - 20 - 21 and to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee may reasonably request. Such opinion may state that no opinion is expressed as to laws other than the internal substantive laws of the Commonwealth of Massachusetts and the Federal laws of the United States. Such opinion may further state that with respect to paragraph (4) in connection with the opinion relating to legality, validity and binding effect of the documents there referred to, such counsel has assumed that the laws of the jurisdictions whose laws govern such documents are not materially different from the internal substantive laws of the Commonwealth of Massachusetts. (xvii) The Loan Participants shall have received from Vedder, Price, Kaufman & Kammholz, special counsel for the Loan Participants, a favorable opinion satisfactory in substance and form to the Documentation Agent, as to such matters incident to the transactions contemplated hereby as the Documentation Agent may reasonably request. (xviii) The Loan Participants and the Owner Participant shall have received a certificate signed by the President, any Executive Vice President, any Senior Vice President or any Vice President of Lessee, dated the Delivery Date, addressed to the Loan Participants and the Owner Participant and certifying as to the matters stated in paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this Section 4(a). Copies of the orders, permits, waivers, authorizations, exemptions and approvals referred to in Section 4(a)(viii) shall have been furnished to the Loan Participants and the Owner Participant. (xix) The Owner Participant shall, by making its Commitment available as provided in Section 1(b) of this Agreement, be deemed to have reaffirmed the representations and warranties made by it in Section 8 of this Agreement. (xx) The Owner Participant shall have received an appraisal report, in form and substance satisfactory to the Owner Participant, from BK Associates, Inc., independent aircraft appraisers, or such other recognized aircraft appraiser agreed upon by the Owner Participant and Lessee. (xxi) The Loan Participants and Owner Participant shall have received an independent insurance broker's report, in form and substance satisfactory to the Documentation Agent 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. (xxii) On the Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to the Airframe or any Engine has occurred. (xxiii) Lessor's Cost for the Aircraft shall be $50,000,000. - 21 - 22 (xxiv) 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. (xxv) The representations and warranties of the Indenture Trustee and the Loan Participants contained in Section 8 shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and each Participant shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President of the Indenture Trustee addressed to such Participant and certifying as to the foregoing matters with respect to the Indenture Trustee. (xxvi) The Owner Participant shall have received from [ ], special counsel to the Owner Participant, 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. (xxvii) In the opinion of the Owner Participant and its special counsel, there shall have been, since the date hereof, 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 hereof, 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. (xxviii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants and the Owner Participant, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for 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. (xxix) The Loan Participants shall have received an opinion addressed thereto, in form and substance reasonably satisfactory to the Documentation Agent, from BK - 22 - 23 Associates, Inc., independent aircraft appraisers, to the effect that the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost. 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 Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to the due and valid registration of the Aircraft in the name of the Owner Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement, such Trust Supplement, the Lease and 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. It is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are all subject to the fulfillment to the satisfaction of Lessee 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 4(a)(ii), 4(a)(iii) and 4(a)(iv) hereof shall have been satisfied. (iii) Those documents described in Section 4(a)(v) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Lessee and the Guarantor) in the manner specified in Section 4(a)(v), shall each be satisfactory in form and substance to Lessee, shall be in full force and effect on the Delivery Date, and an executed counterpart of each thereof (other than the Secured Certificates) shall have been delivered to Lessee or its special counsel. (iv) Lessee shall have received a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant, or other evidence of authority satisfactory to Lessee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing or evidencing authority for the execution, delivery and performance by the Owner Participant of all of the Owner Participant Documents, a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner - 23 - 24 Participant Guarantor, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Owner Participant Guarantor, duly authorizing the execution, delivery and performance by the Owner Participant Guarantor of the Owner Participant Guaranty, and a copy of the general authorizing resolutions of the boards of directors of the Indenture Trustee and the Owner Trustee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Indenture Trustee and the Owner Trustee, respectively, which authorize the execution, delivery and performance by the Indenture Trustee of the Indenture Trustee Documents and the Secured Certificates and by the Owner Trustee of the Owner Trustee Documents, together with such other documents and evidence with respect to the Indenture Trustee, the Owner Participant, the Owner Participant Guarantor and the Owner Trustee as Lessee or its special counsel may reasonably request in order to establish the 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) The representations and warranties of the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, contained in Section 8 hereof shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and Lessee shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President or other authorized representative of the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively, addressed to Lessee and certifying as to the foregoing matters with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively. (vi) Lessee shall have received the opinions set forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case addressed to Lessee and dated the Delivery Date and in each case in scope and substance reasonably satisfactory to Lessee and Lessee's special counsel. (vii) 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. (viii) No applicable law or regulations or guidelines or interpretations by appropriate regulatory authorities shall be in effect which, in the opinion of Lessee or its special counsel, would make it a violation of law or regulations or guidelines for Lessee to enter into any transaction contemplated by the Operative Documents. - 24 - 25 (ix) 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. (x) Lessee shall have been paid Lessor's Cost for the Aircraft. SECTION 5. [Reserved] . SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate Holder (as defined in the Trust Indenture) shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Trust Indenture when and if the principal of and interest on all Secured Certificates held by such holder and all other sums payable to such holder hereunder, under the Trust Indenture and under such Secured Certificates shall have been paid in full. Each of the Loan Participants 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 Loan Participants 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. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and the Owner Participant that as of the Delivery Date: (i) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires, other than failures to qualify which would not have a material adverse effect on the consolidated business, assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents; is a Certificated Air Carrier; has its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) located at Eagan, Minnesota; holds all licenses, certificates, permits and franchises from the appropriate agencies of the United States and/or all other governmental authorities having jurisdiction necessary to authorize Lessee to engage in air transport and to carry on scheduled passenger service as presently conducted (other than those licenses, certificates, permits and franchises which, if not obtained, would not have a material adverse effect on the consolidated business assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability - 25 - 26 of Lessee to perform its obligations under the Lessee Documents); and has the corporate power and authority to own or hold under lease its properties wherever located or used and to enter into and perform its obligations under the Lessee Documents; (ii) the execution, delivery and performance by Lessee of the Lessee Documents will, on the Delivery Date, have been duly authorized by all necessary corporate action on the part of Lessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Lessee except such as have been duly obtained or by the Delivery Date will have been duly obtained, and neither the execution or delivery thereof or the consummation by Lessee of the transactions contemplated thereby nor the compliance by Lessee with any of the terms and provisions of such agreements contravenes any law, judgment, government rule, regulation or order binding on Lessee or the certificate of incorporation or by-laws of Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its properties may be bound or affected; (iii) neither the execution and delivery by Lessee of the Lessee Documents nor the performance by Lessee of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, any Federal, State or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee 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 will on the Delivery Date 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), (B) the registration of the Aircraft referred to in Section 4(a)(ix)(4) and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Delivery Date; (iv) on the Delivery Date the Lessee Documents will each constitute legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof (subject to the qualifications set forth in clause (4) of the form of opinion of counsel to Lessee in Section 4(a)(xi)); (v) there are no pending or, to the best of Lessee's knowledge, threatened actions, suits or proceedings before any court, governmental body, arbitration board, tribunal or administrative agency which might materially adversely affect the business, condition (financial or otherwise), operations or properties of Lessee or Lessee's ability to perform its obligations under the Operative Documents; - 26 - 27 (vi) except for (A) the registration of the Aircraft pursuant to the Federal Aviation Act, (B) the filing for recording pursuant to said 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 Bill of Sale, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such documents under the Uniform Commercial Code of Minnesota and Utah and such other states as may be specified in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the taking of possession by the Indenture Trustee of the original counterpart of each of the Lease and the Lease Supplement covering the Aircraft, no further action, including any 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 in order to establish and perfect the Owner Trustee's title to and the Indenture Trustee's security interest in the Aircraft as against Lessee and any third parties in any applicable jurisdictions in the United States; (vii) there has not occurred any event which constitutes an Event of Default under the Lease (or any event which with the giving of notice or the passage of time or both would constitute an Event of Default under the Lease) which is presently continuing; (viii) 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; (ix) The consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of December 31, 1995 and the related consolidated statements of operations, cash flows and common stockholders' equity of the Guarantor and its consolidated subsidiaries for the year then ended, which have been audited by independent certified public accountants, copies of which have been furnished to the Owner Participant and each Loan Participant, fairly present the consolidated financial condition of the Guarantor and its consolidated subsidiaries as at such date and the results of operations and cash flow of the Guarantor and its consolidated subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied and since December 31, 1995 there has been no material adverse change in the consolidated financial condition, cash flow or results of operations of the Guarantor and its consolidated subsidiaries; (x) on the Delivery Date, the Owner Trustee will receive good title to the Aircraft free and clear of all Liens, except Liens permitted by clause (v) of Section 6 of the Lease, the rights of Lessee under the Lease and the Lease Supplement covering the - 27 - 28 Aircraft, the Lien of the Trust Indenture and the beneficial interest of the Owner Participant in the Aircraft; (xi) 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 or U of the Board of Governors of the Federal Reserve System; (xii) Lessee is not in default in the performance of any term or condition of the Purchase Agreement which materially adversely impairs the transactions contemplated hereby; (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; and (xiv) On the Delivery Date, the Aircraft will be duly certified by the FAA as to type and airworthiness, will be insured by Lessee in accordance with the terms of the Lease and will be in the condition and state of repair required under the terms of the Lease. (b) General Tax Indemnity. [Reserved] - 28 - 29 (c) General Indemnity. [Reserved] (d) Income Tax. For purposes of this Section 7, the term "INCOME TAX" means any Tax based on or measured by gross or net income or receipts (other than taxes in the nature of sales, use, license or property Taxes) (including, without limitation, capital gains taxes, minimum taxes, income taxes collected by withholding and taxes on tax preference items), and Taxes which are capital, doing business, excess profits or net worth taxes, estate taxes, inheritance taxes, succession taxes, medicare, FICA, FUTA and similar taxes and interest, additions to tax, penalties, or other charges in respect thereof. SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner Participant represents that it is acquiring its interest in the Trust Estate for investment and not with a present intent as to any resale or distribution thereof (subject nonetheless to any requirement of law that the disposition of its properties shall at all times be and remain within its control) and that neither it nor anyone acting on its behalf has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended. - 29 - 30 (b) Lessee represents and warrants that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended. (c) Each of the Owner Participant and First Security Bank of Utah, National Association, in its individual capacity, represents and warrants (as to itself) to the other parties to this Agreement that it is, and on the Delivery Date will be, a Citizen of the United States without making use of any voting trust, voting powers agreement or similar arrangement. The Owner Participant agrees, solely for the benefit of Lessee and the Loan Participants, that if (i) it shall cease to be a Citizen of the United States and (ii) while the Aircraft is registered in the United States or at such time as Lessee desires to reregister the Aircraft in the United States, 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 or to permit reregistration of the Aircraft in the United States, as the case may be. It is agreed that: (A) the Owner Participant shall be liable to pay on request to each of the other parties hereto and to each holder of a Secured Certificate for any damages actually suffered by any such other party or holder as the result of the representation and warranty of the Owner Participant in the first sentence of this Section 8(c) 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 actually be incurred by Lessee, any Sublessee or the Loan Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). First Security Bank of Utah, 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 of Utah, National Association, shall obtain actual knowledge that First Security Bank of Utah, National Association, has ceased to be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under the Federal Aviation Act as in effect at such time or, if it is not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Loan Participants, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or First Security Bank of Utah, National Association, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an event which would constitute an Event of Default but for lapse of time or the giving of notice or both) shall not have occurred and be continuing under the Lease due to non-compliance by Lessee with the registration requirements in the Lease. - 30 - 31 (d) First Security Bank of Utah, 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 of Utah, 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 of Utah, 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 of Utah, National Association, in its individual capacity, represents that it has not offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire the same from, anyone, and that no officer or responsible employee of the Corporate Trust Department of First Security Bank of Utah, 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 each of the Loan Participants agree that, at any time after the Depreciation Period, as long as no Event of Default or Default of the type referred to in Section 14(a), 14(b) or 14(e) of the Lease shall have occurred and be continuing, Lessee may elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit A hereto (or such other country as the Owner Participant, in its sole discretion, 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 prior to such reregistration favorable opinions (subject to customary exceptions) addressed to each such party, from counsel of recognized reputation qualified in the laws of the relevant jurisdiction and reasonably satisfactory to the Owner Participant 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 enforceable under the laws of such jurisdiction (or the laws of the jurisdiction to - 31 - 32 which the laws of such jurisdiction would refer as the applicable governing law) to substantially the same effect as in the United States, (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 as a result of such reregistration in order to exercise any rights or remedies with respect to the Aircraft pursuant to the Lease, (E) there is no tort liability of the owner or lessor of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), and (F) (unless Lessee shall have agreed to provide insurance covering the risk of requisition of use of such Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use. In addition, as a condition precedent to any such change in registration, (a) Lessee shall furnish to the Owner Trustee and the Indenture Trustee an Officer's Certificate to the effect that the insurance required by Section 11 of the Lease shall be in full force and effect at the time of such change in registration after giving effect to such change in registration and that the new country of registry imposes aircraft maintenance standards not materially different from those of the United States, France, Germany, Japan, the Netherlands or the United Kingdom and (b) the Owner Participant shall have received assurances reasonably satisfactory to it as to the matters in the preceding clause (a) and that (i) the original indemnities in favor of it under this Agreement afford it substantially the same protection as provided prior to such change in registry, (ii) no Liens shall arise from such reregistration other than Permitted Liens and (iii) such change will not result in the risk of, or the imposition of, or increase the amount of, any Tax for which Lessee is not required to indemnify under the Operative Documents, or is not then willing to enter into a binding agreement to indemnify in a manner reasonably satisfactory in form and substance to the Owner Participant. Lessee shall pay all costs, - 32 - 33 expenses, fees, recording and registration taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. (g) The Owner Participant represents and warrants to Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in its capacity as such and in its individual capacity, as follows: (i) the Owner Participant is a corporation duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under the Owner Participant Documents, and has a tangible net worth (exclusive of goodwill) greater than $75,000,000; (ii) the Owner Participant Documents have been duly authorized by all necessary corporate action on the part of the Owner Participant, do not require any approval not already obtained of stockholders of the Owner Participant or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of the Owner Participant, and have been duly executed and delivered by the Owner Participant, and neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by the Owner Participant with any of the terms and provisions thereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order 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 financing or the citizenship requirements of the Owner Participant under applicable aviation law) or contravene or result in any breach of or constitute any 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, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Owner Participant is a party or by which it or its properties may be bound or affected; (iii) each of the Owner Participant Documents constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant in accordance with the terms thereof (subject to the qualifications set forth in clause (2) of the opinion of counsel to the Owner Participant in Section 4(a)(xiv)); (iv) there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which, if determined adversely to the Owner Participant, would materially adversely affect the financial condition of the Owner Participant or the - 33 - 34 ability of the Owner Participant to perform its obligations under the Owner Participant Documents; (v) upon the execution and delivery of the Trust Indenture, the Trust Indenture Estate will be free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Participant; and (vi) neither the execution and delivery of the Owner Participant Documents nor the performance by the Owner Participant of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, state or foreign government authority or agency except for those exceptions referred to in Section 7(a)(iii) which may be applicable to the Owner Participant and the Owner Participant Documents. (h) Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from Lessor Liens (including for this purpose Liens that 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, (C) claims against the Indenture Trustee relating to Taxes or Expenses which are excluded from the indemnification provided by Section 7 pursuant to said Section 7, or (D) claims against the Indenture Trustee arising out of the transfer by the Indenture Trustee of all or any portion of its interest in the Aircraft, the Trust Estate, the Trust Indenture Estate or the Operative Documents other than a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9 hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of Default is continuing and prior to the time that the Indenture Trustee has received all amounts due pursuant to the Trust Indenture. (j) Each Loan Participant represents, warrants, covenants and agrees as to itself: (i) that this Agreement has been duly authorized, executed and delivered by such Loan Participant and this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as - 34 - 35 enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of its jurisdiction of organization; and (iii) that such Loan Participant has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. (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, and which is consistent with the applicable provisions of the Credit Agreement. (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 - 35 - 36 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) that is expressed as being an obligation of the Owner Participant or the Owner Trustee (in its individual capacity). (m) State Street Bank and Trust Company represents and warrants, in its individual capacity, to Lessee, the Owner Trustee and each Participant as follows: (i) it is a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other 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 trust agreement or other similar arrangement, is likely to change and that it will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other similar arrangement; (ii) it is a Massachusetts trust company duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the requisite corporate power and authority to enter into and perform its obligations under the Trust Indenture and this Agreement and to authenticate the Secured Certificates to be delivered on the Delivery Date; (iii) the Indenture Trustee Documents and the authentication of the Secured Certificates to be delivered on the Delivery Date have been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or state law or governmental rule or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its charter or by-laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (iv) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. (n) The Owner Participant will not, directly or indirectly, sell, assign, convey or otherwise transfer any of its right, title or interest in and to this Agreement, the Trust Estate or the Trust Agreement or any proceeds therefrom to any person or entity, unless - 36 - 37 (i) the proposed transferee is a "Transferee" (as defined below) and (ii) 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, finance company, insurance company, leasing company, institutional investor 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 Affiliate of such a Person identified in clause (A), provided that such Person furnishes to the Owner Trustee, the Loan Participants, 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 Loan Participants, 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 the form attached as Exhibit C hereto or otherwise in form and substance reasonably satisfactory to Lessee, the Owner Trustee and the Majority in Interest of Certificate Holders; 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 (including by use of a voting trust agreement, voting powers agreement or other similar arrangement), and has full power and authority to enter into the transactions contemplated hereby, (N) the Transferee has the requisite power and authority to enter into and carry out the transactions contemplated hereby and such Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants 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 guarantor, (O) the Transferee enters into an agreement or agreements, in form and substance reasonably satisfactory to the Owner Trustee, the Majority in Interest of Certificate Holders, 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 its Interest Deductions, Amortization Deductions and MACRS Deductions and its risk of any Inclusion Event (each as defined in the Tax Indemnity Agreement) to the extent resulting from such transfer, (R) the transferor Owner Participant - 37 - 38 pays all of the reasonable costs and expenses (including, without limitation, reasonable fees and expenses of counsel) incurred in connection with such transfer, including the reasonable 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 20 (10, in the case of a transfer to an Affiliate of the Owner Participant) days' prior written notice thereof to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, specifying the name and address of the proposed Transferee. For the avoidance of doubt, in the event that [ ] or an Affiliate of [ ] is the Owner Participant, nothing in this Section 8(n) shall be deemed to restrict the ability of [ ] or such Affiliate to merge with, consolidate with, or transfer all or substantially all of its assets to any Person which is not an Affiliate of [ ], provided that such Person agrees to be bound by all of the terms of the Operative Documents and undertakes all of the obligations of the Owner Participant thereunder. (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 of Utah, 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)(A) Each Loan Participant represents and warrants that (i) it is not an "employee benefit plan" subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual retirement account, individual retirement annuity or plan subject to Section 4975 of the Code (hereafter collectively referred to as an "ERISA Plan"), and (ii) no part of the funds to be used by it to acquire or hold any Secured Certificate (or any participation or other interest therein) constitutes assets of an ERISA Plan, or any trust established under any ERISA Plan, or of a "church plan", as defined in Section 3(33) of ERISA or Section 414(e) of the Code, or of a "governmental plan", as defined in Section 3(32) of ERISA or Section 414(d) of the Code, subject to the laws of a state of the - 38 - 39 United States having prohibitions on transactions with such church or governmental plan substantially similar to Section 406 of ERISA or Section 4975 of the Code ("Plan Assets"). Each Loan Participant covenants that it will not grant participations (including, without limitation, "risk participations") in its Secured Certificate or Secured Certificates to any Person unless such Person represents, warrants and covenants in accordance with the immediately preceding sentence, and agrees not to transfer the interest so acquired except to another Person qualifying under the terms of this sentence. Other than as set forth in the immediately preceding sentence, each Loan Participant covenants that it will not transfer (including, without limitation, by a change in the capacity in which it holds any Secured Certificates) any interest in any Secured Certificate to any Person unless such Person represents and warrants (or is deemed to represent and warrant) in accordance with the first sentence of this Section 8(q)(A), and unless such Person agrees (or is deemed to agree) not to transfer any such interest except in compliance with the terms of the immediately preceding sentence or this sentence. The Owner Participant represents and warrants that it is not an ERISA Plan and is not to any extent acquiring its interest in the Trust Estate or any interests represented thereby with Plan Assets. The Owner Participant covenants 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 Person unless such Person makes (or is deemed to have made) a representation and warranty as of the date of transfer that either (i) such Person is not an ERISA Plan and no part of the funds to be used by it for the purchase of such right, title and interest (or any part thereof) constitutes Plan Assets, or (ii) that such transfer will not result in a prohibited transaction (as defined in Section 4975 of the Code and ERISA). (B) Lessee represents and warrants that: none of (i) the execution and delivery of this Agreement and the other Operative Documents, (ii) the initial purchase by the Loan Participants of the Secured Certificates, and (iii) the initial acquisition by the Owner Participant of its beneficial interest in the Trust Estate will involve any non-exempt prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation being made in reliance upon and subject to the accuracy of the representations contained in subparagraph (A) of this Section 8(q)). (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 - 39 - 40 disclose so much of the Purchase Agreement as has been assigned to the Owner Trustee under the Purchase Agreement Assignment and not specifically reserved to Lessee under Section 1 thereof, 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 Loan Participants 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. (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. Each Loan Participant agrees that Lessee may, on behalf of the Owner Trustee and upon notice to the affected Certificate Holder, arrange for another institution (which may be a Certificate Holder) to purchase the Secured Certificates of the affected Certificate Holder (providing that such transfer is otherwise in accordance with Section 8(q)(A) hereof) by paying the affected Certificate Holder an amount equal to the unpaid principal amount of the Secured Certificates held by the affected Certificate Holder plus accrued but unpaid interest thereon to the date of payment of such principal amount plus all other amounts owed to such affected Certificate Holder under the Operative Documents (including any Funding Loss Amount payable as a result of the applicable purchase occurring on a day other than the last day of an Interest Period). For purposes of this Section 8(t), "AFFECTED CERTIFICATE HOLDER" shall mean a Certificate Holder which has asserted claims against the Owner Trustee or Lessee under or sought rights or remedies provided by Section 7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture. (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) First Security Bank of Utah, National Association, in its individual capacity, represents and warrants that: - 40 - 41 (i) the Trust Agreement and, assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, each of the other Owner Trustee Documents has been duly executed and delivered by one of its officers who is duly authorized to execute and deliver such instruments on behalf of First Security Bank of Utah, National Association or the Owner Trustee, as the case may be; (ii) the Trust Estate is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to First Security Bank of Utah, National Association, in its individual capacity, and there are no Liens affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Trust Indenture Estate resulting from any act or claim against First Security Bank of Utah, National Association, in its individual capacity, arising out of any event or condition not related to the ownership, leasing, use or operation of the Aircraft or to any other transaction contemplated by this Agreement or any of the Operative Documents, including any such Lien resulting from the nonpayment by First Security Bank of Utah, National Association, in its individual capacity, of any Taxes imposed or measured by its net income; (iii) there has not occurred any event which constitutes (or to the best of its knowledge would, with the passage 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 First Security Bank of Utah, National Association, in its individual capacity, and which is presently continuing; (iv) it is a national banking association duly organized, validly existing and in good standing under the laws of the United States and has the full corporate power, authority and legal right to enter into and perform its obligations under each of the Owner Trustee Documents (to the extent entered into in its individual capacity) and assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, has all requisite power and authority as Owner Trustee to execute, deliver and perform the other Owner Trustee Documents; (v) each of the Owner Trustee Documents has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof, either in its individual capacity or (assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant) as Owner Trustee, as the case may be, nor its performance of any of the terms and provisions thereof will violate any Federal law governing the banking and trust powers of First Security Bank of Utah, National Association, or Utah law or regulation or contravene or result in any breach of the provisions of its articles of association or By-Laws or any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (vi) each of the Owner Trustee Documents has been duly executed and delivered by First Security Bank of Utah, National Association, in its individual - 41 - 42 capacity, as Owner Trustee, or both and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, each thereof is the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (vii) there are no Taxes payable by it (either in its individual capacity or as Owner Trustee), the Trust Estate, the Owner Participant, Lessee, the Indenture Trustee or the Loan Participants to the State of Utah in connection with the execution, delivery and performance of the Operative Documents solely because First Security Bank of Utah, National Association is a national banking association with its principal office in the State of Utah and will perform its obligations under the Operative Documents in the State of Utah, other than franchise or other taxes based on or measured by any fees or compensation received or accrued by First Security Bank of Utah, National Association for services rendered in connection with the transactions contemplated by the Operative Documents. (w) The Owner Participant covenants and agrees that if (i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to Lessee written notice of Lessor's election to retain title to the Aircraft and (iii) the Owner Trustee has failed to make, on or before the Termination Date, any payment required to be made by the Owner Trustee pursuant to Section 9(c) in connection with its retention of title to the Aircraft, the Owner Participant will indemnify Lessee for any losses, damages, costs or expenses of any kind (including any additional rents paid by Lessee and any fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a consequence of such failure by the Owner Trustee. The Owner Participant further covenants and agrees to pay those costs and expenses specified to be paid by the Owner Participant pursuant to Exhibit E to the Lease. (x) Each of the Owner Participant, the Owner Trustee, the Indenture Trustee, each Loan Participant 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, upon compliance by Lessee with all applicable provisions of the Lease, execute and deliver - 42 - 43 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. (y) (A) Lessee will not consolidate with or merge into any other corporation or convey, transfer or lease all or 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 all or 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 all or substantially all of the assets of Lessee as an entirety shall execute and deliver to the Owner Trustee, the Indenture Trustee and each Participant an agreement in form and substance reasonably satisfactory to such 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; (iv) Lessee shall have delivered to the Owner Trustee, the Indenture Trustee and each 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 Participants, 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; and (v) the corporation formed by such consolidation or into which Lessee is merged or the Person which acquires by conveyance, transfer or lease all or substantially all of the assets of Lessee shall make such filings and recordings with the FAA pursuant to the Federal Aviation Act as shall be necessary or desirable to evidence such consolidation, merger, conveyance, transfer or lease with or to such entity. Upon any such consolidation or merger or any such conveyance, transfer or lease of all or 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 - 43 - 44 consolidation or into which Lessee is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, Lessee under this Agreement with the same effect as if such successor corporation or Person had been named as Lessee herein. No such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety shall have the effect of releasing Lessee or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this subparagraph (A) of Section 8(y) from its liability in respect of any Operative Document to which it is a party. (B) Lessee shall at all times maintain its corporate existence except as permitted by subparagraph (A) of this Section 8(y). (z) Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust Supplement and any financing statements or other instruments as are necessary to maintain (or as are reasonably requested by the Owner Participant), 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) Section 3 of the Lease contemplates that, under certain circumstances, the Owner Participant will make certain recalculations of Basic Rent, Excess Amount, Stipulated Loss Value, Termination Value, Special Purchase Price, Initial Installment and Remaining Installments, and the Owner Participant hereby agrees to make such recalculations as and when contemplated by the Lease and subject to all the terms and conditions of the Lease and promptly to take such further actions as may be necessary or desirable to give effect to and to cause the Owner Trustee to give effect to the provisions of Section 3 of the Lease. (bb) The Owner Participant hereby agrees with Lessee, and only with Lessee, and not for the benefit of any other party to this Participation Agreement, that it will promptly pay in full to the Owner Trustee any funds necessary to enable the Owner Trustee promptly to pay to Lessee the full amount of any Reimbursement Amount owed to Lessee. (cc) The Owner Participant hereby agrees to notify Lessee or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York time on the third Business Day prior to the day for which an Excess Amount is indicated in the event the Owner Participant does not intend to pay such Excess Amount in full on the due date. - 44 - 45 (dd) [______________] agrees to act as Administrative Agent hereunder. The Administrative Agent agrees to notify each of the Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual interest expected to accrue on the Secured Certificates during each Interest Period promptly after the commencement of such Interest Period and after the occurrence of any event that would cause such actual interest expected to accrue during such Interest Period to change from the amount previously notified. The Administrative Agent further agrees to perform all of the functions that are required to be performed by the Administrative Agent pursuant to the terms of the Trust Indenture. (ee) The Owner Participant hereby agrees with Lessee that it will pay, or cause to be paid, all costs and expenses that are for the account of the Owner Trustee pursuant to Section 5(d) of the Lease. (ff) 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(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture). (gg) [_____________] agrees to act as Documentation Agent hereunder and to perform all of the functions that are required to be performed by the Documentation Agent hereunder. (hh) [_____________], [____________] and [_____________] each agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate (as defined in the Trust Indenture). SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION . (a) In the event of an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall, pursuant to this Section 9 and in accordance with the requirements of Section 3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt payment structures. Within forty-five Business Days after the need for an adjustment to Rent has been established pursuant to Section 3 of the Lease, the Owner Participant shall deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of debt amortization and Basic Rent, Excess Amounts, Special Purchase Price, Initial Installment, Remaining Installments, Stipulated Loss Value and Termination Value percentages. Within forty-five days of its receipt of the Reoptimization Certificate, Lessee may demand a verification, pursuant to Exhibit E of the Lease, of the information set forth in the Reoptimization Certificate. Upon the acceptance by Lessee of the accuracy of the information set forth in the Reoptimization Certificate or the determination pursuant to such verification procedures of such information, the Owner Participant will cause - 45 - 46 the Owner Trustee (M) to execute a Lease Supplement setting forth the reoptimized Basic Rent, Excess Amounts, Special Purchase Price, Initial Installment, Remaining Installments, Stipulated Loss Value and Termination Value percentages, and (N) to exchange new Secured Certificates containing reoptimized amortization schedules for the Secured Certificates outstanding immediately prior to such reoptimization. (b) In connection with reoptimization adjustments of Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree to changes in the amortization schedule of the Secured Certificates, and (N) each Loan Participant will exchange the Secured Certificates held by it immediately prior to such reoptimization for new Secured Certificates containing reoptimized amortization schedules; provided that such changes do not (X) extend the final maturity of the Secured Certificates or (Y) increase the weighted average lives of the Secured Certificates as of the Delivery Date to more than 15 years or, without the consent of the Owner Participant, increase the weighted average lives of the Secured Certificates by more than six (6) months. SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the Owner Trustee hereby (A) agrees with Lessee, the Loan Participants 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 (B) agrees with Lessee and the Loan Participants not to revoke the Trust Agreement without the prior written consent of Lessee and the Loan Participants so long as the Lease or the Lien of the Trust Indenture remains in effect. 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 10.05 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 (which will not be unreasonably withheld) unless Owner Participant indemnifies Lessee in form and substance satisfactory to Lessee, in its sole discretion, for any adverse consequence resulting from such change. 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: - 46 - 47 (a) Lessee will, at its own cost and expense, 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 (or reasonably requested by the Owner Participant or the Owner Trustee) to enable the Owner Trustee or the Owner Participant 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, at its own cost and expense, 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 Bill 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 Bill of Sale, second, the Lease, with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the Trust Indenture, with the Trust Supplement attached. SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby agreed among Lessee, the Owner Participant and the Owner Trustee that for Federal income tax purposes the Owner Participant will be the owner of the Aircraft to be delivered under the Lease and Lessee will be the lessee thereof, and each party hereto agrees to characterize the Lease as a lease for Federal income tax purposes. SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO JURISDICTION. (a) Except as otherwise defined in this Agreement, terms used herein in capitalized form shall have the meanings attributed thereto in the Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set forth in the Trust Indenture. Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it may be amended from time to time. (b) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto or to the Guarantor shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this - 47 - 48 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 Owner Trustee, the Loan Participants, the Administrative Agent, the Documentation 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, or (D) if to the Guarantor, addressed to the Guarantor at such address as the Guarantor shall have furnished by notice to the parties hereto. (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, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of Lessee in New York City as from time to time may be designated by Lessee in writing to the Owner Participant, the Owner Trustee and the Indenture Trustee. SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant agrees that if, at any time, the Trust Estate becomes subject to any Taxes for which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States from the state in which it is then located, the situs of the trust may be moved with the written consent of the Owner Participant (which consent shall not be unreasonably withheld) and the Owner Participant will take 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 Loan Participants may reasonably request, (B) the rights and obligations under the Operative Documents of the Owner Participant and the Loan Participants 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 - 48 - 49 Owner Participant and the Loan Participants shall have received an opinion or opinions of counsel (satisfactory to the Owner Participant and the Loan Participants), in scope, form and substance satisfactory to the Owner Participant and the Loan Participants 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 Loan Participants, 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 Loan Participants and to the Owner Participant covering the matters described in Section 4(a)(xiii) hereof and such other matters as the Loan Participants and the Owner Participant may reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner Participant, the Indenture Trustee and the Loan Participants 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, the Indenture Trustee and the Loan Participants in connection with such change of situs. SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, or the Indenture Trustee under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture Trustee. (b) The representations, warranties, indemnities and agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee, the Administrative Agent, the Documentation Agent and the Owner Participant provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan Participants', the Indenture Trustee's, the Administrative Agent's, the Documentation Agent's and the Owner Participant's obligations under any and all thereof, shall survive the making available of the respective Commitments by the Loan Participants and 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. - 49 - 50 (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 its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and assigns, each Certificate Holder and its successors and registered assigns, the Indenture Trustee and its successors as Indenture Trustee under the Trust Indenture, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, the Administrative Agent and the Documentation Agent. 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 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 (or any successor statute containing the material terms of 11 U.S.C. Section 1110) in the event of any reorganization of Lessee under such Section. - 50 - 51 SECTION 16. EXPENSES. (a) Invoices and Payment. Each of the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan Participants 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 July 15, 1996). If so submitted and approved, the Owner Participant agrees promptly, but in any event no later than July 31, 1996, to pay (but not in excess of 2% of Lessor's Cost) Transaction Expenses. Notwithstanding the foregoing, to the extent that Transaction Expenses exceed 1% of Lessor's Cost, Lessee at its sole option shall have the right to pay directly its special counsel fees and disbursements and the fee and disbursements of Babcock and Brown Financial Corporation, and Lessee shall be obligated to pay directly any and all Transaction Expenses which are in excess of 2% of Lessor's Cost. (b) Payment of Other Expenses. In the event that the transaction contemplated by this Participation Agreement fails to close as a result of the Owner Participant's failure to negotiate in good faith or to comply with the terms and conditions upon which its participation in the transaction was predicated, the Owner Participant will be responsible for all of its fees and expenses, including but not limited to the fees, expenses and disbursements of its special counsel and the fees of the appraiser referred to in Section 4(a)(xx). SECTION 17. REFINANCINGS. (a) So long as no Event of Default or Default of the type referred to in Section 14(a), 14(b) or 14(e) of the Lease shall have occurred and be continuing, Lessee 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 (including the terms of any debt to be issued in connection with such refinancing); provided that (1) no such refinancing shall subject the Owner Participant to any adverse, or the risk of any adverse, tax consequence unless Lessee agrees to indemnify the Owner Participant for such unindemnified adverse tax consequence (any such indemnity to be satisfactory in form and substance to the Owner Participant) and (2) the other terms and conditions of this Section 17 are met. The Owner Participant understands and agrees that the debt to be issued in connection with such refinancing may be issued in several classes, each of which may have a different interest rate, final maturity date and priority of payment. The Owner Participant further understands and agrees that one or more of such classes may be entitled to the benefit of a liquidity facility, which will entitle the Indenture Trustee (or a collateral agent therefor) to make drawings thereunder to pay interest on a current basis on the enhanced classes of debt for up to three semi-annual interest payments following a payment default with respect to such enhanced classes. In such a structure the Owner Participant agrees that drawings of the entire amount available under the liquidity facility for any class (and the deposit of the proceeds - 51 - 52 thereof into a cash collateral account) will be required in the event of a ratings decline with respect to the related liquidity provider or in the event that the liquidity facility is not extended or replaced prior to its scheduled expiration. Amounts owed to the liquidity facility provider for both drawings and interest thereon will generally be senior to all Loan Participant claims. The Owner Participant understands and agrees that in any refinancing operation it will agree to these and any other conditions which do not impair the customary rights of an owner participant in a leveraged lease transaction. Upon such agreement: (1) within ten Business Days after the reaching of such agreement, the Owner Participant will deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REFINANCING CERTIFICATE") setting forth (i) the proposed date on which the outstanding Secured Certificates will be redeemed, any new debt will be issued and the other aspects of such refinancing will be consummated (such date, the "REFINANCING DATE") and (ii) the following information calculated pursuant to the provisions of paragraph (6) of this Section 17(a): (A) 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 and (C) the proposed revised schedules of Basic Rent percentages, debt amortization, Special Purchase Price, Initial Installment, Remaining Installments, Stipulated Loss Value percentages and Termination Value percentages (calculated in accordance with Section 3(d) of the Lease). Within fourteen days of its receipt of the Refinancing Certificate, Lessee may demand a verification pursuant to Exhibit E to the Lease of the information set forth in the Refinancing Certificate. Upon the acceptance by Lessee of the accuracy of the information set forth in the Refinancing Certificate (or the determination pursuant to such verification procedures), as to the 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, Special Purchase Price, Initial Installment, Remaining Installments, Stipulated Loss Value percentages and Termination Value percentages (such information, whether as set forth or as so determined, the "REFINANCING INFORMATION") the appropriate parties will take the actions specified in paragraphs (2) through (5) below; (2) the appropriate parties will enter into appropriate documentation (which may involve an underwriting agreement in connection with such sale) 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 equal to the then outstanding principal amount of the Secured Certificates (such debt securities, the "NEW DEBT"); (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; - 52 - 53 (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) and the other Operative Documents as may be necessary to effect such refinancing; (5) the Owner Participant shall pay all of the expenses of the first refinancing (so long as the same takes place in 1996) (including, but not limited to, the fees, expenses and disbursements of counsel and any placement or underwriting fees) and such expenses shall be treated as Transaction Expenses (subject to a cap of 2.8% of Lessor's Cost, inclusive of any Transaction Expenses paid by the Owner Participant pursuant to Section 16(a)) and, unless otherwise agreed to by the Owner Participant, Lessee shall pay all other expenses of the first financing and all of the expenses (including, but not limited to, the fees, expenses and disbursements of counsel and any placement or underwriting fees) of any such refinancing after the first refinancing; and (6) when calculating any of the information required to be set forth in a Refinancing Certificate, the Owner Participant shall make such calculations in a manner which (A) maintains the Owner Participant's Net Economic Return (except to the extent the assumptions referred to in the definition of "Net Economic Return" have been altered since the Delivery Date in connection with an adjustment to Rents pursuant to Section 3(d) of the Lease or such assumptions are the subject of the recalculations being conducted by the Owner Participant), and (B) minimizes the Net Present Value of Rents to Lessee to the extent possible consistent with clause (A). All adjustments to Basic Rent shall be (I) in compliance with the tax law as then in effect, including, without limitation, Rev. Proc. 75-28 as amended and then in effect (or any successor thereto) 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 Internal Revenue Code of 1986, as amended, and any regulations thereunder, except to the extent that on the Delivery Date the Lease constituted a "disqualified leaseback or long-term agreement" under Section 467 of the Code on the Delivery Date or was not in compliance with Rev. Proc. 75-28 and without regard to any adjustments to Basic Rent occurring after such date and (II) subject to verification pursuant to Exhibit E to the Lease. (b) Lessee and the Owner Participant agree that none of the Owner Participant's rights against all other parties hereto (including the new Loan Participants) or its obligations to any such parties and none of its interests in the Trust Estate or under the Operative Documents shall be materially adversely affected in the good faith judgment of the Owner Participant compared to such rights and interests as in effect under the Operative Documents prior to the changes contemplated by this Section 17. For purposes of ERISA, except in the case of any refinancing with public debt or pursuant to Rule 144A promulgated under Securities Act of 1933, as amended, the new lenders shall be required to make the representation for a Loan Participant set forth in Section 8(q)(A) and agree to be bound by the provision of such Section 8(q)(A) applicable to a Loan Participant. The Owner Participant agrees that in connection with any refinancing with public debt or pursuant to Rule 144A promulgated under the Securities Act of 1933, as amended, the provisions set forth in Exhibit - 53 - 54 D hereto are acceptable to the Owner Participant and Lessee agrees that in connection with any such refinancing the Owner Participant will not be obligated to agree to any other ERISA provisions. (c) In connection with any such refinancing utilizing public debt or pursuant to Rule 144A promulgated under the Securities Act of 1933, as amended, the Owner Participant shall have a right to review and comment on all offering materials to be used in connection therewith and no such offering materials shall disclose the identity of the Owner Participant. (d) 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. AGENTS. (a) Each Loan Participant hereby appoints and authorizes each of the Administrative Agent and the Documentation Agent (each, an "AGENT") to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Operative Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. Each Agent shall have no duties or responsibilities except those expressly set forth in the Operative Documents. As to any matters not expressly provided for hereby or by the Trust Indenture, each Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority in Interest of Certificate Holders (as defined in the Trust Indenture), and such instructions shall be binding upon all Loan Participants and all Certificate Holders; provided, however, that such Agent shall not be required to take any action that exposes such Agent to personal liability or that is contrary to the Operative Documents or applicable law. Each Agent agrees to give to each Loan Participant prompt notice of each notice given to it by the Owner Trustee pursuant to the terms of the Operative Documents with respect to which such Loan Participant has not otherwise received such notice. (b) No Agent nor such Agent's directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the Trust Indenture, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Loan Participant and shall not be responsible to any Loan Participant for any statements, warranties or representations (whether written or oral) made in or in connection with the Operative Documents; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the - 54 - 55 Operative Documents on the part of any party thereto or to inspect the property (including the books and records) of any such party; (iv) shall not be responsible to any Loan Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Operative Documents or any other instrument or document furnished pursuant thereto; and (v) shall incur no liability under or in respect of the Operative Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. (c) With respect to their Loans and any Secured Certificates issued to them, [ ] and [ ] shall have the same rights and powers under the Operative Documents as any other Loan Participant and may exercise the same as though they were not Agents and the term "Loan Participant" or "Certificate Holder" shall, unless otherwise expressly indicated, include [ ] and [ ] in their individual capacity. [ ] and its Affiliates and [ ] and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Owner Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any Person who may do business with or own securities of any of such Persons, all as if [________] and [_________] were not Agents and without any duty to account therefor to the Loan Participants. (d) Each Loan Participant acknowledges that it has, independently and without reliance upon the Agents or any other Loan Participant and based on the financial statements referred to in Section 7(a)(ix) of this Agreement and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Loan Participant also acknowledges that it will, independently and without reliance upon the Agents or any other Loan Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. (e) Subject to the appointment and acceptance of a successor agent as provided below, any Agent may resign at any time by giving written notice thereof to the Loan Participants, the Owner Trustee and Lessee and may be removed at any time with or without cause by the Majority in Interest of Certificate Holders (as defined in the Trust Indenture). Upon any such resignation or removal, the Majority in Interest of Certificate Holders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority in Interest of Certificate Holders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or removal of the retiring Agent by the Majority in Interest of Certificate Holders, then the retiring Agent may, on behalf of the Loan Participants, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, - 55 - 56 privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the Trust Indenture. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section 18 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the Trust Indenture. Notwithstanding anything contrary herein, the Administrative Agent and the Documentation Agent hereunder and under the Trust Indenture shall be the same institution, respectively, as the Administrative Agent and the Documentation Agent under (and as defined in) the Credit Agreement. - 56 - 57 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: --------------------------------------- Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 [___________________], Owner Participant By: ----------------------------------- Title: Address: Attn: Telecopy No.: - Signature Page - 58 STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: ------------------------------------ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: ----------------------------------- Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 - Signature Page - 59 [INSERT BRIDGE LENDERS] By: -------------------------------------- Title: - Signature Page - 60 SCHEDULE I NAMES AND ADDRESSES Lessee: Northwest Airlines, Inc. U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 Wire Transfer First Bank, N.A., Minneapolis ABA No. 091000022 Acct. No. 150250099440 - Signature Page - 61 Owner Participant: Payments made to the Owner Participant as provided in Section 3.06 of the Trust Indenture shall be made to: SCHEDULE I - PAGE 2 62 Indenture Trustee: State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 Wire Transfer State Street Bank and Trust Company ABA No. 011-00-0028 for credit to State Street Bank and Trust Company Acct. No. 9903-943-0 Attn: Corporate Trust Department Reference: Northwest/NW 1996 B Owner Trustee: First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 Payments made to the Owner Trustee as provided in Section 3(f) of the Lease shall be made to: First Security Bank of Utah, National Association ABA No. 124-0000-12 Acct. No. 051-0922115 Attn: Corporate Trust Department Credit: Northwest/NW 1996 B 63 SCHEDULE II COMMITMENTS Percentage of Loan Participants: Lessor's Cost ----------------- ------------ 64 Owner Participant: - ----------------- ------------ Total Commitments: 100% SCHEDULE II - PAGE 2 65 EXHIBIT A TO PARTICIPATION AGREEMENT [NW 1996 B] SCHEDULE OF COUNTRIES FOR REREGISTRATION Argentina Japan Australia Luxembourg Austria Malaysia Bahamas Mexico Belgium Netherlands Canada New Zealand Chile Norway Denmark Philippines Finland Portugal France Singapore Germany South Africa Hungary South Korea Iceland Sweden India Switzerland Indonesia Thailand Ireland United Kingdom Italy 66 EXHIBIT B TO PARTICIPATION AGREEMENT [NW 1996 B] SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES Argentina Mexico Australia Netherlands Austria New Zealand Bahamas Norway Belgium Philippines Canada Portugal Chile Singapore Denmark South Africa Finland South Korea France Sweden Germany Switzerland Hungary Thailand Iceland United Kingdom India Indonesia Ireland Italy Japan Luxembourg Malaysia 67 EXHIBIT C TO PARTICIPATION AGREEMENT [NW 1996 B] FORM OF GUARANTY [LETTERHEAD OF GUARANTOR] PARENT GUARANTY Dated as of ____________ ____, ______ [Lessee] [Trust Company] [Indenture Trustee] [Loan Participants] One Boeing Model 757-251 Aircraft Manufacturer's Serial Number [ ] Ladies and Gentlemen: Reference is hereby made to the Participation Agreement [NW 1996 B] (as from time to time amended or supplemented, the "Participation Agreement"), dated as of April 24, 1996, among Northwest Airlines, Inc. ("Lessee"), [_____________] (the "Owner Participant"), First Security Bank of Utah, National Association, not in its individual capacity, except as expressly provided therein, but solely as trustee (the "Owner Trustee" and "Lessor") under the Trust Agreement, dated as of April 24, 1996, between the Trustee and the Owner Participant (the "Trust Agreement"), State Street Bank and Trust Company (the "Indenture Trustee") and the Loan Participants listed on Schedule I thereto. Capitalized terms used herein without definition have the respective meanings ascribed thereto in the Participation Agreement. Pursuant to Section 8 of the Participation Agreement and in connection with the transfer of the Interest (as defined in the Assignment Assumption Agreement dated as of the date hereof between [Transferor], a ____________ corporation ("Transferor") and [Transferee], a ____________ corporation ("Transferee") (the "Assumption Agreement")) to be consummated as of the date hereof from Transferor to Transferee, the wholly-owned subsidiary of _________________________ ("Guarantor"), and the execution by Guarantor of the guaranty of Transferee's obligations as contemplated by the Assumption Agreement (this "Guaranty"), Guarantor represents and warrants to, and covenants with, Lessee, First Security 68 Bank of Utah, National Association, in its individual capacity ("Trust Company"), Indenture Trustee and Loan Participants, as follows: 1. Ownership of Transferee. Guarantor directly or indirectly owns and holds all of the issued and outstanding shares of capital stock of Transferee. 2. Additional Representations and Warranties. (i) Guarantor is a corporation duly organized and validly existing pursuant to the laws of ___________________, and has the corporate power and authority to enter into and perform this Guaranty. (ii) The execution, delivery and performance by Guarantor of this Guaranty has been duly authorized by all necessary corporate action on the part of Guarantor, does not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Guarantor except such as have been duly obtained, and this Guaranty will not contravene any applicable law or corporate charter or by-law, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien upon the property of Guarantor under, any indenture, mortgage, contract or other agreement to which Guarantor is a party or by which it may be bound or affected. (iii) Neither the execution and delivery by Guarantor of this Guaranty, nor the consummation of the transactions by Guarantor contemplated hereby, nor the performance of the obligations hereunder or under any other documents contemplated hereby or thereby by Guarantor requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, United States Federal, state, or foreign governmental authority or agency. (iv) This Guaranty has been duly executed and validly delivered by Guarantor and constitutes the legal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its terms except as the enforcement of this Guaranty may be affected by applicable bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally. (v) There are no pending or, to Guarantor's knowledge, threatened actions or proceedings before any court or administrative agency which might materially adversely affect the consolidated financial condition, business or operations of Guarantor, or the ability of Guarantor to perform its obligations under this Guaranty. (vi) No broker's or finder's fees or commissions or advisory fees are or may become payable in connection with this Guaranty or the Assumption Agreement or, if any such fee is payable, such fee will be the responsibility of Guarantor. (vii) On the date hereof the Trust Estate will be free of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to Guarantor. 69 (viii) Guarantor is a bank, insurance company, financial institution or domestic corporation the tangible net worth (exclusive of goodwill) of which is at least $75,000,000. 3. Guaranty. (a) Guarantor hereby unconditionally and irrevocably guarantees, not merely as surety but as obligor: (i) the due and punctual payment of any and all sums which are payable by Transferee pursuant to any provision of the Assumption Agreement and the Participation Agreement, the Tax Indemnity Agreement and any other Operative Document assumed by Transferee pursuant to the Assumption Agreement (collectively, the "Guaranteed Agreements"), and (ii) the due and punctual performance of and compliance with and observance of all other obligations, covenants, warranties and undertakings of or conditions contained in or arising under the Guaranteed Agreements binding upon or made by Transferor and assumed by Transferee under the Assumption Agreement, in each case, whether or not Guarantor shall have contributed funds to Lessor or Transferee, as the case may be, for such payment or performance by Lessor or Transferee (such payments and other obligations guaranteed hereunder hereinafter referred to as the "Obligations"). (b) Guarantor agrees that this Guaranty is an unconditional and absolute guaranty of payment and performance (not merely enforceability) and that its undertakings hereunder are not contingent upon your bringing any action against Transferee or resorting to any security and hereby expressly waives any claim that its undertakings hereunder are so contingent. (c) Guarantor hereby waives promptness, diligence, demand and all notices whatsoever as to the obligations and covenants guaranteed hereby and acceptance of this Guaranty, and waives any other circumstance which might otherwise constitute a defense available to, or a discharge of, the undersigned, and agrees that it shall not be required to consent to, or receive any notice of, any amendment or modification of, or waiver, consent or extension with respect to, the Guaranteed Agreements that may be made or given as provided therein. (d) Guarantor agrees to pay any costs and expenses (including reasonable fees and disbursements of counsel) that may be paid or incurred by the beneficiaries hereof in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty. (e) Guarantor understands and agrees that its obligations hereunder shall be construed as continuing, absolute and unconditional without regard to (i) the validity, regularity or enforceability of any Operative Document, any of the Obligations or any collateral security therefor or guaranty or right of offset with respect thereto at any time or 70 from time to time held by any beneficiary hereof, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by Transferee against any beneficiary hereof or (iii) any other circumstances whatsoever (with or without notice to or knowledge of Transferee or Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of Transferee for the Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any other instance. 4. Quiet Enjoyment. So long as no Event of Default shall have occurred and be continuing, Guarantor will not permit Transferee or Lessor to take or cause to be taken any action contrary to Lessee's rights under the Lease, including, without limitation, Lessee's rights to possession and use of the Aircraft. 5. No Discharge. The obligations of Guarantor hereunder are absolute, unconditional and irrevocable and will not be discharged by, and this Guaranty shall remain in full force and effect notwithstanding: (a) the assignment, conveyance or other transfer by Guarantor of any or all of its interest in or capital stock of Transferee, unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer); (b) the assignment, conveyance or other transfer by Transferee of any or all of its interest in the Trust Estate (as defined in the Trust Agreement), unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer) unless Guarantor guarantees the obligations of the transferee under Section 8(n) of the Participation Agreement; (c) the assignment, conveyance or other transfer by Lessor of any or all of its interest in the Aircraft; (d) any extension or renewal with respect to any obligation of Transferee or Lessor under the Guaranteed Agreements; (e) any modification of, or amendment or supplement to, any of the Guaranteed Agreements; (f) any furnishing or acceptance of additional security or any release of any security; (g) any waiver, consent or other action or inaction or any exercise or non-exercise of any right, remedy or power with respect to Transferee or Lessor, or any change in the structure of Transferee or Lessor; or (h) any insolvency, bankruptcy, reorganization, arrangement, composition, liquidation, dissolution, or similar proceedings with respect to the Trustee or Transferee; or any other occurrence whatsoever, except payment in full of all amounts payable by Transferee under the Guaranteed Agreements and performance in full of all Obligations of Transferee in accordance with the terms and conditions of the Guaranteed Agreements. 6. Reinstatement. Guarantor agrees that this Guaranty shall be automatically reinstated with respect to any payment made prior to any termination of the Guaranty by or on behalf of Transferee pursuant to the Participation Agreement or the other 71 Operative Documents to which Transferee is a party if and to the extent that such payment is rescinded or must be otherwise restored, whether as a result of any proceedings in bankruptcy or reorganization or otherwise. 7. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any set-off or application of funds of Guarantor by any beneficiary hereof, Guarantor shall not be entitled to be subrogated to any of the rights of any beneficiary hereof against Transferee or any collateral, security or guarantee or right of set-off held by any beneficiary hereof for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payment made by Guarantor hereunder, until all amounts and performance owing to the beneficiaries hereof by Transferee on account of the Obligations are paid and performed in full. 8. Severability. Any provision of this Guaranty Agreement that 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. 9. Miscellaneous. This Guaranty shall: (a) be binding upon Guarantor, its successors and assigns; (b) inure to the benefit of, and be enforceable by, Lessee, Trust Company, Indenture Trustee, and Loan Participants, and their respective successors and assigns and each other holder from time to time of any interest in the Aircraft or the Operative Documents, but shall not, and is not intended to, create rights in any other third parties; (c) not be waived, amended or modified without the written consent of Lessee, Trust Company, Indenture Trustee, and Loan Participants; (d) BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; and (e) subject to Section 6 hereof, remain in full force and effect until, and shall be terminated upon (1) the payment in full of all sums payable by Transferee, as the case may be, under the Guaranteed Agreements, and by Guarantor hereunder, and performance in full of Transferee, in accordance with the terms and provisions of the Guaranteed Agreements and Guarantor in accordance with the terms of this Guaranty or (2) the date on which Transferee shall meet the requirements set forth in Section 8 of the Participation Agreement without benefit of this Guaranty; provided that Guarantor hereby covenants and agrees that if Transferee shall at any time thereafter (while Transferee shall be Owner Participant under the Participation Agreement) fail to meet such requirements, Guarantor shall immediately reinstate this Guaranty or execute and deliver to the addressees of this Guaranty a guaranty substantially identical hereto. All notices to, or requests of, demands on and other communications with Guarantor shall be made as set forth in the Participation Agreement. [rest of page intentionally left blank] 72 Very truly yours, [GUARANTOR] By: ------------------------------ Name: Title: 73 EXHIBIT D TO PARTICIPATION AGREEMENT [NW 1996 B] ERISA CONSIDERATIONS IN GENERAL Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") imposes certain requirements on employee benefit plans subject to ERISA ("ERISA PLANS"), and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA's general fiduciary requirements, including the requirement of investment prudence and diversification and the requirement that an ERISA Plan's investment be made in accordance with the documents governing the ERISA Plan. Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986, as amended (the "CODE") prohibit certain transactions involving the assets of an ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts (together with ERISA Plans, "PLANS")) and certain persons (referred to as "PARTIES IN INTEREST" or "DISQUALIFIED PERSONS") having certain relationships to such Plans, unless a statutory or administrative exemption is applicable to the transaction. [A party in interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code.] The Department of Labor has promulgated a regulation, 29 CFR Section 2510.3-101 (the "PLAN ASSET REGULATION"), describing what the assets of a Plan with respect to the Plan's investment in an entity for purposes of ERISA and Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan invests in a Certificate, the Plan's assets would include both the Certificate and an undivided interest in each of the underlying assets of the corresponding Trust, including the Equipment Notes held by such Trust, unless it is established that equity participation in the Trust by employee benefit plans (including Plans and entities whose underlying assets include plan assets by reason of an employee benefit plan's investment in the entity) is not "significant" within the meaning of the Plan Asset Regulation. No assurance can be given and no monitoring or other measures will be taken to ensure that this exception will be met at any particular time. If the assets of a Trust were deemed to constitute the assets of a Plan, transactions involving the assets of such Trust could be subject to the prohibited transaction provisions of ERISA and Section 4975 of the Code unless a statutory or administrative exemption were applicable to the transaction. The fiduciary of a Plan that proposes to purchase and hold any Certificates should consider whether such purchase and holding may involve the indirect extension of credit to a party in interest or a disqualified person. In addition, whether or not the assets of a Trust are deemed to be Plan Assets under the Plan Asset Regulation, if Certificates are 74 purchased by a Plan and Certificates of a subordinate Class are held by a party in interest or a disqualified person with respect to such Plan, the exercise by the holder of the subordinate Class of Certificates of its right to purchase the senior Classes of Certificates upon the occurrence and during the continuation of a Triggering Event could be considered to constitute a prohibited transaction unless a statutory or administrative exemption were applicable. Depending on the identity of the Plan fiduciary making the decision to acquire or hold Certificates on behalf of a Plan, Prohibited Transaction Class Exemption ("PTCE") 91-38 (relating to investments by bank collective investment funds), PTCE 84-14 (relating to transactions effected by a "qualified professional asset manager"), PTCE 95-60 (relating to investment by an insurance company general account) or PTCE 90-1 (relating to investments by insurance company pooled separate accounts) [(collectively, the "CLASS EXEMPTIONS")] could provide an exemption from the prohibited transaction provisions of ERISA and Section 4975 of the Code. There can be no assurance that any of these class exemptions or any other exemption will be available with respect to any particular transaction involving the Certificates. If a prohibited transaction occurs for which no exemption is available, each fiduciary and other party in interest or disqualified person that has engaged in the transaction could be required (i) to restore to the Plan any profit realized on the transaction and (ii) to reimburse the Plan for any losses suffered by such Plan as a result of the investment. In addition, each party in interest or disqualified person involved could be subject to an excise tax equal to 5% of the amount involved in the prohibited transaction for each year the transaction continues and, unless the transaction is corrected within statutorily required periods, to an additional tax of 100% of the amount involved in the transaction. Governmental plans and certain church plans, while not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to state or other federal laws that are substantially similar to the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their counsel before purchasing any Certificates. Any Plan fiduciary which proposes to cause a Plan to purchase any Certificates should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code to such an investment, and to confirm that such purchase and holding will not constitute or result in a non-exempt prohibited transaction or any other violation of an applicable requirement of ERISA. CLASS A CERTIFICATES In addition to the Class Exemptions, an individual exemption may apply to the purchase, holding and secondary market sale of Class A Certificates by Plans, provided that certain specified conditions are met. In particular, the Department of Labor has issued individual administrative exemptions to certain of the Underwriters which are substantially the same as the administrative exemption issued to Morgan Stanley & Co. Incorporated, Prohibited Transaction Exemption 90-24 (55 Fed. Reg. 20,548 (1990) (the "UNDERWRITER EXEMPTION"), which generally exempts from the application of certain, but not all, of the EXHIBIT D - PAGE 2 75 prohibited transaction provisions of Section 406 of ERISA and Section 4975 of the Code certain transaction relating to the initial purchase, holding and subsequent secondary market sale of pass-through certificates which represent an interest in a trust, the assets of which include equipment notes secured by leases, provided that certain conditions set forth in the Underwriter Exemption are satisfied. The Underwriter Exemption sets a number of general and specific conditions which must be satisfied for a transaction involving the initial purchase, holding or secondary market sale of Class A Certificates to be eligible for exemptive relief thereunder. In particular, the acquisition of Class A Certificates by a Plan must be on terms that are at least as favorable to the Plan as they would be in an arm's length transaction with an unrelated party; the rights and interests evidenced by the Certificates must not be subordinated to the rights and interests evidenced by other Certificates of the same trust estate; the Certificates at the time of acquisition by the Plan must be rated in one of the three highest generic rating categories by the Moody's Investor Service, Inc., Standard & Poor's Ratings Group, Duff & Phelps, Inc. or Fitch Investors Service, Inc.; and the investing Plan must be an accredited investor as defined in Rule 501(a)(1) or Regulation D of the Commission under the Securities Act. The Underwriter Exemption does not apply to the Class B Certificates, the Class C Certificates or the Class D Certificates. Even if all of the conditions of the Underwriter Exemption are satisfied with respect to the Class A Certificates, no assurance can be given that the Underwriter Exemption would apply with respect to all transactions involving the Class A Certificates or the assets of the Class A Trust. In particular, it appears that the Underwriter Exemption would not apply to the purchase by Class B Certificateholders, Class C Certificateholders or Class D Certificateholders of Class A Certificates in connection with the exercise of their rights upon the occurrence and during the continuance of a Triggering Event. Therefore, the fiduciary of a Plan considering the purchase of a Class A Certificate should consider the availability of the exemptive relief provided by the Underwriter Exemption, as well as the availability of any other exemptions with respect to transactions to which the Underwriter Exemption may not apply. CLASS B, CLASS C AND CLASS D CERTIFICATES The Class B Certificates, Class C Certificates and Class D Certificates may not be acquired with the assets of a Plan, provided, however, that such Certificates may be acquired with the assets of an insurance company general account that may be deemed to constitute Plan assets if the conditions of Prohibited Transaction Class Exemption 95-60 have been satisfied. By the acceptance of a Class B, C or D Certificate, each Certificateholder will be deemed to have represented and warranted that either (i) no Plan assets have been used to purchase such Certificate or (ii) the conditions of PTCE 95-60 have been satisfied and that such purchase or holding is exempt from the prohibited transaction restrictions of ERISA and the Code pursuant to PTCE 95-60. EXHIBIT D - PAGE 3 76 Each Plan fiduciary (and each fiduciary for a governmental or church plan subject to rules similar to those imposed on Plans under ERISA) should consult with its legal advisor concerning an investment in any of the Certificates. EXHIBIT D - PAGE 4 EX-4.F7 49 FIRST AMENDMENT TO PARTICIPATION AGREEMENT-1996 B 1 FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 B] This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 B], dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) [ ], a [ ] corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (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 (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; W I T N E S S E T H: WHEREAS, Lessee, the Owner Participant, the Owner Trustee, [ ], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 B], dated as of April 24, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 B], dated as of April 24, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 B], dated April 30, 1996 2 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 B] relating to the Aircraft, dated as of April 24, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 B] dated April 30, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 B], dated as of April 24, 1996 (the "TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 B] relating to the Aircraft, dated as of April 24, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 B] dated as of April 24, 1996 (the "GUARANTEE"), pursuant to which the Guarantor guaranteed certain obligations of Lessee; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and Lessee has given its written notice to the Owner Participant and Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent have entered into the Refunding Agreement [NW 1996 B], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 B], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue -2- 3 new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1996 B], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 B] dated as of June 3, 1996 (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in Section 1 of the Refunding 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing 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 Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") entered into three revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of Certificates of each Pass Through Trust, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent entered into the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Participation Agreement is amended as follows: -3- 4 SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 2. AMENDMENT OF SECTION 7(b)(i) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(i) of the Original Participation Agreement is hereby amended by adding the words "or the issuance or transfer of the Pass Through Certificates" after the words "transfer thereof" in clause (E) thereof. SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation Agreement is hereby amended by (i) deleting the words "other than a Loan Participant" from clauses (1), (3), and (10) thereof; (ii) deleting clauses (2) and (4) thereof in their entirety and substituting therefor "Intentionally Omitted", (iii) deleting the words "a Loan Participant" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (iv) deleting the words "any Loan Participant or any Certificate Holder" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (B) in clause (11) thereof and substituting therefor "or", (vi) deleting "(C)" in clause (11) thereof and substituting therefor "(B)", and (vii) deleting the parenthetical clause and the first proviso from clause (13) thereof. SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation Agreement is hereby amended by deleting the second sentence in the last paragraph thereof. SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement is hereby amended by (I) deleting the words "other than a Loan Participant" from the first sentence thereof and (ii) deleting the second and third sentences thereof. SECTION 6. AMENDMENT OF SECTION 7(b)(xii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(xii) of the Original Participation Agreement is hereby amended by (i) ) adding the words "or Pass Through Trustee" after the words "Indenture Trustee", (ii) deleting the words "U.S. Withholding Tax" the first time such words appear therein and substituting therefor the words and punctuation "any Income Tax imposed by the United States Federal government required to be withheld from payments on the Secured Certificates (a 'U.S. WITHHOLDING TAX')", (iii) adding the words "or any Pass Through Certificate, respectively" after the words "Secured Certificate" and (iv) adding the words "or any Pass Through Certificate" after the words "Secured Certificates". SECTION 7. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement is hereby amended by (i) deleting the word "and" between the words "expenses" and "Transaction Expenses" in the second parenthetical phrase of the first paragraph thereof and substituting a comma therefor, (ii) inserting after the phrase "to Section 16 hereof" in such second parenthetical phrase the -4- 5 words "and Refinancing Expenses to the extent not required to be paid by the Owner Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement", (iii) adding the words and punctuation "and, only in the case of an Indemnitee who is the Owner Participant or the Owner Trustee, the Intercreditor Agreement, the Liquidity Facilities and the Pass Through Trust Agreements or any of the transactions contemplated thereby and, only in the case of an Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words "respect thereof" in the first clause (A) thereof, (iv) adding the words and punctuation ", the Pass Through Certificates" after the words "Secured Certificates" the first time such words appear in the first clause (D) thereof, and (v) adding the words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after the words "Operative Documents" in the second clause (A) thereof and in the second clause (B) thereof. SECTION 8. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby amended by (i) deleting the words "each of the Loan Participants" and substituting therefor the words "the Indenture Trustee" in the first line thereof and (ii) inserting the word "or" after the phrase "result of such reregistration" in clause (D) thereof. SECTION 9. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation "the Loan Participants," each time they appear in the second sentence thereof, (ii) deleting the words "the Majority in Interest of the Certificate Holders" from the first proviso of the second sentence thereof and substituting therefor the words "Indenture Trustee"; (iii) deleting the "," between the words "Owner Trustee" and "the Indenture Trustee" from clause (N) of the third sentence thereof and substituting therefor "and", (iv) deleting the words "and the Loan Participants" from clause (N) of the third sentence thereof, (v) deleting the words "to such persons" in clause (N) of the third sentence thereof and inserting in lieu thereof the words "to the Owner Trustee and Lessee", (vi) deleting the words and punctuation "the Majority in Interest of the Certificate Holders," and "and the Indenture Trustee" from clause (O) of the third sentence thereof, and deleting the "," before the word "Lessee" in such clause and substituting therefor the word "and", and (vii) deleting the words and punctuation "the Loan Participants," from the fifth sentence thereof. SECTION 10. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement is hereby amended by (i) adding the words "other than the Pass Through Trustee" after the words "Each Loan Participant" in the first sentence thereof, and (ii) adding a new sentence to the end thereof to read as follows: "The Pass Through Trustee agrees that it will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of the initial supplement (other than the initial supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust Agreement without the prior written consent of the Owner Participant." -5- 6 SECTION 11. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is hereby amended by deleting the fourth and fifth sentences thereof. SECTION 12. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby amended by (i) deleting the words "each Loan Participant" therefrom and (ii) adding a new second paragraph thereto at the end thereof: 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. SECTION 13. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement is hereby amended by (i) deleting the words "each" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii) deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Indenture Trustee and the Owner", (iii) inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement Assignment", the words and punctuation ", the Refunding Agreement", (iv) deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and substituting therefor the words "the Owner", and (v) deleting the word "Participants" the first time it appears in Section 8(y)(A)(iv) and substituting therefor the words "the Indenture Trustee and the Owner Participant". SECTION 14. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 15. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 16. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 17. AMENDMENT OF SECTION 9 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. -6- 7 SECTION 18. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", the Loan Participants" from clause (A) thereof, (ii) deleting the words "Loan Participants" the second time they appear in clause (B) thereof and substituting therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05" from clause (iii) of the second sentence thereof. SECTION 19. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby amended by deleting the words "at the foot of this Agreement" in clause (A) of the second sentence thereof and substituting therefor the words "on the signature pages to the Refunding Agreement". SECTION 20. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is hereby amended by (i) deleting the words "Loan Participants" each time they appear in clauses (A), (B), and (D) thereof and substituting therefor the words "Indenture Trustee", (ii) deleting the "," both times it appears between the words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and substituting therefor "and", and (iii) deleting the words "and the Loan Participants" both times they appear in clause (E) thereof. SECTION 21. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Section 15. Miscellaneous. (a) The Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor. SECTION 22. AMENDMENT OF SECTION 17 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is hereby amended by adding the following new subclause (7) to clause (a) thereof: (7) in connection with any proposed refinancing, if, on the date which is two Business Days prior to the last date on which notice of revocation of redemption may be given pursuant to Section 2.12(b) of the Trust Indenture, the Owner Participant is not satisfied in its sole discretion that such refinancing will occur on the date specified for such refinancing in the notice provided pursuant to Section 2.11 of the Trust Indenture, then Lessee shall not effect such proposed refinancing and shall provide notice to such effect to the Indenture Trustee pursuant to Section 2.12(b) of the Trust Indenture. SECTION 23. AMENDMENT OF SECTION 18 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. -7- 8 SECTION 24. RATIFICATION. Except as hereby modified, the Original Participation Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Participation Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Participation Agreement or any word or phrase referring to a section or provision of the Participation Agreement is deemed for all purposes to be a reference to the Participation Agreement or such section or provision as amended pursuant to this Amendment. SECTION 25. MISCELLANEOUS. (a) Each of the parties hereto agrees that the transactions contemplated hereby shall constitute one of the three refinancing operations permitted in Section 17 of the Participation Agreement. (b) Each party hereto acknowledges and agrees that the Purchaser is a Loan Participant under the Participation Agreement, the Lease and the other Operative Documents, and is entitled to the benefits of the covenants and other provisions therein running in favor of the Loan Participants, and to the security purported to be afforded by the Trust Indenture, but that (i) the Purchaser has no liability arising out of any actions or inactions of the Original Loan Participants or any prior Certificate Holder or any event or condition which occurred or existed prior to the Closing, (ii) the Purchaser is making no representations or warranties other than those set forth in the Refunding Agreement, and (iii) the Purchaser has no liability or obligation under any covenant in any of such agreements for any period prior to the Closing. (c) This Amendment 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 Amendment 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 Amendment shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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. THIS AMENDMENT 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 AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -8- 9 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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: ___________________________________ Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: ___________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ___________________________________ Name: Title: [ ], as Owner Participant By: ___________________________________ Name: Title: -9- 10 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Subordination Agent By: ___________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee By: ___________________________________ Name: Title: -10- 11 SCHEDULE I TO PARTICIPATION AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. EX-4.F8 50 REFUNDING AGREEMENT - 1996 B 1 REFUNDING AGREEMENT [NW 1996 B] This REFUNDING AGREEMENT [NW 1996 B], dated as of June 3, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii) [_____________________], a [____________] corporation (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Participation Agreement (as defined below) as if the Closing Date had occurred. W I T N E S S E T H: WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, [INSERT BRIDGE LENDERS] as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 B], dated as of April 24, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust 2 Indenture and Security Agreement [NW 1996 B], dated as of April 24, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 B], dated April 30, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Lessee entered into the Lease Agreement [NW 1996 B] relating to the Aircraft, dated as of April 24, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 B] dated April 30, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 B], dated as of April 24, 1996 (the "TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 B] relating to the Aircraft, dated as of April 24, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor executed and delivered the Guarantee [NW 1996 B] dated as of April 24, 1996 (the "GUARANTEE") pursuant to which the Guarantor guaranteed certain obligations of the Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and the Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 B], dated as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; -2- 3 WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Trustee and the Lessee entered into the First Amendment to Lease Agreement [NW 1996 B], dated as of the date hereof (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"), containing amendments, modifications and additions necessary to give effect to the transactions described herein; WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent will enter into the First Amendment to Participation Agreement [NW 1996 B], dated as of the Refinancing Date (the "PA AMENDMENT NO. 1"; the Original Participation Agreement, as amended by the PA Amendment No. 1, the "PARTICIPATION AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 B] dated as of the date hereof (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing Secured Certificates bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will enter 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 Refinancing Date (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; -3- 4 NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on June 12, 1996 or on such other date agreed to by the parties hereto (the "REFINANCING DATE"): (i) immediately prior to the Closing, the Owner Participant shall pay to the Owner Trustee an amount equal to the unpaid interest on the Original Secured Certificates accrued up to but not including the Refinancing Date; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Refinancing Secured Certificates being issued to such Pass Through Trustee as set forth in clause (vii) below; (iii) the Owner Trustee shall pay to the Indenture Trustee for the benefit of the holders of the Original Secured Certificates an amount equal to the aggregate principal amount of Original Secured Certificates outstanding on the Refinancing Date, together with accrued and unpaid interest on the Original Secured Certificates up to but not including the Refinancing Date, and all other amounts payable to such holders under the Original Indenture and the Original Participation Agreement; (iv) pursuant to the Indenture, the Indenture Trustee shall disburse to the holders of the Original Secured Certificates the amounts of principal and interest, and other amounts, if any, described in clause (iii) above, owing to them on the Refinancing Date with respect to the Original Secured Certificates as a prepayment of the Original Secured Certificates; (v) simultaneously with the disbursement by the Indenture Trustee of amounts described in clause (iv) above to the holders of the Original Secured Certificates, the Indenture Trustee shall receive the Original Secured Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture; and (vii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Refinancing 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. -4- 5 (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) In case any Pass Through Trustee shall for any reason fail to purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on or prior to June 12, 1996 or such other date as shall be agreed in writing by the parties hereto, the written notice given by the Lessee pursuant to Section 17 of the Original Participation Agreement shall be deemed never to have been given, none of the Owner Participant, the Owner Trustee nor the Lessee shall have any obligation to pay to the holders of the Original Secured Certificates any amount in respect of the prepayment of the Original Secured Certificates, the Original Secured Certificates shall remain outstanding and in full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall not take place. (d) The closing (the "CLOSING") of the transactions described in this Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such other place as the parties hereto may agree. (e) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Refinancing Date. (f) In order to facilitate the transactions contemplated hereby, the Lessee and the Guarantor have entered into the Underwriting Agreement, dated as of the date hereof, among the Lessee, the Guarantor and the several underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to the terms and conditions hereof, the Lessee and the Guarantor will enter into each of the Pass Through Trust Agreements and will undertake to perform certain administrative and ministerial duties under such Pass Through Trust Agreements. SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured Certificates shall be payable as to principal in accordance with the terms of the Indenture, and the Refinancing Secured Certificates shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Refinancing Secured Certificates in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Refinancing Secured Certificates bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Refinancing Secured Certificates shall be dated and authenticated as of the Refinancing Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. -5- 6 SECTION 3. CONDITIONS PRECEDENT. The obligation of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee and the Owner Participant to make the payments and participate in the transactions contemplated by this Agreement on the Refinancing Date are subject to the fulfillment, prior to or on the Refinancing Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder, and paragraph (r) shall not be a condition precedent to the obligations of the Pass Through Trustee hereunder): (a) The Owner Trustee shall have tendered the Refinancing Secured Certificates to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Refinancing Secured Certificates and shall have tendered the Refinancing Secured Certificates to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts or conformed copies of the following documents and any such documents shall be reasonably satisfactory in form and substance to the Owner Participant: (1) this Agreement; (2) the Lease Amendment No. 1; (3) the Indenture; (4) the PA Amendment No. 1; (5) each of the Pass Through Trust Agreements; (6) the Intercreditor Agreement; and (7) the Liquidity Facility for each of the Class A, Class B and Class C Trusts. (c) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Lessee and the Guarantor (as the case may be) as to the person or persons authorized to execute and deliver this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the TIA Amendment No. 1 and any other documents to be executed on behalf of the Lessee or the Guarantor (as the case may be) in connection with the -6- 7 transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Lessee and the Guarantor or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the 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 the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby; and (3) a copy of the certificate of incorporation of the Lessee and the Guarantor, certified by the Secretary of State of the State of Minnesota in the case of the 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 the Lessee and the Guarantor, certified by the Secretary or Assistant Secretary of the 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 the 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 Refinancing Date, as to the due incorporation and good standing of the Lessee or the Guarantor (as the case may be) in such state. (d) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received a certificate signed by an authorized officer of the Lessee (and, with respect to the matters set forth in clauses (4) and (5) below, of the Guarantor), dated the Refinancing Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Original Lease and has a current, valid certificate of airworthiness; (2) the FAA Bill of Sale, the Original Lease and the Original Indenture have been duly recorded, and the Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49, United States Code, relating to aviation (the "FEDERAL AVIATION ACT"); (3) the Aircraft has been registered with the FAA in the name of the Owner Trustee, and the Lessee has authority to operate the Aircraft; (4) the representations and warranties contained herein of the Lessee and the Guarantor are correct as though made on and as of the Refinancing Date, except to the extent that such representations and -7- 8 warranties (other than those contained in clause (v) of Section 8(d)) relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (5) there has been no material adverse change in the financial condition of the Guarantor and its subsidiaries, taken as a whole, since December 31, 1995. (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement, the Indenture, the PA Amendment No. 1, 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 and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary or an Assistant Secretary of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Refinancing 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). (f) The Pass Through Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement, the PA Amendment No. 1, and any other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons; -8- 9 (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; (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 Refinancing Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Refinancing 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). (g) The Pass Through Trustee and the Owner Trustee each shall have received a certificate signed by an authorized officer of the Owner Participant, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Refinancing 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). (h) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an independent insurance broker's report as to the due compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (i) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for the Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal department, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee and the Owner Participant each shall have received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form and substance satisfactory to each of them. -9- 10 (l) The Pass Through Trustee and the Owner Trustee each shall have received an opinion addressed to it from Fulbright & Jaworski L.L.P., special counsel for the Owner Participant, and an opinion addressed to it from corporate counsel to the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee shall have received an opinion of White & Case, special counsel for the Liquidity Provider, and in house German counsel for the Liquidity Provider, each in form and substance satisfactory to the Pass Through Trustee. (n) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The 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 Refinancing Secured Certificates to be purchased from the Owner Trustee. (p) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustees to make the payments described in Section l(a)(ii) or for the Owner Trustee or the Owner Participant to participate in the transactions contemplated by this Agreement on the Refinancing Date. (q) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee or the Guarantor which are required in connection with the Pass Through Trustee's making of the payments described in Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Refinancing Date shall have been duly obtained. (r) The Lessee and the Owner Participant shall each have executed and delivered to the other the TIA Amendment No. 1. Promptly following the recording of the Lease Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of the Lease Amendment No. 1 and the Indenture. SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in the transactions contemplated by this Agreement and to execute and deliver each of the Pass Through Trust Agreements and -10- 11 the PA Amendment No. 1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion referred to in subsections (j) through (n) of Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter from counsel rendering such opinion authorizing the Lessee and the Guarantor to rely on such opinion as if it were addressed to the Lessee and the Guarantor, (ii) each certificate referred to in subsections (e) through (g) of Section 3, (iii) executed counterparts or conformed copies of the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1, and (iv) such other documents and evidence with respect to each other party hereto as the Lessee, the Guarantor or their counsel may reasonably request in order to establish the due consummation of the transactions contemplated by this Agreement, the taking of all necessary action in connection therewith and compliance with the conditions herein set forth. (b) The respective obligations of each of the Lessee, the Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Pass Through Trustee are correct as though made on and as of the Refinancing 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), (ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) 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. SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Indenture. The Lessee and the Guarantor, by execution and delivery hereof, consent to such execution and delivery of the Indenture. The Indenture shall be effective as of the Refinancing Date. SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, by execution and delivery hereof, consent to the amendment to the Original Lease effected by, and request and instruct the Owner Trustee to execute and deliver, the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1 shall be effective as provided therein. SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner -11- 12 Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the execution and delivery of the PA Amendment No. 1 by each of the parties thereto, the Original Participation Agreement shall be amended as set forth in the PA Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall be a party thereto from and after the Refinancing Date to the extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing Date. SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) each of the 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 on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under (i) in the case of the Lessee, this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 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; (b) the 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; (c) the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, and the performance of the obligations of the Lessee or the Guarantor (as the case may be) under this Agreement, the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, have been duly authorized by all necessary corporate action on the part of the Lessee or the Guarantor, do not -12- 13 require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the 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 the Lessee or the Guarantor (as the case may be) or the certificate of incorporation or by-laws of the 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 the Lessee or the Guarantor (as the case may be) under, any indenture, mortgage, contract or other agreement to which the 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; (d) neither the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 or any other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, nor the performance of the obligations of the Lessee or the Guarantor (as the case may be) hereunder or under the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement or the other Operative Documents to which the Lessee or the Guarantor (as the case may be) is a party, nor the consummation by the Lessee or the Guarantor (as the case may be) 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 in respect of, the Department of Transportation, the FAA, or any other federal, state or foreign governmental authority having jurisdiction, other than (i) 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, (ii) 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, (iii) the consents, approvals, notices, registrations and other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement, (iv) the registrations and filings referred to in Section 8(f), and (v) 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; -13- 14 (e) this Agreement constitutes, and each of the Participation Agreement, the Pass Through Trust Agreements, the Tax Indemnity Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment No. 1 and the Lease Amendment No. 1 shall have been executed and delivered by each of the parties thereto, will constitute, the legal, valid and binding obligations of the Lessee or the Guarantor (as the case may be) enforceable against the 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, 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; (f) except for the filings and registrations referred to in Section 7(a)(vi) of the Participation Agreement, such filings and registrations as shall have been made or effected subsequent thereto and the filing for recording pursuant to the Federal Aviation Act of the Indenture and the Lease Amendment No. 1, 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 the 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 other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease and the Lease Amendment No. 1 (to the extent the Lease constitutes chattel paper), and the filing of continuation statements at periodic intervals with respect to the Uniform Commercial Code financing statements in effect on the Refinancing Date covering the security interests created by the Original Indenture or describing the Lease as a lease; (g) neither the 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; (h) neither the Lessee nor the Guarantor is an "investment company" within the meaning of the Investment Company Act of 1940, as amended; -14- 15 (i) 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; and (j) 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. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the parties below represents, warrants and covenants to each of the other parties to this Agreement and to the Liquidity Provider as follows: (a) The Indenture Trustee in its individual capacity represents, warrants and covenants that: (1) 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 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 PA Amendment No. 1, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party; (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, the PA Amendment No. 1 and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party 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; (3) this Agreement constitutes, and the Participation Agreement, when the PA Amendment No. 1 has been executed and delivered by the Indenture Trustee, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the -15- 16 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; (4) 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 (5) there are no Indenture Trustee Liens on the Aircraft or any portion of the Trust Estate. (b) The Owner Trustee, in its individual capacity (except as provided in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7) and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and (11) below) as Owner Trustee, represents and warrants that: (1) 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, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver the Trust Agreement, has the corporate power and authority to carry out the terms of the Trust Agreement, and has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of the Trust Agreement by the Owner Participant), as Owner Trustee, and to the extent expressly provided herein or therein, in its individual capacity, the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Refinancing Secured Certificates, the Lease, the PA Amendment No. 1 and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) 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 and (assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant) this Agreement constitutes, and each of the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Indenture, when entered into, and the Lease, when the Lease Amendment No. 1 shall have been entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, -16- 17 in its individual capacity or as Owner Trustee, as the case may be, enforceable against it in its individual capacity or as Owner Trustee, as the case may be, in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, the Owner Trustee has duly authorized, and on the Refinancing Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Refinancing Secured Certificates pursuant to the terms and provisions hereof and of the Indenture, and each Refinancing Secured Certificate on the Refinancing Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Refinancing Secured Certificate and the Indenture; (4) neither the execution and delivery by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, the Original Participation Agreement, the PA Amendment No. 1, the Trust Agreement, the Original Indenture, the Indenture, the Original Lease, the Lease Amendment No. 1, the Refinancing Secured Certificates or any other Operative Document to which it is a party, 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 hereby or 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 hereof and 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; (5) 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, -17- 18 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 Indenture, the Lease or the Refinancing 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 8(d); (6) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (7) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (8) 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 redemption of the Original Secured Certificates or the issuance of the Refinancing 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 (1), (2), (3) and (4) above, that, in each case, would not have been imposed if the Trust Estate were -18- 19 not located in the State of Utah and First Security Bank of Utah, 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; (9) 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 (1), (2), (3) and (4) above; (10) 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; (11) the Owner Trustee has not, in its individual capacity or as Owner Trustee, directly or indirectly offered any Refinancing 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, the Original Loan Participants 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 Refinancing 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; and (12) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) 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, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Original Participation Agreement, the Tax Indemnity Agreement, the Trust Agreement, the TIA Amendment No. 1 and the PA Amendment No. 1; this Agreement has been duly authorized, executed and delivered by it; and each of this Agreement, the Tax Indemnity -19- 20 Agreement and the Trust Agreement constitutes, and the Participation Agreement when the PA Amendment No. 1 shall have been entered into, and the Tax Indemnity Agreement when the TIA Amendment No. 1 shall have been entered into, will constitute, the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their 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; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 or any other Operative Document to which it is a party nor (B) compliance by it with all of the provisions hereof or 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, 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; (3) 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 or was required, as the case may be, for the due execution, delivery or performance by it of this Agreement, the TIA Amendment No. 1 and the PA Amendment No. 1; (4) there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or arbitrator which would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Participation Agreement, the Tax Indemnity Agreement and the Trust Agreement; (5) 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 refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Refinancing 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 -20- 21 acquire any of the same from, any Person; the Owner Participant's interest in the Trust Estate and the Trust Agreement was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Refinancing 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 that 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 Indenture, (D) which the Owner Participant 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). (d) The Pass Through Trustee represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements, the Intercreditor Agreement and the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1, and (upon execution and delivery of the PA Amendment No. 1), the Participation Agreement, will 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 -21- 22 affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the performance by the Pass Through Trustee of the Participation Agreement, the purchase by the Pass Through Trustee of the Refinancing 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; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby or by the Participation Agreement, 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; (5) 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, the Intercreditor Agreement or the Participation 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 Refinancing 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 as a grantor trust under -22- 23 subpart E, Part I of Subchapter J of the Code, such trusts will not be subject to any Taxes imposed by the Commonwealth of Massachusetts or any political subdivision thereof; (6) 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 Participation Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) 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, the Lessee or the Guarantor. (e) The Subordination Agent represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement and, when the PA Amendment No. 1 has been executed and delivered by each of the parties thereto, the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent each of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery by the Subordination Agent of the PA Amendment No. 1), the Participation Agreement, will constitute, the legal, valid and binding -23- 24 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; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the Participation Agreement, or the performance by the Subordination Agent of the Participation 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; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby or by the Participation Agreement requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement, the PA Amendment No. 1 or the Participation 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 Refinancing 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); -24- 25 (6) 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 PA Amendment No. 1, the Participation Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter, the Lessee or the Guarantor. SECTION 10. NOTICES. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and any such notice shall become effective upon being deposited in the United States mail, with proper postage for first-class registered or certified mail prepaid, or when delivered personally or, if promptly confirmed by mail as provided above, when dispatched by facsimile or other written telecommunication, addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement. SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below and subject to the cap set forth in Section 17(a)(5) of the Participation Agreement, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Indenture Trustee and the Original Loan Participants in connection with the transactions contemplated by this 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) shall be paid promptly by the Owner Participant, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Refinancing Secured Certificates issued under the Indenture of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, -25- 26 Oklahoma, (D) Shearman & Sterling, special counsel for the Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special counsel for the Original Loan Participants; (2) the reasonable fees, expenses and disbursements of [___________], special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the total amount of Transaction Expenses paid by the Owner Participant pursuant to Section 16(a) of the Participation Agreement and Refinancing Expenses exceed 2.8% of Lessor's Cost, the Lessee shall pay directly any and all Refinancing Expenses to the extent of such excess. In the event that the transactions contemplated by this Section 11 and the agreements referred to herein are not consummated, the Lessee shall bear and pay all costs, expenses and fees referred to in this Section 11; provided that if the transactions fail to be consummated as a result of the failure of the Owner Participant to act in good faith in consummating the transactions, or to otherwise comply with the terms hereof, the Owner Participant shall bear and pay its own fees, costs and expenses (including, without limitation, the fees and expenses of its special counsel) and the Lessee shall pay all other reasonable fees, costs and expenses as aforesaid. SECTION 12. 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. SECTION 13. MISCELLANEOUS. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations, warranties and agreements herein of the Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee, and the Lessee's, the Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the Subordination Agent's and the Pass Through Trustee's -26- 27 obligations under any and all thereof, shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. (b) This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only 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 each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and, subject to the terms of the Participation 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 Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject to the provisions of the Participation Agreement, its successors and permitted assigns. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. No purchaser or holder of any Refinancing Secured Certificates shall be deemed to be a successor or assign of any holder of the Original Secured Certificates. SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -27- 28 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. NORTHWEST AIRLINES, INC., Lessee By: _________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -28- 29 NORTHWEST AIRLINES CORPORATION, Guarantor By: _________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -29- 30 [_________________________] Owner Participant By: _____________________________________ Title: Address: Attn: Telecopy No.: -30- 31 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: ___________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -31- 32 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: ___________________________________ Title: Address: c/o State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -32- 33 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee, Indenture Trustee By: ___________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -33- 34 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: ___________________________________ Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Facsimile: (801) 246-5053 -34- 35 SCHEDULE I TO REFUNDING AGREEMENT PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1A dated as of the Closing Date. 2. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1B dated as of the Closing Date. 3. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1C dated as of the Closing Date. 36 SCHEDULE II TO REFUNDING AGREEMENT REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
Interest Rate Purchaser and Maturity --------- ------------ Northwest Airlines Principal Purchase Pass Through Trust Amount Price --------- -------- 1996-1A [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1B [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1C [ _ ]% Refinancing Secured Certificates due [ ] $[ ]
EX-4.G1 51 TRUST AGREEMENT-1996 C 1 TRUST AGREEMENT [NW 1996 C] This TRUST AGREEMENT [NW 1996 C] dated as of April 26, 1996 between [ ], a [ ] corporation (the "ORIGINAL OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); W I T N E S S E T H : ARTICLE I DEFINITIONS AND TERMS SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall otherwise require and except as contained in this Section 1.01, the capitalized terms used herein shall have the respective meanings assigned thereto in the Lease (as hereinafter defined) for all purposes hereof. All definitions contained in this Section 1.01 shall be equally applicable to both the singular and plural forms of the terms defined. For all purposes of this Trust Agreement the following terms shall have the following meanings: "Excluded Payments" has the meaning ascribed to such term in the Trust Indenture. "Indenture Event of Default" has the meaning which the term "Event of Default" has in the Trust Indenture. "Lease" means that certain Lease Agreement [NW 1996 C], to be dated as of the date hereof, and to be entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of this Trust Agreement, as said Lease Agreement may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Trust Agreement. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Event of Default" has the meaning which the term "Event of Default" has in the Lease. 2 "Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns. "Owner Participant" means the Original Owner Participant and each Subsequent Owner Participant to the extent that the same shall, at the relevant time, have an Ownership Interest. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by this Trust Agreement. "Participation Agreement" has the meaning ascribed to such term in the Lease. "Replacement Airframe" has the meaning ascribed to such term in the Trust Indenture. "Replacement Engine" has the meaning ascribed to such term in the Trust Indenture. "Subsequent Owner Participant" means any Person to which the Original Owner Participant or any transferee from the Original Owner Participant or any Subsequent Owner Participant shall have transferred at any time after the Delivery Date its undivided right, title and interest originally held by the Original Owner Participant in this Trust Agreement, the Trust Estate and the Participation Agreement, to the extent permitted by Section 8.1 of this Trust Agreement and Section 8 of the Participation Agreement; provided that in the event of any such transfer so long as the Lease shall be in effect or any Secured Certificates remain unpaid, such transferee and its transferor shall have complied with all of the terms of Section 8(n) of the Participation Agreement. "Trust Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant, the Loan Participants or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its individual capacity, or to the Loan Participants or any other holder of a Secured Certificate, or to any of their respective directors, officers, employees, servants and agents, pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. 2 3 "Trust Indenture Estate" has the meaning ascribed to such term in the Trust Indenture. "Trust Office" shall mean the principal corporate trust office of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or the principal corporate trust office of any successor Owner Trustee. "Trust Supplement" means a supplement to the Trust Indenture and to this Trust Agreement in substantially the form of Exhibit A to the Trust Indenture which shall particularly describe the Aircraft, and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Trust Agreement. ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS; DECLARATION OF TRUST SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant hereby authorizes and directs the Owner Trustee to execute and the Owner Trustee agrees for the benefit of the Owner Participant that it will on or before the Delivery Date, execute and deliver the Operative Documents and any other agreements, instruments or documents to which the Owner Trustee is a party in the respective forms thereof in which delivered from time to time by the Owner Participant to the Owner Trustee for execution and delivery and, subject to the terms hereof, to perform its duties and, upon instructions from the Owner Participant, exercise its rights under said Operative Documents in accordance with the terms thereof. SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the Owner Participant, subject, however, to the provisions of and the Lien created by the Trust Indenture and to the provisions of the Lease and the Participation Agreement. ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF SECURED CERTIFICATES SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the 3 4 benefit of the Owner Participant that it will, on the Delivery Date, subject to due compliance with the terms of Section 3.02 hereof: (a) purchase the Aircraft pursuant to the Participation Agreement and the Bill of Sale; (b) accept from Lessee the delivery of the Bill of Sale and the FAA Bill of Sale; (c) cause the Aircraft to be leased to Lessee under the Lease, and in furtherance thereof execute and deliver a Lease Supplement covering the Aircraft; (d) execute and deliver the Trust Supplement covering the Aircraft; (e) issue to the Loan Participants Secured Certificates in the amounts and otherwise as provided in Section 1(a) of the Participation Agreement; (f) execute and deliver the financing statements referred to in Section 4(a)(vi) of the Participation Agreement, together with all other agreements, documents and instruments referred to in Section 4 of the Participation Agreement to which the Owner Trustee is a party; (g) effect the registration of the Aircraft in the name of the Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of Sale; (ii) an application for registration of the Aircraft in the name of the Owner Trustee (including without limitation an affidavit from the Owner Trustee in compliance with the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) this Trust Agreement; and (h) execute and deliver all such other instruments, documents or certificates and take all such other actions in accordance with the directions of the Owner Participant, as the Owner Participant may deem necessary or advisable in connection with the transactions contemplated hereby. SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation of the Owner Trustee to take the action required by Section 3.01 hereof with respect to the Aircraft shall be subject to the following conditions precedent: (a) the Original Owner Participant shall have made the full amount of its Commitment set forth in Schedule II of the Participation 4 5 Agreement available to the Owner Trustee, in immediately available funds, in accordance with Section 1 of the Participation Agreement; and (b) the Owner Participant shall have notified the Owner Trustee that the terms and conditions of Section 4 of the Participation Agreement, insofar as they relate to the Aircraft, shall have been complied with in a manner satisfactory to the Original Owner Participant. SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, take the actions specified to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in accordance with the provisions of such Section 8(x) provided Lessee shall have paid all amounts required by such Section 19(d) and 8(x). SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR REPLACEMENT ENGINES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of a Replacement Airframe and Replacement Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a Replacement Engine being substituted pursuant to Section 10(b) of the Lease, subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease, as the case may be: (a) to the extent not previously accomplished by a prior authorization, authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees of Lessee) to accept delivery of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engines; (b) accept from Lessee or other vendor of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine a bill of sale or bills of sale (if tendered), and the invoice, if any, with respect to the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine being furnished pursuant to Section 10(a) or (b) of the Lease; (c) in the case of a Replacement Airframe, make application to the Federal Aviation Administration for the registration in the name of the Owner Trustee of the Aircraft of which such Replacement Airframe is a part; 5 6 (d) execute and deliver a Lease Supplement and a Trust Supplement covering (i) the Aircraft of which such Replacement Airframe is part or (ii) such Replacement Engine, as the case may be; (e) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) the Airframe and Engines (if any) or the Engine being replaced to Lessee; (f) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Airframe and Engines or engines (if any) or the Engine or engine being replaced from the lien created under the Trust Indenture and release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such replaced Airframe and Engines, if any, or Engine) from the assignment and pledge under the Trust Indenture; and (g) upon instructions from the Owner Participant, take such further action as may be contemplated by clauses (A) and (B) of the third paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of Section 10(b) of the Lease, as the case may be. SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In the event of the substitution of a Replacement Airframe for the Airframe or the substitution of a Replacement Engine for any Engine or engine, all provisions of this Trust Agreement relating to such replaced Airframe or Engine or engine shall be applicable to such Replacement Airframe or Replacement Engine with the same force and effect as if such Replacement Airframe or Replacement Engine were the same airframe or engine as the Airframe or Engine being replaced but for the Event of Loss with respect to such Airframe or Engine. SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of an engine being transferred to the Owner Trustee pursuant to Section 5(b) of the Lease, subject to due compliance with the terms of such Section 5(b): (a) accept from Lessee the bill of sale with respect to such engine contemplated by such Section 5(b) (if tendered); (b) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would 6 7 be Lessor Liens but for the proviso in the definition of Lessor Liens) and to an Engine to Lessee as contemplated by such Section 5(b); and (c) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Engine being transferred to Lessee pursuant to such Section 5(b) from the lien of the Trust Indenture and to release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such Engine) from the assignment and pledge under the Trust Indenture. ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture Trustee. Until the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with the provisions of Article III of the Trust Indenture. (b) Payments to Owner Trustee; Other Parties. After the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, any payment of the type referred to in Section 4.01(a) hereof (other than Excluded Payments) received by the Owner Trustee, any payments received from the Indenture Trustee other than as specified in Section 4.01(d) hereof and any other amount received as part of the Trust Estate and for the application or distribution of which no provision is made herein, shall be distributed forthwith upon receipt by the Owner Trustee in the following order of priority: first, so much of such payment as shall be required to reimburse the Owner Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof shall be retained by the Owner Trustee; second, so much of the remainder for which provision as to the application thereof is contained in the Lease or any of the other Operative Documents shall be applied and distributed in accordance with the terms of the Lease or such other Operative Document; and third, the balance, if any, shall be paid to the Owner Participant. (c) Certain Distributions to Owner Participant. All amounts from time to time distributable by the Indenture Trustee to the Owner Participant pursuant to the Trust 7 8 Indenture shall, if paid to the Owner Trustee, be distributed by the Owner Trustee to the Owner Participant in accordance with the provisions of Article III of the Trust Indenture. (d) Excluded Payments. Any Excluded Payments received by the Owner Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded Payments are payable under the provisions of the Participation Agreement, the Tax Indemnity Agreement, the Lease and the Operative Documents on the day received (or on the next succeeding Business Day if the funds to be so distributed shall not have been received by the Owner Trustee by 12:00 noon, New York City time). (e) Multiple Owner Participants. If as a result of a transfer by an Owner Participant under Section 8.01 of this Trust Agreement, there is more than one Owner Participant hereunder, each such Owner Participant shall hold in proportion to its respective beneficial interest in the Trust Estate, an undivided beneficial interest in the entire Trust Estate and is entitled to receive ratably with any other Owner Participant payments distributable by the Owner Trustee hereunder. No Owner Participant shall have legal title to the Aircraft or any other portion of the Trust Estate. SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make distributions or cause distributions to be made to the Owner Participant pursuant to this Article IV by transferring by wire transfer in immediately available funds on the day received (or the next succeeding Business Day if the funds to be so distributed shall not have been received by the Owner Trustee by 12:00 noon, New York time, the amount to be distributed to such account or accounts of the Owner Participant as the Owner Participant may designate from time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner Trustee will, if so requested by the Owner Participant in writing, pay any or all amounts payable to the Owner Participant pursuant to this Article IV either (i) by crediting such amount or amounts to an account or accounts maintained by the Owner Participant with the Owner Trustee in its individual capacity in immediately available funds, (ii) by payment at the Trust Office of the Owner Trustee, in immediately available funds, or (iii) by mailing an official bank check or checks in such amount or amounts payable to the Owner Participant at such address as the Owner Participant shall have designated in writing to the Owner Trustee. ARTICLE V DUTIES OF THE OWNER TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall have knowledge of a Lease Event of Default or Indenture Event of Default (or an event which with the passage of time or the giving of notice or both would constitute a Lease Event of Default or an Indenture Event of Default) the Owner Trustee shall give to the 8 9 Owner Participant prompt telephonic or telecopy notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event. The notice shall set forth in reasonable detail the facts and circumstances known to it with respect to such Lease Event of Default or Indenture Event of Default. Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain from taking such action, not inconsistent with the provisions of the Trust Indenture, with respect to such Lease Event of Default, Indenture Event of Default or other event as the Owner Trustee shall be directed in writing by the Owner Participant. If the Owner Trustee shall not have received instructions as above provided within thirty (30) days after the mailing of such notice to the Owner Participant, the Owner Trustee until instructed otherwise in accordance with the preceding sentence may, but shall be under no duty to, take or refrain from taking such action with respect to such Lease Event of Default, Indenture Event of Default or other event, not inconsistent with the provisions of the Trust Indenture, as it shall deem advisable in the best interests of the Owner Participant. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by an officer of FSBU in the Corporate Trust Department, the Owner Trustee shall not be deemed to have knowledge of a Lease Event of Default, Indenture Event of Default or other event referred to in this Section 5.01 unless notified in writing by the Indenture Trustee, the Owner Participant or Lessee. SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of Sections 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of the Owner Participant, the Owner Trustee will take such of the following actions, not inconsistent with the provisions of the Trust Indenture, as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder or under any of the Operative Documents to which the Owner Trustee is a party or in respect of all or any part of the Trust Estate as shall be specified in such instructions; (ii) take such action to preserve or protect the Trust Estate (including the discharge of Liens) as may be specified in such instructions; (iii) approve as satisfactory to it all matters required by the terms of the Lease or the other Operative Documents to be satisfactory to the Owner Trustee, it being understood that without written instructions 9 10 of the Owner Participant, the Owner Trustee shall not approve any such matter as satisfactory to it (it being understood that the provisions of Sections 3.03, 3.04 and 3.06 hereof do not constitute instructions by the Owner Participant for the Owner Trustee to approve of or consent to the matters to be approved of or consented to by the Owner Trustee in the sections of the Lease referred to in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of Lessee under the Operative Documents, after the expiration or earlier termination of the Lease, deliver the Aircraft to the Owner Participant in accordance with such instructions, convey all of the Owner Trustee's right, title and interest in and to the Aircraft for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or net lease the Aircraft on such terms and to such lessee or lessees as shall be designated in such instructions. SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be required to take any action under Section 5.01 (other than the giving of the notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have been indemnified by the Owner Participant, in manner and form satisfactory to the Owner Trustee, against any liability, cost or expense (including reasonable counsel fees and disbursements) which may be incurred in connection therewith; and, if the Owner Participant shall have directed the Owner Trustee to take any such action or refrain from taking any action, the Owner Participant agrees to furnish such indemnity as shall be required and, in addition, to the extent not otherwise paid pursuant to the provisions of the Lease or of the Participation Agreement, to pay the reasonable compensation of the Owner Trustee for the services performed or to be performed by it pursuant to such direction and any reasonable fees and disbursements of counsel or agents employed by the Owner Trustee in connection therewith. The Owner Trustee shall not be required to take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably determine, or shall have been advised by counsel, that such action is contrary to the terms of any of the Operative Documents to which the Owner Trustee is a party, or is otherwise contrary to law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with any of the Operative Documents to which the Owner Trustee is a party, except as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, or (to the extent not inconsistent with the provisions of the Trust Indenture) as expressly provided by the terms hereof or in written instructions from the Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and no implied 10 11 duties or obligations shall be read into this Trust Agreement against the Owner Trustee. FSBU agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof) promptly take such action as may be necessary to duly discharge and satisfy in full all Lessor Liens attributable to it in its individual capacity which it is required to discharge pursuant to Section 8(h) of the Participation Agreement and otherwise comply with the terms of said Section binding on it. SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to the contrary notwithstanding, the Owner Trustee shall comply with the provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of special counsel for the Owner Trustee, of all the applicable conditions precedent specified in Section 3.02 hereof and in Section 4 of the Participation Agreement. SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to, and the Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate except (i) as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, (ii) as expressly provided by the terms hereof, or (iii) as expressly provided in written instructions from the Owner Participant pursuant to Section 5.01 or 5.02 hereof. ARTICLE VI THE OWNER TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts hereby created and agrees to perform the same but only upon the terms hereof applicable to it. The Owner Trustee also agrees to receive and disburse all monies received by it constituting part of the Trust Estate upon the terms hereof. FSBU shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence, (b) for performance of the terms of the last sentence of Section 5.04 hereof and the first sentence of Section 5.01 hereof, (c) for its or the Owner Trustee's failure to use ordinary care to disburse funds, (d) for liabilities that may result from the inaccuracy of any representation or warranty of it (or from the failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation Agreement and (e) for any Tax based on or measured by any fees, commissions or compensation received by it for acting as trustee in connection with any of the transactions contemplated by the Operative Documents. 11 12 SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with written instructions furnished pursuant to Section 5.02 hereof and except as provided in, and without limiting the generality of, Sections 3.01 and 5.04 hereof and the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU shall have any duty (i) to see to any recording or filing of any Operative Document or of any supplement to any thereof or to see to the maintenance of any such recording or filing or any other filing of reports with the Federal Aviation Administration or other governmental agencies, except that FSBU, in its individual capacity, shall comply with the reporting requirements set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall, to the extent that information for that purpose is supplied by Lessee pursuant to any of the Operative Documents, complete and timely submit (and furnish the Owner Participant with a copy of) any and all reports relating to the Aircraft which may from time to time be required by the Federal Aviation Administration or any government or governmental authority having jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, other than to forward to the Owner Participant copies of all reports and other written information which the Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against any part of the Trust Indenture Estate or the Trust Estate, except as provided in Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and records with respect to the Aircraft at any time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease or any other Operative Document. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity warrants that on the Delivery Date the Owner Trustee shall have received whatever title was conveyed to it by Lessee and that the Aircraft shall during the Term be free of Lessor Liens attributable to it, or (b) any representation or warranty as to the validity, legality or enforceability of this Trust Agreement or any Operative Document to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof except to the extent that any such statement is expressly made herein or therein as a representation by FSBU in its individual capacity or by the Owner Trustee and except that FSBU in its individual capacity hereby represents and warrants that this Trust Agreement has been, and (assuming due 12 13 authorization, execution and delivery by the Original Owner Participant of this Trust Agreement) the Operative Documents to which it or the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by it or the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of itself or the Owner Trustee, as the case may be and that this Trust Agreement constitutes the legal, valid and binding obligation of FSBU or the Owner Trustee, as the case may be, enforceable against FSBU or the Owner Trustee, as the case may be, in accordance with its terms. SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as provided in Section 22 of the Lease, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law, and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The Owner Trustee shall incur no liability to anyone in acting in reliance upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Unless other evidence in respect thereof is specifically prescribed herein, any request, direction, order or demand of the Owner Participant or Lessee mentioned herein or in any of the Operative Documents to which the Owner Trustee is a party shall be sufficiently evidenced by written instruments signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director and in the name of the Owner Participant or Lessee, as the case may be. The Owner Trustee may accept a copy of a resolution of the Board of Directors or Executive Committee of Lessee, certified by the secretary or any assistant secretary of Lessee as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or Committee and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Owner Trustee may for all purposes hereof rely on a certificate signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. In the administration of trusts hereunder, the Owner Trustee may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may, at the expense of the Trust Estate, consult with counsel, accountants and other skilled persons to be selected and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by 13 14 it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such agent, attorney, counsel, accountant or other skilled person appointed by it with due care hereunder. SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder, the Owner Trustee acts solely as trustee and not in its individual capacity except as otherwise expressly provided herein; and, subject to the terms of the Participation Agreement and the Trust Indenture, all persons, other than the Owner Participant, as provided herein, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Trust Estate for payment or satisfaction thereof. SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the Owner Participant or (subject to the provisions of the Trust Indenture) the Trust Estate for any fee as compensation for its services hereunder; provided, however, that the Owner Trustee shall have a lien upon the Trust Estate (subject, however, to the lien of the Trust Indenture) for any such fee not paid by Lessee as contemplated by the last paragraph of Section 7(c) of the Participation Agreement. Pursuant to Section 7(c) of the Participation Agreement and subject to Section 16 thereof, Lessee shall be required to pay the reasonable fees and expenses of the Owner Trustee comprising the compensation and reimbursement of expenses to which the Owner Trustee is entitled under this Section 6.07. SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all monies under this Trust Agreement or any agreement contemplated hereby. The Owner Participant shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Owner Participant. The Owner Trustee shall be responsible for causing to be prepared, at the request and expense of the Owner Participant, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. The Owner Participant or the Owner Trustee, as the case may be, upon request, will furnish the Owner Trustee or the Owner Participant, as the case may be, with all such information as may be reasonably required from the Owner Participant or the Owner Trustee, as the case may be, in connection with the preparation of such income tax returns. The Owner Trustee will give to the Owner Participant, upon request, such periodic information concerning receipts and disbursements by it with respect to the Trust Estate as would be helpful to the Owner Participant in preparing its tax returns. SECTION 6.09. FIXED INVESTMENT TRUSTS. Notwithstanding anything herein to the contrary, the Owner Trustee shall not be authorized and shall have no power to "vary the investment" of the Owner Participant within the meaning of Treasury Regulations Section 301.7701-4(c)(1). 14 15 ARTICLE VII INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner Participant hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and hereby indemnify, protect, save and keep harmless FSBU in its individual capacity and its successors, assigns, legal representatives, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its individual capacity on or measured by any compensation received by FSBU in its individual capacity for its services hereunder or in connection with the transactions contemplated by the Operative Documents or otherwise excluded in subclause (e) below), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and including, without limitation, any liability of an owner, any strict liability and any liability without fault) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against FSBU in its individual capacity (whether or not also indemnified against by Lessee under the Lease or under the Participation Agreement or also indemnified against by any other person but only to the extent not otherwise paid or reimbursed by Lessee or such other person) in any way relating to or arising out of this Trust Agreement or any of the Operative Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of the Owner Trustee or FSBU in its individual capacity hereunder, except (a) in the case of willful misconduct or gross negligence on the part of the Owner Trustee or FSBU in its individual capacity in the performance or non-performance of its duties hereunder or under any of the other Operative Documents to which the Owner Trustee is a party or (b) those resulting from the inaccuracy of any representation or warranty of FSBU in its individual capacity (or from the failure of FSBU in its individual capacity to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture or, with respect to representations or warranties of FSBU in its individual capacity only, in Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the Participation Agreement or in any of the other Operative Documents or (c) as may result from a breach by FSBU in its individual capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in the case of the failure to use ordinary care on the part of the Owner Trustee or FSBU in its individual capacity in the disbursement of funds or (e) those claims arising under any circumstances or upon any terms where Lessee would not have been required to indemnify the Owner Trustee in its individual capacity pursuant to Section 7(b) or 7(c) of the Participation Agreement (disregarding, for this purpose, 15 16 Sections 7(b)(ii)(3) (to the extent that such disposition referred to therein results from the Owner Trustee acting in accordance with written instructions of the Owner Participant), 7(b)(ii)(5)(i) (to the extent that it results from the willful misconduct or gross negligence of the Owner Participant to the extent imposed on the Owner Trustee), 7(b)(ii)(8), 7(c)(B) (to the extent that such failure referred to therein results from the Owner Trustee's acting in accordance with written instructions of the Owner Participant), 7 (c)(D) (to the extent such disposition therein results from the Owner Trustee's acting in accordance with written instructions of the Owner Participant), 7(c)(F),7(c)(H), 7(c)(I) and 7(c)(J) of the Participation Agreement and disregarding, for this purpose, those claims arising or resulting from any action taken by or inaction of the Owner Trustee in accordance with written instructions of the Owner Participant). The indemnities contained in this Section 7.01 extend to FSBU only in its individual capacity and shall not be construed as indemnities of the Trust Indenture Estate or the Trust Estate (except to the extent, if any, that FSBU in its individual capacity has been reimbursed by the Trust Indenture Estate or the Trust Estate for amounts covered by the indemnities contained in this Section 7.01). The indemnities contained in this Section 7.01 shall survive the termination of this Trust Agreement. In addition, if necessary, FSBU in its individual capacity shall be entitled to indemnification from the Trust Estate, subject to the Lien of the Trust Indenture, for any liability, obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee, the Owner Participant or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same FSBU in its individual capacity shall have a Lien on the Trust Estate, subject to the Lien of the Trust Indenture, which shall be prior to any interest therein of the Owner Participant. The payor of any indemnity under this Article VII shall be subrogated to any right of the person indemnified in respect of the matter as to which such indemnity was paid. ARTICLE VIII TRANSFER OF THE OWNER PARTICIPANT'S INTEREST SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n) of the Participation Agreement shall (with the same force and effect as if set forth in full, mutatis mutandis, in this Section 8.01) be applicable to any assignment, conveyance or other transfer by any Owner Participant of its right, title or interest in and to the Participation Agreement, the Trust Estate or this Trust Agreement. If there is more than one Owner Participant, no assignment, conveyance or other transfer by an Owner Participant of any of its right, title or interest in and to this Trust Agreement or the Trust Estate shall be valid unless each other Owner Participant's prior written consent (which consent may be withheld in the sole discretion of such other Owner Participants) is given to such assignment, conveyance or other transfer. 16 17 SECTION 8.02. ACTIONS OF THE OWNER PARTICIPANTS. If at any time prior to the termination of this Trust Agreement there is more than one Owner Participant, then during such time, if any action is required to be taken by all Owner Participants and whenever any direction, authorization, approval, consent, instruction, or other action is permitted to be given or taken by the Owner Participant it shall be given or taken only upon unanimous agreement of all Owner Participants; provided, however, that the termination of this Trust Agreement pursuant to Section 11.01 hereof may be effected upon the election of any Owner Participant. ARTICLE IX SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the Participation Agreement and (ii) may resign at any time without cause by giving at least sixty (60) days' prior written notice to the Owner Participant, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such resignation to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In addition, the Owner Participant may at any time remove the Owner Trustee without cause by a notice in writing delivered to the Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such removal to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or removal of the Owner Trustee, the Owner Participant may appoint a successor Owner Trustee by an instrument signed by the Owner Participant. If a successor Owner Trustee shall not have been appointed within thirty (30) days after such notice of resignation or removal, the Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor shall have been appointed as above provided. Any successor Owner Trustee so appointed by such court shall immediately and without further act be superseded by any successor Owner Trustee appointed as above provided. (b) Execution and Delivery of Documents, etc. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee and the Owner Participant an instrument accepting such appointment, and thereupon such successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts 17 18 hereunder with like effect as if originally named the Owner Trustee herein; but nevertheless, upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to such successor Owner Trustee all monies or other property then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will execute such documents as are provided to it by such successor Owner Trustee and will take such further actions as are requested of it by such successor Owner Trustee as are reasonably required to cause registration of the Aircraft included in the Trust Estate to be transferred upon the records of the Federal Aviation Administration, or other governmental authority having jurisdiction, into the name of the successor Owner Trustee. (c) Qualification. Any successor Owner Trustee, however appointed, shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement and shall also be a bank or trust company organized under the laws of the United States or any state thereof having a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. (d) Merger, etc. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee may be transferred, shall, subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without further act. SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee shall have been directed to do so by the Owner Participant, the Owner Trustee and the Owner Participant shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement) approved by the Owner Trustee and the Owner Participant, either to act as co-trustee, jointly with the Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as an "ADDITIONAL TRUSTEE"). In the event an Indenture 18 19 Event of Default not arising from a Lease Event of Default shall occur and be continuing, the Owner Trustee may act under the foregoing provisions of this Section 9.02 without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 9.02 in such contingency. Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; (E) the Owner Participant, at any time, by an instrument in writing may remove any such additional trustee unless such additional trustee was appointed by the Owner Trustee without the concurrence of the Owner Participant during the occurrence of an Indenture Event of Default not arising from a Lease Event of Default, in which case the Owner Trustee shall have the power to remove any such additional trustee without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its 19 20 agent and attorney-in-fact for it in such connection in such contingency; and (F) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, the Trust Indenture or affect the interests of the Indenture Trustee or the holders of the Secured Certificates in the Trust Indenture Estate. ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS SECTION 10.01. SUPPLEMENTS AND AMENDMENTS. (a) Supplements and Amendments. This Trust Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Owner Trustee and the Owner Participant. Subject to Section 10.02 hereof and the first sentence of Section 10 of the Participation Agreement, the Owner Trustee will execute any amendment, supplement or other modification of this Trust Agreement or of any other Operative Document to which the Owner Trustee is a party which it is requested to execute by the Owner Participant, except that the Owner Trustee shall not execute any such amendment, supplement or other modification which, by the express provisions of any of the above documents, requires the consent of any other party unless such consent shall have been obtained. (b) Delivery of Amendments and Supplements to Certain Parties. A signed copy of each amendment or supplement referred to in Section 10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each holder of a Secured Certificate. SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to executing any document required to be executed by it pursuant to the terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its counsel to the effect that the execution of such document is authorized hereunder. If in the opinion of the Owner Trustee any such document adversely affects any right, duty, immunity or indemnity in favor of the Owner Trustee hereunder or under any other Operative Document to which the Owner Trustee is a party, the Owner Trustee may in its discretion decline to execute such document. 20 21 SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be necessary for any written request furnished pursuant to Section 10.01 hereof to specify the particular form of the proposed documents to be executed pursuant to such Section, but it shall be sufficient if such request shall indicate the substance thereof. SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the execution by the Owner Trustee of any document entered into pursuant to Section 10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof to the Owner Participant, but the failure of the Owner Trustee to mail such conformed copy shall not impair or affect the validity of such document. SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be required to enable the Owner Trustee to enter into the Lease Supplement covering the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and Section 3.01 hereof. ARTICLE XI MISCELLANEOUS SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement and the trusts created hereby shall be of no further force or effect upon the earlier of (a) both the final discharge of the Trust Indenture pursuant to Section 10.01 thereof and the sale or other final disposition by the Owner Trustee of all property constituting part of the Trust Estate and the final distribution by the Owner Trustee of all monies or other property or proceeds constituting part of the Trust Estate in accordance with Article IV hereof, provided that at such time Lessee shall have fully complied with all of the terms of the Lease and the Participation Agreement or (b) twenty-one years less one day after the death of the last survivor of all of the descendants of the grandparents of David Rockefeller living on the date of the earliest execution of this Trust Agreement by any party hereto, but if this Trust Agreement and the trusts created hereby shall be or become authorized under applicable law to be valid for a period commencing on the 21st anniversary of the death of such last survivor (or, without limiting the generality of the foregoing, if legislation shall become effective providing for the validity of this Trust Agreement and the trusts created hereby for a period in gross exceeding the period for which this Trust Agreement and the trusts created hereby are hereinabove stated to extend and be valid), then this Trust Agreement and the trust created hereby shall not terminate under this subsection (b) but shall extend to and continue in effect, but only if such nontermination and extension shall then be valid under applicable law, until the day preceding such date as the same shall, under applicable law, cease to be valid; otherwise this Trust Agreement and the trusts created hereby shall continue in full force and effect 21 22 in accordance with the terms hereof, subject to the Owner Participant's right to revoke such trusts and cause the Trust Estate (subject to the Lien of the Trust Indenture) to be distributed. SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE. The Owner Participant shall not have legal title to any part of the Trust Estate. [No transfer, by operation of law or otherwise, of any right, title and interest of the Owner Participant in and to the Trust Estate hereunder shall operate to terminate] this Trust Agreement or the trusts hereunder or entitle any successors or transferees of the Owner Participant to an accounting or to the transfer of legal title to any part of the Trust Estate. SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment, sale, transfer or other conveyance of its interest in the Aircraft by the Owner Trustee made pursuant to the terms hereof or of the Lease or the Participation Agreement shall bind the Owner Participant and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Owner Participant in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY. Except for the terms of Section 8(n) of the Participation Agreement incorporated in Article VIII hereof and except as otherwise provided in Articles IX and X hereof, nothing herein, whether expressed or implied, shall be construed to give any Person other than the Owner Trustee and the Owner Participant any legal or equitable right, remedy or claim under or in respect of this Trust Agreement; but this Trust Agreement shall be held to be for the sole and exclusive benefit of the Owner Trustee and the Owner Participant. SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. (a) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 11.05(a). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.05(a), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the Owner Participant, to the respective addresses set forth below the signatures of such parties on the signature page of the Participation Agreement, or (B) if to a Subsequent Owner Participant, addressed to such Subsequent Owner Participant at such address as such Subsequent Owner Participant shall have furnished by notice to the 22 23 parties hereto or (C) if to any subsequent Certificate Holder, addressed to such Certificate Holder at its address set forth in the secured certificate register maintained pursuant to Section 2.07 of the Trust Indenture. (b) Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Trust Agreement, the Participation Agreement, 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 the Participation 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. SECTION 11.06. SEVERABILITY. Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.07. WAIVERS, ETC. No term or provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing entered into in compliance with the terms of Article X hereof; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. SECTION 11.08. COUNTERPARTS. This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.09. BINDING EFFECT, ETC. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII hereof, its assigns. Any request, notice, direction, consent, waiver or other instrument or action by the Owner Participant shall bind its successors and assigns. Any Owner Participant which shall cease to have any Ownership Interest shall thereupon cease to be a party hereto or an Owner Participant for any reason and shall have no further obligations hereunder. 23 24 SECTION 11.10. HEADINGS; REFERENCES. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. SECTION 11.12. PERFORMANCE BY THE OWNER PARTICIPANT. Any obligation of the Owner Trustee in its individual capacity or as Owner Trustee hereunder or under any other Operative Document or other document contemplated herein, may be performed by the Owner Participant and any such performance shall not be construed as a revocation of the trust created hereby. 24 25 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [Owner Participant] By______________________________ Title:__________________________ FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By______________________________ Title:__________________________ 25 EX-4.G2 52 FIRST AMENDMENT TO TRUST AGREEMENT - 1996 C 1 FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 C] This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 C], dated as of June 12, 1996, between [_____________], a [_________] corporation (the "OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Trust Agreement (as defined below); W I T N E S S E T H: WHEREAS, Northwest Airlines, Inc. (the "LESSEE"), the Owner Participant, the Owner Trustee, [______________________], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and State Street Bank and Trust Company, as Indenture Trustee (the "INDENTURE TRUSTEE") entered into the Participation Agreement [NW 1996 C], dated as of April 26, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 C], dated as of April 26, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 C] relating to the Aircraft, dated as of April 26, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 C] dated April 29, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to 2 Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 C], dated as of April 26, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 C], dated April 29, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, Lessee, Northwest Airlines Corporation, as Guarantor, the Owner Trustee, State Street Bank and Trust Company, as Pass Through Trustee, the Owner Participant, the Indenture Trustee and State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent, have entered into the Refunding Agreement [NW 1996 C], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"), providing for a refinancing operation as contemplated by Section 17 of the Original Participation Agreement; WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 C], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1996 C], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); and WHEREAS, the Owner Participant and the Owner Trustee wish to amend the Original Trust Agreement as set forth herein to give effect to the transactions contemplated by the Refunding Agreement; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Trust Agreement is amended as follows: SECTION 1. AMENDMENT OF SECTION 11.01 OF THE ORIGINAL TRUST AGREEMENT. Section 11.01 of the Original Trust Agreement is hereby amended by adding the following clause to the end thereof after the word "distributed": "provided, however, such right is subject to the provisions of Section 10 of the Participation Agreement." SECTION 2. AMENDMENT OF SECTION 11.05(a) OF THE ORIGINAL TRUST AGREEMENT. Section 11.05(a) of the Original Trust Agreement is hereby amended by -2- 3 deleting the word "Participation" in clause (A) of the second sentence thereof and substituting therefor the word "Refunding". SECTION 3. DIRECTION. Pursuant to and in conformity with Section 10.01(a) of the Trust Agreement, the Owner Participant hereby requests the Owner Trustee to execute this Amendment. SECTION 4. RATIFICATION. Except as hereby modified, the Original Trust Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Trust Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Trust Agreement or any word or phrase referring to a section or provision of the Trust Agreement is deemed for all purposes to be a reference to the Trust Agreement or such section or provision as amended pursuant to this Amendment. SECTION 5. MISCELLANEOUS. This Amendment 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. The terms of this Amendment shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII of the Original Trust Agreement as amended hereby, its assigns. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. -3- 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [Owner Participant] By: -------------------------------- Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By: -------------------------------- Name: Title: -4- EX-4.G3 53 TRUST INDENTURE-1996 C 1 AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 C] AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 C], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Owner Trustee under the Trust Agreement referred to below (together with its successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity, except as expressly stated herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE"). W I T N E S S E T H WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and the Owner Trustee have entered into the Trust Agreement whereby, among other things, (i) the Owner Trustee has established a certain trust for the use and benefit of the Owner Participant subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of, and with the priority of payment to, the holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has been authorized and directed to execute and deliver this Trust Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 C] dated as of April 26, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the Trust Agreement and Indenture Supplement [NW 1996 C] (the "SUPPLEMENT") dated April 29, 1996 to the Original Indenture, (iii) the Original Indenture and the Supplement were recorded by the Federal Aviation Administration on May 3, 1996 and were assigned Conveyance No. E21277 and (iv) the Lease Agreement [NW 1996 C] dated as of even date with the Original Indenture between the Owner Trustee and Lessee and the Lease Supplement No. 1 [NW 1996 C] were recorded by the Federal Aviation Administration on May 3, 1996 and were assigned Conveyance No. E21276 and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Loan Participants Secured Certificates (as defined in the Original Indenture); WHEREAS, the parties have agreed that subject to certain conditions, Lessee shall have the right to cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Secured Certificates issued to the Loan Participants pursuant to the Original Indenture shall be redeemed and new Secured Certificates (the "REFINANCING SECURED CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Trust Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Refinancing Secured Certificates and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of all of the Owner Trustee's right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Certificate Holders, subject to Section 2.15 and Article III hereof; 2 WHEREAS, all things have been done to make the Secured Certificates, when executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid, binding and enforceable obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Trust Indenture the valid, binding and legal obligation of the Owner Trustee for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened: -2- 3 GRANTING CLAUSE NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Secured Certificates from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions herein and in the Participation Agreement and the Secured Certificates contained, for the benefit of the Certificate Holders and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Certificate Holders by the Owner Trustee and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Secured Certificates by the holders thereof, and for other good and valuable consideration the receipt and adequacy whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors in trust and assigns, for the security and benefit of the Certificate Holders, a first priority security interest in and mortgage lien on all right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges, other than Excluded Payments (which collectively, excluding Excluded Payments but including all property hereafter specifically subjected to the Lien of this Trust Indenture by the Trust Agreement and Indenture Supplement or any mortgage supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire title as provided herein and in the Lease), all as more particularly described in the Trust Agreement and Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture; (2) the Lease and any Lease Supplement and all Rent thereunder (including, without limitation, all amounts of Interim Rent, Basic Rent, Supplemental Rent and payments of any kind thereunder (excluding any Excluded Payments)), and the Guarantee; (3) the Purchase Agreement (to the extent specified in the Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent and Agreement and the Bill of Sale; (4) all rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the lien of this Indenture; (5) all insurance and requisition proceeds with respect to the Aircraft, including but not limited to the insurance required under Section 11 of the Lease, but excluding insurance proceeds described in clauses (ii) and (iii) of the definition of Excluded Payments; -3- 4 (6) all rights of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under the Participation Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder, but excluding all Excluded Payments; (7) all monies and securities from time to time deposited or required to be deposited with the Indenture Trustee pursuant to any terms of this Indenture or the Lease or required hereby or by the Lease to be held by the Indenture Trustee hereunder (other than Excluded Payments); and (8) all proceeds of the foregoing. Concurrently with the delivery of the Original Indenture, the Owner Trustee has delivered to the Indenture Trustee the original executed counterpart of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt is attached), and executed copies of the Participation Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and its successors and assigns, in trust for the benefit and security of the Loan Participants and the Certificate Holders, except as provided in Section 2.15 and Article III hereof without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (8) inclusive above, subject to the terms and provisions set forth in this Trust Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Owner Trustee shall remain liable under the Indenture Agreements to perform all of the obligations assumed by it thereunder, except to the extent prohibited or excluded from doing so pursuant to the terms and provisions thereof, and the Indenture Trustee and the Certificate Holders shall have no obligation or liability under the Indenture Agreements, by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to the Indenture Agreements, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. Subject to the terms hereof, the Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, and with full power (in the name of the Owner Trustee or otherwise) to ask for, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds but in all cases excluding Excluded Payments) due and to become due under or arising out of the Indenture Agreements, and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Without limiting the generality of the foregoing, but subject to the rights of the Owner Trustee and the Owner Participant hereunder, during the continuance of any Event of Default under this Trust Indenture, the Indenture Trustee shall have the right under such power of attorney to accept any offer in connection with the exercise of remedies as set forth herein of any purchaser to purchase the Airframe and Engines and upon such purchase to execute and deliver in the name of and on behalf of the Owner Trustee an appropriate bill of sale and other instruments of transfer relating to the Airframe and Engines, when purchased by such purchaser, and to perform all other necessary or appropriate acts with respect to any such purchase, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or -4- 5 appropriate to protect and preserve the right, title and interest of the Indenture Trustee in and to such Rents (other than Excluded Payments) and other sums and the security intended to be afforded hereby; provided, however, that no action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or liabilities of the Owner Trustee to any Person beyond those obligations and liabilities specifically set forth in this Trust Indenture and in the other Operative Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture shall not have been fully discharged, to make all payments of Rent (other than Excluded Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to, or as directed by, the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Trust Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Trust Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem necessary or desirable to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be created hereby or to obtain for the Indenture Trustee the full benefits of the assignment hereunder and of the rights and powers herein granted. The parties hereto acknowledge that neither the Owner Trustee nor the Owner Participant shall have any obligation as to any recording, filing, refiling or re-recording of any documents or instruments in regard to maintaining the perfection of the security interests created hereunder, in the Trust Indenture Estate or any security interest that may be claimed to have been created by the Lease or the ownership interest of the Owner Trustee in the Aircraft. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants and agrees that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that it will not, except as otherwise provided in this Trust Indenture and except with respect to Excluded Payments, (i) accept any payment from Lessee under any Indenture Agreement, (ii) enter into any agreement amending or supplementing any Indenture Agreement, (iii) execute any waiver or modification of, or consent under, the terms of, or exercise any rights, powers or privileges under, any Indenture Agreement, (iv) settle or compromise any claim (other than those relating to an Excluded Payment) arising under any Indenture Agreement or (v) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any Indenture Agreement to arbitration thereunder. The Owner Trustee does hereby further agree that it will not without the written consent of the Indenture Trustee: (a) except as set forth in Section 8(bb) of the Participation Agreement, collect or agree to the receipt or collection of any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease but excluding any Excluded Payment prior to the due date for the payment thereof provided for by the Lease or assign, transfer or hypothecate (other than to the Indenture Trustee hereunder) any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease but excluding any Excluded Payment, then due or to accrue in the future under the Lease in respect of the Airframe and Engines; or (b) except as contemplated by the Trust Agreement in connection with the appointment of a successor owner trustee, sell, mortgage, transfer, assign or hypothecate (other than to the Indenture Trustee hereunder) its interest in the Airframe and Engines or any part -5- 6 thereof or in any amount to be received by it from the use or disposition of the Airframe and Engines, other than amounts distributed to it pursuant to Article III hereof. It is hereby further agreed that any and all property described or referred to in the granting clauses hereof which is hereafter acquired by the Owner Trustee shall ipso facto, and without any further conveyance, assignment or act on the part of the Owner Trustee or the Indenture Trustee, become and be subject to the Lien herein granted as fully and completely as though specifically described herein, but nothing contained in this paragraph shall be deemed to modify or change the obligations of the Owner Trustee contained in the foregoing paragraphs. Notwithstanding the Granting Clause or any of the foregoing paragraphs, there is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excluded Payments. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "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. "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 hereof. "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 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. "Cash Equivalents" shall mean the investments specified in Section 22(a) of the Lease. "Certificate Holder" shall mean any holder from time to time of one or more Secured Certificates. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Continuous Stay Period" shall have the meaning specified in Section 4.04(a) hereof. -6- 7 "Corporate Trust Department" or "Trust Office" means the principal corporate trust office of the Owner Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, 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 and each Certificate Holder. "Corporate Trust Office" shall mean the principal office of the Indenture Trustee located at Two International Place, 4th Floor, Boston, Massachusetts 02110, 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 and each Certificate Holder. "Debt" shall mean any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments or for the deferred purchase price of property, goods or services. "Debt 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" means any event or condition that with the giving of notice or the lapse of time or both would become an Event of Default. "Dollars" and "$" shall mean the lawful currency of the United States of America. "Enforcement Date" shall have meaning specified in Section 4.03 hereof. "Event of Default" shall have the meaning specified in Section 4.02 hereof. "Excess Amount" shall have the meaning specified in Section 2.03(b) hereof. "Excluded Payments" shall mean (i)(A) 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) and 7(c) of the Participation Agreement and (B) any other payment to the Owner Participant pursuant to any provision of any Operative Document, (ii) proceeds of public liability insurance (or proceeds of governmental indemnities in lieu thereof) 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) 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) all Indemnity Adjusted Payments, (vi) fees payable to the Owner Trustee or the Indenture Trustee pursuant to the last sentence of Section 7(c) of the Participation Agreement, (vii) provided that the Secured Certificates shall have been duly assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the Owner Trustee pursuant to the third sentence of Section 19(d) of the Lease, (viii) any payment of the foregoing under the Guarantee, (ix) interest accrued on any of the above, and (x) any right to enforce the payment of any amount described in clauses (i) through (ix) above. "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 Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Guarantor" shall have the meaning specified in the Lease. -7- 8 "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 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. "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" shall mean that certain Lease Agreement [NW 1996 C], dated as of April 26, 1996, entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of the Original Trust Indenture, as said Lease Agreement has been, or may from time to time be, supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Indenture. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Default" shall mean any event or condition that with the giving of notice or the lapse of time or both would become a Lease Event of Default. "Lease Event of Default" shall mean an "Event of Default" as defined in the Lease. "Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Lessee Operative Documents" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. "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 hereof (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 (plus, in the case of Series C Secured Certificates, 75 basis points) 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, -8- 9 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. "Mortgaged Property" shall have the meaning specified in Section 3.03 hereof. "Owner Indemnitee" shall have the meaning specified in the definition of Excluded Payments herein. "Owner Participant" shall mean [ ], so long as such party shall have any interest in the Trust Estate, and transferees thereof as permitted by Section 8 of the Participation Agreement. "Participants" shall mean and include the Loan Participants and the Owner Participant. "Participation Agreement" shall mean that certain Participation Agreement [NW 1996 C], dated as of April 26, 1996, among the Owner Trustee, the Indenture Trustee, Lessee and the Participants, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Past Due Rate" shall mean, with respect to the Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in effect from time to time. "Payment Date" shall mean each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Secured Certificates have been paid in full. "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. "QIB" shall have the meaning specified in Section 2.08 hereof. "Replacement Airframe" shall mean any airframe substituted for the Airframe pursuant to Section 5.06 hereof. "Replacement Engine" shall mean any engine substituted for an Engine pursuant to Section 5.06 hereof. "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. "Section 1110 Period" shall have the meaning specified in Section 4.04(a) hereof. -9- 10 "Secured Certificates" shall mean and include any Secured Certificates issued hereunder, and issued in exchange therefor or replacement thereof. "Secured Obligations" shall have the meaning specified in Section 2.06 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Holder" shall have the meaning specified in Section 2.15(c) hereof. "Series A" or "Series A Secured Certificates" means Secured Certificates issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A." "Series B" or "Series B Secured Certificates" means Secured Certificates issued and designated as "Series B" hereunder, 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" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series C." "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. "Transactions" means the transactions contemplated by the Participation Agreement and the other Operative Documents. "Trust Agreement and Indenture Supplement" shall mean a supplement to the Trust Agreement and to this Indenture, in substantially the form of Exhibit A hereto, 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. "Trust Indenture", "this Trust Indenture", "the Trust Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this Amended and Restated Trust Indenture and Security Agreement [NW 1996 C] as it may from time to time be supplemented or amended as herein provided, including supplementing by the Trust Agreement and Indenture Supplement pursuant hereto. "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 this Trust Indenture, excluding Excluded Payments. SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this Trust Indenture the terms used but not defined herein are used as defined in the Lease. ARTICLE II THE SECURED CERTIFICATES SECTION 2.01. FORM OF SECURED CERTIFICATES. The Secured Certificates shall be substantially in the form set forth below: -10- 11 THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [NW 1996 C] DATED AS OF APRIL 26, 1996. SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N539US. No.____ Date: [______,__] $_________________ INTEREST RATE MATURITY DATE ------------- ------------- [________] [________,_______] FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 C], dated as of April 26, 1996, between the Owner Participant named therein and the Owner Trustee (herein as such Trust Agreement may be supplemented or amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Interest Rate indicated above. The Principal Amount of this Secured Certificate shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Secured Certificate set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including _______, _____. Notwithstanding the foregoing, the final payment made on this Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Secured Certificate. Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "TRUST INDENTURE" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 C], dated as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Secured Certificate and not defined herein shall have the respective meanings assigned in the Trust Indenture. This Secured Certificate shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Trust Indenture or the Participation Agreement -11- 12 shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Trust Indenture and each holder hereof, by its acceptance of this Secured Certificate, agrees that (A) it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the holder hereof as above provided, (B) neither the Owner Trustee nor the Indenture Trustee is personally liable or liable in any manner to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Trust Indenture or in the Participation Agreement, for any liability under the Trust Indenture or the Participation Agreement, and (C) the Owner Participant is not personally liable or liable in any manner to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Participation Agreement, for any liability under the Participation Agreement; provided, however, that nothing herein contained shall limit, restrict or impair the right of the Indenture Trustee, subject always to the terms and provisions of the Trust Indenture, to accelerate the maturity of this Secured Certificate upon occurrence of an Event of Default under the Trust Indenture in accordance with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment against the Owner Trustee on this Secured Certificate for purposes of realizing upon the Trust Indenture Estate and to exercise all rights and remedies provided under the Trust Indenture or otherwise realize upon the Trust Indenture Estate. There shall be maintained a Secured Certificate Register for the purpose of registering transfers and exchanges of Secured Certificates at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Trust Indenture. The Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Trust Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Secured Certificate, except that in the case of any final payment with respect to this Secured Certificate, the Secured Certificate shall be surrendered promptly thereafter by the Indenture Trustee to the Owner Trustee for cancellation. The holder hereof, by its acceptance of this Secured Certificate, agrees that, except as provided in the Trust Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts hereunder) to the date of such payment, second, to the payment of the Principal Amount of this Secured Certificate then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of Principal Amount of this Secured Certificate remaining unpaid in the inverse order of their normal maturity. This Secured Certificate is one of the Secured Certificates referred to in the Trust Indenture which have been or are to be issued by the Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Secured Certificates. The provisions of this Secured Certificate are subject to the Trust Indenture. Reference is hereby made to the Trust Indenture and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Secured Certificate and the rights and obligations of the holders of, and the nature and extent of the security for, any other Secured Certificates executed and delivered under the Trust Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust Indenture, to all of which terms and conditions in the Trust Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Secured Certificate. As provided in the Trust Indenture and subject to certain limitations therein set forth, this Secured Certificate is exchangeable for a like aggregate Principal Amount of Secured Certificates of different authorized denominations, as requested by the holder surrendering the same. -12- 13 Prior to due presentment for registration of transfer of this Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Secured Certificate is registered as the owner hereof for all purposes whether or not this Secured Certificate be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Secured Certificate is subject to redemption as provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This Secured Certificate is also subject to assumption by Lessee as provided in Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.14 of the Trust Indenture but not otherwise. [The indebtedness evidenced by this Secured Certificate is, to the extent and in the manner provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Trust Indenture) in respect of [Series A Secured Certificates]1[Series A and Series B Secured Certificates]2, and this Secured Certificate is issued subject to such provisions. The Certificate Holder of this Secured Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]** Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Secured Certificate shall not be entitled to any benefit under the Trust Indenture or be valid or obligatory for any purpose. THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. * * * - --------------- 1 To be inserted in the case of a Series B Secured Certificate. 2 To be inserted in the case of a Series C Secured Certificate. ** To be inserted for each Secured Certificate other than any Series A Secured Certificate. -13- 14 IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Certificate to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By___________________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Secured Certificates referred to in the within-mentioned Trust Indenture. STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By___________________________________ Name: Title: -14- 15 SCHEDULE I SECURED CERTIFICATE AMORTIZATION Percentage of Principal Amount Payment Date to be Paid ------------ ---------------- [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES. The Secured Certificates shall be dated the date of issuance thereof, shall be issued in three separate series consisting of Series A, Series B and Series C and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Agreements as set forth in Schedule II hereto in connection therewith and (ii) the Secured Certificates issued under the Original Indenture shall be concurrently redeemed. The Secured Certificates shall be issued in registered form only. The Secured Certificates shall be issued in denominations of $1,000 and integral multiples thereof, except that one Secured Certificate of each Series may be in an amount that is not an integral multiple of $1,000. Each Secured Certificate shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Secured Certificate shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Secured Certificates. Notwithstanding the foregoing, the final payment made under each Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Secured Certificate. Each Secured Certificate shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Certificate Holders, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case pursuant to Section 7 of the Participation Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Advances (as -15- 16 defined in the Liquidity Facilities) under any Liquidity Facility except to the extent included in Net Interest and Related Charges, and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used in this Section, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes, plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Secured Certificate a fraction, the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes issued under Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any Series D Secured Certificates or Series D Equipment Notes. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to the Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount which would be payable if such drawings bore interest at the Designated Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding Liquidity Facility) which result from any Interest Drawing, Final Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities). As used in this Section "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) except with respect to that portion of any Final Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section, a Payment Default when used in connection with a Secured Certificate or Equipment Note means a default in the payment of principal thereof or interest thereon other than a default in the payment of principal or interest on a Series D Equipment Note which has not been cured other than solely because of acceleration. The following terms are used in this Section as defined in the Intercreditor Agreement without regard to any amendment, modification or supplement thereto after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and Series D Equipment Notes. The Secured Certificates shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Secured Certificates bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Secured Certificates or did not hold such offices at the respective dates of such Secured Certificates. The Owner Trustee may from time to time execute and deliver Secured Certificates with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Secured Certificates shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Secured Certificates to be authenticated hereunder on original issue with respect to the Aircraft. No Secured Certificate shall be secured by or entitled to any benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears on such Secured Certificate a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Secured Certificates shall be conclusive evidence, and the only evidence, that such Secured Certificate has been duly authenticated and delivered hereunder. -16- 17 SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY. (a) Without impairing any of the other rights, powers, remedies, privileges, liens or security interests of the Certificate Holders under this Trust Indenture, each Certificate Holder, by its acceptance of a Secured Certificate, agrees that as between it and the Owner Trustee, except as expressly provided in this Trust Indenture, the Participation Agreement or any other Operative Document, (i) the obligation to make all payments of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Secured Certificates, and the performance by the Owner Trustee of every obligation or covenant contained in this Trust Indenture and in the Participation Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Trust Indenture and any agreement referred to herein other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Trust Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Owner Trustee is responsible for, or is making, in its individual capacity, for which there would be personal liability of the Owner Trustee), no recourse shall be had with respect to this Trust Indenture 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, and (ii) none of the Owner Trustee, in its individual capacity, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable hereunder, under the Participation Agreement or any of the other Operative Documents or under the Secured Certificates except as expressly provided herein or in the Participation Agreement; provided, however, that nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Trust Indenture or such other agreements of rights and remedies against the Trust Estate. These provisions are not intended as any release or discharge of the indebtedness represented by the Secured Certificates and the Trust Indenture, but are intended only as a covenant not to sue the Owner Trustee or the Indenture Trustee in their individual capacities, except as expressly provided herein or in the Participation Agreement, or the Owner Participant, except as expressly provided in the Participation Agreement, for a deficiency with respect to such indebtedness, the indebtedness represented by this Trust Indenture and the Secured Certificates to remain in full force and effect as fully as though these provisions were not contained in this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders have expressly reserved all their rights and remedies against the Trust Indenture Estate, including the right, in the event of a default in the payment of all or part of the Principal Amount of, interest on, Make-Whole Amount, if any, or any other amount due with respect to any Secured Certificate within the periods provided for in Section 4.02(b) hereof, or upon the occurrence and continuation of any other Event of Default under this Trust Indenture, to foreclose upon this Trust Indenture, and/or to receive the proceeds from the Trust Indenture Estate and otherwise to enforce any other right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner Participant from personal liability, or constitute a covenant not to sue the Owner Participant, for any breach by it of any of its covenants, representations or warranties contained in the Participation Agreement for the benefit of the Indenture Trustee or the Certificate Holders or for any of the payments it has agreed to make to the Indemnitee Trustee or the Certificate Holders pursuant to the Participation Agreement or (y) release the Owner Trustee or constitute a covenant not to sue the Owner Trustee for any breach by it of any representations, warranties or covenants of the Owner Trustee contained in the Operative Documents for the benefit of the Indenture Trustee or the Certificate Holders or (z) release the Owner Trustee in its individual capacity from personal liability, or constitute a covenant not to sue the Owner Trustee in its individual capacity for any breach by it of any representations, warranties or covenants of the Owner Trustee made in its individual capacity in the Operative Documents for the benefit of the Indenture Trustee or the Certificate Holders. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant -17- 18 to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, 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 any Certificate Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of (x) the Owner Trustee (in its individual capacity) under the Participation Agreement or this Trust Indenture or by separate agreement or (y) the recourse liability of the Owner Participant under the Participation Agreement), to make payment on account of any amount payable as principal, Make-Whole Amount, if any, interest or other amounts on the Secured Certificates, (iii) the Certificate Holders shall have or shall have been permitted to foreclose the Lien of this Trust Indenture, and (iv) any Certificate Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Owner Trustee (in its individual capacity) or the Owner Participant on account of clause (ii) above, then such Certificate Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Trustee (in its individual capacity) or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a Certificate Holder 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 clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Certificate Holder 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 the Participation Agreement or this Trust Indenture (and any exhibits or annexes hereto or thereto) or by separate agreement or from retaining any amount paid by Owner Participant under Section 2.14 or 4.03 hereof. SECTION 2.04. METHOD OF PAYMENT. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Secured Certificate or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Certificate Holders in the manner provided herein. The Owner Trustee shall not have any responsibility for the distribution of such payment to any Certificate Holder. Notwithstanding the foregoing or any provision in any Secured Certificate to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such holder's Secured Certificate or Secured Certificates to such holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such holder with a bank located in the continental United States the amount to be distributed to such holder, for credit to the account of such holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate such holders for loss of use of funds at the Debt Rate until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Secured Certificate, except that, in the case of the final payment in respect of any Secured Certificate, such Secured Certificate shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Secured Certificate is registered on the Secured Certificate Register as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable with respect to such Secured Certificate and for all other purposes, and none of the Owner Trustee or the Indenture Trustee shall be affected by any notice to the contrary. So long as any signatory to the Participation Agreement or nominee thereof shall be a -18- 19 registered Certificate Holder, all payments to it shall be made to the account of such Certificate Holder specified in Schedule I thereto and otherwise in the manner provided in or pursuant to the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Secured Certificate (and such exclusion and withholding shall constitute payment in respect of such Secured Certificate) any and all United States withholding taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Secured Certificates, to withhold such amounts and timely pay the same to the appropriate authority in the name of and on behalf of the Certificate Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Certificate Holder (with a copy to the Owner Trustee and Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Certificate Holder may reasonably request from time to time. The Indenture Trustee and each Certificate Holder agree that (i) no such withholding or action with respect thereto shall constitute or give rise to any Event of Default and (ii) in the event of the failure of the Indenture Trustee to withhold and pay over any such taxes to the appropriate taxing authority, no indemnity will be sought from the Owner Trustee, the Owner Participant or the Trust Estate. If a Certificate Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Secured Certificate(s) held by such holder is made (but prior to the making of such payment), or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by Law (after taking into account any applicable exemptions claimed by the Certificate Holder) to be withheld from payments hereunder or under the Secured Certificates held by such holder in respect of United States federal income tax. If a Certificate Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Secured Certificates held by such holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Certificate Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Secured Certificates held by such holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Certificate Holder withholding taxes at the appropriate rate under Law and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. The Indenture Trustee and each Certificate Holder agree that (i) no such withholding or action with respect thereto shall constitute or give rise to any Event of Default and (ii) in the event of the failure of the Indenture Trustee to withhold and pay over any such taxes to the appropriate taxing authority, no indemnity will be sought from the Owner Trustee, the Owner Participant or the Trust Estate. -19- 20 SECTION 2.05. APPLICATION OF PAYMENTS. In the case of each Secured Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Secured Certificate (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Secured Certificate; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Secured Certificate remaining unpaid (provided that such Secured Certificate shall not be subject to redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Secured Certificate in the inverse order of their normal maturity. SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE. A Certificate Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Secured Certificates held by such Certificate Holder and all other sums then payable to such Certificate Holder hereunder and under the other Operative Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall have been paid in full. SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED CERTIFICATES. The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the registration of Secured Certificates and the registration of transfers of Secured Certificates. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Secured Certificate Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the purpose of registering Secured Certificates and transfers of Secured Certificates as herein provided. A holder of any Secured Certificate intending to exchange such Secured Certificate shall surrender such Secured Certificate to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Secured Certificate, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Secured Certificate, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Secured Certificates of a like aggregate Principal Amount and of the same series. At the option of the Certificate Holder, Secured Certificates may be exchanged for other Secured Certificates of any authorized denominations of a like aggregate Principal Amount, upon surrender of the Secured Certificates to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Secured Certificates are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Secured Certificates which the Certificate Holder making the exchange is entitled to receive. All Secured Certificates issued upon any registration of transfer or exchange of Secured Certificates (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Trust Indenture, -20- 21 as the Secured Certificates surrendered upon such registration of transfer or exchange. Every Secured Certificate presented or surrendered for registration of transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Certificate Holder or such holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of any applicable state. The Indenture Trustee shall make a notation on each new Secured Certificate of the amount of all payments of Principal Amount previously made on the old Secured Certificate or Secured Certificates with respect to which such new Secured Certificate is issued and the date to which interest on such old Secured Certificate or Secured Certificates has been paid. Interest shall be deemed to have been paid on such new Secured Certificate to the date on which interest shall have been paid on such old Secured Certificate, and all payments of the Principal Amount marked on such new Secured Certificate, as provided above, shall be deemed to have been made thereon. The Owner Trustee shall not be required to exchange any surrendered Secured Certificates as provided above during the ten-day period preceding the due date of any payment on such Secured Certificate. The Owner Trustee shall in all cases deem the Person in whose name any Secured Certificate shall have been issued and registered as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable by the Owner Trustee with respect to such Secured Certificate and for all purposes until a notice stating otherwise is received from the Indenture Trustee and such change is reflected on the Secured Certificate Register. The Indenture Trustee will promptly notify the Owner Trustee and Lessee of each registration of a transfer of a Secured Certificate. Any such transferee of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to the provisions of the Participation Agreement applicable to Certificate Holders, including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(ff), 13(b), 13(c), 15(b), 15(c) and 16, and shall be deemed to have represented and warranted (except as provided above), and covenanted, to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by the original Loan Participants in the Participation Agreement. Subject to compliance by the Certificate Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates upon transfer or exchange within 10 Business Days of the date a Secured Certificate is surrendered for transfer or exchange. SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED CERTIFICATES. If any Secured Certificate shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the holder of such Secured Certificate, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Secured Certificate, payable in the same Principal Amount dated the same date and captioned as issued in connection with the Aircraft. The Indenture Trustee shall authenticate each replacement Secured Certificate on request by the Owner Trustee and shall make a notation on each replacement Secured Certificate of the aggregate amount of all payments of Principal Amount previously made on the mutilated, destroyed, lost or stolen Secured Certificate with respect to which the replacement Secured Certificate is issued and the date to which interest on such mutilated, destroyed, lost or stolen Secured Certificate has been paid. If the Secured Certificate being replaced has become mutilated, such Secured Certificate shall be surrendered to the Indenture Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the Secured Certificate being replaced has been destroyed, lost or stolen, the holder of such Secured Certificate shall furnish to the Owner Trustee and the Indenture Trustee such security or indemnity as may be required by them to save the Owner Trustee and the Indenture Trustee harmless and evidence satisfactory to the Owner Trustee and the Indenture Trustee of the destruction, loss or theft of such Secured Certificate and of the ownership thereof. If a "qualified institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen Secured Certificate, then the written indemnity of such QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Lessee, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Secured Certificate. Subject to compliance by the Certificate Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates within 10 Business Days of the date of the written request therefor from the Certificate Holder. -21- 22 SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION. (a) No service charge shall be made to a Certificate Holder for any registration of transfer or exchange of Secured Certificates, but the Indenture Trustee, as Secured Certificate Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Secured Certificates; provided, however, that neither the Owner Trustee nor the Owner Participant shall bear any such costs of registration, transfer or exchange including, without limitation, in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Secured Certificates surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Secured Certificates. SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES. (a) On the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders but without Make-Whole Amount. (b) If the Lease is terminated with respect to the Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13 hereof and to Section 8(x) of the Participation Agreement, on the date the Lease is so terminated all the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES. All of the Secured Certificates may be redeemed by the Owner Trustee in connection with a transaction described in, and subject to the terms and conditions of, Section 17 of the Participation Agreement upon at least 30 days' revocable prior written notice to the Indenture Trustee and the Certificate Holders, and the Secured Certificates shall, as provided in Section 17 of the Participation Agreement, be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION. (a) Neither any redemption of any Secured Certificate nor any purchase by the Owner Trustee of any Secured Certificate may be made except to the extent and in the manner expressly permitted by this Trust Indenture. No purchase of any Secured Certificate may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Secured Certificates shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Certificate Holder of such Secured Certificates to be redeemed or purchased, at such Certificate Holder's address appearing in the Secured Certificate Register; provided that, in the case of a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be deemed revoked in the event that the Lease does not in fact terminate on the specified termination date or if notice of such redemption shall have been given in connection with a refinancing of Secured Certificates and the Indenture Trustee receives written notice of such revocation from Lessee or the Owner Trustee not later than three days prior to the redemption date. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and -22- 23 payable upon each such Secured Certificate, and that, if any such Secured Certificates are then outstanding, interest on such Secured Certificates shall cease to accrue on and after such redemption date, and (4) the place or places where such Secured Certificates are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Secured Certificates to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption date in immediately available funds the redemption price of the Secured Certificates to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid (and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee or at any office or agency maintained for such purposes pursuant to Section 2.07, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Secured Certificates then outstanding shall cease to bear interest. Upon surrender of any such Secured Certificate for redemption or purchase in accordance with said notice, such Secured Certificate shall be redeemed at the redemption price. If any Secured Certificate called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Secured Certificate as of such redemption date. SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE. If, in accordance with Section 8(x) of the Participation Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a full recourse basis) all of the obligations of the Owner Trustee hereunder, under the Secured Certificates and all other Operative Documents by supplemental indenture satisfactory to the Indenture Trustee (which shall contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease and (ii) other provisions necessary or advisable to effectuate such assumption), then upon delivery of such supplemental indenture, payment by Lessee of all expenses (including reasonable fees and expenses of counsel) for the Owner Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of the Secured Certificates and other amounts owing to the Certificate Holders substantially in the form of the Guarantee, and delivery of an opinion of counsel for Lessee that such assumption has been duly and validly effected, the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Secured Certificates and all other Operative Documents and the Owner Participant shall be released and discharged from any further obligations under the Participation Agreement and any other Operative Document to which it is a party, except with respect to any such obligations that accrued prior thereto. SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES. The Owner Trustee and the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.14, purchase all but not less than all of the Secured Certificates outstanding hereunder, and each Certificate Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind other than (i) of title to the Secured Certificates so conveyed and (ii) against Liens on such Secured Certificates arising by, through or under such holder), all of the right, title and interest of such Certificate Holder in and to the Secured Certificates held by it, and such purchaser or its nominee shall assume all of such holder's obligations under the Participation Agreement and hereunder. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Participation Agreement to the holder thereof. Such option to purchase the Secured Certificates may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there -23- 24 shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default, the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Trustee or the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Secured Certificates shall become irrevocable upon the sixteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Certificate Holders will comply with all the provisions of Section 2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes, charges and expenses required pursuant to Section 2.09 in connection with the issuance of such new Secured Certificate shall be borne by the Owner Participant. SECTION 2.15. SUBORDINATION. (a) The Owner Trustee and, by acceptance of its Secured Certificates of any Series, each Certificate Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g) hereof, except as expressly provided in Article III hereof. (b) By the acceptance of its Secured Certificates of any Series (other than Series A), each Certificate Holder of such Series agrees that in the event that such Certificate Holder, in its capacity as a Certificate Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.15 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article III hereof. (c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured Obligations in respect of Series A Secured Certificates have been paid in full and (ii) after the Secured Obligations in respect of Series A Secured Certificates have been paid in full, the Certificate Holders of Series B until the Secured Obligations in respect of Series B Secured Certificates have been paid in full. SECTION 2.16. DEFEASANCE. (a) The Owner Trustee will be deemed to have paid and will be discharged from any and all obligations in respect of the Secured Certificates on the 90th day (or such other period as may be specified in the relevant provision of the United States Bankruptcy Code) (such period being the "Preference Period") after the date of the deposit referred to in clause (i) of this Section 2.16(a) if: (i) with reference to this Section 2.16(a), the Owner Trustee has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee (or another trustee satisfying the requirements of Section 8.02) and conveyed all right, title and interest for the benefit of the Certificate Holders, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Indenture Trustee, which provides irrevocable instructions therein to apply such money or the proceeds of -24- 25 such U.S. Government Obligations to the payment of such principal and interest with respect to the Secured Certificates, as trust funds in trust, specifically entrusted to the Indenture Trustee for the benefit of the Certificate Holders for payment of the principal of and interest, if any, on the Secured Certificates, and dedicated solely to, the benefit of the Certificate Holders, in and to (A) money in an amount, (B) U.S. Government Obligations that, through the payment of interest, and principal in respect thereof in accordance with their terms, will provide, not later than one day before the due date of any payment referred to in this clause (i), money in an amount or (C) a combination thereof in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Indenture Trustee, to pay and discharge, without consideration of the reinvestment of such interest and after payment of all federal, state and local withholding taxes or other similar charges and assessments in respect thereof payable by the Indenture Trustee with respect to the amounts deposited pursuant to clause (A), (B) or (C), the principal of and accrued interest on the outstanding Secured Certificates at the maturity of such principal or interest; (ii) the Owner Trustee shall have delivered to the Indenture Trustee (A) either (1) a ruling directed to the Indenture Trustee received from the Internal Revenue Service to the effect that the Certificate Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Owner Trustee's exercise of its option under this Section 2.16(a) and will be subject to federal income tax on that same amount and in the same manner and at the same times as would have been the case if such option had not been exercised or (2) an Opinion of Counsel to the same effect as the ruling described in clause (1) above accompanied by a ruling to that effect published by the Internal Revenue Service, unless there has been a change in the applicable federal income tax law since the date of this Indenture such that a ruling from the Internal Revenue Service is no longer required and (B) an Opinion of Counsel to the effect that (1) the creation of the defeasance trust does not violate the Investment Company Act of 1940 and (2) after the passage of the Preference Period, the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code (or any successor or replacement provision) in a case commenced by or against the Owner Trustee or Lessee under either such statute, and either (I) the trust funds will no longer remain the property of the Owner Trustee or Lessee (and therefore will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally) or (II) if a court were to rule under any such law in any case or proceeding that the trust funds remained the property of the Owner Trustee or Lessee (y) assuming such funds remained in the possession of the Indenture Trustee prior to such court ruling to the extent not paid to the Certificate Holders, the Indenture Trustee will hold, for the benefit of the Certificate Holders, a valid and perfected security interest in such trust funds that is not avoidable in bankruptcy or otherwise except for the effect of Section 552(b) of the United States Bankruptcy Code (or any successor or replacement provision) on interest on the trust funds accruing after the commencement of a case under such statute and (z) the Certificate Holders will be entitled to receive adequate protection of their interests in such trust funds if such trust funds are used in such case or proceeding; and (iii) the Owner Trustee shall have made arrangements reasonably satisfactory to the Indenture Trustee for payment or satisfaction of all amounts due under the third paragraph of Section 2.02. After any such irrevocable deposit and satisfaction of the condition precedent provided in clause (ii) of this Section 2.16(a), the Indenture Trustee upon request shall execute and deliver appropriate instruments to release the Lien of this Trust Indenture in accordance with Section 10.01 and shall acknowledge in writing the discharge of the Owner Trustee's obligations under the Secured Certificates and this Trust Indenture except for those surviving obligations in the immediately succeeding paragraph. Notwithstanding the foregoing, prior to the end of the Preference Period, none of the Owner Trustee's obligations under this Trust Indenture shall be discharged. Subsequent to the end of the Preference Period, the Owner Trustee's obligations in Sections 2.07 and 2.08 shall survive until the Secured Certificates are no longer outstanding. -25- 26 (b) In lieu of satisfying its obligations set forth in Section 2.16(a), the Owner Trustee may elect, in its sole discretion, to satisfy the conditions specified in clauses (i) and (ii) of Section 2.16(a) without regard to the requirement described in Section 2.16(a)(ii)(A) and may, in lieu of satisfying the requirements set forth in Section 2.16(a)(ii)(A), provide only an Opinion of Counsel to the effect that the Certificate Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Owner Trustee's providing of the deposit referred to in Section 2.16(a)(i) and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit had not been made. If the Owner Trustee elects such option, then the Indenture Trustee upon request shall execute and deliver appropriate instruments to release the Lien of this Trust Indenture in accordance with Section 10.01 and the Owner Trustee shall be released from its obligations set forth in Section 4.01 (other than Section 4.01(a)). All other obligations of the Owner Trustee hereunder shall remain in full force and effect. For the avoidance of doubt, the effect of the Owner Trustee's exercise of its option set forth in this subsection (b) shall be to create an economic defeasance rather than the legal defeasance that would result if the option set forth in subsection (a) above were to be exercised. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. BASIC RENT DISTRIBUTION. Except as otherwise provided in Section 3.03 hereof, each installment of Basic Rent or Interim Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly distributed in the following order of priority: FIRST, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Secured Certificates shall be distributed to the Certificate Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Secured Certificate bears to the aggregate amount of the payments then due under all Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Secured Certificates shall be distributed to the Certificate Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Secured Certificate bears to the aggregate amount of the payments then due under all Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series C Secured Certificates shall be distributed to the Certificate Holders of Series C ratably, -26- 27 without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Secured Certificate bears to the aggregate amount of the payments then due under all Series C Secured Certificates; and SECOND, the balance, if any, of such installment remaining thereafter shall be distributed to the Owner Trustee; provided, however, that if an Event of Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "Second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 5.09 hereof until whichever of the following shall first occur: (i) all Events of Default shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "Second", (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of such Section 3.03, or (iii) the 120th day after the receipt of such payment in which case such payment shall be distributed as provided in this clause "Second". SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION; REFINANCING. Except as otherwise provided in Section 3.03 hereof, any payments received by the Indenture Trustee (i) with respect to the Aircraft as the result of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a refinancing of the Secured Certificates pursuant to Section 17 of the Participation Agreement shall be applied to redemption of the Secured Certificates and to all other amounts payable hereunder or to the Indenture Trustee or any Certificate Holder under the Participation Agreement by applying such funds in the following order of priority: FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for any reasonable costs or expenses incurred in connection with such redemption for which they are entitled to reimbursement, or indemnity by Lessee, under the Operative Documents and then (b) to pay any other amounts then due to the Indenture Trustee and the Certificate Holders under this Trust Indenture, the Participation Agreement or the Secured Certificates; SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, to pay the amounts specified in paragraph (ii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, to pay the amounts specified in paragraph (iii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series C Secured Certificates; and THIRD, as provided in clause "Fourth" of Section 3.03 hereof; provided, however, that if a Replacement Airframe or Replacement Engine shall be substituted for the Airframe or Engine subject to such Event of Loss as provided in Section 10 of the Lease and in accordance with Section 5.06 hereof, any insurance, condemnation or similar proceeds which result from such Event of Loss and are paid over to the Indenture Trustee shall be held by the Indenture Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be invested as provided in Section 5.09 hereof) as additional security for the obligations of Lessee under the Lessee Operative Documents and, unless otherwise applied pursuant to the Lease, such proceeds (and -27- 28 such investment earnings) shall be released to Lessee at Lessee's written request upon the release of such damaged Airframe or Engine and the replacement thereof as provided in the Lease. SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT. Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Section 15 of the Lease or Article IV hereof) after an Event of Default shall have occurred and be continuing and after the occurrence of an Indenture Trustee Event, as well as all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly distributed by the Indenture Trustee in the following order of priority: FIRST, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate (all such property being herein called the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) , but other than income tax on, or measured by, fees payable to the Indenture Trustee in its individual capacity pursuant to the Operative Documents to which it is a party incurred by the Indenture Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Certificate Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or any Certificate Holder, liquidated or otherwise, upon such Event of Default shall be applied by the Indenture Trustee as between itself and the Certificate Holders in reimbursement of such expenses and any other expenses for which the Indenture Trustee or the Certificate Holders are entitled to reimbursement under any Operative Document and in the case the aggregate amount to be so distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as shall be required to reimburse the then existing or prior Certificate Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to such then existing or prior Certificate Holders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Certificate Holder pursuant to said Section 5.03 hereof; THIRD, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series A Secured Certificates (other than Make-Whole Amount) to the date of distribution, shall be distributed to the Certificate Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount) to the date of distribution; -28- 29 (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series B Secured Certificates [(other than Make-Whole Amount)] to the date of distribution, shall be distributed to the Certificate Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than the Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than the Make-Whole Amount) to the date of distribution; and (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series C Secured Certificates (other than Make-Whole Amount) to the date of distribution, shall be distributed to the Certificate Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than the Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than the Make-Whole Amount) to the date of distribution; and FOURTH, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee. No Make-Whole Amount shall be due and payable on the Secured Certificates as a consequence of the acceleration of the Secured Certificates. SECTION 3.04. CERTAIN PAYMENTS. (a) Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in this Trust Indenture and for which such provision is made in the Lease, the Participation Agreement or any other Operative Document shall be applied forthwith to the purpose for which such payment was made in accordance with the terms of the Lease, the Participation Agreement or such other Operative Document, as the case may be. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of the Participation Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the third paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the -29- 30 Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the third paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) [Intentionally Omitted] (d) Notwithstanding anything to the contrary contained in this Trust Indenture, any amounts received by the Indenture Trustee which constitute Excluded Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. (e) Notwithstanding any provision of this Trust Indenture to the contrary, any amounts held by the Indenture Trustee that would, but for the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall, notwithstanding the provisions of said Section, be distributed to Lessee unless and until a Lease Event of Default shall have occurred and be continuing. SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any other Operative Document shall be distributed by the Indenture Trustee to the extent received or realized at any time (i) prior to the payment in full of all Secured Obligations due the Certificate Holders, in the order of priority specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in full of all Secured Obligations due the Certificate Holders, in the following order of priority: FIRST, to the extent payments or amounts described in clause "First" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "First" of Section 3.03 hereof, and SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof. Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04 hereof, all payments received and amounts realized by the Indenture Trustee under the Lease or otherwise with respect to the Aircraft (including, without limitation, all amounts realized upon the sale or release of the Aircraft after the termination of the Lease with respect thereto), to the extent received or realized at any time after payment in full of all Secured Obligations due the Certificate Holders, shall be distributed by the Indenture Trustee in the order of priority specified in clause (ii) of the immediately preceding sentence of this Section 3.05. SECTION 3.06. PAYMENTS TO OWNER TRUSTEE. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account (within the time limits contemplated by Section 2.04(a)) specified in Schedule I to the Participation Agreement. SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE. -30- 31 All payments received by the Indenture Trustee pursuant to the Guarantee shall be distributed forthwith by the Indenture Trustee in the same order of priority, and in the same manner, as it would have distributed the payment in respect of which such payment under the Guarantee was received. ARTICLE IV COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. COVENANTS OF OWNER TRUSTEE. The Owner Trustee hereby covenants and agrees (the covenants and agreements only in clause (b) below being made by the Owner Trustee in its individual capacity) as follows: (a) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Secured Certificates and hereunder in accordance with the terms of the Secured Certificates and this Trust Indenture and all amounts, if any, payable by it to the Certificate Holders under the Participation Agreement; (b) the Owner Trustee in its individual capacity covenants and agrees that it shall not, directly or indirectly, cause or permit to exist a Lessor Lien attributable to it in its individual capacity with respect to the Aircraft or any other portion of the Trust Estate; that it will promptly, at its own expense, take such action as may be necessary to duly discharge such Lessor Lien attributable to it in its individual capacity; and that it will make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Lessor Liens attributable to it in its individual capacity; (c) in the event the Owner Trustee shall have Actual Knowledge of an Event of Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Event of Default or Event of Loss to the Indenture Trustee, each Certificate Holder, Lessee and the Owner Participant; (d) the Owner Trustee will furnish to the Certificate Holders and the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of any Termination Notice and a copy of each report or notice received pursuant to Section 9(a) and 11(c) of the Lease to the extent that the same shall not have been furnished to the Certificate Holders or the Indenture Trustee pursuant to the Lease; (e) except with the consent of the Indenture Trustee (acting pursuant to instructions given in accordance with Section 9.01 hereof), the Owner Trustee will not contract for, create, incur, assume or suffer to exist any Debt (other than the Secured Certificates), and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the Debt of any other person; and (f) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. EVENT OF DEFAULT. "EVENT OF DEFAULT" means any of the following events (whatever the reason for such Event of Default and whether such event shall be voluntary or involuntary or come about or be effected by operation of Law -31- 32 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): (a) any Lease Event of Default (provided that any such Lease Event of Default caused solely by a failure of Lessee to pay to the Owner Trustee or the Owner Participant when due any amount that is included in the definition of Excluded Payments shall not constitute an Event of Default unless notice is given by the Owner Trustee to the Indenture Trustee that such failure shall constitute an Event of Default); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due and payable under any Secured Certificate or hereunder (other than any such failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof or as a result of a Lease Event of Default or a Lease Default) and such failure shall have continued unremedied for ten Business Days in the case of any payment of Principal Amount or interest or Make-Whole Amount, if any, thereon and, in the case of any other amount, for ten Business Days after the Owner Trustee or the Owner Participant receives written demand from the Indenture Trustee or any Certificate Holder; or (c) any Lien required to be discharged by the Owner Trustee, in its individual capacity pursuant to Section 4.01(b) hereof or in its individual or trust capacity pursuant to Section 8(h) of the Participation Agreement, or by the Owner Participant pursuant to Section 8(h) of the Participation Agreement shall remain undischarged for a period of 30 days after the Owner Trustee or the Owner Participant, as the case may be, shall have received written notice from the Indenture Trustee or any Certificate Holder of such Lien; or (d) any representation or warranty made by the Owner Participant or the Owner Trustee herein, in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in any certificate furnished by the Owner Participant or the Owner Trustee to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents shall prove to have been false or incorrect when made in any material respect and continues to be material; and if such misrepresentation is capable of being corrected and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 60 days (or, without affecting Section 4.02(f) hereof, in the case of the representations made in Section 8(c) of the Participation Agreement as to the citizenship of the Owner Trustee in its individual capacity or of the Owner Participant, respectively, as soon as is reasonably practicable but in any event within 60 days) following notice thereof from the Indenture Trustee or any Certificate Holder to the Owner Trustee or the Owner Participant, as the case may be; or (e) other than as provided in (c) above or (f) below, any failure by the Owner Trustee or Owner Participant to observe or perform in any material respect any other covenant or obligation of the Owner Trustee or Owner Participant, as the case may be, for the benefit of the Indenture Trustee or the Certificate Holders contained in the Participation Agreement, Section 4.01(a) of the Trust Agreement, the Secured Certificates or this Trust Indenture which is not remedied within a period of 60 days after notice thereof has been given to the Owner Trustee and the Owner Participant (or, if such failure cannot be remedied during such 60-day period and the Owner Trustee and/or the Owner Participant have been and are diligently proceeding to remedy such failure, such additional period not in excess of 120 days, if such failure is capable of being remedied during such additional period, as may be necessary to remedy such failure); or (f) if at any time when the Aircraft is registered under the laws of the United States, the Owner Participant shall not be a Citizen of the United States, and as the result thereof the registration of the Aircraft under the Federal Aviation Act, and regulations then applicable thereunder, shall cease to be effective; provided that no Event of Default shall be deemed to have occurred under this paragraph (f) -32- 33 unless such circumstances continue unremedied for more than 60 days after the Owner Participant has Actual Knowledge of the state of facts that resulted in such ineffectiveness and of such loss of citizenship; or (g) at any time either (i) the commencement of an involuntary case or other proceeding in respect of the Owner Participant, the Owner Trustee or the Trust Estate 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 seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii) the commencement by the Owner Participant, the Owner Trustee or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee or the Trust Estate to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or the making by the Owner Participant, the Owner Trustee or the Trust Estate of any assignment for the benefit of creditors or the Owner Participant or the Owner Trustee shall take any action to authorize any of the foregoing; provided, however, that an event referred to in this Section 4.02(g) with respect to the Owner Participant shall not constitute an Event of Default if within 30 days of the commencement of the case or proceeding (A) a final non-appealable order, judgment or decree shall be entered in such case or proceeding by a court or a trustee, custodian, receiver or liquidator, or (B) an opinion of counsel, reasonably satisfactory to the Indenture Trustee, shall be provided by the Owner Participant, in each case to the effect that, no part of the Trust Estate (except for the Owner Participant's beneficial interest therein) and no right, title or interest under the Trust Indenture Estate shall be included in, or be subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 4.02(g); provided further that an event referred to in this Section 4.02(f) with respect to the Owner Participant shall not constitute an Event of Default if, not later than 90 days following such event, the Owner Participant has been replaced with an entity eligible to act as Owner Participant in accordance with Section 8(n) of the Participation Agreement. SECTION 4.03. CERTAIN RIGHTS. The Indenture Trustee shall give the Certificate Holders, the Owner Trustee and the Owner Participant prompt written notice of any Event of Default of which the Indenture Trustee has Actual Knowledge and, if any such Event of Default results from a Lease Event of Default that can be cured by the payment of money (it being understood that defaults requiring action such as the obtaining of insurance and the procuring of maintenance services can be so remedied), shall give the Certificate Holders, the Owner Trustee and the Owner Participant not less than ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence and consummate the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the provisions of Section 15 of the Lease. If an Event of Default shall have occurred and be continuing, the Owner Trustee shall have the following rights hereunder, any of which may be exercised directly by the Owner Participant. If as a result of the occurrence of an Event of Default in respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease, the Indenture Trustee shall have insufficient funds to make any payment of Principal Amount and interest on any Secured Certificate on the day it becomes due and payable, the Owner Trustee may, without the consent or concurrence of any Certificate Holder, but shall not be obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the manner provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an amount equal to the portion of the Principal Amount and interest (including interest, if any, on any overdue payments of such portion of Principal Amount and interest) then due and payable on the Secured Certificates, and, unless the Owner Trustee has cured Events of Default in respect of -33- 34 payments of Basic Rent on each of the three immediately preceding Basic Rent payment dates, or the Owner Trustee has cured six previous Events of Default in respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any Event of Default which would otherwise have arisen on account of the nonpayment by Lessee of such installment of Interim Rent or Basic Rent (but not any other Default or Event of Default which shall have occurred and be continuing). If any Event of Default (other than in respect of the nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured by the payment of money (it being understood that defaults requiring action such as the obtaining of insurance and the procuring of maintenance services can be so remedied) has occurred, the Owner Trustee may, without the consent or concurrence of any Certificate Holder, but shall not be obligated to, cure such Event of Default by making such payment prior to the Enforcement Date as is necessary to accomplish the observance or performance of the defaulted covenant, condition or agreement to the party entitled to the same. Except as hereinafter in this Section 4.03 provided, the Owner Trustee shall not, as a result of exercising the right to cure any such Event of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable under the Lease for or on account of costs or expenses incurred in connection with the exercise of such right, nor shall any claim of the Owner Trustee against Lessee or any other party for the repayment of such costs or expenses impair the prior right and security interest of the Indenture Trustee in and to the Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the first or second preceding paragraphs of this Section 4.03, the Owner Trustee shall be subrogated to the rights of the Indenture Trustee and the Certificate Holders in respect of the Interim Rent or Basic Rent which was overdue at the time of such payment and interest payable by Lessee on account of its being overdue and any Supplemental Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant to the immediately preceding paragraph (but in either case shall have no rights as a secured party hereunder), and thereafter, the Owner Trustee shall be entitled to receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt thereof by the Indenture Trustee; provided, however, that (i) if the Principal Amount and interest on the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to all Secured Certificates shall have been paid in full, be subordinate to the rights of the Indenture Trustee and the Certificate Holders in respect of such payment of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and (ii) the Owner Trustee shall not be entitled to seek to recover any such payment (or any payment in lieu thereof) except pursuant to the foregoing right of subrogation until payment of the Principal Amount and interest that has become due in accordance with Section 4.04(b) hereof. SECTION 4.04. REMEDIES. (a) If an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, then and in every such case the Indenture Trustee may, subject to the second paragraph of this Section 4.04(a), exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article IV and shall have and may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and, in the event such Event of Default is also a Lease Event of Default, any and all of the remedies pursuant to Section 15 of the Lease and may take possession of all or any part of the properties covered or intended to be covered by the Lien created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee and Lessee and all persons claiming under any of them wholly or partly therefrom, provided, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft or foreclose the Lien of this Trust Indenture. Unless an Event of Default not resulting from or relating to a Lease Event of Default has occurred and is continuing, the Owner Participant may bid at any public sale and become the purchaser. Without limiting any of the foregoing but subject to the immediately succeeding paragraph, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Trust Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder as a result of an Event of Default which arises solely by reason of one -34- 35 or more events or circumstances which constitute a Lease Event of Default unless the Indenture Trustee as security assignee of the Owner Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 15 of the Lease to terminate the Lease (so long as the Aircraft is not subsequently re-leased to Lessee or an Affiliate thereof) or take possession and/or sell the Aircraft with respect to the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any person. In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any rights or remedy of the Indenture Trustee hereunder) to participate in such proceedings. It is expressly understood and agreed that, subject only to the immediately preceding paragraph, the inability, described in such paragraphs, of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising any or all of its rights, powers and remedies under this Trust Indenture, including, without limitation, this Article IV. (b) If an Event of Default shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery of written notice or notices to the Owner Trustee and the Owner Participant, declare all the Secured Certificates to be due and payable, whereupon the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued but unpaid interest thereon (without Make-Whole Amount) and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. This Section 4.04(b), however, is subject to the condition that, if at any time after the Principal Amount of the Secured Certificates shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Secured Certificates and all other amounts payable under the Secured Certificates (except the Principal Amount of the Secured Certificates which by such declaration shall have become payable) shall have been duly paid, and every other Default and Event of Default with respect to any covenant or provision of this Trust Indenture shall have been cured, then and in every such case a Majority in Interest of Certificate Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. (c) The Certificate Holders shall be entitled, at any sale pursuant to Section 15 of the Lease or this Section 4.04, to credit against any purchase price bid at such sale by such holder all or any part of the unpaid obligations owing to such Certificate Holder and secured by the Lien of this Trust Indenture (but only to the extent that such purchase price would have been paid to such Certificate Holder pursuant to Article III hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c) were not given effect). -35- 36 (d) In the event of any sale of the Trust Indenture Estate, or any part thereof, pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Trust Indenture, the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued interest thereon (without Make-Whole Amount), and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement (or its designee) is a Certificate Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any Mortgaged Property or take any action with respect to any Mortgaged Property so acquired by it if such acquisition or action would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. RETURN OF AIRCRAFT, ETC. (a) If an Event of Default shall have occurred and be continuing and the Indenture Trustee shall have foreclosed, or shall concurrently be foreclosing, the Lien of this Trust Indenture and shall be taking steps for the sale or repossession of the Aircraft, subject to Section 4.03 hereof, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Mortgaged Property included in the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents to the fullest extent permitted by applicable law, and (ii) pursue all or part of such Mortgaged Property wherever it may be found and, in the event that a Lease Event of Default has occurred and is continuing, may enter any of the premises of Lessee wherever such Mortgaged Property may be or be supposed to be and search for such Mortgaged Property and take possession of and remove such Mortgaged Property. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Trust Indenture. (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Mortgaged Property, make all such expenditures for maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modifications or alterations to and of the Mortgaged Property, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the Mortgaged Property and to carry on the business and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Mortgaged Property, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modification or alteration of the Mortgaged Property or any part thereof as the Indenture Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Mortgaged Property and every part thereof, except Excluded Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Trust Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, improvement, modification or alteration of the Mortgaged Property and of conducting the business thereof, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Mortgaged Property or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Trust Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee with respect hereto. -36- 37 SECTION 4.06. REMEDIES CUMULATIVE. Subject to the other provisions of Article IV hereof, each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or Lessee or to be an acquiescence therein. SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS. In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Trust Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Owner Trustee, the Owner Participant, the Indenture Trustee and Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Mortgaged Property, and all rights, remedies and powers of the Owner Trustee, the Owner Participant, the Indenture Trustee or Lessee shall continue as if no such proceedings had been instituted. SECTION 4.08. WAIVER OF PAST DEFAULTS. Upon written instruction from a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Default or Event of Default hereunder and its consequences and upon any such waiver such Default or Event of Default shall cease to exist and any Event of Default arising from any such Default shall be deemed to have been cured for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon; provided, that in the absence of written instructions from all the Certificate Holders, the Indenture Trustee shall not waive any Default or Event of Default (i) in the payment of the Principal Amount, Make-Whole Amount, if any, and interest and other amounts due under any Secured Certificate then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Certificate Holder. SECTION 4.09. APPOINTMENT OF RECEIVER. The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee thereof) for all or any part of the Mortgaged Property, whether such receivership be incidental to a proposed sale of the Mortgaged Property or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Mortgaged Property shall be entitled to exercise all the rights and powers of the Indenture Trustee with respect to the Mortgaged Property. SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC. The Owner Trustee irrevocably appoints the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture, whether pursuant to foreclosure or power of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Owner Trustee hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing -37- 38 and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Trust Indenture, the right of any Certificate Holder to receive payment of principal of, and premium, if any, and interest on a Secured Certificate on or after the respective due dates expressed in such Secured Certificate, or to bring suit for the enforcement of any such payment on or after such respective dates in accordance with the terms hereof, shall not be impaired or affected without the consent of such Certificate Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default arising from a failure to pay Rent, the Indenture Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms of Sections 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default or Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture Trustee shall not have received instructions as above provided within 20 days after mailing notice of such Event of Default to the Certificate Holders, the Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default or Default as it shall determine advisable in the best interests of the Certificate Holders. If the Indenture Trustee shall at any time declare the Lease to be in default pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall forthwith notify the Owner Participant, the Certificate Holders, the Owner Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall not be deemed to have knowledge of a Default or an Event of Default (except, in the case of the Indenture Trustee, the failure of Lessee to pay any installment of Interim Rent or Basic Rent within one Business Day after the same shall become due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee, the Owner Participant or one or more Certificate Holders. SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, subject to the terms of this Section 5.02, take such of the following actions as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder as shall be specified in such instructions; (ii) give such notice or direction or exercise such right, remedy or power under the Lease, the Participation Agreement, the Purchase Agreement, or any other part of the Trust Indenture Estate as shall be specified in such instructions; and (iii) after the occurrence and during the continuance of an Event of Default, approve as satisfactory to the Indenture Trustee all matters required by the terms of the Lease to be satisfactory to the Owner Trustee, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall not approve any such matter as satisfactory to the Indenture Trustee; provided, -38- 39 that anything contained in this Trust Indenture, the Lease or the other Operative Documents to the contrary notwithstanding: (1) the Owner Trustee or the Owner Participant may, at all times without the consent of the Indenture Trustee, (A) to the exclusion of the Indenture Trustee demand, collect, sue for or otherwise obtain all amounts included in Excluded Payments from Lessee, (B) unless the Lien of this Trust Indenture shall have been foreclosed upon, grant or withhold its consent to amendments or supplements to Indenture Agreements required in accordance with Article IX hereof and (C) seek legal or equitable remedies to require Lessee to maintain the insurance coverage referred to in Section 11 of the Lease; provided, that the rights referred to in this clause (1) shall not be deemed to include the exercise of any remedies provided for in Section 15 of the Lease other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by Lessee of such amounts included in Excluded Payments or performance by Lessee of such insurance covenant or to recover damages for the breach thereof; (2) at all times prior to the foreclosure of the Lien of this Trust Indenture, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be unreasonably withheld if no right or interest of the Owner Trustee or the Owner Participant shall be diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; (3) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, each of the Owner Trustee, the Owner Participant and, except with respect to clauses (iii) and (iv), the Indenture Trustee shall have the right (i) to receive from Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which any thereof is permitted or required to give or furnish to the Owner Trustee or Lessor pursuant to any Operative Document (including pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 11(e) of the Lease specifically confers on Lessor, and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of Lessor under Section 21 of the Lease; (4) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee shall at all times, to the exclusion of the Indenture Trustee, have the right to adjust Rent, Stipulated Loss Values and Termination Values as provided in Section 3(d) of the Lease; (5) unless an Indenture Trustee Event shall have occurred, to exercise all of the rights of Lessor under Section 7(b) of the Lease; (6) whether or not a Default or Event of Default shall have occurred and is continuing, the Owner Trustee may, without the consent of the Indenture Trustee, (i) solicit and make bids with respect to the Aircraft under Section 9 of the Lease in respect of a termination of the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales value" and "fair market rental value" under Section 19 of the Lease for all purposes except following an Event of Default pursuant to Section 15 of the Lease, and (iii) make an election pursuant to and in accordance with the provisions of Section 9(c) of the Lease; and (7) so long as no Event of Default shall have occurred and be continuing, all other rights of the "Lessor" under the Lease shall be exercised by the Owner Trustee to the exclusion of the Indenture Trustee including, without limitation, the right to (i) exercise all rights with respect to Lessee's use and -39- 40 operation, modification or maintenance of the Aircraft and any Engine which the Lease specifically confers on Lessor, (ii) consent to and approve any assignment pursuant to Section 13 of the Lease and (iii) request further assurances pursuant to Section 16 of the Lease; provided that the foregoing shall not limit (A) any rights separately granted to the Indenture Trustee under the Operative Agreements or (B) the right of the Indenture Trustee to receive any funds to be delivered to the "Lessor" under the Lease (except with respect to Excluded Payments) and under the Purchase Agreement. Notwithstanding anything to the contrary contained herein (including this Section 5.02), the Indenture Trustee shall have the right, to the exclusion of the Owner Trustee and the Owner Participant (other than with respect to Excluded Payments), to (A) declare the Lease to be in default under Section 15 thereof and (B) subject only to the provisions of Sections 4.03, 4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15 (other than in connection with Excluded Payments) at any time that a Lease Event of Default shall have occurred and be continuing. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as specified by Lessee pursuant to Section 8(e) of the Participation Agreement or as may be specified from time to time in written instructions of a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee will furnish to each Certificate Holder (and, during the continuation of an Indenture Trustee Event, to the Owner Trustee and Owner Participant), promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder, including, without limitation, a copy of any Termination Notice (as defined in the Lease) and a copy of each report or notice received pursuant to Sections 9(a) and 11(c) of the Lease, respectively, to the extent that the same shall not have been furnished to such Certificate Holder pursuant hereto or to the Lease. (b) If any Lease Event of Default shall have occurred and be continuing and the Owner Trustee shall not have cured fully such Lease Event of Default under and in accordance with Section 4.03 hereof, on request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall declare the Lease to be in default pursuant to Section 15 thereof and exercise those remedies specified by such Certificate Holders. The Indenture Trustee agrees to provide to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with such declaration by the Indenture Trustee, notice of such declaration by the Indenture Trustee. SECTION 5.03. INDEMNIFICATION. The Indenture Trustee shall not be under any obligation to take any action under this Trust Indenture or any other Operative Document and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds or otherwise incur the risk of any financial liability in the performance of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (the written indemnity of any Certificate Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Indenture Trustee shall be accepted as reasonable assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture or any other Operative Document be deemed to impose a duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or of the Lease or is otherwise contrary to Law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR INSTRUCTIONS. The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Trust Indenture or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Trust Indenture or as expressly provided in -40- 41 written instructions from Certificate Holders as provided in this Trust Indenture; and no implied duties or obligations shall be read into this Trust Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof), promptly take such action as may be necessary duly to discharge all liens and encumbrances on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the ownership of the Aircraft or the administration of the Trust Indenture Estate or any other transaction pursuant to this Trust Indenture or any document included in the Trust Indenture Estate. SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR INSTRUCTIONS. The Owner Trustee and the Indenture Trustee agree that they will not use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate except (i) as required by the terms of the Lease or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Trust Indenture and in accordance with the express terms hereof. SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES. At any time an Airframe or Engine is to be replaced under or pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of Default is continuing, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid, but only upon compliance by Lessee with the applicable provisions of Section 10 of the Lease and upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee, requesting such release specifically describing the Airframe and/or Engine(s) so to be released. (2) A certificate signed by a duly authorized officer of Lessee stating the following: A. With respect to any Replacement Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe to be received (including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number) as consideration for the Airframe to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of such Replacement Airframe free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Airframe will on such date be in good working order and condition, and that such Replacement -41- 42 Airframe has been or, substantially concurrently with such withdrawal, will be duly registered in the name of the Owner Trustee under the Federal Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and that Lessee will have the full right and authority to use such Replacement Airframe; (iv) the existence of the insurance required by Section 11 of the Lease with respect to such Replacement Airframe and the payment of all premiums then due thereon; (v) that the Replacement Airframe is of the same or an improved model as the Airframe requested to be released from this Indenture; (vi) the fair market value of the Replacement Airframe as of the date of such certificate (which in the judgment of Lessee shall be not less than the then fair market value of the Airframe requested to be released (assuming such Airframe was in the condition and repair required to be maintained under the Lease)); (vii) the fair market value of the Airframe immediately prior to the date the Airframe suffered an Event of Loss (assuming that such Airframe was in the condition and repair required under the Lease); (viii) that no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default, has occurred which has not been remedied or waived, and that Lessee will not be in default, by the making and granting of the request for release and the addition of a Replacement Airframe, in the performance of any of the terms and covenants of the Lease; and (ix) that the release of the Airframe so to be released will not be in contravention of any of the provisions of this Indenture; or B. with respect to the replacement of any Engine: (i) a description of the Engine which shall be identified by manufacturer's serial number; -42- 43 (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) as consideration for the Engine to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Engine will on such date be in good working order and condition and that such Replacement Engine is substantially the same as the Engine to be released (or as improved model); (iv) the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then fair market value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease)); (v) the fair market value of the Engine to be released (immediately prior to any Event of Loss suffered by such Engine and assuming that such Engine was in the condition and repair required under the Lease); (vi) that each of the conditions specified in Section 10(b) of the Lease with respect to such Replacement Engine have been satisfied and that Lessee will not be in default, by the making and granting of the request for release and the addition of the Replacement Engine, in the performance of any of the terms and covenants of the Lease; (vii) that, with respect to the replacement of an Engine pursuant to Section 9(d) of the Lease, no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default has occurred which has not been remedied or waived; and (viii) that the release of the Engine so to be released will not be in contravention of any of the provisions of this Indenture. (3) (a) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting -43- 44 such Replacement Airframe or Replacement Engine and any related warranty rights to the lien of this Indenture. (b) With respect to the replacement of any Engine, such Uniform Commercial Code financing statements covering the lien created by this Indenture as deemed necessary or desirable by counsel for the Indenture Trustee to protect the lien under the Indenture in the Replacement Engine. (4) A certificate from either an aircraft engineer (who may be an employee of Lessee) or a firm of independent aircraft appraisers selected by Lessee confirming the accuracy of the information set forth in clause (2)A(vi) of this Section 5.06. (5) The opinion of in-house counsel to Lessee, or other counsel satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Trust Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be lawfully released from the lien of this Trust Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Trust Indenture, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate and interest of the Owner Trustee to and the lien of this Trust Indenture on such Replacement Aircraft or Replacement Engine. SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS. If a Replacement Airframe or Replacement Engine is being substituted as contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Certificate Holders and Lessee, subject to fulfillment of the conditions precedent and compliance by Lessee with its obligations set forth in Section 10 of the Lease and the requirements of Section 5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to execute and deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease. -44- 45 SECTION 5.08. EFFECT OF REPLACEMENT. In the event of the substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced and (b) the provisions of this Trust Indenture shall no longer be applicable to the Airframe or Engine or Engines being replaced, which shall be released from the Lien of this Indenture. SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of the Lease shall be held in accordance with the terms of such Section and the Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of the Owner Trustee under such Section. Any amounts held by the Indenture Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee may acquire the same using its best efforts. Unless otherwise expressly provided in this Trust Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Trust Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever such sale is necessary to make a distribution required by this Trust Indenture. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse all monies constituting part of the Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its individual capacity, and the Indenture Trustee, in its individual capacity, shall not be answerable or accountable under any circumstances, except (i) for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be willful misconduct or negligence), (ii) in the case of the Indenture Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii) for liabilities that may result, in the case of the Owner Trustee, from the inaccuracy of any representation or warranty of the Owner Trustee expressly made in its individual capacity in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents) or, in the case of the Indenture Trustee (in its individual capacity), from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable for any action or -45- 46 inaction of the other or of the Owner Participant. The Owner Trustee shall not be deemed to be a trustee for the Certificate Holders for any purpose. SECTION 6.02. ABSENCE OF DUTIES. In the case of the Indenture Trustee, except in accordance with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the Lease or of this Trust Indenture or any other document, or to see to the maintenance of any such registration, recording or filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Lessee's covenants under the Lease with respect to the Aircraft. The Owner Participant shall not have any duty or responsibility hereunder, including, without limitation, any of the duties mentioned in clauses (i) through (v) above; provided, that nothing contained in this sentence shall limit any obligations of the Owner Participant under the Participation Agreement or relieve the Owner Participant from any restriction under Section 4.03 hereof. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR DOCUMENTS. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its individual capacity warrants that (i) the Owner Trustee has received on the Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Trustee in its individual capacity. Neither the Owner Trustee, in its individual capacity or as Owner Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual or trust capacities, makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Trust Indenture, the Trust Agreement, the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Owner Trustee made in its individual capacity and the representations and warranties of the Indenture Trustee in its individual capacity, in each case expressly made in this Trust Indenture or in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement). The Loan Participants, the Certificate Holders and the Owner Participant make no representation or warranty hereunder whatsoever. SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the Certificate Holders, Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by Law or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under such general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for any interest thereon (except that the Indenture Trustee shall invest -46- 47 all monies held as directed by Lessee so long as no Lease Event of Default or Lease Default has occurred and is continuing (or in the absence of such direction, by the Majority In Interest of Certificate Holders) in Cash Equivalents; provided, however, that any payments received, or applied hereunder, by the Indenture Trustee shall be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL. Neither the Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors (or Executive Committee thereof) of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Secured Certificates outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to Lessee the manner of ascertainment of which is not specifically described herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee and the Indenture Trustee for any action taken or omitted to be taken by them in good faith in reliance thereon. The Indenture Trustee shall assume, and shall be fully protected in assuming, that the Owner Trustee is authorized by the Trust Agreement to enter into this Trust Indenture and to take all action to be taken by it pursuant to the provisions hereof, and shall not inquire into the authorization of the Owner Trustee with respect thereto. In the administration of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled persons. SECTION 6.06. CAPACITY IN WHICH ACTING. The Owner Trustee acts hereunder solely as trustee as herein and in the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein, in the Trust Agreement and in the Participation Agreement. SECTION 6.07. COMPENSATION. The Indenture Trustee shall be entitled to reasonable compensation, including expenses and disbursements (including the reasonable fees and expenses of counsel), for all services rendered hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by Lessee, and shall have the right, on and subsequent to an Event of Default hereunder, to use or apply any monies held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against the Loan Participants, the Certificate Holders, the Owner Trustee or the Owner Participant for any fee as compensation for its services as trustee under this Trust Indenture. SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS. In the administration of the trusts created hereunder, the Indenture Trustee shall have the right to seek instructions from a Majority in Interest of Certificate Holders should any provision of this Trust Indenture appear to conflict with any other provision herein or should the Indenture Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no liability in refraining from acting until it receives such -47- 48 instructions. The Indenture Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.08. ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. SCOPE OF INDEMNIFICATION. The Owner Trustee, not in its individual capacity, but solely as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its individual and trust capacities), and its successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Trust Indenture), claims, actions, suits, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever, which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also indemnified against by any other Person under any other document) in any way relating to or arising out of this Trust Indenture or any other Operative Document to which it is a party or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder except only in the case of willful misconduct or gross negligence (or negligence in the case of handling funds) of the Indenture Trustee in the performance of its duties hereunder or resulting from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in Section 8 of the Participation Agreement or Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities under such Sections; provided that, so long as the Lease is in effect, the Indenture Trustee, unless otherwise prohibited by law, shall not make any claim under this Section 7.01 for any claim or expense without first making demand on Lessee for the payment on behalf of Lessor of such claim or expense pursuant to the Lease or the Participation Agreement, including, without limitation, Section 7(b) or 7(c) of the Participation Agreement. In addition, if necessary, the Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement including upon any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee, Lessee and the Certificate Holders. SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In -48- 49 addition, a Majority in Interest of Certificate Holders may at any time (but only with the consent of Lessee, which consent shall not be unreasonably withheld, except that such consent shall not be necessary if a Lease Event of Default is continuing) remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Certificate Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so long as no Lease Event of Default shall have occurred and be continuing, shall be subject to Lessee's reasonable approval. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as above provided. (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee an instrument accepting such appointment and assuming the obligations of the Indenture Trustee under the Participation Agreement arising from and after the time of such appointment, and thereupon such successor Indenture Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee herein; but nevertheless upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all monies or other property then held by such predecessor Indenture Trustee hereunder. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having its principal place of business in the Borough of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations under the Operative Documents are guaranteed by an affiliated entity having) a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. (d) Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Indenture Trustee may be transferred, shall, subject to the terms of paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the Indenture Trustee under this Trust Indenture without further act, except that such Person shall give prompt subsequent notice of such transaction to the Owner Trustee and the Owner Participant. SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Trust Indenture Estate shall be situated or to make any claim or bring any suit with respect to or in connection with the Trust Indenture Estate, this Trust Indenture, any other Indenture Agreement, the Secured Certificates or any of the transactions contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interests of the Certificate Holders (and the Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture Trustee shall have been requested to do so by a Majority in Interest of Certificate Holders, then in any such case, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and such other instruments as may from time to time be necessary or advisable either (1) to constitute one or more bank or trust companies or -49- 50 one or more persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as additional trustee or trustees of all or any part of the Trust Indenture Estate, or to act as separate trustee or trustees of all or any part of the Trust Indenture Estate, in each case with such rights, powers, duties and obligations consistent with this Trust Indenture as may be provided in such supplemental indenture or other instruments as the Indenture Trustee or a Majority in Interest of Certificate Holders may deem necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional and separate trustee, subject in each case to the remaining provisions of this Section 8.03. If the Owner Trustee shall not have taken any action requested of it under this Section 8.03(a) that is permitted or required by its terms within 15 days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing provisions of this Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and perform any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee. In case any additional or separate trustee appointed under this Section 8.03(a) shall die, become incapable of acting, resign or be removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to the Indenture Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.03(a). (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Trust Indenture Estate or otherwise payable under any Operative Document to the Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights, powers, duties and obligations conferred or imposed upon any additional or separate trustee shall be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly except to the extent that applicable Law of any jurisdiction in which any particular act is to be performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of the Indenture Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Indenture Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.03 shall be subject to, and shall have the benefit of Articles IV through VIII and Article X hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. (c) If at any time the Indenture Trustee shall deem it no longer necessary or desirable in order to conform to any such law or take any such action or shall be advised by such counsel that it is no longer so necessary or desirable in the interest of the Certificate Holders, or in the event that the Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Certificate Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when and to the extent it could so act under Section 8.03(a) hereof. -50- 51 ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS. (a) Except as provided in Section 5.02 hereof, the Owner Trustee agrees it shall not enter into any amendment of or supplement to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee and a Majority in Interest of Certificate Holders. Anything to the contrary contained herein notwithstanding, without the necessity of the consent of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter into amendments of or additions to the Lease to modify Section 5 (except to the extent that such amendment would affect the rights or exercise of remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such amendments, modifications and changes do not and would not affect the time of, or reduce the amount of, Rent payments (other than Excluded Payments) until after the payment in full of all Secured Obligations or otherwise adversely affect the Certificate Holders. (b) Without limiting the provisions of Section 9.01(a) hereof, the Indenture Trustee agrees with the Certificate Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Certificate Holders, or does not adversely effect the Certificate Holders, but upon the written request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each holder of an affected Secured Certificate then outstanding, no such amendment of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11 or 2.15 or Article III or Section 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an Event of Default) of the Lease, the definitions of "Event of Default", "Default", "Lease Event of Default", "Lease Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Secured Certificate, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in favor of the Owner Trustee, the Indenture Trustee or the Certificate Holders (except that the Owner Trustee (in its individual capacity) or the Indenture Trustee, as the case may be, may consent to any waiver or reduction of an indemnity payable to it), (iv) consent to any change in the Trust Indenture or the Lease which would permit redemption of Secured Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as permitted by Section 2.14 hereof, (v) except as contemplated by the Lease or the Participation Agreement, reduce the amount or extend the time of payment of Interim Rent, Basic Rent, Stipulated Loss Value, or Termination Value for the Aircraft in each case as set forth in the Lease, or modify, amend or supplement the Lease or consent to any assignment of the Lease, in either case releasing Lessee from its obligations in respect of the payment of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections -51- 52 3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. So long as no Lease Event of Default has occurred and is continuing, without the consent of Lessee no amendment or supplement to this Trust Indenture or waiver or modification of the terms hereof shall adversely affect Lessee. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Certificate Holder for any of the following purposes: (i) (a) to cure any defect or inconsistency herein or in the Secured Certificates, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Certificate Holders in its capacity solely as Certificate Holder; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Trust Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Certificate Holders, or to surrender any rights or power herein conferred upon the Owner Trustee, the Owner Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and (vii) to include on the Secured Certificates any legend as may be required by law. SECTION 9.02. TRUSTEES PROTECTED. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of Section 9.01 hereof adversely affects any right, duty, immunity or indemnity with respect to such institution under this Trust Indenture or the Lease, such institution may in its discretion decline to execute such document. SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to Section 9.01 hereof, the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each Certificate Holder at its address last set forth in the Secured Certificate Register, but the failure of the Indenture Trustee to mail such copies shall not impair or affect the validity of such document. SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST AGREEMENT AND INDENTURE SUPPLEMENT. No written request or consent of the Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof shall be required to enable the Owner Trustee to enter into any Lease Supplement specifically required by the terms of the Lease or to execute and deliver a Trust Agreement and Indenture Supplement specifically required by the terms hereof. -52- 53 ARTICLE X MISCELLANEOUS SECTION 10.01. TERMINATION OF TRUST INDENTURE. Upon (or at any time after) payment in full of the Principal Amount of, Make-Whole Amount, if any, and interest on and all other amounts due under all Secured Certificates and provided that there shall then be no other Secured Obligations due to the Certificate Holders and the Indenture Trustee hereunder or under the Participation Agreement, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft and the Engines from the Lien of this Trust Indenture and releasing the Lease, the Bill of Sale, the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto from the assignment and pledge thereof hereunder and the Indenture Trustee shall execute and deliver such instrument as aforesaid and give written notice thereof to Lessee; provided, however, that this Trust Indenture and the trusts created hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property constituting part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all monies or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE HOLDERS. No holder of a Secured Certificate shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Secured Certificate or other right, title and interest of any Certificate Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Trust Indenture or entitle such holder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Trust Indenture Estate. SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING. Any sale or other conveyance of the Trust Indenture Estate, or any part thereof (including any part thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind the Certificate Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders in and to such Trust Indenture Estate or part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS. Nothing in this Trust Indenture, whether express or implied, shall be construed to give any person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or equitable right, remedy or claim under or in respect of this Trust Indenture. SECTION 10.05. NOTICES. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), with a copy to the Owner Participant addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee, -53- 54 addressed to it at its office at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to any Participant, Lessee or any Certificate Holder, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party (if any) set forth on the signature pages to the Refunding Agreement or in the Secured Certificate Register. Whenever any notice in writing is required to be given by the Owner Trustee, any Participant or the Indenture Trustee or any Certificate Holder or Lessee to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after being mailed, addressed as provided above. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Trust Indenture. SECTION 10.06. SEVERABILITY. Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS. No term or provision of this Trust Indenture or the Secured Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Owner Trustee and the Indenture Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any Secured Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 10.08. SUCCESSORS AND ASSIGNS. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the permitted successors and assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificate Holder shall bind the successors and assigns of such holder. This Trust Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby, thereby and by the Participation Agreement. Each Certificate Holder by its acceptance of a Secured Certificate agrees to be bound by this Trust Indenture and all provisions of the Participation Agreement applicable to a Loan Participant or a Certificate Holder. SECTION 10.09. HEADINGS. The headings of the various Articles and sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.10. NORMAL COMMERCIAL RELATIONS. Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or any bank or other Affiliate of such Participant may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Lessee, fully to the same extent as if this Trust Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. -54- 55 SECTION 10.11. GOVERNING LAW; COUNTERPART FORM. THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the parties hereto in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.12. VOTING BY CERTIFICATE HOLDERS. All votes of the Certificate Holders shall be governed by a vote of a Majority in Interest of Certificate Holders, except as otherwise provided herein. SECTION 10.13. BANKRUPTCY. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee hereunder), shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any of the provisions of this Trust Indenture or the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner Trustee will take any action contrary to Lessee's rights under the Lease, including the right to possession and use of, and the quiet enjoyment of, the Aircraft, except in accordance with provisions of the Lease. -55- 56 IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to be duly executed by their respective officers thereof duly authorized as of the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, as Owner Trustee By:__________________________ Name:________________________ Title: STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By:__________________________ Name:________________________ Title: -56- 57 EXHIBIT A TO TRUST INDENTURE AND MORTGAGE TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 C] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 C], dated _________, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 C] dated as of April 26, 1996 (the "TRUST AGREEMENT"), between the Owner Trustee and the Owner Participant named therein. W I T N E S S E T H: WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 C], dated as of June 12, 1996 (as amended and supplemented to the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft (such term and other terms used but not defined herein having the respective meanings ascribed thereto in the Trust Indenture), and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for recordation on the date hereof with the FAA as one document; NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust Indenture Estate covers all of Owner Trustee's right, title and interest in and to the following described property: 58 AIRFRAME One airframe identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number ------------ ----- ------------ -------------- together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Two aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows: Manufacturer Manufacturer's Model Serial Number ------------ -------------------- ------------- together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to any of such engines. Together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts). As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Loan Participants and of the Certificate Holders, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under the Lease Supplement [of even date herewith] covering the property described above subject, however, to all of the terms of the Trust Indenture including, without limitation, the rights of the Owner Trustee and the Owner Participant under Section 5.02 of the Trust Indenture. Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Certificate Holders, except EXHIBIT A-2 59 as provided in Section 2.15 and Article III of the Trust Indenture without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Trust Indenture Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. EXHIBIT A-3 60 IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, Owner Trustee By:__________________________ Name: Title: EXHIBIT A-4 61 SCHEDULE I
PRINCIPAL AMOUNT INTEREST RATE ---------------- ------------- Series A $25,196,968 7.67% Series B $ 8,272,791 8.07% Series C $ 6,530,241 8.97%
62 SECURED CERTIFICATES AMORTIZATION SERIES A AIRCRAFT: N539US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 1.50247046% Jul 2, 1998 0.00000000% Jan 2, 1999 2.05203261% Jul 2, 1999 0.00000000% Jan 2, 2000 2.05202864% Jul 2, 2000 0.00000000% Jan 2, 2001 2.05202864% Jul 2, 2001 0.00000000% Jan 2, 2002 2.05203261% Jul 2, 2002 0.00000000% Jan 2, 2003 2.05203261% Jul 2, 2003 0.00000000% Jan 2, 2004 2.05203261% Jul 2, 2004 0.00000000% Jan 2, 2005 2.05203261% Jul 2, 2005 0.00000000% Jan 2, 2006 2.05202864% Jul 2, 2006 0.00000000% Jan 2, 2007 2.05203261% Jul 2, 2007 0.00000000% Jan 2, 2008 2.05202864% Jul 2, 2008 0.00000000% Jan 2, 2009 2.18793785% Jul 2, 2009 0.00000000% Jan 2, 2010 11.84974716% Jul 2, 2010 0.00000000% Jan 2, 2011 12.75862239% Jul 2, 2011 0.00000000% Jan 2, 2012 13.73721235% Jul 2, 2012 17.12663603% Jan 2, 2013 15.83719914% Jul 2, 2013 0.87462111% Jan 2, 2014 3.60524330%
63 SERIES B AIRCRAFT: N539US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.08332351% Jul 2, 1999 0.00000000% Jan 2, 2000 2.08332351% Jul 2, 2000 0.00000000% Jan 2, 2001 2.08332351% Jul 2, 2001 0.00000000% Jan 2, 2002 2.08332351% Jul 2, 2002 0.00000000% Jan 2, 2003 2.08333560% Jul 2, 2003 0.00000000% Jan 2, 2004 2.08332351% Jul 2, 2004 0.00000000% Jan 2, 2005 2.08333560% Jul 2, 2005 0.00000000% Jan 2, 2006 2.08332351% Jul 2, 2006 0.00000000% Jan 2, 2007 2.08332351% Jul 2, 2007 0.00000000% Jan 2, 2008 11.71053397% Jul 2, 2008 0.00000000% Jan 2, 2009 26.21972440% Jul 2, 2009 0.00000000% Jan 2, 2010 0.00000000% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 39.20766281% Jul 2, 2014 4.11214305%
64 SERIES C AIRCRAFT: N539US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.54168261% Jul 2, 1999 0.00000000% Jan 2, 2000 3.58983688% Jul 2, 2000 0.00000000% Jan 2, 2001 4.73212244% Jul 2, 2001 0.00000000% Jan 2, 2002 5.97686977% Jul 2, 2002 0.00000000% Jan 2, 2003 7.33328219% Jul 2, 2003 0.00000000% Jan 2, 2004 8.81135934% Jul 2, 2004 0.00000000% Jan 2, 2005 10.42201965% Jul 2, 2005 0.00000000% Jan 2, 2006 5.35591259% Jul 2, 2006 0.00000000% Jan 2, 2007 11.62116375% Jul 2, 2007 0.00000000% Jan 2, 2008 11.57707656% Jul 2, 2008 0.00000000% Jan 2, 2009 0.00000000% Jul 2, 2009 0.00000000% Jan 2, 2010 0.00000000% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 0.00000000% Jul 2, 2014 0.83237357% Jan 2, 2015 27.20630066%
65 SCHEDULE II 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. EX-4.G4 54 LEASE AGREEMENT-1996 C 1 LEASE AGREEMENT [NW 1996 C] This LEASE AGREEMENT [NW 1996 C], dated as of April 26, 1996, between FIRST SECURITY BANK OF UTAH, 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. The following terms shall have the following meanings for all purposes of this Lease Agreement [NW 1996 C] and shall be equally applicable to both the singular and the plural forms of the terms herein defined: "Administrative Agent" means [_____________], a [_________] banking corporation, as administrative agent pursuant to the Participation Agreement, and any successor acting as administrative agent. "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. "After-Tax Basis" means an additional amount which when added to the amount of payment otherwise required to be made on an After-Tax Basis, after deduction of all Federal, state, local and foreign taxes required to be paid by or on behalf of a Person in respect of the receipt or realization of any such amounts, results in a sum equal to the payment required under the provisions of the Operative Documents to be made on an After-Tax Basis. Any payment under the Operative Documents which does not actually result in an increase (or a decrease in a refund) of the Owner Participant's Federal, state, local or foreign income tax liability for the year of the accrual or receipt of such payment but which reduces any net operating loss or business credit or foreign tax credit carryover of the recipient shall be treated as giving rise to an actual increase in (or a decrease in a refund of) tax liability for the year in which such tax attribute if not reduced thereby would have given rise to a reduction in such recipient's tax liability (or such recipient's allowable refund in respect of any 2 such taxes). With respect to the Owner Participant, for purposes of this definition, it shall be assumed that United States federal, state, local and foreign income taxes are payable at the Highest Marginal Rate (as defined in the Tax Indemnity Agreement) then applicable to the Owner Participant. "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 two 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 Boeing 757-251 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. "Assumed Interest Rate" has the meaning set forth in Section 3(c) hereof. "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 -2- 3 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 Commencement Date and ending on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. "Bill of Sale" means a full warranty bill 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 Bill of Sale shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good title to the Airframe and each Engine described in such Bill 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 New York, New York; Boston, Massachusetts; Salt Lake City, Utah; or Minneapolis, Minnesota and, in connection with any payment of Rent and so long as any Secured Certificate is a Eurodollar Loan (as defined in the Trust Indenture), such day is also a day for trading by and between banks in the interbank Eurodollar market. "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. "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. -3- 4 "Commencement Date" means January 2, 1997. "Commitment" means the commitment of a Loan Participant 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 1996 C], 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. "Credit Agreement" means the Credit Agreement, dated as of November 2, 1995, among Lessee, the banks, financial institutions and other institutional lenders listed on the signature pages thereof, [____________], as documentation agent, [____________], as administrative agent, and [___________], as syndication agent, as the same may be amended, supplemented or otherwise modified from time to time. "Debt Rate" has the meaning set forth in the Trust Indenture. "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, 2003, provided, however, that if the chief legal officer or chief tax officer of Lessee has actual knowledge that the Depreciation Period is other than the period specified in the Tax Assumptions as a result of an "Operative Event" (as defined in the Tax Indemnity Agreement), then ending on the last day of the Owner Participant's taxable year in which a depreciation or cost recovery deduction is allowed or allowable with respect to the Aircraft. "Documentation Agent" means [__________], a bank organized under the laws of [__________], as documentation agent pursuant to the Participation Agreement, and any successor acting as documentation agent. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of the two Pratt & Whitney Model PW2037 engines listed by manufacturer's serial number in the initial Lease Supplement, -4- 5 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 two 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 hereunder. The term "Engines" means, as of any date of determination, all Engines then leased hereunder. "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 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government) 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 for a period in excess of 180 consecutive days or, if earlier, until the end of the Term or, in the case of a requisition of title by the United States Government or any other government of registry of the Aircraft which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government, as the case may be, the requisition of title shall not have been reversed within 90 days from the date of such requisition of title or, if earlier, at the end of the Term (it being understood that a requisition of title by any government other than as expressly provided above shall constitute an immediate Event of Loss); (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, prior to the -5- 6 expiration of such 180 day period, shall have undertaken and shall be diligently carrying forward in a manner that does not discriminate against the Aircraft all steps which are necessary or desirable to permit the normal use of such property by Lessee, and, within one year of such prohibition, Lessee 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, provided, notwithstanding any of the foregoing, such prohibition shall constitute an Event of Loss if such use shall have been prohibited for a period of two 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any instrumentality or agency of any thereof whose obligations are backed by the full faith and credit of such government, which shall have occurred during the Basic Term (or the Interim 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; (vi) any divestiture of title to or interest in an Engine treated as an Event of Loss pursuant to Section 7(b) hereof; and (vii) the operation of or location of the Aircraft, while under requisition for use by any government, in an area excluded from coverage by any insurance policy in effect with respect to the Aircraft required by this Agreement, unless in the case of a requisition by the United States Government or any other government of registry of the Aircraft which is listed on Exhibit C to the Participation Agreement and is designated a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government, Lessee shall have obtained an indemnity in lieu thereof from such government or such agency or instrumentality. 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 the Transition 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 the Transition Date; provided, however, that, to the extent that the aggregate amount of interest due and payable on the Transition Date on the Secured Certificates for the period from and including the Delivery Date to but excluding the Transition Date is less than the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Transition Date if such Secured Certificates had borne interest at the Assumed Interest Rate for such period, the -6- 7 corresponding percentage set forth in Exhibit B shall be decreased by the amount which when multiplied by Lessor's Cost will equal such differential. "Expenses" has the meaning specified in Section 7(c) of the Participation Agreement. "FAA Bill of Sale" means a bill 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. "Funding Loss Amount" has the meaning assigned to that term in the Trust Indenture. "Guarantee" means the Guarantee [NW 1996 C], dated as of the date hereof, made by the Guarantor in favor of the Parties, 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 the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Administrative Agent, the Documentation Agent, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents. "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. -7- 8 "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. "Interest Period" means Interest Period as defined in the Trust Indenture. "Interim Rent" means the rent payable for the Aircraft for the Interim Term pursuant to Section 3(b) hereof. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions hereof. "Lease Agreement", "this Lease Agreement", "this Lease", "this Agreement", "herein", "hereof", "hereunder", "hereby" or other like words mean this Lease Agreement [NW 1996 C] 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 semi-annual periods throughout the Basic Term and any Renewal Term ending on a Lease Period Date, the first such period commencing on and including the Commencement Date and each succeeding period commencing on the date immediately following the preceding Lease Period Date. "Lease Period Date" means July 2, 1997 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 -8- 9 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 Bill of Sale, the Bill 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 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 of Utah, 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 of Utah, 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 risk of interference with the payment of Rent (other than Excluded Payments in favor of First Security Bank of Utah, 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. -9- 10 "Lien" means any mortgage, pledge, lien, charge, claim, encumbrance, lease, sublease, sub-sublease or security interest. "Loan Participant" means each institution executing the Participation Agreement as a Loan Participant, and its respective successors and assigns, and any Certificate Holder; at any time when there is only one Certificate Holder, "each Loan Participant" shall mean such 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 assigned to that term in the Trust Indenture. "Manufacturer" means The Boeing Company, a Delaware corporation. "Manufacturer Documents" means the Purchase Agreement and the Consent and Agreement. "Moody's" means Moody's Investors Service, Inc. "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 after-tax present value, as of the Delivery Date, of Basic Rent set forth in Exhibit B hereto through and including the date on which the Special Purchase Price is payable pursuant to Section 19(d) hereof, and the Special Purchase Price payable as of such date, computed on the basis of the same methodology, constraints and assumptions as were utilized in determining Basic Rent, the Special Purchase Price, Stipulated Loss Value and Termination Value percentages as of the Delivery Date. "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 Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Guarantee, the Owner Participant Guaranty, the Purchase Agreement Assignment and the Consent and Agreement. -10- 11 "Overall Transaction" means all the transactions contemplated by the Operative Documents. "Owner Participant" means the corporation executing the Participation Agreement as the Owner Participant and 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 Participant Guarantor" means the entity executing the Owner Participant Guaranty as guarantor thereunder. "Owner Participant Guaranty" means the Owner Participant Guaranty [NW 1996 C], dated as of the date hereof, made by the Owner Participant Guarantor in favor of Lessee, Lessor, the Loan Participants and the Indenture Trustee, as such Owner Participant Guaranty may be amended or supplemented from time to time pursuant to the applicable provisions thereof. "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 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 1996 C], dated as of the date hereof, among Lessee, the Loan Participants, the Indenture Trustee, the 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. -11- 12 "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. "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 (calculated based on the actual number of days elapsed in a year consisting of 365 days or 366 days, as the case may be) equal to (x) 1% over the Base Rate for the first 5 Business Days from the date such payment became due, and (y) 3% over the Base Rate thereafter. "Permitted Carrier" means an air carrier domiciled and principally based in a country set forth on Exhibit C to the Participation Agreement and designated therein as a "Specified Country". "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 C to the Participation Agreement. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Prepaid Rent" has the meaning assigned in Section 3(g) hereof. "Purchase Agreement" means the Purchase Agreement No. 1631, dated December 1, 1989, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1996 C], 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. -12- 13 "Reimbursement Amount" has the meaning set forth in Section 3(g) hereof. "Renewal Term" means any Fixed Renewal Term or Fair Market Renewal Term as those terms are defined in Section 19 hereof. "Rent" means Interim Rent, Basic Rent and Supplemental Rent, collectively. "Rent Differential Amount" has the meaning set forth in Section 3(c) hereof. "Restricted Country" has the meaning set forth on Exhibit C to the Participation Agreement. "Return Site" means a major airport on Lessee's route system located within the forty-eight contiguous states of the United States. "S&P" means Standard & Poor's Corporation. "Secured Certificates" has the meaning assigned to that term in the Trust Indenture. "Special Purchase Price" shall mean the amount denominated as such in Exhibit B hereto. "Specified Country" has the meaning set forth on Exhibit C to the Participation Agreement. "Stipulated Loss Value" with respect to the Aircraft as of any date through and including January 2, 2019, 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). To the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Interim Term or the Lease Period in which such Stipulated Loss Value Date occurs up to and including such Stipulated Loss Value Date is greater or less than the amount included in calculating the percentage set forth in Exhibit C with respect to such Stipulated Loss Value Date on account of such interest, the corresponding percentage set forth in Exhibit C shall be adjusted appropriately to compensate for such differential. "Stipulated Loss Value" as of any date after January 2, 2019 shall be the amount determined as provided in Section 19(a) hereof. -13- 14 "Stipulated Loss Value Date" means the 2nd calendar day of each calendar month during the Interim Term, 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. "Supplemental Rent" means all amounts, liabilities and obligations (other than Interim Rent and Basic Rent) which Lessee assumes or agrees to pay to Lessor or others hereunder, under the Participation Agreement, under the Tax Indemnity Agreement or under any of the other Operative Documents. The parties acknowledge that Supplemental Rent is a general category and, accordingly, agree that any provision of any Operative Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment. "Tax Indemnitee" means the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors and permitted assigns. "Tax Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1996 C], dated as of the date hereof, 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, 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 Interim Term, 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 January 2, 2019, means, but subject always to the provisions of -14- 15 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). In the event that the Termination Date with respect to which Termination Value is determined is a date on which Basic Rent is payable in advance as indicated on Exhibit B, to the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Lease Period ending on such Termination Date is greater or less than the amount included in calculating the corresponding percentage set forth in Exhibit D with respect to such Termination Date on account of such interest, the corresponding percentage set forth in Exhibit D shall be adjusted appropriately to compensate for such differential. "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker, special counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Vedder, Price, Kaufman & Kammholz, special counsel to the Loan Participants, such information to be furnished by the Documentation Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee and Guarantor, such information to be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements (but excluding any sales, use and other transfer taxes which apply to the Aircraft), such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, and the reasonable out-of-pocket expenses of the Owner Participant, such information to be furnished by the Owner Participant, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust Indenture, such information to be furnished by the Indenture Trustee, (v) the fees of Aeroeconomics, Inc. and BK Associates, Inc. with respect to the appraisals of the Aircraft pursuant to Sections 4(a)(xx) and 4(a)(xxix), respectively, of the Participation Agreement, such information to be furnished by the Owner Participant in the case of Aeroeconomics, Inc. and by the Documentation Agent in the case of BK Associates, Inc., (vi) the reasonable and actual fees, expenses and disbursements of Dewey Ballantine, special counsel to the Owner Participant, such information to be furnished by the Owner Participant, (vii) the fee and reasonable disbursements of Babcock and Brown Financial Corporation, such information to be furnished by Lessee, and (viii) the fee payable to the Loan Participants on the Delivery Date. -15- 16 "Transition Date" means the date designated as such in Exhibit B hereto. "Trust Agreement" means that certain Trust Agreement [NW 1996 C], dated as of the date hereof, between the Owner Participant and First Security Bank of Utah, 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 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 1996 C], dated as of the date hereof, between Lessor and the Indenture Trustee, as originally executed or as modified, amended or supplemented in accordance with the provisions thereof. "Trust Supplement" means a supplement to the Trust Agreement and the Trust Indenture, substantially in the form of Exhibit A to the Trust Indenture. "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 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. SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to satisfaction of the conditions set forth in Section 4(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 Section 4(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 -16- 17 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 AMD RENT. (a) Interim Term and Basic Term. The Interim Term shall commence on the Delivery Date and end on and include the day immediately preceding the Commencement Date unless earlier terminated pursuant to the provisions hereof. The Basic Term shall commence on the Commencement Date and end on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. (b) Interim Rent. Lessee shall pay Interim Rent on the Commencement Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for Interim Rent on the Commencement Date. Although the Interim Rent percentage set forth in Exhibit B hereto has been computed on the assumption that the rate of interest on the Secured Certificates will be the Assumed Interest Rate, Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, the Interim Rent payable on the Commencement Date shall be increased or decreased (but not below zero) by the difference between (i) the aggregate amount of interest due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to but excluding the Commencement Date and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to the Commencement Date if such Secured Certificates had borne interest at the Assumed Interest Rate. If the amount determined in accordance with clause (i) of the preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be increased by such difference. If the amount determined in accordance with clause (i) of the preceding sentence shall be less than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be decreased (but not below zero) by such difference. (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 applicable Lease Period Date specified in Exhibit B hereto. Although the Basic Rent percentages set forth in Exhibit B hereto have been computed on the assumption that the rate of interest on the Secured Certificates throughout the Term will be 6.5% per annum, computed on the basis of a 360-day year of twelve 30-day -17- 18 months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, each installment of Basic Rent shall be increased or decreased (but not below zero), as the case may be, by the Rent Differential Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with respect to the Basic Term, the difference between (i) the aggregate amount of interest due and payable on such Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on such Lease Period Date if such Secured Certificates had borne interest at the Assumed Interest Rate, in each case for the period from and including the Lease Period Date (or the Commencement Date in the case of the first Lease Period) next preceding such Lease Period Date to but excluding such Lease Period Date. If, as of any Lease Period Date, the amount determined in accordance with clause (i) of the immediately preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Basic Rent payable on such Lease Period Date shall be increased by the Rent Differential Amount. If, as of any Lease Period Date, the amount determined in accordance with such clause (ii) shall exceed the amount determined in accordance with such clause (i), the amount of Basic Rent due on such Lease Period Date shall be decreased (but not below zero) by the Rent Differential Amount. (d) Adjustments to Basic Rent. (i) In the event that (A) the Delivery Date occurs other than on April 29, 1996, or (B) Transaction Expenses paid by Lessor pursuant to Section 16 of the Participation Agreement are determined to be other than 1.0% 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, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated on or prior to November 15, 1996 using the same methods and assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and Special Purchase Price, 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. (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, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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, subject to the Owner Participant's consent, which the Owner -18- 19 Participant may withhold in its sole discretion, 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, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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 and the Special Purchase Price 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 Amount set forth in Exhibit B in a manner consistent with such recalculation. In addition, (X) any recalculation of Basic Rent, Stipulated Loss Value or Termination Value percentages made pursuant to this Section 3(d) shall take into account any decrease in the Excess Amount with respect to the Transition Date required by the proviso to the definition of "Excess Amount", (Y) after January 31, 1997 but prior to July 2, 1997, the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C and the Termination Value percentages set forth in Exhibit D shall be recalculated to take into account any decrease in Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) of this sentence, and (Z) at the time of any payment of Stipulated Loss Value or Termination Value, the Stipulated Loss Value percentage set forth in Exhibit C or the Termination Value percentage set forth in Exhibit D, by reference to which the amount of such payment is determined shall be recalculated to take into account any decrease in the Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) or clause (Y) of this sentence. (iv) Any recalculation of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price 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. In addition, notwithstanding any other provisions herein, in no event shall the Special Purchase Price be adjusted to an amount that is less than the greater of (A) the Termination Value as of July 2, 2012, (B) the estimated fair market value of the Aircraft on July 2, 2012, determined as of the Delivery Date and set forth in the opinion received from Aeroeconomics, Inc. pursuant to Section -19- 20 4(a)(xx) of the Participation Agreement (the "APPRAISAL"), and (C) 101% multiplied by the present value as of July 2, 2012 of (x) the remaining scheduled Basic Rent through the end of the Basic Term plus (y) 42.2% of Lessor's Cost (i.e., the fair market value of the Aircraft as of the end of the Basic Term as set forth in the Appraisal) (the present value calculation described in this clause (C) shall utilize a semi-annual compounded discount rate no lower than that utilized by the Owner Participant in determining the Special Purchase Price as of the Delivery Date, but in no event shall such discount rate be less than 11.8% per annum). Such recalculated Basic Rent, Excess Amount and Stipulated Loss Value and Termination Value percentages and the Special Purchase Price 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 Interim Rent and 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 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), 4.07 and 4.08(1) of Rev. Proc. 75-28 and with Section 467 of the Internal Revenue Code of 1986, as amended, as each is then in effect as long as the Schedule of Basic Rent was in compliance with Section 467 of the Code as in effect on the Closing Date, it being understood that, to the extent that any grandfather, effective date, or similar provisions in any regulations under Section 467 or other administrative pronouncement interpreting Section 467 promulgated or issued after the Closing -20- 21 Date causes such regulations or pronouncement not to be applicable to the Schedule of Basic Rent in effect on the Closing Date, such Schedule shall be deemed to be in compliance with Section 467 as in effect on the Closing Date (provided that the test of Rev. Proc. 75-28 Section 4.08(1) and Section 467 shall be applied on a prospective basis from the date of such adjustment if and to the extent permitted by applicable law, as then in effect) 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, on behalf of Lessor, as Supplemental Rent when due any amount of premium payable when due under the Trust Indenture and shall pay on behalf of Lessor amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when the same shall become due and payable. 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 Interim Rent and 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 of Utah, National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW 1996 C (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, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1996 C (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 10 Business Days prior to the date such payment of Rent is due). 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 -21- 22 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 the Transition Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall on the Transition Date, prepay on the Transition 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 shall, under all circumstances and whether or not an Event of Default shall be continuing on the Transition Date, pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount equal to the excess, if any, of the interest on the Secured Certificates relating to the period from and including the Delivery Date to but excluding the Transition Date over the Excess Amount payable on the Transition Date; provided, further, 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 equal to the Base Rate as in effect from time to time plus 5% per annum 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 -22- 23 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 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 Interim Rent or 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 of Utah, 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 that 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 -23- 24 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, 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 Return Site then being serviced by Lessee's 757-200 aircraft, which Return Site shall be chosen by Lessor and reasonably acceptable to Lessee (provided, that at Lessor's request, Lessee will consider in good faith a Return Site not then being serviced by Lessee's 757-200 aircraft, provided, further, that, in the case of a return to a Return Site not then being serviced by Lessee's 757-200 aircraft, Lessee is able to return the Airframe immediately following a revenue passenger flight with the Airframe to such Return Site), and Lessor will give Lessee at least ten (10) days' prior written notice of the Return Site; 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 and not due to any act or failure to act on the part of Lessee; the Airframe will be fully equipped with the Engines (or other Pratt & Whitney Model PW2037 engines or two engines of the same or another manufacturer of not less than equivalent utility, fair market sales 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 both 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 without the necessity of any further expense being incurred by Lessor, (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 -24- 25 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 Exhibit F. Lessor agrees to pay Lessee those amounts specified in Exhibit F to be for the cost, expense or account of Lessor. 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 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) bill 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 bill 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 bill 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 that 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) Lessee shall invoice Lessor, and 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 thirty (30) 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 -25- 26 facilities for the Aircraft (maintenance costs and other out-of-pocket costs other than parking fees incurred by Lessee in connection with such storage 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 that 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 Sublessee) either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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, the 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 forty-five (45) days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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 -26- 27 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 Boeing 757-200 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 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 or such manner as shall have been approved by the Owner Participant pursuant to Section 7(b)(x) and without in any way discriminating against the Aircraft, by reason of its leased status, including, without limitation, the termination of airworthiness directives; 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 (which records, logs and other materials, as between Lessor and Lessee and all parties claiming through Lessee, shall be the property of Lessor but shall be maintained by Lessee during the Term and shall become the property of Lessee upon Lessee's purchase of the Aircraft pursuant to the terms of this Lease or upon the occurrence of an Event of Loss and Lessee's compliance with Section 10 hereof); 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, -27- 28 rule, regulation or order in any reasonable manner which does not materially adversely affect Lessor or the Owner Participant 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 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 Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee 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 any 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 Permitted 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 -28- 29 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; (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; -29- 30 (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 (which, if entered into with tax-exempt entities during the Depreciation Period, may not exceed three years) 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 (the term of which, during the Depreciation Period, may not exceed three years), 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 the Owner Participant and the Indenture Trustee in their sole discretion, 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 the Sublessee under such sublease is a foreign air carrier (other than a foreign air carrier principally based and domiciled in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Sublessee is principally based and domiciled 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 domiciled and principally based in a country listed on Exhibit C to the Participation Agreement and designated therein as a "Restricted Country", Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee to the effect that (I) the terms of the proposed -30- 31 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 and domiciled, (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, (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 Lessor (or Lessee, as "lessee", or the proposed Sublessee, as "sublessee", as appropriate) and to the Lien of the Trustee Indenture, (V) such Sublease will not result in a risk of unindemnified Taxes to Lessor or the Owner Participant (it being agreed that in the event such opinion cannot be given in a form reasonably satisfactory to the Owner Participant, such opinion will be waived if (A) the Owner Participant has received assurances satisfactory to it to the effect that such Sublease will not result in any such risk, or (B) Lessee shall have entered into a binding agreement to indemnify in a manner satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant for such unindemnified Taxes; provided, however, that if (a) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (b) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such subleasing or (c) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee), (VI) none of the Owner Trustee, the Owner Participant or the Indenture Trustee will be required to register to do business in such country as a result of such sublease, after (A) taking into account any other contacts of the Owner Trustee and the Owner Participant with such jurisdiction (provided, that upon request by Lessee (such request having been acknowledged by the Owner Participant's general counsel), the Owner Trustee and the Owner Participant must respond -31- 32 within fourteen (14) Business Days after receipt of such request describing its contacts in such jurisdiction, or else such party shall be deemed for purposes of this clause (VI) to have no such contacts) and (B) assuming that the Indenture Trustee has no other contacts with such jurisdiction, and (VII) there is no tort liability for owners not in possession of aircraft in such country more onerous than under the laws of the United States or any state thereof (it being agreed that in the event such opinion cannot be given in a form reasonably satisfactory to the Owner Participant, such opinion will be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover the risk of such tort liability), 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; provided, further, that in the event the Sublessee's maintenance program for the Airframe will be a block overhaul program, a sublease entered into pursuant to this clause (x) to such Sublessee shall not extend beyond the date which is six months prior to the expiration of the Basic Term or any Renewal Term then in effect (and Lessee, if the last Sublessee was not a U.S. Air Carrier, shall upon expiration of the sublease to such Sublessee (1) incorporate the Aircraft into Lessee's approved maintenance program for aircraft of the same make and model and in active commercial service and (2) place the Aircraft into active passenger service or, in lieu thereof, upon the return of the Aircraft to Lessor pursuant to Section 5, Lessee shall comply with those return conditions that would have been applicable had Lessee adopted a block overhaul program) unless either the Owner Participant shall have previously approved in writing the maintenance procedures of the Sublessee or Lessee shall have irrevocably committed to purchase the Aircraft at, or extend the Term of this Lease by a period of at least six months from, the end of the Basic Term or such Renewal Term, as the case may be. 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 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 -32- 33 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 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 (A) fifteen (15) days prior to entering into any Sublease with a term of more than one (1) year, (B) five (5) Business Days prior to entering into any Sublease with a term equal to or less than one (1) year with a Permitted Sublessee and (C) five (5) days prior to entering into any Sublease with a term equal to or less than one (1) year with any proposed Sublessee other than a Permitted Sublessee, 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 of Utah, 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 -33- 34 (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 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 -34- 35 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) 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, the Owner Participant, 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 diminish the value, utility or remaining useful life of the Airframe or such Engine, or materially impair the condition or airworthiness thereof, below the value, utility, remaining useful life, condition or airworthiness 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 original cost of all Obsolete Parts which shall have been removed and not replaced shall not exceed $500,000. 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 -35- 36 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, remaining useful life, condition or airworthiness 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. Termination Event. (1) [Intentionally Omitted]. (2) Lessee shall have the right to elect to terminate this Lease on any Lease Period Date occurring on or after January 2, 2003 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 its best efforts to obtain bids in Dollars 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, lease or ownership 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 -36- 37 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 cash bid therefor (net of any brokerage commissions) 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 that 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 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 sale price of the Aircraft sold by Lessor after deducting the reasonable expenses incurred by Lessor, the Owner Participant or the Indenture Trustee 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) on behalf of Lessor, the premium and Funding Loss 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 that 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. 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 premium and Funding Loss Amount, if any, due on the Secured Certificates and, so long as -37- 38 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 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, if Lessee revokes its Termination Notice or, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that payment by Lessee of the amount specified in clause (3)(A) above in connection with a termination where Lessor has not elected to retain title will not constitute a preference under applicable U.S. bankruptcy laws, a Default or an Event of Default of the type referred to in Section 14(e) hereof shall exist on such Termination Date (unless, in the case of any such Default or Event of Default, Lessee has obtained an order from the applicable bankruptcy court approving the payment of any such amount), 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, the Indenture Trustee 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, in which case Lessee shall pay only the reasonable costs and expenses of the Indenture Trustee), 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, Basic Rent or any other amounts hereunder arising subsequent to such date of sale or retention shall cease to accrue, Lessee shall have no further obligation in this respect 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 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 and a Termination Notice may be given not more than once during any 365-day period. If (x) there is a sale of the Aircraft pursuant to this Section 9(c), (y) an Event of Default of the type described in Section 14(c) relating to Section 7(a) or Section 8 shall have occurred and be continuing on the date of such sale and (z) the fair market sales value of the Aircraft on the date of such sale is lower than it would have been had no such Event of Default occurred, Lessee shall pay to Lessor, in addition to any other amounts due hereunder, the amount in excess of Termination Value that Lessor would have received had no such Event of Default occurred. Lessor and Lessee shall confer in good faith with a view to reaching agreement on what the fair market sales value of the Aircraft would have been in the absence of such Event of Default. If Lessor and Lessee have not so agreed within 10 days after notice by Lessor or the Owner Participant of the occurrence of such Event of Default, the question -38- 39 shall be determined by an appraisal in accordance with the procedures described in Section 19(c). (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 Interim Rent or 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) the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence) (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 the Commencement Date or 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 Interim Rent or Basic Rent that would have been due on the Commencement Date or such Lease Period Date as if such Event of Loss had not occurred, or (ii) 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, 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 -39- 40 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. 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, if Basic Rent is payable in arrears on the date of such payment as indicated on Exhibit B hereto, Basic Rent due on such payment date, and all Supplemental Rent), under the Participation Agreement and under the Tax Indemnity Agreement, (1) Basic Rent, Supplemental Rent, Stipulated Loss Value, Termination Value or any other amount due hereunder shall cease to accrue, and Lessee shall have no further obligation in any such respect, provided, that the obligations of Lessee under the other Operative Documents which, by their express terms, are stated to survive shall not be terminated, (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 that 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 bill 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. Notwithstanding anything to the contrary contained in the foregoing, in the event that any payment of Stipulated Loss Value is to be made pursuant to this Section 10(a) on a date that is subsequent to the scheduled expiration of the Term, then Lessee shall, in addition to any other amounts payable pursuant to this Section 10(a), pay on the relevant Loss Payment Date such additional amount as is necessary to preserve the Owner Participant's Net Economic Return. Any calculation of any such additional amount shall be made by the Owner Participant and shall be subject to the verification procedures set forth in Exhibit E hereto. 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 (Lessee shall in connection therewith provide the certificate or the appraisal described in Section 5.06(4) of the Trust Indenture) 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 any airframe so substituted hereunder shall have a year of manufacture after December 31, 1994 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 bill of sale and a -40- 41 Federal Aviation Administration bill 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 that 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 bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft 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, (7)(x) furnish Lessor with an opinion of tax counsel chosen by the Owner Participant and reasonably acceptable to Lessee to the effect that such substitution will not result in any adverse tax consequences to the Owner Participant or (y) indemnify the Owner Participant as to such tax consequences in a manner reasonably satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (a) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB+/Baa1" or better from either S&P or Moody's so long as the rating by the other agency is not less than "BBB" or "Baa2", as the case may be, or (b) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such substitution or (c) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the -41- 42 Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee, and (8) 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 Interim Rent or 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 Pratt & Whitney Model PW2037 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, and Lessee shall in connection therewith provide the certificate or appraisal described in Section 5.06(2)(B)(iv) of the Trust Indenture; provided that both 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) bill 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 that 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 bill 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 -42- 43 "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 Interim Rent or 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) and the Owner Participant 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 to Lessor and Lessee, as their interests may appear; 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) and the Owner Participant 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 which is a Specified Country. 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any instrumentality or agency of any thereof whose obligations are backed by the full faith and credit of such government, 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, instrumentality or agency, as the case may be, prior to the end of the Term, Lessee shall be obligated to return the Airframe and such Engines or engines to Lessor -43- 44 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, instrumentality or agency. 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 Exhibit F) 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) bill 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 bill 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens), against receipt from Lessor of a bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 which is a Specified Country. 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government (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. (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 -44- 45 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 or a Default of the type referred to in Section 14(a) or 14(e) 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 or 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 any 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 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 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 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 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 -45- 46 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 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 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, any 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 by Lessee 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 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 -46- 47 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 or a Default of the type referred to in Section 14(a) or 14(e) 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 -47- 48 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 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) and the Owner Participant 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) and the Owner Participant 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 -48- 49 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). (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 by Lessee 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, 1996, a report, signed by Marsh & McLennan, Incorporated 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 -49- 50 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. (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. (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 or a Default of the type referred to in Section 14(a) or 14(e) 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 -50- 51 any such Event of Default or 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 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 unless an Event of Default shall have occurred and be continuing) 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; 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: -51- 52 (a) Lessee shall not have made a payment of Interim Rent, Basic Rent or Stipulated Loss Value within ten (10) 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 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 and in clauses (i)(B) and (ii) of the first sentence of second paragraph of Exhibit F) 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 one hundred eighty (180) 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 the representations and warranties in, or in connection with, the Credit Agreement) 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 -52- 53 (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 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 Section 14(c) or (d) hereof, 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 -53- 54 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, if any, 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 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 Stipulated Loss Value Date not earlier than ten days from the date of such notice, may demand that the 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 Interim Rent or Basic Rent for the Aircraft due on or after the payment date specified in such notice), any unpaid Interim Rent or Basic Rent due on the payment date so specified (unless Basic Rent is payable in advance on such date but 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 Stipulated Loss Value Date specified as the payment date in -54- 55 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 Stipulated Loss Value Date specified as the payment date in such notice at an annual rate equal to the Base Rate plus 3%; or (ii) an amount equal to the excess, if any, of the Stipulated Loss Value for such Aircraft, computed as of the Stipulated Loss Value Date specified as the payment date in such notice over the fair market sales value of such Aircraft (computed as hereafter in this Section provided) as of the Stipulated Loss Value 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 Interim Rent or Basic Rent for the Aircraft due on or after such date), any unpaid Interim Rent or 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 and an all cash, contemporaneous sale, 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 -55- 56 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 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 will endeavor 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 and any such public sale shall be conducted in general so as to afford Lessee (and any Sublessee) a commercially reasonable opportunity to bid (it being understood that Lessor shall -56- 57 incur no liability for its failure to provide any such notice). 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 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 at its expense 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 1997, 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 -57- 58 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 telecopy 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President-Finance and Treasurer (Telecopy No. (612) 726-0665), 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 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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. This Lease is a net lease. 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, -58- 59 (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, upon compliance with the notice provisions set forth in Section 19(e) hereof, to renew this Lease for up to three 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"). 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. At the expiration of the third Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have the option, upon compliance with the notice provisions set forth in Section 19(e) hereof, to renew this Lease for a renewal term of not less than one year and not more than three 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"). The aggregate length of all Fair Market Renewal Terms pursuant to this Section 19(a)(2) may not exceed five years. (3) If no written notice is delivered by Lessee to Lessor pursuant to Section 19(e) 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), 14(e) or 14(f) 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 -59- 60 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 any portion of Basic Rent during the Basic Term was payable in advance, in which case the same proportion of Basic Rent (i.e., the total Basic Rent payable during the Basic Term divided into the total Basic Rent payable in advance during the Basic Term) shall be payable in advance during such Renewal Term, 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 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 compliance with the notice provisions set forth in Section 19(e) hereof, to purchase the Aircraft on the last Business Day of the Basic Term or any Renewal Term for a purchase price equal to the fair market sales value of the Aircraft; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the purchase price by Lessee will not constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled to purchase the Aircraft if there shall exist on such last Business Day of the Basic Term or any Renewal Term, as the case may be, a Default of the type referred to in Section 14(e) hereof. 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 that 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. 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 -60- 61 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 this Lease, including the purchase and renewal options of 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 a notice from Lessee pursuant to Section 19(e) hereof, 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, 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 July 2 , 2012 (or, if July 2, 2012 is not a Business Day, the Business Day immediately succeeding July 2, 2012), Lessee shall have the -61- 62 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; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the Special Purchase Price by Lessee will not constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled to purchase the Aircraft if there shall exist on July 2, 2012 (or, if July 2, 2012 is not a Business Day, on the Business Day immediately succeeding July 2, 2012) a Default of the type referred to in Section 14(e) hereof. 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 2.15 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 that 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. (e) In order to exercise any right pursuant to Sections 19(a) or 19(b) hereof, Lessee shall, no earlier than 540 days and no later than 270 days prior to the expiration of the Basic Term or any Renewal Term, as the case may be, deliver to Lessor a notice in writing stating that it intends to exercise one of the options set forth in Sections 19(a) or 19(b) hereof. Any such notice shall be revocable until the date that is 270 days prior to the expiration of the Basic Term or such Renewal Term, as the case may be. Failure to revoke any such notice prior to such 270th day prior to the end of the Basic Term or such Renewal Term, as the case may be, shall constitute a binding and irrevocable election by Lessee to exercise one of the options set forth in Sections 19(a) or 19(b) hereof. In the event that any such notice has so been provided to Lessor, Lessee shall, no earlier than the 270th day and no later than the 90th day prior to the expiration of the Basic Term or such Renewal Term, as the case may be, specify which of the options in Sections 19(a) or 19(b) Lessee intends to elect. For the avoidance of doubt, the parties agree and acknowledge that Lessee may not specify which of the options in Sections 19(a) or 19(b) it intends to elect prior to the date that is 270 days earlier than the expiration of the Basic Term or such Renewal Term, as the case may be. 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 -62- 63 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 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 Moody's or AA or better by S&P and having a final maturity of ninety (90) days or less from date of purchase thereof; and (iii) commercial paper -63- 64 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 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 a Default of the type referred to in Section 14(a) or 14(e) or an Event of Default shall have occurred and be continuing. If a Default of the type referred to in Section 14(a) or 14(e) or an Event of Default shall have occurred and be continuing, Lessor, or if the Trust Indenture shall not have been discharged, the Indenture Trustee as assignee of Lessor, shall hold any such gain as security for the obligations of Lessee under this Lease and apply it against such obligations as and when due, and once all such Defaults and Events of Default have been remedied, any gain not so applied shall be remitted to Lessee. 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 -64- 65 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. 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 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. SECTION 27. HOLDOVER RENT. In the event that Lessee shall fail to return the Aircraft in accordance with Section 5 hereof at the scheduled expiration of the Term, then, unless such failure shall occur as a result of (x) the Aircraft having suffered an Event of Loss or (y) Lessee having purchased the Aircraft pursuant to Section 19 hereof and, in the case of either clauses (x) or (y) above, Lessee shall have made all payments required to be made pursuant to such Sections, Lessee shall pay to Lessor, for each such day beyond the scheduled expiration of the Term during which the Aircraft is not returned to Lessor in accordance with Section 5 hereof, an amount equal to the higher of (A) the daily fair market rental value of the Aircraft during such period, computed in accordance with Section 19(c) hereof, and (B) the average daily Basic Rent payable by Lessee during the Term. - -65- 66 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 OF UTAH, 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: Senior Vice President-Finance and Treasurer 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 - 67 EXHIBIT A TO LEASE AGREEMENT [NW 1996 C] LEASE SUPPLEMENT NO. [NW 1996 C] LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement [NW 1996 C], dated as of April 26, 1996, 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 1996 C], dated as of April 26, 1996, relating to one Boeing 757-251 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 Boeing 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the date hereof consists of the following components: - --------------------- (1) This language for Lease Supplement No. 1. (2) This language for other Lease Supplements. 68 (i)Airframe: FAA Registration No. ______; manufacturer's serial no. _____; and (ii)Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P______ and P______ (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 January 2, 2019. 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 The Boeing Company, or any subcontractor or supplier of The Boeing Company, 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 69 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 OF UTAH, 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 70 EXHIBIT B TO LEASE AGREEMENT [NW 1996 C] INTERIM RENT, 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. Interim Rent, Basic Rent and Excess Amount: Excess Amount Transition (Percentage of Date Lessor's Cost) ----------------------- --------------------- Interim Rent Commencement (Percentage of Date Lessor's Cost) ----------------------- --------------------- * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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. 71 INTERIM RENT, 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 (Percentage of Lease Period Date Lessor's Cost) ----------------------- --------------------- * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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 5 of 5 72 Lessor's Cost for the Aircraft: Special Purchase Price: Transition Date: EXHIBIT B - Page 5 of 5 73 EXHIBIT C TO LEASE AGREEMENT [NW 1996 C] 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 ----------------------- --------------------- 74 EXHIBIT D TO LEASE AGREEMENT [NW 1996 C] 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 ----------------------- --------------------- EX-4.G5 55 FIRST AMENDMENT TO LEASE AGREEMENT-1996 C 1 FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 C] This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 C], dated as of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee under the Trust Agreement [NW 1996 C], dated as of April 26, 1996 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a certain Lease Agreement [NW 1996 C], dated as of April 26, 1996 (the "ORIGINAL LEASE"), between Lessee and Lessor (the Original Lease, as supplemented by Lease Supplement No. 1 [NW 1996 C] ("LEASE SUPPLEMENT NO. 1") between Lessor and Lessee, dated April 29, 1996, herein called the "LEASE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; WITNESSETH: WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the Aircraft, which consists of the following components: (i) Airframe: FAA Registration No. N539US; manufacturer's serial No. 26486; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P727168 and P727169; WHEREAS, Section 17 of the Participation Agreement [NW 1996 C], dated as of April 26, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee, [ ] (the "OWNER PARTICIPANT"), the loan participants named therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured Certificates issued by the Owner Trustee under the Trust Indenture and Security Agreement [NW 1996 C], dated as of April 26, 1996, between Lessor (not in its individual capacity except as expressly provided therein but as trustee) and the Indenture Trustee may be refinanced under certain circumstances; WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW 1996 C], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State Street Bank and Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines Corporation (the "GUARANTOR"); WHEREAS, Lessor and Lessee desire to recalculate the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price in order to reflect, among other things, the interest rate of the refinanced Secured Certificates; 2 WHEREAS, in connection with the recalculation of the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, Lessor and Lessee desire to amend the Lease; WHEREAS, a counterpart of the Original Lease, to which were attached and made a part thereof counterparts of Lease Supplement No. 1, the Trust Indenture and Security Agreement [NW 1996 C], dated as of April 26, 1996, and the Trust Agreement and Indenture Supplement [NW 1996 C], dated April 29, 1996, was recorded by the Federal Aviation Administration (the "FAA") on May 3, 1996, and assigned Conveyance No. E21279; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE. (a) The definitions of "Business Day", "Excess Amount", "Indemnitee", "Loan Participant", "Operative Documents", "Stipulated Loss Value", "Supplemental Rent", "Tax Indemnitee", and "Termination Value" in Section 1 of the Lease are hereby amended applicable on and after the Closing Date, to read as follows: "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. "EXCESS AMOUNT" for the Closing Date or the Commencement 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 the Closing Date or the Commencement Date. "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) 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). "LOAN PARTICIPANT" means for any period prior to the Closing, the Original Loan Participants and their successors and assigns, and from and after the Closing, the Purchasers and their successors and registered assigns, including any Certificate Holder. -2- 3 "OPERATIVE DOCUMENTS" means each of the Participation Agreement, the documents referred to in Section 4(a)(v) of the Participation Agreement (including any amendments, modifications or supplements thereto), the Refunding Agreement, the Trust Indenture Amendment and the Refinancing Secured Certificates, collectively, and "Operative Document" shall mean each of the Operative Documents, individually. "STIPULATED LOSS VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v) hereof, the amount determined by multiplying Lessor's Cost 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 January 2, 2019 shall be the amount determined as provided in Section 19(a) hereof. "SUPPLEMENTAL RENT" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Interim Rent or 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 the Other Pass Through Trust Agreement, 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 and 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. "TERMINATION VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v), the amount determined by multiplying Lessor's Cost by the percentage specified in Exhibit D hereto opposite the Termination Date with -3- 4 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). (b) The following definitions are hereby inserted in Section 1 of the Lease in alphabetical order to be applicable on and after the Closing Date: "CLOSING" means the consummation of the refinancing operation contemplated by Section 1 of the Refunding Agreement. "CLOSING DATE" means the date on which the Closing shall occur. "INDEMNITY ADJUSTED PAYMENT" means any indemnity payment made pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Provider and the Subordination Agent. "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 Westdeutsche Landesbank Girozentrale, acting through its New York branch, as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider under the Liquidity Facilities, or any successor thereto. "MAKE-WHOLE AMOUNT" has the meaning assigned to that term in the Trust Indenture. "ORIGINAL LOAN PARTICIPANTS" means each institution executing the Participation Agreement as a Loan Participant. "ORIGINAL TRUST INDENTURE" means the Trust Indenture and Security Agreement [NW 1996 C], dated as of April 26, 1996, between the Owner Trustee and State Street Bank and Trust Company, as amended, modified and supplemented prior to the Closing Date. "OTHER PASS THROUGH TRUST AGREEMENT" means the pass through trust agreement and supplement pursuant to which the Class D pass through trust certificates are issued. -4- 5 "PASS THROUGH CERTIFICATES" means the pass through certificates to be issued by the Pass Through Trustee in connection with the Refinancing 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 Refunding Agreement to be entered into by and between Lessee and the Pass Through Trustee in connection with the Refinancing Transaction. "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. "PURCHASERS" means the Pass Through Trustees under each Pass Through Trust Agreement. "REFINANCING CERTIFICATE" means a certificate of an authorized representative of the Owner Participant delivered pursuant to Section 17(a)(1) of the Participation Agreement, setting forth, among other things, the Refinancing Date, the principal amount of debt to be issued by the Owner Trustee on the Refinancing Date, and the proposed revised schedules of Excess Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages, and the proposed Amortization Schedules. "REFINANCING DATE" means the proposed date on which the outstanding Secured Certificates will be redeemed and refinanced pursuant to Section 17 of the Participation Agreement. "REFINANCING EXPENSES" means the costs, fees, commissions and other expenses payable by the Owner Participant pursuant to Section 11(a) of the Refunding Agreement. "REFINANCING SECURED CERTIFICATES" means the Secured Certificates to be issued by Lessor to the Purchasers pursuant to the Trust Indenture Amendment and the Refunding Agreement on the Closing Date. "REFINANCING TRANSACTION" means a refinancing transaction pursuant to Section 17 of the Participation Agreement involving, among other things, (i) the redemption of the Secured Certificates issued on the Refinancing Date and the concurrent issuance and sale of the Refinancing Secured Certificates to the Pass Through Trustees (or their designee) and (ii) the issuance and sale of the Pass Through Certificates by the Pass Through Trustees. -5- 6 "REFUNDING AGREEMENT" means that certain Refunding Agreement [NW 1996 C], dated as of June 3, 1996, among Lessor, Lessee, the Owner Participant, the Purchasers, the Indenture Trustee, the Subordination Agent, and the Guarantor, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "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. "TRUST INDENTURE AMENDMENT" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 C], dated as of the Closing Date, 1996, between Lessor and State Street Bank and Trust Company, as Indenture Trustee. "TRUST INDENTURE ESTATE" has the meaning assigned to that term in the Trust Indenture. (c) The definitions of "Administrative Agent", "Assumed Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in Section 1 of the Lease are hereby deleted on and after the Closing Date. SECTION 2. AMENDMENT OF SECTION 3 OF THE LEASE. (a) Section 3(b) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (b) Section 3(c) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (c) Section 3(d)(i) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (i) In the event that (A) the Closing Date occurs other than on June 12, 1996, (B) Transaction Expenses paid by Lessor pursuant to Section 16 of the Participation Agreement are determined to be other than 1.0% of Lessor's Cost, or (C) Refinancing Expenses paid by Lessor or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement are determined to be other than 1.3281% of Lessor's Cost, then in each case, the Basic Rent percentages set forth in Exhibit B and the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated by the Owner Participant, on or prior to November 15, 1996 using the same methods and -6- 7 assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, 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. (d) Section 3(d)(ii) of the Lease is hereby amended by (i) deleting on and after the Closing Date "(A)" at the beginning thereof, (ii) deleting on and after the Closing Date the word "and" at the end of clause (A) thereof and substituting a period therefor, and (iii) deleting on and after the Closing Date clause (B) thereof in its entirety. (e) Section 3(d)(iii) of the Lease is hereby amended by deleting on and after the Closing Date the second sentence thereof. (f) The second sentence of Section 3(e) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "Lessee shall pay, on behalf of Lessor, 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 such Section 2.10(b) or Section 2.11." (g) Section 3(f) of the Lease is hereby amended by deleting on and after the Closing Date the numbers and punctuation "124-000-12" in the first sentence thereof and substituting therefor the numbers and punctuation "124-0000-12". (h) Section 3(g) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (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 the Commencement Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall, on the Commencement Date, prepay on the Commencement 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 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 -7- 8 rate per annum equal to the Base Rate as in effect from time to time plus 5% per annum 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 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 to 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 Interim Rent or 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 Make-Whole Amount, if any, due with respect to) the Secured Certificates then outstanding. (i) The following new Section 3(h) shall be added to the end of Section 3 of the Lease to be applicable on and after the Closing Date: (h) In the event that Lessee exercises its option to satisfy any indemnity obligation under the Tax Indemnity Agreement pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement, Lessee shall pay, in addition to any other payments due hereunder, (i) on each Lease Period Date, the portion of the Indemnity Adjusted Payments then due and payable on such date as set forth in an appropriate schedule to the Tax Indemnity Agreement and (ii) on the date that Stipulated Loss Value, Termination Value or the Special Purchase Price becomes due and payable, as the case may be, the Indemnity Adjusted Payment then due and payable by reference to the date as of which such Stipulated Loss Value, Termination Value or Special Purchase Price is payable as set forth in an appropriate schedule to the Tax Indemnity Agreement. -8- 9 SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE. Section 7(b)(x)(2) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the Owner Participant and the Indenture Trustee" and substituting therefor the word "Lessor", and (ii) deleting on and after the Closing Date the word "their" and substituting therefor the word "its". SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE. Section 9(c) of the Lease is hereby amended by deleting on and after the Closing Date the word "premium" each time it appears therein and substituting therefor the words "Make-Whole Amount" and by deleting on and after the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount" each time such words and such words and punctuation appear. SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE. Section 10(a) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier that thirty (30) days after such occurrence)" in clause (i)(y) thereof and substituting therefor the words "an earlier Business Day irrevocably specified fifteen days in advance by notice from Lessee to Lessor and the Indenture Trustee" and (ii) inserting on and after the Closing Date the words and punctuation ", which appraisal shall be from a firm of independent aircraft appraisers satisfactory to the Owner Participant," after the words "the certificate or the appraisal" in the third parenthetical phrase of clause (A) of the third paragraph thereof. SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE. Section 14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date the words and punctuation ", the Refunding Agreement" after the words "Participation Agreement" and (ii) adding on and after the Closing Date the words "and except for representations or warranties contained in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in the Refunding Agreement) or any document or instrument furnished pursuant to either thereof" after the word "Agreement" at the end of the first parenthetical phrase therein. SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "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: -9- 10 (i) if to Lessee, for U.S. Mail at 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President - Finance and Treasurer, (Telecopy No. (612) 726-0665), or to such other address, telex number or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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 on the signature pages of the Refunding Agreement." SECTION 8. AMENDMENT OF SECTION 19(D) OF THE LEASE. The second sentence of Section 19(d) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: 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. SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the Lease is hereby amended by (i) deleting on and after the Closing Date the word "or" between the words "Trust Agreement" and the words "the Trust Indenture" and substituting a comma therefor and (ii) inserting on and after the Closing Date the words "or the Refunding Agreement" after the words "Trust Indenture". SECTION 10. AMENDMENT OF EXHIBITS. (a) Exhibits B, C and D to the Lease attached hereto are applicable on and after the Closing Date. Exhibits B, C and D to the Lease are applicable until the Closing Date. -10- 11 (b) The parties hereto agree that Exhibits B, C and D attached hereto reflect the recalculation of Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price to take into account the interest rates borne by the Secured Certificates as of the Closing Date. SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease set forth in Sections 1 through 10 hereof shall be effective as of the date hereof. SECTION 12. RATIFICATION. Except as amended hereby, the Lease as heretofore supplemented continues and shall remain in full force and effect in all respects. SECTION 13. MISCELLANEOUS. Any provision of this Amendment 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 Amendment 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. Nothing contained herein shall be construed as conveying to Lessee any right, title or interest in the Aircraft except as a lessee. The section and paragraph headings in this Amendment 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 Amendment. THIS AMENDMENT 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 Amendment 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. To the extent, if any, that this Amendment 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 Amendment 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 as mortgagee under the Trust Indenture on the signature page thereof. -11- 12 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment to be duly executed on the day and year first above written. FIRST SECURITY BANK OF UTAH, 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: (1)Receipt of this original counterpart of the foregoing Amendment is hereby acknowledged this _____ day of ____________________, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: --------------------------------------- Title: - ---------------------------- (1) This language contained in the original counterpart only. EX-4.G6 56 GUARANTEE-1996 C 1 GUARANTEE [NW 1996 C] This GUARANTEE [NW 1996 C], dated as of April 26, 1996 (as amended, modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I hereto (collectively, together with their successors and permitted assigns, the "PARTIES", and, individually, a "PARTY"). WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to enter into a Lease Agreement [NW 1996 C], dated as of the date hereof (as amended, modified or supplemented from time to time, the "LEASE"), between the Lessee and First Security Bank of Utah, National Association, not in its individual capacity but solely as Owner Trustee (as defined therein), except as expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing 757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines (such aircraft and engines, and any substitute Airframe and Engines under the Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation Agreement [NW 1996 C], dated as of the date hereof (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), among the Lessee and the Parties; and WHEREAS, it is a condition precedent to the obligations of the Parties to consummate the transactions contemplated by the Participation Agreement that the Guarantor execute and deliver this Guarantee; and WHEREAS, the Lessor will assign by way of collateral security certain of its right, title and interest in and to this Guarantee to the Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and Security Agreement [NW 1996 C], dated as of the date hereof, between the Lessor and the Indenture Trustee (as amended, modified or supplemented from time to time, the "TRUST INDENTURE"), as security for the obligations of the Lessor referred to therein; and WHEREAS, the capitalized terms used herein that are not defined herein are used herein as defined in the Lease; NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and to induce the other Parties referred to above to enter into the Participation Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. GUARANTEE. (a) The Guarantor does hereby acknowledge that it is fully aware of the terms and conditions of the Lease, the Participation Agreement and the other Operative 2 Documents and the transactions and the other documents contemplated thereby, and does hereby irrevocably and fully and unconditionally guarantee, as primary obligor and not as surety merely, to the Parties, as their respective interests may appear, the payment by the Lessee of all payment obligations when due under the Lease (including, without limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement and the other Operative Documents to which the Lessee is a party (such obligations of the Lessee guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative Documents, and the timely performance of all other obligations of the Lessee thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby agree that in the event that the Lessee fails to pay any Financial Obligation when due for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within five days after the date on which such Financial Obligation became due and payable and the applicable grace period has expired, the Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Financial Obligation was not paid when due and for five days after the applicable grace period has expired, the amount of such Financial Obligation. The Guarantor hereby agrees that in the event the Lessee fails to perform any Nonfinancial Obligation for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within 10 Business Days after the date on which such Nonfinancial Obligation is required to be performed (for avoidance of doubt, to include any applicable grace period), the Guarantor shall cause such Nonfinancial Obligation to be performed within 10 Business Days following the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Nonfinancial Obligation was not performed when so required and that any applicable grace period has expired. (b) The obligations of the Guarantor hereunder shall not be, to the fullest extent permitted by law, affected by: the genuineness, validity, regularity or enforceability (or lack thereof) of any of the Lessee's obligations under the Lease or any other Operative Document to which the Lessee is a party, any amendment, waiver or other modification of the Lease or such other Operative Document (except that any such amendment or other modification in writing shall be given effect in determining the obligations of the Guarantor hereunder), or by any substitution, release or exchange of collateral for or other guaranty of any of the Obligations (except to the extent that such substitution, release or exchange is - 2 - 3 undertaken in accordance with the terms of the Operative Documents) without the consent of the Guarantor, or by any priority or preference to which any other obligations of the Lessee may be entitled over the Lessee's obligations under the Lease and the other Operative Documents to which the Lessee is a party, or by any other circumstance that might otherwise constitute a legal or equitable defense to or discharge of the obligations of a surety or guarantor including, without limitation, any defense arising out of any laws of the United States of America or any State thereof which would excuse, discharge, exempt, modify or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not, to the fullest extent permitted by law, affect the liability of the Guarantor hereunder: (a) the extension of the time for or waiver of, at any time or from time to time, without notice to the Guarantor, the Lessee's performance of or compliance with any of its obligations under the Operative Documents (except that such extension or waiver in writing shall be given effect in determining the obligations of the Guarantor hereunder)), (b) any assignment, transfer, sublease or other arrangement by which the Lessee transfers possession or loses control of the use of the Aircraft, (c) any defect in the title, condition, design, operation or fitness for use of, or damage to or loss or destruction of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or with any other Person, or any sale, transfer, lease or disposal of any of its assets or (e) any change in the ownership of any shares of capital stock of the Lessee. (c) This Guarantee is an absolute, present and continuing guaranty of payment and performance and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Lessee any unpaid amounts due or otherwise to enforce performance by the Lessee. The Guarantor specifically agrees, to the fullest extent permitted by law, that it shall not be necessary or required, and that the Guarantor shall not be entitled to require, that any Party (i) file suit or proceed to obtain or assert a claim for personal judgment against the Lessee for the Obligations, or (ii) make any effort at collection of the Obligations from the Lessee, or (iii) foreclose against or seek to realize upon any security now or hereafter existing for the Obligations, including the Trust Estate or the Trust Indenture Estate (as such term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations, or make any effort at collection of the Obligations from any such other Person, or exercise or assert any other right or remedy to which any Party is or may be entitled in connection with the Obligations or any security or other guaranty therefor, or (v) assert or file any claim against the assets of the Lessee or any other guarantor or other Person liable for the Obligations, or any part thereof, before or as a condition of enforcing the liability of the Guarantor under this Guarantee or requiring payment of said Obligations by the Guarantor hereunder, or at any time thereafter. (d) The Guarantor agrees, to the fullest extent permitted by law, that, without limiting the generality of this Guarantee, if an Event of Default shall have occurred and be continuing and the Lessor (or any assignee thereof including, without limitation, the Indenture Trustee) shall be prevented by applicable law from exercising its remedies (or any of - 3 - 4 them) under Section 15 of the Lease, the Lessor (or any assignee thereof, including, without limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive hereunder from the Guarantor, upon demand therefor the sums that would otherwise have been due from the Lessee under the Lease had such remedies been able to be exercised. The Guarantor hereby unconditionally waives, to the fullest extent permitted by law, any requirement that, as a condition precedent to the enforcement of the obligations of the Guarantor hereunder, the Lessee or all or any one or more of any other guarantors of any of the Obligations be joined as parties to any proceedings for the enforcement of any provision of this Guarantee. 2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be deemed to create any right in any Person except a Party and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person. 3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives notice of the acceptance of this Guarantee and of the performance or nonperformance by the Lessee, demand for payment from the Lessee or any other Person, notice of nonpayment or failure to perform on the part of the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent permitted by law, all other demands or notices whatsoever, other than the request for payment hereunder and notice provided for in Section 1 hereof. The obligations of the Guarantor shall be absolute and unconditional and shall remain in full force and effect until satisfaction of all Obligations hereunder and, without limiting the generality of the foregoing, to the extent not prohibited by applicable law, shall not be released, discharged or otherwise affected by the existence of any claims, set-off, defense or other rights that the Guarantor may have at any time and from time to time against any Party, whether in connection herewith or any unrelated transactions. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Financial Obligation is rescinded or must otherwise be returned by any Party upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding with respect to the Lessee or otherwise, all as though such payment had not been made. The Guarantor, by virtue of any payment or performance hereunder to a Party, shall be subrogated to such Party's claim against the Lessee or any other Person relating thereto; provided, however, that the Guarantor shall not be entitled to receive payment from the Lessee in respect of any claim against the Lessee arising from a payment by the Guarantor: (a) while an Event of Default shall have occurred and be continuing, in which case no such payment in respect of such a claim by the Guarantor may be made by the Lessee; or (b) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings relating to the Lessee, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Lessee, whether or not involving insolvency or bankruptcy proceedings, in which case the Obligations shall be paid and performed in full before any payment in respect of a claim by the Guarantor shall be made by or on behalf of the Lessee. - 4 - 5 4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or waiver or modification of, or consent under, the terms hereof, shall be effective unless evidenced by an instrument in writing signed by the Guarantor and each Party against whom such amendment, supplement, waiver, modification or consent is to be enforced. 5. PAYMENTS. All payments by the Guarantor hereunder in respect of any Obligation shall be made in Dollars and otherwise as provided in the Lease, the Participation Agreement or any other Operative Document in which such Obligation is contained; provided that the Guarantor consents to all the terms of the Trust Indenture and agrees to make all payments hereunder directly to the Indenture Trustee until such time as the Indenture Trustee shall give notice to the Guarantor that the Lien of the Trust Indenture has been fully discharged and thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay directly to the Lessor, in its individual capacity, or to the Owner Participant or another Party, as the case may be, any amount owing to such Person as Supplemental Rent for indemnities provided in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or otherwise not constituting part of the Trust Indenture Estate (as such term is defined in the Trust Indenture). 6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust Indenture, the Lessor will assign, and create a security interest in, certain of its rights hereunder to and for the benefit of the Indenture Trustee. From and after the execution and delivery of the Trust Indenture, and until receipt by the Guarantor of a written notice from the Indenture Trustee to the effect that the Trust Indenture has been fully satisfied and discharged, no remedy or election hereunder may be exercised by the Lessor or consent given by the Lessor, except by or with the prior written consent of the Indenture Trustee, and the Guarantor will make payment of all amounts hereunder that are assigned to the Indenture Trustee directly to the Indenture Trustee, and such payments shall discharge the obligations of the Guarantor to the Lessor to the extent of such payments. 7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Parties as follows: (a) It is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware. It has all requisite corporate power and authority to own and operate its properties, to carry on its business as presently conducted and to enter into and perform its obligations under this Guarantee. (b) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with or the taking of any other action in respect of, any Federal, state, municipal or other governmental department, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, is now, or under existing law in the future will be, required or necessary on its behalf to authorize the execution, delivery and performance (other than as contemplated by the Operative Documents in the case of the - 5 - 6 performance of the Non-Financial Obligations) by it of this Guarantee, or for the legality, validity, binding effect or enforceability hereof. (c) Neither the execution and delivery of this Guarantee, the performance of its obligations hereunder, nor its consummation of the transactions contemplated hereby, will conflict with or result in any breach of, or constitute a default under, or result in any creation or imposition of any Lien upon any of its property or assets under, any applicable laws or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject, or its Articles of Incorporation or by-laws. (d) The execution, delivery and performance by it of this Guarantee have been duly authorized by all necessary corporate action. This Guarantee has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 8. JURISDICTIONAL MATTERS. The Guarantor (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 Guarantee brought by any party, 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 Guarantee may not be enforced in or by such courts. The Guarantor hereby generally consents to service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of the Guarantor in New York City as from time to time may be designated by the Guarantor in writing to the Parties. 9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Parties, with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and (c) shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of, and shall be enforceable by, each of the Parties to the fullest extent permitted by applicable laws. The headings in this Guarantee are for purposes of reference only, and shall not limit or otherwise affect the meanings hereof. - 6 - 7 10. NOTICES. All requests, notices or other communications hereunder shall be in writing, addressed as follows: If to the Guarantor: Northwest Airlines Corporation for U.S. Mail: 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 for Overnight courier: 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President -- Finance and Treasurer Telecopy No.: (612) 726-0665 If to a Party: to the address or telecopy number set forth in the Participation Agreement All requests, notices or other communications shall be given in the manner, and shall be effective at the times and under the terms, set forth in Section 13(b) of the Participation Agreement. 11. NO WAIVERS. No failure on the part of any Party to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder or under the Lease, the Participation Agreement or the other Operative Documents, and any other agreement or instrument relating thereto will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise of such right or remedy or the exercise of any other right or remedy or under the Lease, the Participation Agreement or the other Operative Documents, and any other agreement or instrument relating thereto. 12. SURVIVAL. All representations and warranties contained herein or made in writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee regardless of any investigation made by any Party or any other Person. 13. SEVERABILITY. To the fullest extent permitted by applicable law, any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or any provision in any other Operative Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 7 - 8 14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES 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 GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK. 15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by such Party in enforcing, or collecting under, this Guarantee. 16. TERMINATION. Subject to the provisions of Section 3 hereof, this Guarantee shall terminate upon the indefeasible payment and performance in full of all of the Obligations. 17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to the Obligations described in Section 1 and nothing in this Guarantee shall be deemed to constitute a guarantee of payment of any of the Secured Certificates or shall give rise to any inference that the Lessee or the Guarantor has so guaranteed such payment. - 8 - 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed as of the date first hereinabove set forth. NORTHWEST AIRLINES CORPORATION By:__________________________________________ Name: Joseph E. Francht, Jr. Title: Senior Vice President-Finance and Treasurer Accepted as of the above date: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION in its individual capacity and as Owner Trustee By:_______________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY in its individual capacity and as Indenture Trustee By:________________________________ Name: Title: - 9 - 10 SCHEDULE I TO GUARANTEE [NW 1996 C] PARTIES First Security Bank of Utah, National Association, in its individual capacity and as Owner Trustee State Street Bank and Trust Company, as Indenture Trustee [Owner Participant] [Bridge Lenders] EX-4.G7 57 PARTICIPATION AGREEMENT-1996 C 1 PARTICIPATION AGREEMENT [NW 1996 C] THIS PARTICIPATION AGREEMENT [NW 1996 C] dated as of April 26, 1996, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of the State of Minnesota (herein called "LESSEE"), (ii) the institution listed on Schedule I hereto and identified therein as the "OWNER PARTICIPANT" which executes and delivers a counterpart of this Agreement and of the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date referred to below, (iii) the institutions listed on Schedule I and identified therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, 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"), and (v) State Street Bank and Trust Company, a Massachusetts trust company, in its individual capacity and as Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein, in such latter capacity together with any successor indenture trustee, called the "INDENTURE TRUSTEE"); W I T N E S S E T H: WHEREAS, pursuant to the Purchase Agreement (as such term is defined in the Lease hereinafter referred to) between Lessee and the Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things, certain Boeing 757-251 aircraft, including the Aircraft which has been delivered by the Manufacturer to Lessee and is the subject of this Agreement; WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Lessee and the Owner Trustee are entering into a Purchase Agreement Assignment [NW 1996 C], dated as of the date hereof (herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to the Owner Trustee certain rights and interests of Lessee under the Purchase Agreement with respect to the Aircraft; and (ii) the Manufacturer has executed the Consent and Agreement [NW 1996 C] (herein called the "CONSENT AND AGREEMENT"), substantially in the form attached to the Purchase Agreement Assignment (herein called the "CONSENT AND AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996 C], 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 2 Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE") for the use and benefit of the Owner Participant; WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with the execution and delivery of this Agreement are entering into the Trust Indenture and Security Agreement [NW 1996 C], 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 issues to each of the Loan Participants one or more secured certificates (herein called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan Participants arising from the Loan Participants' making secured loans to the Owner Trustee to finance a portion of the Owner Trustee's purchase of the Aircraft, which Secured Certificates are to be secured by the mortgage and security interests created by the Owner Trustee in favor of the Indenture Trustee, and 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; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1996 C], dated as of the date hereof (such Lease Agreement, as the same may be amended or supplemented from time to time to the extent permitted by the terms thereof and this Agreement, herein called the "LEASE", such term to include, unless the context otherwise requires, the Lease Supplement referred to below), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft is sold and delivered by Lessee to the Owner Trustee under the Bill 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; WHEREAS, certain terms are used herein as defined in Section 13(a) hereof; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and conditions of this Agreement, each Loan Participant agrees to finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule II opposite the name of such Loan Participant. Each Loan Participant shall make such Loan to the Owner Trustee on a date to be designated pursuant to Section 2 hereof, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100- 1033, not - 2 - 3 later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite such Loan Participant's name in Schedule II hereto. Upon the occurrence of the above transfers by the Loan Participants to the Owner Trustee, to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon, the Owner Trustee shall issue and the Indenture Trustee shall authenticate Secured Certificates which shall be delivered simultaneously to the Loan Participants under the Trust Indenture to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon. The Owner Trustee agrees to pay the Secured Certificates in installments in the amounts and on the dates provided in the Trust Indenture together with interest thereon and all other amounts payable with respect thereto, all as more fully provided in the Trust Indenture. (b) Participation by Owner Participant. Subject to the terms and conditions of this Agreement, the Owner Participant hereby agrees to participate in the payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft on a date to be designated pursuant to Section 2 hereof, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite the Owner Participant's name in Schedule II hereto. (c) General Provisions. The amount of the participation of each of the Loan Participants and the Owner Participant to be made as provided above in the payment of Lessor's Cost for the Aircraft is hereinafter called such party's "COMMITMENT" for the Aircraft. In case any of the Loan Participants or the Owner Participant shall default in its obligation under the provisions of this Section 1, no other such party shall have any obligation to make any portion of such defaulted amount available or to increase the amount of its Commitment and the obligation of such nondefaulting party shall remain subject to the terms and conditions set forth in this Agreement. Upon receipt by the Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant to this Section 1 and the satisfaction of the conditions set forth in Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take title to and accept delivery of the Aircraft. In consideration of the transfer of title to and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall, simultaneously with such transfer of title and delivery, pay to Lessee from the amounts so furnished it by the Participants, the Lessor's Cost. (d) Determination of Interest Period. The length of each Interest Period shall be determined by Lessee on behalf of the Owner Trustee in accordance with Section 2.02 of the Trust Indenture. SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each Participant, the Owner Trustee and the Indenture Trustee at least two Business Days' telecopy - 3 - 4 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 and the amount of each Participant's Commitment for the Aircraft. As to each Participant, the making of its Commitment for the Aircraft available in the manner required by Section 1 shall constitute a waiver of such notice. SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant agrees that its releasing the amount of its Commitment for the Aircraft to the account of the Owner Trustee in accordance with the terms of Section 1 shall constitute, subject to satisfaction or waiver of the conditions set forth in Section 4(a), without further act, authorization and direction by the Owner Participant to the Owner Trustee: (i) to pay to Lessee the Lessor's Cost for the Aircraft; (ii) to the extent not previously accomplished by a prior authorization, to authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees, or an agent or agents, of Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant to the Acceptance Certificate; (iii) to accept from Lessee the Bill of Sale and the FAA Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9); (iv) to execute an Aircraft Registration Application, the Lease Supplement and the Trust Supplement, in each case covering the Aircraft; (v) to borrow from the Loan Participants to finance a portion of the Lessor's Cost for the Aircraft and to issue to the Loan Participants Secured Certificates in aggregate principal amount equal to the amount borrowed, pursuant hereto and to the Trust Indenture; and (vi) to take such other action as may be required to be taken by the Owner Trustee on the Delivery Date by the terms of any Operative Document. SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations in the Aircraft. It is agreed that the obligations of each of the Loan Participants and the Owner Participant to participate in the payment of Lessor's Cost and to make available the amount of its respective Commitment are subject to the satisfaction prior to or on the Delivery Date of the following conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it relates to representations and warranties only contained in the Tax Indemnity Agreement), (xx), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and (xxvii) shall not be a condition precedent to the obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a condition precedent to the obligations of the Owner Participant: - 4 - 5 (i) The Loan Participants 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 applicable law or regulations or guidelines or interpretations thereof by appropriate regulatory authorities shall be in effect which, in the opinion of such Loan Participant or the Owner Participant, as the case may be, or their respective counsel, would make it a violation of law or regulations or guidelines for such Loan Participant or the Owner Participant to make its Commitment available in accordance with Section 1 hereof or, in the case of such Loan Participant, to acquire a Secured Certificate or to realize the benefits of the security afforded by the Trust Indenture. (iii) In the case of the Owner Participant, the Loan Participants shall have made available the amount of their Commitments for the Aircraft in accordance with Section 1 hereof. (iv) In the case of the Loan Participants, 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 Documentation Agent and the Owner Participant and shall be in full force and effect and executed counterparts shall have been delivered to the Loan Participants and the Owner Participant, or their respective counsel, provided that only each Loan Participant shall receive an executed original of its respective Secured Certificate and provided, further, that an excerpted copy of the Purchase Agreement shall only be delivered to and retained by the Owner Trustee and the Owner Participant (but the Indenture Trustee shall also retain an excerpted copy of the Purchase Agreement which may be inspected by the Documentation Agent and its counsel before the Delivery Date and subsequent to the Delivery Date may be inspected and reviewed by the Indenture Trustee, any Loan Participant and their respective counsel if and only if there shall occur and be continuing an Event of Default), 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 shall only be delivered to Lessee and the Owner Participant and their respective counsel: (1) an excerpted copy of the Purchase Agreement (insofar as it relates to the Aircraft); (2) the Purchase Agreement Assignment; (3) the Lease; - 5 - 6 (4) a Lease Supplement covering the Aircraft dated the Delivery Date; (5) the Tax Indemnity Agreement; (6) the Trust Agreement; (7) a Trust Supplement covering the Aircraft dated the Delivery Date; (8) the Bill of Sale; (9) the FAA Bill of Sale; (10) an acceptance certificate covering the Aircraft in the form agreed to by the Documentation Agent, 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; (12) the Secured Certificates; (13) the Consent and Agreement; (14) the Guarantee; and (15) the Owner Participant Guaranty. All of the foregoing documents, together with this Agreement, are sometimes referred to herein, collectively, as the "OPERATIVE DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT". (vi) A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the Granting Clause of the Trust Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Owner 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 Owner Participant or the Documentation Agent shall have been executed and delivered by Lessee or the Owner Trustee and duly filed. (vii) The Loan Participants and the Owner Participant shall have received the following, in each case in form and substance satisfactory to the Documentation Agent and the Owner Participant: - 6 - 7 (1) a certified copy of the Certificate of Incorporation and By-Laws of Lessee and a copy of resolutions of the board of directors of Lessee, certified by a Vice President, the Secretary or an Assistant Secretary of Lessee, duly authorizing the sale of the Aircraft and the lease by Lessee of the Aircraft under the Lease and the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the Purchase Agreement Assignment, the Tax Indemnity Agreement and each other document required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof, and a certified copy of the Certificate of Incorporation and By-Laws of the Guarantor and a copy of resolutions of the Board of Directors of the Guarantor, certified by a Vice President, the Secretary or an Assistant Secretary of the Guarantor, duly authorizing the execution, delivery and performance by the Guarantor of the Guarantee; (2) such other documents and evidence with respect to Lessee, the Guarantor, the Manufacturer, the Owner Trustee, the Owner Participant, the Owner Participant Guarantor, the Indenture Trustee, and the Loan Participants as the Loan Participants or the Owner Participant, or the respective counsel for the Loan Participants or the Owner Participant, may reasonably request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; and (3) a certificate of Lessee as to the person or persons authorized to execute and deliver this Agreement, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft and any other documents to be executed on behalf of Lessee in connection with the transactions contemplated hereby and as to the signatures of such person or persons, and a certificate of the Guarantor as to the person or persons authorized to execute and deliver the Guarantee and as to the signatures of such person or persons. (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 following statements shall be true, and the Documentation Agent and the Owner Participant shall have received evidence satisfactory to it to the effect that: - 7 - 8 (1) the Owner Trustee has good title (subject to filing and recording the FAA Bill of Sale with the Federal Aviation Administration) to the Aircraft on such Delivery Date, free and clear of Liens other than the rights of Lessee under the Lease and Lease Supplement covering the Aircraft, the mortgage and security interests created by the Trust Indenture, the rights of the Owner Participant under the Trust Agreement and the Trust Supplement, and Liens permitted by clause (v) of Section 6 of the Lease; (2) the Aircraft has been duly certified by the Federal Aviation Administration (or there shall have been received adequate assurances from the Federal Aviation Administration that the certification will be issued as soon as the registration of the Aircraft is complete) as to type and airworthiness in accordance with the terms of the Lease; (3) the FAA Bill of Sale, the Lease, the Lease Supplement, the Trust Indenture and the Trust Supplement covering the Aircraft shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the Federal Aviation Administration, and the Trust Agreement shall have been filed (or shall be in the process of being so filed) with the Federal Aviation Administration; and (4) application for registration of the Aircraft in the name of the Owner Trustee has been duly made with the Federal Aviation Administration. (x) On the Delivery Date, (A) the representations and warranties of Lessee, the Owner Participant and the Owner Trustee contained in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing, or would result from the purchase, sale, lease or mortgage of the Aircraft, which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default. (xi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for Lessee and the Guarantor, as to New York and certain federal law matters, and Lessee's and the Guarantor's in-house or other counsel, as to Minnesota and certain federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota and has the corporate power and authority to carry on its business as now conducted and to enter into and - 8 - 9 perform its obligations under the Lessee Documents. Lessee is a Certificated Air Carrier. The Guarantor is a corporation duly organized and validly existing pursuant to the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under the Guarantee; (2) the execution, delivery and performance of the Lessee Documents by Lessee and of the Guarantee by the Guarantor have been duly authorized by all necessary corporate action on the part of Lessee and the Guarantor, as the case may be, do not require any approval of stockholders of Lessee or the Guarantor, as the case may be, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of Lessee or the Guarantor, as the case may be (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of any thereof by Lessee or the Guarantor, as the case may be, nor the performance by Lessee or the Guarantor, as the case may be, of its respective obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on Lessee or the Guarantor, as the case may be, or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Permitted Liens) upon any property of Lessee or the Guarantor, as the case may be, under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter, by-law or permit issued by any Minnesota or United States governmental authority to which Lessee or the Guarantor, as the case may be, is a party or by which Lessee or the Guarantor, as the case may be, or its properties may be bound or affected; (3) neither the execution and delivery by Lessee of the Lessee Documents or by the Guarantor of the Guarantee nor the performance by Lessee or the Guarantor of their respective 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, except for (A) the registration of the Aircraft (including the placement on board of the owner's copy of the application for registration of the Aircraft and, if necessary, a flying time wire), recordations and other actions referred to in paragraph 5 below and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents or the Guarantee after the Delivery Date; (4) the Guarantee has been duly entered into and delivered by the Guarantor, the Purchase Agreement (insofar as it relates to the Aircraft) has been duly entered into and delivered by Lessee, and each of the other Lessee Documents has been duly entered into and delivered by Lessee and each of such - 9 - 10 other Lessee Documents and the Guarantee constitutes 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 its respective terms, except as limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally, (C) applicable laws which may affect the remedies provided in the Lease, which laws, however, do not in the opinion of such counsel make the remedies provided in the Lease inadequate for the practical realization of the benefits provided thereby, but no opinion is expressed as to the amount or priority of any recovery under any particular circumstances and, in particular, no opinion is expressed as to the effect on such remedies of Section 1-201(37) of the Uniform Commercial Code, as in effect in any jurisdiction, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations; (5) subject to the registration of the Aircraft with the Federal Aviation Administration in the name of the Owner Trustee, and assuming the due and timely filing for recordation in accordance with the provisions of the Federal Aviation Act of (A) the FAA Bill of Sale, (B) the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and made a part thereof and (C) the Trust Indenture with the Trust Supplement attached thereto and made a part thereof, with respect to such portion of the Aircraft as is covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code by virtue of the same constituting an "aircraft" or an "aircraft engine" as defined in the Federal Aviation Act, no further filing or recording of any document (including any financing statement with respect to the Lease under Article 9 of the Uniform Commercial Code of Minnesota or Utah), is necessary in any applicable jurisdiction within the United States in order (x) to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee or any third parties or (y) to create and perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee or any third parties. With respect to such portion of the Aircraft, if any, as may not be deemed to constitute an "aircraft" or "aircraft engine" as defined in the Federal Aviation Act, except for the filing of financing statements in appropriate filing offices in the States of Minnesota and Utah and such other states as may be specified in such counsel's opinion, and for the filings of periodic continuation statements with respect to such filings as and when required, (x) under the federal laws of the United States and - 10 - 11 the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary under Article 9 of the Uniform Commercial Code in order to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee and any third parties in any applicable jurisdiction within the United States, and (y) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary or advisable under Article 9 of the Uniform Commercial Code in order to create or perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee and any third parties in any applicable jurisdiction within the United States; and (6) there are no legal or governmental proceedings pending or, to the best knowledge of such in-house counsel, threatened to which Lessee or Guarantor or any of their respective subsidiaries is a party or to which any of the properties of Lessee or Guarantor or any of their respective subsidiaries is subject other than those proceedings summarized in the Guarantor's publicly filed annual, quarterly and other reports filed with the Securities and Exchange Commission, and proceedings which such in-house counsel believes would not reasonably be expected to have a material adverse effect on Lessee and its subsidiaries, taken as a whole, or on the power or ability of Lessee to perform its obligations under the Lessee Documents. The opinion contemplated by this paragraph (xi) shall be to such further effect with respect to such other matters as the Documentation Agent or the Owner Participant may reasonably request. Such opinion with respect to the matters specified in this paragraph (xi) may rely exclusively (A) upon the opinion of special counsel in Oklahoma City, Oklahoma, referred to in paragraph (xv) of this Section 4(a) with respect to the matters stated therein, and (B) upon the opinion of Ray, Quinney & Nebeker with respect to the opinion in paragraph (5) above insofar as it relates to the laws of the State of Utah and (C) upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, with respect to matters of fact, and may state that no opinion is expressed as to laws other than laws of the State of New York (in the case of such special counsel's opinion), the State of Minnesota and the Delaware General Corporation Law (in the case of Lessee's in-house or other counsel's opinion) and the Federal laws of the United States. Such counsel may assume that, except for the filings and recordations contemplated herein, there are no filings or recordations with respect to the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement or the Trust Indenture with the Federal Aviation Administration, or of Uniform Commercial Code financing statements naming the Owner Trustee as a debtor in the filing offices of the Secretary of State of Minnesota, the Secretary of State of Utah or in any other filing office in the States of Minnesota or Utah, or in such other filing offices in such other jurisdictions as shall be identified in such counsel's opinion. (xii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from a counsel to the Manufacturer, with respect to the - 11 - 12 Manufacturer Documents and such other matters as such parties may reasonably request. (xiii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, to the effect that: (1) First Security Bank of Utah, National Association is a national banking association duly organized, validly existing and in good standing under the laws of the United States, is a Citizen of the United States and has under the laws of the State of Utah and federal banking law the power, authority and legal right to execute, deliver and carry out in its capacity as Owner Trustee or in its individual capacity, as the case may be, the terms of the Owner Trustee Documents, including the Secured Certificates; (2) each of the Owner Trustee Documents has been duly authorized, executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, and each of the Owner Trustee Documents constitutes the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations, and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (3) the execution, delivery and performance by the Owner Trustee and by First Security Bank of Utah, National Association, in its individual capacity, or both, as the case may be, of the Owner Trustee Documents and the consummation of the transactions by the Owner Trustee and by First Security Bank of Utah, National Association in its individual capacity contemplated thereby are not and will not be in violation of the articles of association or By-Laws of First Security Bank of Utah, National Association or of any indenture, mortgage, credit agreement, license or other agreement or instrument known to - 12 - 13 such counsel after due inquiry to which First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee is a party or by which it is bound, or of any Federal or Utah law, governmental rule or regulation applicable to First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee or any judgment or order applicable to it and known to such counsel after due inquiry; (4) neither the execution and delivery by the Owner Trustee and, where appropriate, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, of the Owner Trustee's Documents nor the consummation of any of the transactions by the Owner Trustee, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing Federal law governing the banking and trust powers of First Security Bank of Utah, National Association or Utah law (except for filings pursuant to the Uniform Commercial Code, and except for compliance with requirements of the Federal Aviation Act as to which such counsel may express no opinion); (5) the Trust Agreement, as supplemented by the Trust Supplement, duly creates for the benefit of the Owner Participant the trust interest in the Trust Estate which the Trust Agreement by its terms purports to create; (6) assuming that Utah law were to govern the perfection of the security interests in the Trust Indenture Estate under the Trust Indenture, except for (i) the Indenture Trustee's taking of possession of the original counterparts of the Lease and the Lease Supplement covering the Aircraft (insofar as the Lease and the Lease Supplement covering the Aircraft may constitute chattel paper (as such term is defined in the Uniform Commercial Code as in effect in Utah)) and all monies and securities (including instruments) required to be deposited with the Indenture Trustee, and (ii) the filing of Uniform Commercial Code financing statements with the office of the Division of Corporations and Commercial Code of the State of Utah with respect to the security interests created in the Trust Indenture Estate under the Trust Indenture, naming the Owner Trustee as debtor and the Indenture Trustee as secured party, which filing has been duly effected, no other filing or recording or refiling or rerecording is necessary in the State of Utah to create, perfect or maintain the perfected status of such security interest (except for the timely filing of continuation statements in respect of such financing statements); (7) assuming that the Operative Documents were negotiated to a substantial degree in the State of New York and that the closing of a substantial portion of the transactions contemplated by the Operative Documents occurred - 13 - 14 in the State of New York, the choice of New York law to govern the Participation Agreement, the Lease, and each other Operative Document (other than the Trust Agreement) to which the Owner Trustee or First Security Bank of Utah, National Association in its individual capacity, or both, is a party is, under the laws of the State of Utah, a valid choice of law and should, in a properly presented case, be honored by the courts of the State of Utah; (8) the Owner Trustee has received from Lessee such title to the Aircraft as Lessee had immediately prior to the conveyance to the Owner Trustee, subject to the rights of the Owner Trustee and Lessee under the Lease and the security interest created pursuant to the Trust Indenture and the Trust Supplement; (9) no taxes, fees or other charges, except taxes imposed on fees payable to the Owner Trustee, will be imposed by Salt Lake City or the State of Utah or any political subdivision or taxing authority thereof on or with respect to the execution, delivery or performance of any of the Operative Documents and the trust created pursuant to the Trust Agreement will not be subject to any such taxes, fees or other charges on, based on or measured by the net income of the Trust Estate (as distinguished from the net income of the Owner Participant) solely by reason of the Owner Trustee's location in Salt Lake City or the State of Utah (assuming for purposes of this opinion that the Owner Participant, the Owner Trustee and the Trust Estate would not be subject to any such tax, fee or other charge if the Owner Trustee performed its duties under the Trust Agreement and the Trust Indenture from an office located outside Utah); and (10) there are no pending or, to the knowledge of such counsel after due inquiry, threatened proceedings against or affecting the Owner Trustee before any court or administrative agency, individually or in the aggregate, which, if determined adversely to it, would materially adversely affect the power or ability of the Owner Trustee to perform its obligations under the Owner Trustee Documents. Such opinion shall be to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Indenture Trustee or Lessee may reasonably request. Such opinion may state that (A) no opinion is expressed as to laws other than the laws of the State of Utah, the Federal laws of the United States governing the banking and trust powers of First Security Bank of Utah, National Association, and the Federal Aviation Act as it relates to paragraph (1) and (B) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. Such opinion may assume (M) the due authentication of the Secured Certificates by the Indenture Trustee, (N) that the Operative Documents (other than the Trust Agreement) are legal, valid and binding under the laws of the State of New York and (O) the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and of the other Operative - 14 - 15 Documents by each of the parties thereto other than First Security Bank of Utah, National Association in its individual capacity and as the Owner Trustee. (xiv) The Loan Participants shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Trustee and Lessee, from Dewey Ballantine, special counsel for the Owner Participant and the Owner Participant Guarantor, and the Owner Participant's in-house counsel, to the collective effect that: (1) the Owner Participant is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Documents; the Owner Participant Guarantor is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Guaranty; (2) the Owner Participant Documents have been duly authorized, executed and delivered by the Owner Participant and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitute legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations; the Owner Participant Guaranty has been duly authorized, executed and delivered by the Owner Participant Guarantor and constitutes the legal, valid and binding obligation of the Owner Participant Guarantor, enforceable against the Owner Participant Guarantor in accordance with its terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; (3) neither the execution and delivery by the Owner Participant of the Owner Participant Documents or by the Owner Participant Guarantor of the Owner Participant Guaranty nor the consummation of any of the transactions by the Owner Participant or the Owner Participant Guarantor contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency of the United States, the State of Delaware or the State in - 15 - 16 which the principal office of the Owner Participant or the Owner Participant Guarantor is located (or any governmental subdivision of any thereof) (except as shall have been duly obtained or given, specifying the same); (4) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the other parties, if any, thereto (other than the Owner Participant in the case of this Agreement), and the due authentication of the Secured Certificates by the Indenture Trustee, the Owner Trustee Documents (other than the Trust Agreement) constitute legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (5) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the Indenture Trustee as aforesaid, the Trust Indenture duly creates for the benefit of the Indenture Trustee the security interests which the Trust Indenture purports to create and the Indenture Trustee is entitled to the benefits and security afforded by the Trust Indenture; (6) the execution, delivery and performance of the Owner Participant Documents by the Owner Participant does not require any approval of stockholders of the Owner Participant, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Documents by the Owner Participant nor the performance by the Owner Participant of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on the Owner Participant or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any New York, Delaware or United States governmental authority to which the Owner Participant is a party or by which it or its properties may be bound or affected; the execution, - 16 - 17 delivery and performance of the Owner Participant Guaranty by the Owner Participant Guarantor does not require any approval of stockholders of the Owner Participant Guarantor, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant Guarantor (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Guaranty by the Owner Participant Guarantor, nor the performance by the Owner Participant Guarantor of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on the Owner Participant Guarantor or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant Guarantor under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any New York, Delaware or United States governmental authority to which the Owner Participant Guarantor is a party or by which it or its properties may be bound or affected; and (7) there are no pending or, to the best knowledge of such counsel, threatened actions or proceedings against or affecting the Owner Participant before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant, would have a material adverse effect on the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; there are no pending or, to the best knowledge of such counsel, threatened actions or proceedings against or affecting the Owner Participant Guarantor before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant Guarantor, would have a material adverse effect on the Owner Participant Guarantor or the ability of the Owner Participant Guarantor to perform its obligations under the Owner Participant Guaranty; and to such further effect with respect to such other matters or documents relating to the Owner Participant's or the Owner Participant Guarantor's obligations in connection with this Agreement as the Documentation Agent, the Indenture Trustee, the Owner Trustee or Lessee may reasonably request. Such opinion may rely upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, as to matters of fact. Such opinion may state that (M) no opinion is expressed as to laws other than the General Corporation Law of the State of Delaware, the laws of the State of New York and the Federal laws of the United States, and (N) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. - 17 - 18 (xv) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to the effect that: (1) the FAA Bill of Sale, the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and the Trust Indenture with the Trust Supplement attached thereto are in due form for recording by and have been duly filed for recordation with the Federal Aviation Administration in accordance with the provisions of Section 44107 of Title 49 of the United States Code; (2) proper application for registration of the Aircraft in the name of the Owner Trustee together with the affidavits of the Owner Trustee and the Owner Participant required by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations and the Trust Agreement have been duly filed with the Federal Aviation Administration in accordance with the Federal Aviation Act, and such counsel is of the opinion that the Federal Aviation Administration will issue a Certificate of Aircraft Registration (AC Form 8050-3) in response to said application; (3) the Owner Trustee is the owner of the legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interests created by the Trust Indenture and such other Liens as are permitted by the Lease or this Agreement; (4) the Aircraft is eligible for registration in the name of the Owner Trustee and will be duly registered in due course in the name of the Owner Trustee pursuant to and in accordance with the provisions of Sections 44102 and 44103 of Title 49 of the United States Code; (5) the Trust Indenture as supplemented by the Trust Supplement creates a duly and validly perfected first priority security interest in the Aircraft and a duly perfected assignment of all the right, title and interest of the Owner Trustee in, to and under the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), subject only to the Lease and to Liens permitted by the Lease and the Trust Indenture, it being understood that no opinion need be expressed as to the validity or enforceability of such security interest under local law or as against third parties in respect of the Aircraft when the same is outside the United States; - 18 - 19 (6) none of the Trust Indenture, the Trust Agreement, the Trust Supplement, the Lease or the Lease Supplement is required to be filed or recorded in any other place within the United States in order to perfect the security interest in the Aircraft and the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), under the applicable laws of any jurisdiction within the United States; (7) no authorization, approval, consent, license or order of, or registration with, or giving of notice to, the FAA Aircraft Registry is required for the valid authorization, delivery or performance of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture and the Trust Supplement except for such authorizations, approvals, consents, licenses, orders, registrations, and notices as have been effected; and (8) no other registration of the Aircraft and no filings or recordings (other than the filings and recordings with the FAA referred to above) are necessary to provide constructive notice to third parties in any jurisdiction within the United States of the Owner Trustee's title to the Aircraft or the beneficial interest of the Owner Participant in the Aircraft. Such opinion may state that no opinion is expressed as to laws other than the Federal laws of the United States. Said opinion may also contain a statement to the effect that such opinion is limited to the records maintained by the Federal Aviation Administration Aircraft Registry and does not cover liens that are perfected without the filing of notice thereof with the Federal Aviation Administration, such as Federal tax liens, liens arising under Section 1368(a) of Title 29 of the United States Code and possessory artisans' liens, and is subject to the accuracy of FAA personnel in the filing, indexing and recording of instruments filed with the FAA and in the search for encumbrance cross-reference index cards for the Engines. Said opinion may also rely on the opinion obtained by such counsel from counsel for the Aeronautical Center of the FAA, satisfactory in form and scope to such counsel, and on past practice of the FAA which is consistent with such Aeronautical Center counsel's opinion. (xvi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, to the effect that: (1) State Street Bank and Trust Company is a Massachusetts trust company, duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the full corporate power, - 19 - 20 authority and legal right to enter into and perform its obligations under the Indenture Trustee Documents and, in its capacity as Indenture Trustee, to authenticate the Secured Certificates to be delivered on the Delivery Date; (2) the execution, delivery and performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the Indenture Trustee Documents and the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby and compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with the terms thereof including, without limitation, the authentication of the Secured Certificates to be delivered on the Delivery Date, have been duly authorized by all necessary corporate action on the part of State Street Bank and Trust Company, and neither the execution and delivery thereof nor the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby nor compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with any of the terms and provisions thereof (i) does or will contravene any law or governmental rule or regulation of the United States governing the banking or trust powers of State Street Bank and Trust Company or the Commonwealth of Massachusetts or any order or judgment known to such counsel and applicable to or binding on State Street Bank and Trust Company, or (ii) does or will contravene or result in any breach of, or constitute any default under, the charter documents or By-Laws of State Street Bank and Trust Company or the provisions of any indenture, mortgage, contract or other agreement, in each case known to such counsel, to which State Street Bank and Trust Company is a party or by which it or any of its properties is or may be bound or affected; (3) neither the execution and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, of the Indenture Trustee Documents or the certificates of authentication on the Secured Certificates to be delivered on the Delivery Date, nor the performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the transactions contemplated thereby requires or required the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or Massachusetts governmental authority or agency governing the banking or trust powers of State Street Bank and Trust Company or under any Massachusetts law; (4) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each - 20 - 21 such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; (5) the Secured Certificates to be issued and dated the Delivery Date have been duly authenticated and delivered by the Indenture Trustee pursuant to the terms of the Indenture Trustee Documents; (6) to the best knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting State Street Bank and Trust Company before any court or administrative agency or arbitration board or tribunal which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of State Street Bank and Trust Company to perform its obligations under the Indenture Trustee Documents; and (7) there are no taxes, fees or other governmental charges ("TAXES") payable under the laws of the Commonwealth of Massachusetts with respect to the execution of and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the Indenture Trustee Documents (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts. Neither State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, the Owner Participant, the Owner Trustee, nor the trust created by the Trust Agreement will, as a result of the transactions contemplated thereby, be subject to any taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would have not been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts, and there are no taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) upon or with respect to the Aircraft or any Engine or any part of any interest therein, or the purchase, ownership, delivery, lease, sublease, possession, presence, use, operation, condition, storage, maintenance, - 21 - 22 modification, alteration, repair, sale, return, transfer or other disposition of the Aircraft or any Engine which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts; and to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee may reasonably request. Such opinion may state that no opinion is expressed as to laws other than the internal substantive laws of the Commonwealth of Massachusetts and the Federal laws of the United States. Such opinion may further state that with respect to paragraph (4) in connection with the opinion relating to legality, validity and binding effect of the documents there referred to, such counsel has assumed that the laws of the jurisdictions whose laws govern such documents are not materially different from the internal substantive laws of the Commonwealth of Massachusetts. (xvii) The Loan Participants shall have received from Vedder, Price, Kaufman & Kammholz, special counsel for the Loan Participants, a favorable opinion satisfactory in substance and form to the Documentation Agent, as to such matters incident to the transactions contemplated hereby as the Documentation Agent may reasonably request. (xviii) The Loan Participants and the Owner Participant shall have received a certificate signed by the President, any Executive Vice President, any Senior Vice President or any Vice President of Lessee, dated the Delivery Date, addressed to the Loan Participants and the Owner Participant and certifying as to the matters stated in paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this Section 4(a). Copies of the orders, permits, waivers, authorizations, exemptions and approvals referred to in Section 4(a)(viii) shall have been furnished to the Loan Participants and the Owner Participant. (xix) The Owner Participant and the Loan Participants shall, by making their Commitments available as provided in Section 1(b) of this Agreement, be deemed to have reaffirmed the representations and warranties made by them in Section 8 of this Agreement. (xx) The Owner Participant shall have received an opinion, in form and substance satisfactory to the Owner Participant, from Aeroeconomics, Inc., independent aircraft appraisers, or such other recognized aircraft appraiser, to the effect, among other relevant matters, that (A) the Aircraft will have, at the end of the third Fixed Renewal Term, (i) at least 20% of its original economic life remaining and (ii) a fair market value of at least 20% of Lessor's Cost (without taking into account any increase or decrease for inflation or deflation during the Interim Term, the Basic Term and the Fixed Renewal Terms or the terms of any purchase option provided in - 22 - 23 the Lease) and taking into account any costs to the Owner Trustee or the Owner Participant of removal and delivery of the Aircraft to the Owner Trustee at the end of the third Fixed Renewal Term; (B) the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost; and (C) it will be commercially feasible for a third party to utilize the Aircraft at the end of the third Fixed Renewal Term. (xxi) The Loan Participants and Owner Participant shall have received an independent insurance broker's report, in form and substance satisfactory to the Documentation Agent 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. (xxii) On the Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to the Airframe or any Engine has occurred. (xxiii) Lessor's Cost for the Aircraft shall be $50,000,000. (xxiv) 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. (xxv) The representations and warranties of the Indenture Trustee and the Loan Participants contained in Section 8 shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and each Participant shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President of the Indenture Trustee addressed to such Participant and certifying as to the foregoing matters with respect to the Indenture Trustee. (xxvi) The Owner Participant shall have received from Dewey Ballantine, special counsel to the Owner Participant, 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. (xxvii) In the opinion of the Owner Participant and its special counsel, there shall have been, since the date hereof, 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 - 23 - 24 hereof, 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. (xxviii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants and the Owner Participant, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for 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. Section1110 with respect to the Aircraft. (xxix) The Loan Participants shall have received an opinion, in form and substance reasonably satisfactory to the Documentation Agent, from BK Associates, Inc., independent aircraft appraisers, to the effect that the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost. (xxx) Lessee shall have executed and delivered to the Owner Participant a letter from the Owner Participant to Lessee relating to Lessee's weighted average cost of capital. 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 Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to the due and valid registration of the Aircraft in the name of the Owner Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement, such Trust Supplement, the Lease and 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. It is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are all subject to the fulfillment to the satisfaction of Lessee 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, - 24 - 25 exemptions, authorizations and approvals shall be in full force and effect on the Delivery Date. (ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii) and 4(a)(iv) hereof shall have been satisfied. (iii) Those documents described in Section 4(a)(v) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Lessee and the Guarantor) in the manner specified in Section 4(a)(v), shall each be satisfactory in form and substance to Lessee, shall be in full force and effect on the Delivery Date, and an executed counterpart of each thereof (other than the Secured Certificates) shall have been delivered to Lessee or its special counsel. (iv) Lessee shall have received a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant, or other evidence of authority satisfactory to Lessee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing or evidencing authority for the execution, delivery and performance by the Owner Participant of all of the Owner Participant Documents, a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant Guarantor, certified as of the Delivery Date by the Secretary or Assistant Secretary of the Owner Participant Guarantor, duly authorizing the execution, delivery and performance by the Owner Participant Guarantor of the Owner Participant Guaranty, and a copy of the general authorizing resolutions of the boards of directors of the Indenture Trustee and the Owner Trustee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Indenture Trustee and the Owner Trustee, respectively, which authorize the execution, delivery and performance by the Indenture Trustee of the Indenture Trustee Documents and the Secured Certificates and by the Owner Trustee of the Owner Trustee Documents, together with such other documents and evidence with respect to the Indenture Trustee, the Owner Participant, the Owner Participant Guarantor and the Owner Trustee as Lessee or its special counsel may reasonably request in order to establish the 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) The representations and warranties of the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, contained in Section 8 hereof shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and Lessee shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President or other authorized representative of the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively, addressed to Lessee and - 25 - 26 certifying as to the foregoing matters with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively. (vi) Lessee shall have received the opinions set forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case addressed to Lessee and dated the Delivery Date and in each case in scope and substance reasonably satisfactory to Lessee and Lessee's special counsel. (vii) 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. (viii) No applicable law or regulations or guidelines or interpretations by appropriate regulatory authorities shall be in effect which, in the opinion of Lessee or its special counsel, would make it a violation of law or regulations or guidelines for Lessee to enter into any transaction contemplated by the Operative Documents. (ix) 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. (x) Lessee shall have been paid Lessor's Cost for the Aircraft. SECTION 5. PUBLICITY. Each party hereto agrees that it will use its best efforts not to disclose, or permit any of its employees or agents to disclose, the identity of the Owner Participant or the terms of the Operative Documents in connection with the issuance or release for external publication of any article or advertising or publicity matter relating to the terms and conditions of any of the Operative Documents or the transactions contemplated thereby without the prior written consent of the Owner Participant and Lessee, provided that nothing in this Section 5 shall prevent the Loan Participants from publishing a tombstone which may include the initial principal amount of the Secured Certificates, provided, further, that no such tombstone shall disclose the identity of the Owner Participant without the prior written consent of the Owner Participant. SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate Holder (as defined in the Trust Indenture) shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Trust Indenture when and if the principal of and interest on all Secured Certificates held by such holder and all other sums - 26 - 27 payable to such holder hereunder, under the Trust Indenture and under such Secured Certificates shall have been paid in full. Each of the Loan Participants 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 Loan Participants 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. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and the Owner Participant that as of the Delivery Date: (i) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires, other than failures to qualify which would not have a material adverse effect on the consolidated business, assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents; is a Certificated Air Carrier; has its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) located at Eagan, Minnesota; holds all licenses, certificates, permits and franchises from the appropriate agencies of the United States and/or all other governmental authorities having jurisdiction necessary to authorize Lessee to engage in air transport and to carry on scheduled passenger service as presently conducted (other than those licenses, certificates, permits and franchises which, if not obtained, would not have a material adverse effect on the consolidated business assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents); and has the corporate power and authority to own or hold under lease its properties wherever located or used and to enter into and perform its obligations under the Lessee Documents; (ii) the execution, delivery and performance by Lessee of the Lessee Documents will, on the Delivery Date, have been duly authorized by all necessary corporate action on the part of Lessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Lessee except such as have been duly obtained or by the Delivery Date will have been duly obtained, and none of such agreements contravenes any law, judgment, government rule, regulation or order binding on Lessee or the certificate of incorporation or By-Laws of Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its properties may be bound or affected; - 27 - 28 (iii) neither the execution and delivery by Lessee of the Lessee Documents nor the performance by Lessee of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, any Federal, State or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee 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 will on the Delivery Date 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), (B) the registration of the Aircraft referred to in Section 4(a)(ix)(4) and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Delivery Date; (iv) on the Delivery Date the Lessee Documents will each constitute legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof (subject to the qualifications set forth in clause (4) of the form of opinion of counsel to Lessee in Section 4(a)(xi)); (v) there are no pending or, to the best of Lessee's knowledge, threatened actions, suits or proceedings before any court or administrative agency which might materially adversely affect the business, condition (financial or otherwise), operations or properties of Lessee and its subsidiaries taken as a whole or Lessee's ability to perform its obligations under the Operative Documents; (vi) except for (A) the registration of the Aircraft pursuant to the Federal Aviation Act, (B) the filing for recording pursuant to said 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 Bill of Sale, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such documents under the Uniform Commercial Code of Minnesota and Utah and such other states as may be specified in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the taking of possession by the Indenture Trustee of the original counterpart of each of the Lease and the Lease Supplement covering the Aircraft, no further action, including any 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 in order to establish and perfect the Owner Trustee's title to and the Indenture Trustee's security interest in the Aircraft as against Lessee and any third parties in any applicable jurisdictions in the United States; (vii) there has not occurred any event which constitutes an Event of Default under the Lease (or any event which with the giving of notice or the passage of time or - 28 - 29 both would constitute an Event of Default under the Lease) which is presently continuing; (viii) 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; (ix)(a) The consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of December 31, 1995 and the related consolidated statements of operations, cash flows and common stockholders' equity of the Guarantor and its consolidated subsidiaries for the year then ended, which have been audited by independent certified public accountants, copies of which have been furnished to the Owner Participant and each Loan Participant, fairly present the consolidated financial condition of the Guarantor and its consolidated subsidiaries as at such date and the results of operations and cash flow of the Guarantor and its consolidated subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied and since December 31, 1995 there has been no material adverse change in the consolidated financial condition, cash flow or results of operations of the Guarantor and its consolidated subsidiaries; (x) on the Delivery Date, the Owner Trustee will receive good title to the Aircraft free and clear of all Liens, except Liens permitted by clause (v) of Section 6 of the Lease, the rights of Lessee under the Lease and the Lease Supplement covering the Aircraft, the Lien of the Trust Indenture and the beneficial interest of the Owner Participant in the Aircraft; (xi) 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 or U of the Board of Governors of the Federal Reserve System; (xii) Lessee is not in default in the performance of any term or condition of the Purchase Agreement which materially adversely impairs the transactions contemplated hereby; (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 or any interest therein; - 29 - 30 (xiv) On the Delivery Date, the Aircraft will be duly certified by the FAA as to type and airworthiness, will be insured by Lessee in accordance with the terms of the Lease and will be in the condition and state of repair required under the terms of the Lease; and (xv) neither Lessee nor any subsidiary of Lessee is an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended. (b) General Tax Indemnity. [RESERVED] - 30 - 31 (c) General Indemnity. [Reserved] - 31 - 32 (d) Income Tax. For purposes of this Section 7, the term "INCOME TAX" means any Tax based on or measured by gross or net income or receipts (other than taxes in the nature of sales, use, license, property or value added Taxes (except value added taxes in the nature of any income, franchise, capital, doing business, excess profits or net worth tax) (including, without limitation, capital gains taxes, minimum taxes, income taxes collected by withholding and taxes on tax preference items), and Taxes which are capital, doing business, excess profits or net worth taxes and interest, additions to tax, penalties, or other charges in respect thereof. SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner Participant represents that it is acquiring its interest in the Trust Estate for investment and not with a present intent as to any resale or distribution thereof (subject nonetheless to any requirement of law that the disposition of its properties shall at all times be and remain within its control) and that neither it nor anyone acting on its behalf has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended, or the securities laws, rules and regulations of any state. (b) Lessee represents and warrants that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended, or the securities laws, rules and regulations of any state. (c) Each of the Owner Participant and First Security Bank of Utah, National Association, in its individual capacity, represents and warrants to the other parties to this Agreement that it is, and on the Delivery Date will be, a Citizen of the United States without making use of any voting trust, voting powers agreement or similar arrangement. The Owner Participant agrees, solely for the benefit of Lessee and the Loan Participants, that if (i) it shall -32- 33 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 hereto 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 in the first sentence of this Section 8(c) 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 Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). First Security Bank of Utah, 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 of Utah, National Association, shall obtain actual knowledge that First Security Bank of Utah, National Association, has ceased to be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under the Federal Aviation Act as in effect at such time or, if it is not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Loan Participants, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or First Security Bank of Utah, National Association, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an event which would constitute an Event of Default but for lapse of time or the giving of notice or both) shall not have occurred and be continuing under the Lease due to non-compliance by Lessee with the registration requirements in the Lease. (d) First Security Bank of Utah, 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 of Utah, 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 of Utah, 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 - 33 - 34 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 of Utah, National Association, in its individual capacity, represents that it has not offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire the same from, anyone, and that no officer or responsible employee of the Corporate Trust Department of First Security Bank of Utah, 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 or any similar securities related to the Aircraft 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 or the securities laws, rules and regulations of any state. (f) The Owner Participant and each of the Loan Participants agree that, at any time after the Depreciation Period, as long as no Event of Default or a Default of the type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and be continuing, Lessee may elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit A hereto (or such other country as the Owner Participant 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 qualified in the laws of the relevant jurisdiction and reasonably satisfactory to the Owner Participant, 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, - 34 - 35 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) none of the Owner Trustee, the Owner Participant or the Indenture Trustee will be required to register to do business in the country in which the Aircraft is to be registered as a result of such reregistration, after (1) taking into account any other contacts of the Owner Trustee and the Owner Participant with such jurisdiction (provided, that upon request by Lessee (such request having been acknowledged by the Owner Participant's general counsel), the Owner Trustee and the Owner Participant must respond within fourteen (14) Business Days after receipt of such request describing its contacts in the jurisdiction of reregistration, or else such party shall be deemed for purposes of this clause (D) to have no such contacts) and (2) assuming that the Indenture Trustee has no other contacts with such jurisdiction, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), and (F) (unless Lessee shall have agreed to provide insurance covering the risk of requisition of use of such Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use. In addition, as a condition precedent to any such change in registration, (a) Lessee shall furnish to the Owner Trustee and the Indenture Trustee an Officer's Certificate to the effect that the insurance required by Section 11 of the Lease shall be in full force and effect at the time of such change in registration after giving effect to such change in registration and that the new country of registry imposes aircraft maintenance standards not materially different from those of the United States, France, Germany, Japan, the Netherlands or the United Kingdom and (b) the Owner Participant shall have received assurances satisfactory to it that (i) the original indemnities in favor of it under this Agreement afford it substantially the same protection as provided prior to such change in registry, and (ii) such change will not result in the risk of, or the imposition of, or increase the amount of, any Tax for which Lessee is not required to indemnify under the Operative Documents, or is not then willing to enter into a binding agreement to indemnify in a manner satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (A) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (B) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional - 35 - 36 adverse tax consequences resulting from such reregistration or (C) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee. Lessee shall pay all costs, expenses, fees, recording and registration taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. (g) The Owner Participant represents and warrants to Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in its capacity as such and in its individual capacity, as follows: (i) the Owner Participant is a corporation duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under the Owner Participant Documents; (ii) the Owner Participant Documents have been duly authorized by all necessary corporate action on the part of the Owner Participant, do not require any approval not already obtained of stockholders of the Owner Participant or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of the Owner Participant, and have been duly executed and delivered by the Owner Participant, and, subject to and in reliance upon the representations made by the Loan Participants and Lessee in Section 8(q) hereof, neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by the Owner Participant with any of the terms and provisions thereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order 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 financing or the citizenship requirements of the Owner Participant under applicable aviation law) or contravene or result in any breach of or constitute any 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, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Owner Participant is a party or by which it or its properties may be bound or affected provided, that no representation or warranty as to ERISA (as hereinafter defined) is made by the Owner Participant except as set forth in Section 8(q)(A); (iii) each of the Owner Participant Documents constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant - 36 - 37 in accordance with the terms thereof (subject to the qualifications set forth in clause (2) of the opinion of counsel to the Owner Participant in Section 4(a)(xiv)); (iv) there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which, if determined adversely to the Owner Participant, would materially adversely affect the financial condition of the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; (v) upon the execution and delivery of the Trust Indenture, the Trust Indenture Estate will be free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Participant; (vi) neither the execution and delivery of the Owner Participant Documents nor the performance by the Owner Participant of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, state or foreign government authority or agency except for those exceptions referred to in Section 7(a)(iii) which may be applicable to the Owner Participant and the Owner Participant Documents (it being understood that no representation or warranty is made with respect to the 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 aviation law); and (vii) the Owner Participant is not an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended. (h) Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from Lessor Liens (including for this purpose Liens that 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. - 37 - 38 (i) State Street Bank and Trust Company, in its individual capacity, covenants and agrees that it shall not cause or permit to exist any Lien, arising as a result of (A) claims against the Indenture Trustee not related to its interest in the Aircraft or the administration of the Trust Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not permitted by, or failure of the Indenture Trustee to take any action required by, the Operative Documents to the extent such acts arise or such failure arises from or constitutes gross negligence or willful misconduct, (C) claims against the Indenture Trustee relating to Taxes or Expenses which are excluded from the indemnification provided by Section 7 pursuant to said Section 7, or (D) claims against the Indenture Trustee arising out of the transfer by the Indenture Trustee of all or any portion of its interest in the Aircraft, the Trust Estate, the Trust Indenture Estate or the Operative Documents other than a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9 hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of Default is continuing and prior to the time that the Indenture Trustee has received all amounts due pursuant to the Trust Indenture. (j) Each Loan Participant represents, warrants, covenants and agrees as to itself: (i) that this Agreement has been duly authorized, executed and delivered by such Loan Participant and this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of its jurisdiction of organization; and (iii) that such Loan Participant has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. (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, and which is consistent with the applicable provisions of the Credit Agreement and subject to the provisions hereof. (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 - 38 - 39 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) under this Agreement or the Trust Indenture (and any exhibits or annexes thereto) or the Owner Participant under this Agreement. (m) State Street Bank and Trust Company represents and warrants, in its individual capacity, to Lessee, the Owner Trustee and each Participant as follows: (i) it is a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other 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 trust agreement or other similar arrangement, is likely to change and that it will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other similar arrangement; (ii) it is a Massachusetts trust company duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the requisite corporate power and authority to enter into and perform its obligations under the Trust Indenture and this Agreement and to authenticate the Secured Certificates to be delivered on the Delivery Date; (iii) the Indenture Trustee Documents and the authentication of the Secured Certificates to be delivered on the Delivery Date have been duly authorized by all - 39 - 40 necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or state law or governmental rule or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its charter or By-Laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (iv) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. (n) So long as the Aircraft shall be subject to the Lease and at all times prior to the release of the Lien of the Trust Indenture, the Owner Participant will not, directly or indirectly, sell, assign, convey or otherwise transfer any of its right, title or interest in and to the Aircraft, this Agreement, the Trust Estate, the Tax Indemnity Agreement, or the Trust Agreement or any proceeds therefrom to any person or entity, unless the proposed transferee is a "Transferee" (as defined below), and such sale, assignment, conveyance or transfer is with respect to all, but not less than all, of such Transferee's right, title and interest to a single entity (except that the Owner Participant may transfer to one or more Transferees all or any portion of its interest, if any, in the residual value of the Aircraft (which interest shall not include any of the Owner Participant's right, title or interest in any of the Operative Documents); provided that such transfer of residual value shall result in no increase, decrease or change in any of Lessee's, any Loan Participant's, or the Indenture Trustee's obligations, rights or responsibilities under the Operative Documents and that such Transferee or Transferees of residual value shall have no right to consent or object to any matter or decision under, or relating to, the Aircraft or any of the Operative Documents and provided, further, that no Lien shall result from such transfer). A "TRANSFEREE" shall mean either (A) a bank or other financial institution or insurance company with a combined capital, surplus and undivided profits of at least $50,000,000 or a corporation whose tangible net worth is at least $50,000,000, 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, insurance company, or corporation, provided that such bank, financial institution, insurance company, or corporation furnishes to the Owner Trustee, the Loan Participants, 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 Loan Participants, 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 the form attached as Exhibit D hereto; provided, however, that any Transferee shall not be - 40 - 41 (i) an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or (ii) 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 (unless such entity is General Electric Company, International Lease Finance Corporation, any similar entity or any of their respective Affiliates, provided, that (I) such entity is not included within the immediately preceding clause (i) of this subsection (n) and (II) no such entity has, through ownership of common or preferred stock, effective voting control of an entity described in such immediately preceding clause (I)). 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 (or has effected a voting trust agreement, voting powers agreement or other similar arrangement so as not to affect the then continued (if applicable) United States registration of the Aircraft), and has full power and authority to enter into the transactions contemplated hereby, (N) the Transferee has the requisite power and authority to enter into and carry out the transactions contemplated hereby and such Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants an opinion of counsel in the form attached as Exhibit E hereto, (O) the Transferee enters into (i) an agreement in the form attached as Exhibit B hereto or (ii) such other form approved by 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 each other Operative Document to which the Owner Participant is a party 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 and makes the representations and warranties comparable to those made by the Owner Participant thereunder provided that with respect to ERISA, the Transferee makes the representations and warranties contained in Section 7(h) of the agreement in the form attached as Exhibit B hereto, (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 (provided that the term "applicable Federal law" shall not include ERISA), (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 unless such transfer is effected in connection with the exercise of remedies as a result of and during the continuance of an Event of Default in which case any expenses incurred by Lessee in connection with such transfer shall not be reimbursed, 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 - 41 - 42 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 20 days' prior written notice thereof to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, specifying the name and address of the proposed Transferee. Upon any such transfer, Lessee shall, at the Transferee's expense, use its reasonable efforts promptly to cause to be obtained new insurance certificates (consistent with the provisions of Section 11 of the Lease) that reflect the interest of the Transferee in the Aircraft. (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 of Utah, 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)(A) Each Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Secured Certificate or any interests represented thereby with the assets of any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1) of the Code or of any entity the assets of which constitute "plan" assets under ERISA. 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 as set forth in the preceding sentence and a covenant as set forth in this sentence. (B) Lessee represents and warrants that: none of (i) the execution and delivery of this Agreement and the other Operative Documents, (ii) the initial purchase by the Loan Participants of the Secured Certificates, and (iii) the initial acquisition by the Owner Participant of its beneficial interest in the Trust Estate will involve any non-exempt prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation being made in reliance upon and subject to the accuracy of the representations contained in subparagraph (A) of this Section 8(q)). - 42 - 43 (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 and not specifically reserved to Lessee under Section 1 thereof, 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 Loan Participants 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. (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. Each Loan Participant agrees that Lessee may, on behalf of the Owner Trustee and upon notice to the affected Certificate Holder, arrange for another institution (which may be a Certificate Holder) to purchase the Secured Certificates of the affected Certificate Holder by paying the affected Certificate Holder an amount equal to the unpaid principal amount of the Secured Certificates held by the affected Certificate Holder plus accrued but unpaid interest thereon to the date of payment of such principal amount plus all other amounts owed to such affected Certificate Holder under the Operative Documents (including any Funding Loss Amount payable as a result of the applicable purchase occurring on a day other than the last day of an Interest Period). For purposes of this Section 8(t), "AFFECTED CERTIFICATE HOLDER" shall mean a Certificate Holder which has asserted claims - 43 - 44 against the Owner Trustee or Lessee under or sought rights or remedies provided by Section 7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture. (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) First Security Bank of Utah, National Association, in its individual capacity, represents and warrants that: (i) the Trust Agreement and, assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, each of the other Owner Trustee Documents has been duly executed and delivered by one of its officers who is duly authorized to execute and deliver such instruments on behalf of First Security Bank of Utah, National Association or the Owner Trustee, as the case may be; (ii) the Trust Estate is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to First Security Bank of Utah, National Association, in its individual capacity, and there are no Liens affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Trust Indenture Estate resulting from any act or claim against First Security Bank of Utah, National Association, in its individual capacity, arising out of any event or condition not related to the ownership, leasing, use or operation of the Aircraft or to any other transaction contemplated by this Agreement or any of the Operative Documents, including any such Lien resulting from the nonpayment by First Security Bank of Utah, National Association, in its individual capacity, of any Taxes imposed or measured by its net income; (iii) there has not occurred any event which constitutes (or to the best of its knowledge would, with the passage 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 First Security Bank of Utah, National Association, in its individual capacity, and which is presently continuing; (iv) it is a national banking association duly organized, validly existing and in good standing under the laws of the United States and has the full corporate power, authority and legal right to enter into and perform its obligations under each of the Owner Trustee Documents; (v) each of the Owner Trustee Documents has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof - 44 - 45 nor its performance of any of the terms and provisions thereof will violate any Federal law governing the banking and trust powers of First Security Bank of Utah, National Association, or Utah law or regulation or contravene or result in any breach of the provisions of its articles of association or By-Laws or any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (vi) each of the Owner Trustee Documents has been duly executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, each thereof is the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (vii) there are no Taxes payable by it (either in its individual capacity or as Owner Trustee), the Trust Estate, the Owner Participant, Lessee, the Indenture Trustee or the Loan Participants to the State of Utah in connection with the execution, delivery and performance of the Operative Documents solely because First Security Bank of Utah, National Association is a national banking association with its principal office in the State of Utah and will perform its obligations under the Operative Documents in the State of Utah, other than franchise or other taxes based on or measured by any fees or compensation received or accrued by First Security Bank of Utah, National Association for services rendered in connection with the transactions contemplated by the Operative Documents. (w) The Owner Participant covenants and agrees that if (i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to Lessee written notice of Lessor's election to retain title to the Aircraft and (iii) the Owner Trustee has failed to make, on or before the Termination Date, any payment required to be made by the Owner Trustee pursuant to Section 9(c) in connection with its retention of title to the Aircraft, the Owner Participant will indemnify Lessee for any losses, damages, costs or expenses of any kind (including any additional rents paid by Lessee and any fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a consequence of such failure by the Owner Trustee. The Owner Participant further covenants and agrees to pay those costs and expenses specified to be paid by the Owner Participant pursuant to Exhibit E to the Lease. (x) Each of the Owner Participant, the Owner Trustee, the Indenture Trustee, each Loan Participant and Lessee covenants and agrees that if Lessee elects (a) to - 45 - 46 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. (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 each Participant an agreement in form and substance reasonably satisfactory to such 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; (iv) Lessee shall have delivered to the Owner Trustee, the Indenture Trustee and each 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 Participants, 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; and (v) 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, shall make such filings and recordings with the FAA pursuant - 46 - 47 to the Federal Aviation Act, as shall be necessary or desirable to evidence such consolidation, merger, conveyance, transfer or lease with or to such entity. Upon any such consolidation or merger or any such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety in accordance with this subparagraph (A) of Section 8(y), the successor corporation or Person formed by such consolidation or into which Lessee is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, Lessee under this Agreement with the same effect as if such successor corporation or Person had been named as Lessee herein. No such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety shall have the effect of releasing Lessee or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this subparagraph (A) of Section 8(y) from its liability in respect of any Operative Document to which it is a party. (B) Lessee shall at all times maintain its corporate existence except as permitted by subparagraph (A) of this Section 8 (y). (z) Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust Supplement and any financing statements or other instruments as are necessary to maintain, so long as the Trust Indenture or the Lease is in effect, the perfection of the security interests created by the Trust Indenture and any security interest that may be claimed to have been created by the Lease and the interest of the Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the Indenture Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable them to take such action. Lessee will notify the Owner Trustee, the Owner Participant and the Indenture Trustee of any change in the location of its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) promptly after making such change or in any event within the period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. (aa) Section 3 of the Lease contemplates that, under certain circumstances, the Owner Participant will make certain recalculations of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the Owner Participant hereby agrees to make such recalculations as and when contemplated by the Lease and subject to all the terms and conditions of the Lease and promptly to take such further actions as may be necessary or desirable to give effect to and to cause the Owner Trustee to give effect to the provisions of Section 3 of the Lease. (bb) To the extent that any Excess Amount is due on the Commencement Date, the Owner Participant shall have the right to prepay to the Indenture Trustee all or a portion of such Excess Amount on the last Business Day occurring in 1996, and the Indenture Trustee agrees that it shall invest such amount in accordance with the terms set forth in the - 47 - 48 Trust Indenture. The Owner Participant hereby agrees with Lessee, and only with Lessee, and not for the benefit of any other party to this Participation Agreement, that it will pay in full to Lessee upon termination of the Lease the Reimbursement Amount for which Lessee has not previously received an offset pursuant to Section 3(g) of the Lease. (cc) The Owner Participant hereby agrees to notify Lessee or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York time on the third Business Day prior to the day for which an Excess Amount is indicated stating whether or not the Owner Participant intends to pay such Excess Amount in full by 10:30 A.M. (New York time) on the due date. (dd) [________________] agrees to act as Administrative Agent hereunder. The Administrative Agent agrees to notify each of the Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual interest expected to accrue on the Secured Certificates during each Interest Period promptly after the commencement of such Interest Period and after the occurrence of any event that would cause such actual interest expected to accrue during such Interest Period to change from the amount previously notified. The Administrative Agent further agrees to perform all of the functions that are required to be performed by the Administrative Agent pursuant to the terms of the Trust Indenture. (ee) The Owner Participant hereby agrees with Lessee that it will pay, or cause to be paid, all costs and expenses that are for the account of the Owner Trustee pursuant to Sections 5(a) and 5(d) of the Lease. The Owner Participant further agrees with Lessee that it will provide the information contemplated to be provided by it pursuant to clause (VI) of Section 7(b)(x) of the Lease within the time period contemplated therein. (ff) 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(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture). (gg) [____________] agrees to act as Documentation Agent hereunder and to perform all of the functions that are required to be performed by the Documentation Agent hereunder. (hh) [____________], [____________] and [_______________] each agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate (as defined in the Trust Indenture). (ii) Lessee agrees and covenants that it shall not purchase or guarantee or acquire any interest in any Secured Certificate or any other certificate for which a Secured Certificate is security except as provided in Section 8(x). - 48 - 49 SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall, pursuant to this Section 9 and in accordance with the requirements of Section 3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt payment structures. Within forty-five Business Days after the need for an adjustment to Rent has been established pursuant to Section 3 of the Lease, the Owner Participant shall deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of debt amortization and Basic Rent, Excess Amounts, Special Purchase Price, Stipulated Loss Value and Termination Value percentages. Within forty-five days of its receipt of the Reoptimization Certificate, Lessee may demand a verification, pursuant to Exhibit E of the Lease, of the information set forth in the Reoptimization Certificate. Upon the acceptance by Lessee of the accuracy of the information set forth in the Reoptimization Certificate or the determination pursuant to such verification procedures of such information, the Owner Participant will cause the Owner Trustee (M) to execute a Lease Supplement setting forth the reoptimized Basic Rent, Excess Amounts, Special Purchase Price, Stipulated Loss Value and Termination Value percentages, and (N) to exchange new Secured Certificates containing reoptimized amortization schedules for the Secured Certificates outstanding immediately prior to such reoptimization. (b) In connection with reoptimization adjustments of Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree to changes in the amortization schedule of the Secured Certificates, and (N) each Loan Participant will exchange the Secured Certificates held by it immediately prior to such reoptimization for new Secured Certificates containing reoptimized amortization schedules; provided that such changes do not (X) change the final maturity of any Secured Certificates to beyond twenty years from the Delivery Date or (Y) increase the weighted average lives of the Secured Certificates as of the Delivery Date to more than 15 years. SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the Owner Trustee hereby (A) agrees with Lessee, the Loan Participants 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 (B) agrees with Lessee and the Loan Participants not to revoke the Trust Agreement without the prior written consent of Lessee and the Loan Participants so long as the Lease or the Lien of the Trust Indenture remain in effect. 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 10.05 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 - 49 - 50 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 Bill 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 Bill of Sale, second, the Lease, with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the Trust Indenture, with the Trust Supplement attached. (c) Lessee agrees that it will consummate, with Owner Participant, on terms substantially identical to those set forth in the Operative Documents, leveraged lease transactions in respect of the first four Boeing 757-251 aircraft delivered by the Manufacturer to Lessee subsequent to the date of this Agreement. 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 - 50 - 51 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 attributed thereto in the Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set forth in the Trust Indenture. Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it may be amended from time to time. (b) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto or to the Guarantor shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier (only if such communication is also given or made by an additional method herein permitted), 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 Owner Trustee, the Loan Participants, the Administrative Agent, the Documentation 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, or (D) if to the Guarantor, addressed to the Guarantor at such address as the Guarantor shall have furnished by notice to the parties hereto. (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, Wickersham & Taft, 100 Maiden Lane, New York, New - 51 - 52 York 10038, Attention: Managing Attorney, or such office of Lessee in New York City as from time to time may be designated by Lessee in writing to the Owner Participant, the Owner Trustee and the Indenture Trustee. SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant agrees that if, at any time, the Trust Estate becomes subject to any Taxes for which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States from the state in which it is then located, the situs of the trust may be moved with the written consent of the Owner Participant (which consent shall not be unreasonably withheld) and the Owner Participant will take 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 Loan Participants may reasonably request in form and substance satisfactory to such parties, (B) the rights and obligations under the Operative Documents of the Owner Participant and the Loan Participants 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 Loan Participants shall have received an opinion or opinions of counsel (satisfactory to the Owner Participant and the Loan Participants), in scope, form and substance satisfactory to the Owner Participant and the Loan Participants 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 Loan Participants, 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 Loan Participants and to the Owner Participant covering the matters described in Section 4(a)(xiii) hereof and such other matters as the Loan Participants and the Owner Participant may reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner Participant, the Indenture Trustee and the Loan Participants on an 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, the Indenture Trustee and the Loan Participants in connection with such change of situs. SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, or the Indenture Trustee under the - 52 - 53 terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture Trustee. (b) The representations, warranties, indemnities and agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee, the Administrative Agent, the Documentation Agent and the Owner Participant provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan Participants', the Indenture Trustee's, the Administrative Agent's, the Documentation Agent's and the Owner Participant's obligations under any and all thereof, shall survive the making available of the respective Commitments by the Loan Participants and 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, and shall be enforceable by, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and assigns, each Certificate Holder and its successors and registered assigns, the Indenture Trustee and its successors as Indenture Trustee under the Trust Indenture, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, the Administrative Agent and the Documentation Agent. 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 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 - 53 - 54 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 Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan Participants shall promptly submit to the Owner Trustee and Lessee for their review 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 July 15, 1996). The Owner Participant agrees to transfer to the Owner Trustee promptly but in any event no later than August 15, 1996 such amount as shall be necessary in order to enable the Owner Trustee to pay Transaction Expenses. To the extent of funds received by it, the Owner Trustee agrees to pay all invoices of Transaction Expenses that have been approved by it and Lessee promptly upon receipt thereof. Notwithstanding the foregoing, to the extent that Transaction Expenses exceed 1% of Lessor's Cost, Lessee at its sole option shall have the right to pay directly its special counsel fees and the fee and reasonable disbursements of Babcock and Brown Financial Corporation. SECTION 17. REFINANCINGS. (a) So long as no Event of Default or a Default of the type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and be continuing, Lessee shall have the right to refinance all (but not less than all) of the Secured Certificates with Dollar denominated debt 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 (including the terms of any debt to be issued in connection with such refinancing); provided that no such refinancing shall subject the Owner Participant to any adverse, or the risk of any adverse, tax consequence unless Lessee agrees to indemnify the Owner Participant for such unindemnified adverse tax consequence (any such indemnity to be satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (1) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (2) Lessee provides the Owner - 54 - 55 Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such refinancing or (3) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee); provided further that (x) the Owner Participant agrees that it will not be entitled to any indemnity from Lessee for any failure of the debt in such refinancing to constitute "qualified nonrecourse indebtedness" within the meaning of Treasury Regulation Section 1.861-10T(b) with respect to the first refinancing described in the next paragraph, provided it is satisfactory to, or has no adverse tax consequences for, the Owner Participant and (y) no offering material related to any public refinancing shall disclose the identity of the Owner Participant. The Owner Participant has been informed by Lessee that the debt to be issued in connection with such refinancing may be issued in several classes, each of which may have a different interest rate, final maturity date and priority of payment. The Owner Participant acknowledges that it has been informed that one or more of such classes may be entitled to the benefit of a liquidity facility which shall not be provided by Lessee or a Person who is an Affiliate of Lessee, and which will entitle the Indenture Trustee (or a collateral agent therefor) to make drawings thereunder to pay interest on a current basis on the enhanced classes of debt for up to three semi-annual interest payments following a payment default with respect to such enhanced classes. The Owner Participant acknowledges being informed that under such a structure drawings of the entire amount available under the liquidity facility for any class (and the deposit of the proceeds thereof into a cash collateral account) will be required in the event of a ratings decline with respect to the related liquidity provider or in the event that the liquidity facility is not extended or replaced prior to its scheduled expiration and that amounts owed to the liquidity facility provider for both drawings and interest thereon will generally be senior to all Loan Participant claims. The Owner Participant agrees that in any refinancing operation it will consider in good faith these and any other conditions which do not impair the customary rights of an owner participant in a leveraged lease transaction. In the event that any such agreement is concluded: (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 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 proposed date on which the outstanding Secured Certificates will be redeemed (such date, 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 increased or decreased and (D) the proposed revised - 55 - 56 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 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 (such debt securities, the "NEW DEBT") except that the principal amount of New Debt may exceed by no more than 105% 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; (5) the Owner Participant shall pay all of the expenses of the first refinancing (including, but not limited to, the fees, expenses and disbursements of counsel and any placement or underwriting fees) and such expenses shall be treated as Transaction Expenses; 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 - 56 - 57 assumptions and constraints 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 and constraints 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), 4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc. 75-28 Section 4.08(1) shall be applied on a prospective basis from the date of such adjustment) and Section 467 of the Code as then in effect as long as the Schedule of Basic Rent was in compliance with Section 467 of the Code as in effect on the Closing Date, it being understood that, to the extent that any grandfather, effective date, or similar provisions in any regulations under Section 467 or other administrative pronouncement interpreting Section 467 promulgated or issued after the Closing Date causes such regulations or pronouncement not to be applicable to the Schedule of Basic Rent in effect on the Closing Date, such Schedule shall be deemed to be in compliance with Section 467 as in effect on the Closing Date. (b) The final maturity and weighted average life of the New Debt on an aggregate basis shall not exceed by more than six months those of the Secured Certificates. (c) 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. (d) The Owner Participant, at the time of the closing of the second or third refinancing pursuant to this Section 17, if any, shall be paid a fee of $25,000 in respect of each such refinancing provided, that in the event that a similar refinancing is concurrently being effected on identical terms under any of the other transactions entered into in 1996 by the Owner Participant and Lessee for the lease of Boeing 757-251 aircraft pursuant to which a fee is payable pursuant to the corresponding provisions of the applicable participation agreement, Lessee shall not be required to pay a separate fee of $25,000 for each such refinancing, it being the intent of the parties that a total fee of $50,000 shall be paid by Lessee for all such concurrent refinancings on identical terms for which a fee is otherwise payable pursuant to the corresponding provisions of the applicable participation agreement. SECTION 18. AGENTS. (a) Each Loan Participant hereby appoints and authorizes each of the Administrative Agent and the Documentation Agent (each, an "AGENT") to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Operative Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. Each Agent shall have no duties or responsibilities except those expressly set forth in the Operative Documents. As to any matters not expressly provided for hereby or by the Trust Indenture, each Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining - 57 - 58 from acting) upon the instructions of the Majority in Interest of Certificate Holders (as defined in the Trust Indenture), and such instructions shall be binding upon all Loan Participants and all Certificate Holders; provided, however, that such Agent shall not be required to take any action that exposes such Agent to personal liability or that is contrary to the Operative Documents or applicable law. Each Agent agrees to give to each Loan Participant prompt notice of each notice given to it by the Owner Trustee pursuant to the terms of the Operative Documents with respect to which such Loan Participant has not otherwise received such notice. (b) No Agent nor such Agent's directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the Trust Indenture, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Loan Participant and shall not be responsible to any Loan Participant for any statements, warranties or representations (whether written or oral) made in or in connection with the Operative Documents; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Operative Documents on the part of any party thereto or to inspect the property (including the books and records) of any such party; (iv) shall not be responsible to any Loan Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Operative Documents or any other instrument or document furnished pursuant thereto; and (v) shall incur no liability under or in respect of the Operative Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. (c) With respect to their Loans and any Secured Certificates issued to them, [ ] and [ ] shall have the same rights and powers under the Operative Documents as any other Loan Participant and may exercise the same as though they were not Agents and the term "Loan Participant" or "Certificate Holder" shall, unless otherwise expressly indicated, include [ ] and [ ] in their individual capacity. [ ] and its Affiliates and [ ] and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Owner Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any Person who may do business with or own securities of any of such Persons, all as if [ ] and [ ] were not Agents and without any duty to account therefor to the Loan Participants. (d) Each Loan Participant acknowledges that it has, independently and without reliance upon the Agents or any other Loan Participant and based on the financial statements referred to in Section 7(a)(ix) of this Agreement and such other documents and -58- 59 information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Loan Participant also acknowledges that it will, independently and without reliance upon the Agents or any other Loan Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. (e) Subject to the appointment and acceptance of a successor agent as provided below, any Agent may resign at any time by giving written notice thereof to the Loan Participants, the Owner Trustee and Lessee and may be removed at any time with or without cause by the Majority in Interest of Certificate Holders (as defined in the Trust Indenture). Upon any such resignation or removal, the Majority in Interest of Certificate Holders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority in Interest of Certificate Holders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or removal of the retiring Agent by the Majority in Interest of Certificate Holders, then the retiring Agent may, on behalf of the Loan Participants, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the Trust Indenture. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section 18 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the Trust Indenture. Notwithstanding anything contrary herein, the Administrative Agent and the Documentation Agent hereunder and under the Trust Indenture shall be the same institution, respectively, as the Administrative Agent and the Documentation Agent under (and as defined in) the Credit Agreement. -59- 60 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: -------------------------------------------- Title: Sr. Vice President-Finance and Treasurer Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 [ ] Owner Participant By: -------------------------------------------- Title: Address: Attn: Telecopy No.: - Signature Page - 61 STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: -------------------------------------------- Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: -------------------------------------------- Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 - Signature Page - 62 [INSERT BRIDGE LENDERS] By: -------------------------------------------- Title: - Signature Page - 63 SCHEDULE I NAMES AND ADDRESSES Lessee: Northwest Airlines, Inc. U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 Wire Transfer First Bank, N.A., Minneapolis ABA No. 091000022 Acct. No. 150250099440 Owner Participant: Payments made to the Owner Participant as provided in Section 3.06 of the Trust Indenture shall be made to: 64 Indenture Trustee: State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 Wire Transfer State Street Bank and Trust Company ABA No. 011-00-0028 for credit to State Street Bank and Trust Company Acct. No. 9903-943-0 Attn: Corporate Trust Department Reference: Northwest/NW 1996 C Owner Trustee: First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 Payments made to the Owner Trustee as provided in Section 3(f) of the Lease shall be made to: First Security Bank of Utah, National Association ABA No. 124-0000-12 Acct. No. 051-0922115 Attn: Corporate Trust Department Credit: Northwest/NW 1996 C SCHEDULE I - PAGE 2 65 SCHEDULE II COMMITMENTS
Percentage of Loan Participants: Lessor's Cost - ------------------ -------------
66
Owner Participant: ----------- Total Commitments: 100%
SCHEDULE II - PAGE 2 67 EXHIBIT A TO PARTICIPATION AGREEMENT [NW 1996 C] SCHEDULE OF COUNTRIES FOR REREGISTRATION Argentina Japan Australia Luxembourg Austria Malaysia Belgium Mexico Brazil Netherlands Canada New Zealand Chile Norway Denmark People's Republic of China Finland Portugal France Republic of China (Taiwan) Germany Singapore Greece South Africa Hungary South Korea Iceland Spain India Sweden Indonesia Switzerland Ireland Thailand Italy United Kingdom 68 EXHIBIT B TO PARTICIPATION AGREEMENT [NW 1996 C] ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 C] ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 C], dated as of , , between , a corporation (the "ASSIGNOR"), and , a corporation (the "ASSIGNEE"). W I T N E S S E T H: WHEREAS, the parties hereto desire to effect (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Participation Agreement [NW 1996 C], dated as of April 26, 1996, among Northwest Airlines, Inc., the Assignor, each Loan Participant named therein, First Security Bank of Utah, National Association, and State Street Bank and Trust Company (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), including, without limitation, any indemnity payments payable to the Assignee directly or indirectly thereunder, (ii) the Trust Agreement identified in the Participation Agreement (the "TRUST AGREEMENT"), (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Tax Indemnity Agreement identified in the Participation Agreement, and (v) the proceeds therefrom and (b) the assumption by the Assignee of the obligations of the Assignor accruing from and after the Effective Time; and WHEREAS, such documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Participation Agreement): 1. ASSIGNMENT. The Assignor has sold, assigned, conveyed, transferred and set over, and does hereby sell, assign, convey, transfer and set over, unto the Assignee as of the date hereof all of its present and future right, title and interest in, under and with respect to the Trust Estate, the Aircraft, the Participation Agreement, the Trust Agreement, the Tax Indemnity Agreement and all other Operative Documents to which the Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which the Assignor is bound, and any proceeds therefrom, together with all other documents and 69 instruments evidencing any of such right, title and interest, except such rights of the Assignor as have accrued to the Assignor prior to the Effective Time (as subsequently defined) (including specifically, but without limitation, the right to receive any amounts due or accrued to the Assignor under the Trust Agreement prior to the Effective Time and the right to receive any indemnity payment pursuant to the Participation Agreement or the Tax Indemnity Agreement with respect to events occurring prior to the Effective Time). 2. ASSUMPTION. The Assignee hereby undertakes all of the duties and obligations of the "Owner Participant" accruing on or subsequent for the Effective Time (for the avoidance of doubt, excluding any duties, obligations and liabilities of the Assignor required to be performed by it on or prior to the date hereof under the Participation Agreement, the Trust Agreement, any of the other Operative Documents to which the Assignor is a party or by which it is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which the Assignor is a party or by which the Assignor is bound), pursuant to the Participation Agreement, the Trust Agreement, and each other Operative Document to which the Assignor is a party, each contract, agreement, document or instrument hereby assigned and each other contract, agreement, document or instrument relating to the Trust Estate by which the Assignor is bound, and hereby confirms that it shall be deemed a party to the Participation Agreement, the Trust Agreement and each other Operative Document to which the Assignor is a party or by which it is bound and each such other contract, agreement, document and instrument, and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Owner Participant. The assignment and assumption contemplated hereby shall not release the Assignor from its obligations under the Participation Agreement or the Trust Agreement except to the extent expressly assumed by the Assignee pursuant to this Section 2, provided, that Assignor's rights under Section 7 of the Participation Agreement and under the Tax Indemnity Agreement to the extent relating to acts, conditions or events occurring or existing prior to the date hereof shall be retained in full by Assignor. 3. APPOINTMENT AS ATTORNEY-IN-FACT. In furtherance of the within assignment, the Assignor hereby constitutes and appoints the Assignee, and its successors and assigns, the true and lawful attorneys of the Assignor, with full power of substitution, in the name of the Assignee or in the name of the Assignor but on behalf of and for the benefit of and at the expense of the Assignee, to collect for the account of the Assignee all items sold, transferred or assigned to the Assignee pursuant hereto; to institute and prosecute, in the name of the Assignor or otherwise, but at the expense of the Assignee, all proceedings that the Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and compromise at the expense of the Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by the Assignee; and to do all such acts and things in relation thereto at the expense of the Assignee as the Assignee shall reasonably deem advisable. The Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by the Assignor in any manner or for any reason or by virtue of any dissolution of the Assignor. EXHIBIT B - PAGE 2 70 4. PAYMENTS. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee, and the Assignee hereby covenants and agrees to pay over to the Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignee that, under Section 1 hereof, belong to the Assignor. 5. FURTHER ASSURANCES. Each party hereto shall, at any time and from time to time, upon the request of any other party hereto, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the other party may reasonably request to obtain the full benefits of this Assignment and of the right and powers herein granted. 6. INVESTMENT PURPOSE. The Assignee hereby represents that it is acquiring the trust and other interests hereby assigned to it for its own account for the purpose of investment and not with a view to the distribution or resale of either thereof. 7. REPRESENTATIONS AND WARRANTIES. The Assignee represents and warrants that: (a) it is duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations and the obligations of the Owner Participant under the Operative Documents to which it is or will be a party; (b) this Assignment and Assumption Agreement has been duly authorized by all necessary action on its part, does not require any approval not already obtained of its stockholders or any approval or consent not already obtained of any trustee or holders of any of its indebtedness or obligations, and has been duly executed and delivered by the Assignee, and neither the execution and delivery thereof, nor the consummation of the transactions contemplated hereby, nor compliance by the Assignee with any of the terms and provisions hereof or of any of the Operative Documents to which it will become a party or by which it will be bound, will contravene any United States Federal or state law, judgment, governmental rule, regulation or order applicable to or binding on the Assignee (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA (except as set forth in subsection 7(h) below) or aviation or to the nature of the equipment to be owned by the Owner Trustee, other than such laws, rules, or regulations relating to lease transactions generally or to the citizenship requirements of the Assignee under the Federal Aviation Act) or contravene or result in any breach of or constitute any default under, or result in the creation of any Lien (other EXHIBIT B - PAGE 3 71 than Liens provided for in the Operative Documents) upon any property of the Assignee or, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Assignee is a party or by which it or its properties may be bound or affected; (c) each of the Operative Documents to which it will become a party, assuming such document is the legal, valid and binding obligation of each other party thereto, will constitute the legal, valid and binding obligation of the Assignee, enforceable in accordance with its terms; (d) there are no pending or, to the knowledge of the Assignee, threatened actions or proceedings against the Assignee before any court or administrative agency which, if determined adversely to the Assignee, would materially adversely affect the ability of the Assignee to perform its obligations under any Operative Document to which it will become a party; (e) upon the execution and delivery of this Assignment and Assumption Agreement, the Trust Estate and the Trust Indenture Estate will be free and clear of Lessor Liens (including for the this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Assignee; (f) neither the execution and delivery by the Assignee of this Assignment and Assumption Agreement, nor the consummation by it of any of the transactions contemplated hereby, requires the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or other governmental authority or agency (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 lease transactions generally or to the citizenship requirements of the Assignee under applicable aviation law); (g) the Assignee is not an "investment company" or a company controlled by an "investment company" required to register as such under the Investment Company Act of 1940, as amended; (h) either (x) no part of the funds to be used by it to acquire any right, title or interest in the Trust Estate, or in this Agreement, the Trust Agreement, the Tax Indemnity Agreement or any other of the Operative Documents to which the Assignee is a party or by which the Owner Participant is bound, directly or indirectly constitutes, or may be deemed under the Code, ERISA or any applicable state law or any rulings or regulations thereunder to be, the assets of any "employee benefit plan" as defined in Section 3(3) of EXHIBIT B - PAGE 4 72 ERISA or of any "plan" within the meaning of Section 4975(e)(1) of the Code or of any entity the assets of which constitute "plan" assets under ERISA, or (y) the transfer to and ownership of such right, title and interest by the Assignee is and will continue to be covered by Prohibited Transaction Class Exemption 91-38 or 95-60. (i) on the date hereof [it is a Citizen of the United States (without use of a voting trust agreement or voting powers agreement)] [it has entered into a voting powers or voting trust agreement which has been approved by the FAA (to the extent required by the Federal Aviation Act or the FAA)]; (j) the transfer to it of all of the Assignor's right, title and interest as Owner Participant will not adversely affect the continued registration of the Aircraft in the name of the Owner Trustee or violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or violate any provisions of the Securities Act of 1933, as amended, or any other applicable Federal or state law (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA (except as set forth in subsection 7(h) above)); and (k) [it is a "Transferee" satisfying the conditions set forth in Section 8(n) of the Participation Agreement] [alternatively, guaranty meeting the requirements of Section 8(n) of the Participation Agreement to be provided]; and (1) such Transferee is not (i) an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or (ii) 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 (unless such entity is General Electric Company, International Lease Finance Corporation, any similar entity or any of their respective Affiliates, provided, that (I) such entity is not included within the immediately preceding clause (i) of this subsection (l) and (II) no such entity has, through ownership of common or preferred stock, effective voting control of an entity described in such immediately preceding clause (i). 8. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor represents and warrants that: (a) it is a corporation duly organized and validly existing in good standing under the laws of the State of and has the requisite power, authority and legal right to enter into and carry out the transactions contemplated hereby; EXHIBIT B - PAGE 5 73 (b) this Agreement has been duly authorized, executed and delivered by it and constitutes the legal, valid and binding obligation of Assignor, enforceable against it in accordance with its terms; (c) no action or proceeding is pending, has been instituted or, to the knowledge of Assignor, is threatened, before any court or governmental agency, nor has any order, judgment or decree been issued or, to the knowledge of Assignor, is threatened, by any court or governmental agency which would materially adversely affect the ability of Assignor to complete and consummate its obligations contemplated hereby; (d) the Trust Estate is free of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to it; (e) it has fully performed all of its obligations under the Participation Agreement and under each other Operative Document to which it is a party or by which it is bound, which obligations by their terms are required to be satisfied or performed prior to the Effective Time or prior to the consummation of the transactions contemplated hereby; (f) neither the execution, delivery and performance by it of this Agreement, nor compliance by it with any of the provisions thereof requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness obligations of it or contravenes or will contravene any law or any order of any court or governmental authority of agency applicable to or binding on it (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA) or contravenes or will contravene the provisions of, or constitute a default under, its [Certificate of Incorporation] or [By-Laws] or any indenture, mortgage, contract or any agreement or instrument to which it is a party or by which it or any of its property may be bound or affected; (g) the transfer to Assignee of all of the Assignor's right, title and interest as Owner Participant will not violate, or affect registration of the Aircraft under, any provision of the Federal Aviation Act (or any rules or regulations promulgated thereunder), violate the Securities Act of 1933, as amended (and no registration pursuant to such Act or the rules and regulations thereunder shall be required in connection with such transfer), or violate any other applicable Federal or state law (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA); and (h) Assignor has assumed the risk of any loss of Interest Deductions, Amortization Deductions and MACRS Deductions and the risk of any Inclusion EXHIBIT B - PAGE 6 74 Event (each as defined in the Tax Indemnity Agreement) resulting from the transfer to Assignee pursuant to the Assignment. 9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE. 10. COUNTERPARTS. This Assignment may be executed in any number of counterparts, all of which together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 11. THIRD PARTY BENEFICIARIES. Each party hereto agrees, for the benefit of the Owner Trustee, each Loan Participant, each Certificate Holder, the Indenture Trustee and Lessee (collectively, the "BENEFICIARIES"), that the representations, warranties and covenants of such party contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. 12. EFFECTIVENESS. This Agreement shall be effective upon its execution and delivery by each of Assignor and Assignee, the exact time of occurrence of which (the "EFFECTIVE TIME") shall be agreed in a writing signed by Assignor and Assignee addressed to Lessee, the Owner Trustee and the Indenture Trustee. EXHIBIT B - PAGE 7 75 IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. [ASSIGNOR] By ------------------------------------------ Title [ASSIGNEE] By ------------------------------------------ Title EXHIBIT B - PAGE 8 76 EXHIBIT C TO PARTICIPATION AGREEMENT [NW 1996 C] SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES ** Argentina * Japan * Australia * Luxembourg * Austria ** Malaysia * Belgium ** Mexico ** Brazil * Netherlands * Canada * New Zealand ** Chile * Norway * Denmark ** People's Republic of China * Finland Portugal * France ** Republic of China (Taiwan)*** * Germany Singapore ** Greece ** South Africa ** Hungary South Korea * Iceland Spain ** India * Sweden ** Indonesia * Switzerland * Ireland ** Thailand * Italy * United Kingdom - ----------------------------------------- * Designates "Specified Country". ** Designates "Restricted Country". *** 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 C - PAGE 1 77 EXHIBIT D TO PARTICIPATION AGREEMENT FORM OF GUARANTY [LETTERHEAD OF GUARANTOR] PARENT GUARANTY Dated as of , [Lessee] [Trust Company] [Indenture Trustee] [Loan Participants] One Boeing Model 757-251 Aircraft Manufacturer's Serial Number [ ] Ladies and Gentlemen: Reference is hereby made to the Participation Agreement [NW 1996 C] (as from time to time amended or supplemented, the "Participation Agreement"), dated as of April 26, 1996, among Northwest Airlines, Inc. [ ] (the "Owner Participant"), First Security Bank of Utah, National Association, not in its individual capacity, except as expressly provided therein, but solely as trustee (the "Owner Trustee" and "Lessor") under the Trust Agreement, dated as of April 26_, 1996, between the Trustee and the Owner Participant (the "Trust Agreement"), State Street Bank and Trust Company (the "Indenture Trustee") and the Loan Participants listed on Schedule I thereto. Capitalized terms used herein without definition have the respective meanings ascribed thereto in the Participation Agreement. Pursuant to Section 8 of the Participation Agreement and in connection with the transfer of the Interest (as defined in the Assignment and Assumption Agreement dated as of the date hereof between [Transferor], a corporation ("Transferor") and [Transferee], a corporation ("Transferee") (the "Assumption Agreement")) to be consummated as of the date hereof from Transferor to Transferee, the wholly-owned subsidiary of ("Guarantor"), and the execution by Guarantor of the guaranty of Transferee's obligations as contemplated by the Assumption Agreement (this "Guaranty"), Guarantor represents and warrants to, and covenants with, Lessee, First Security Bank of Utah, National Association, in its individual capacity ("Trust Company"), Indenture Trustee and Loan Participants, as follows: EXHIBIT D - PAGE 1 78 1. Ownership of Transferee. Guarantor directly or indirectly owns and holds all of the issued and outstanding shares of capital stock of Transferee. 2. Additional Representations and Warranties. (i) Guarantor is a corporation duly organized and validly existing pursuant to the laws of , and has the corporate power and authority to enter into and perform this Guaranty. (ii) The execution, delivery and performance by Guarantor of this Guaranty has been duly authorized by all necessary corporate action on the part of Guarantor, does not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Guarantor except such as have been duly obtained, and this Guaranty will not contravene any applicable law or corporate charter or by-law, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien upon the property of Guarantor under, any indenture, mortgage, contract or other agreement to which Guarantor is a party or by which it may be bound or affected. (iii) Neither the execution and delivery by Guarantor of this Guaranty, nor the consummation of the transactions by Guarantor contemplated hereby, nor the performance of the obligations hereunder or under any other documents contemplated hereby or thereby by Guarantor requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, United States Federal, state, or foreign governmental authority or agency. (iv) This Guaranty has been duly executed and validly delivered by Guarantor and constitutes the legal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its terms except as the enforcement of this Guaranty may be affected by applicable bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally. (v) There are no pending or, to Guarantor's knowledge, threatened actions or proceedings before any court or administrative agency which might materially adversely affect the consolidated financial condition, business or operations of Guarantor, or the ability of Guarantor to perform its obligations under this Guaranty. (vi) No broker's or finder's fees or commissions or advisory fees are or may become payable in connection with this Guaranty or the Assumption Agreement or, if any such fee is payable, such fee will be the responsibility of Guarantor. (vii) On the date hereof the Trust Estate will be free of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to Guarantor. (viii) Guarantor is (A) a Citizen of the United States (or has effected a voting trust agreement, voting powers agreement or other similar arrangement) and (B) a bank, EXHIBIT D - PAGE 2 79 insurance company, financial institution or domestic corporation the net worth of which is at least $50,000,000. 3. Guaranty. (a) Guarantor hereby unconditionally and irrevocably guarantees, not merely as surety but as obligor: (i) the due and punctual payment of any and all sums which are payable by Transferee pursuant to any provision of the Assumption Agreement (and in particular, Section 4 thereof) and the Participation Agreement, the Tax Indemnity Agreement and any other Operative Document assumed by Transferee pursuant to the Assumption Agreement (collectively, the "Guaranteed Agreements"), and (ii) the due and punctual performance of and compliance with and observance of all other obligations, covenants, warranties and undertakings of or conditions contained in or arising under the Guaranteed Agreements binding upon or made by Transferor and assumed by Transferee under the Assumption Agreement, in each case, whether or not Guarantor shall have contributed funds to Lessor or Transferee, as the case may be, for such payment or performance by Lessor or Transferee (such payments and other obligations guaranteed hereunder hereinafter referred to as the "Obligations"). (b) Guarantor agrees that this Guaranty is an unconditional and absolute guaranty of payment and performance (not merely enforceability) and that its undertakings hereunder are not contingent upon your bringing any action against Transferee or resorting to any security and hereby expressly waives any claim that its undertakings hereunder are so contingent. (c) Guarantor hereby waives promptness, diligence, demand and all notices whatsoever as to the obligations and covenants guaranteed hereby and acceptance of this Guaranty, and waives any other circumstance which might otherwise constitute a defense available to, or a discharge of, the undersigned, and agrees that it shall not be required to consent to, or receive any notice of, any amendment or modification of, or waiver, consent or extension with respect to, the Guaranteed Agreements that may be made or given as provided therein. (d) Guarantor agrees to pay any costs and expenses (including reasonable fees and disbursements of counsel) that may be paid or incurred by the beneficiaries hereof in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty. (e) Guarantor understands and agrees that its obligations hereunder shall be construed as continuing, absolute and unconditional without regard to (i) the validity, regularity or enforceability of any Operative Document, any of the Obligations or any collateral security therefor or guaranty or right of offset with respect thereto at any time or EXHIBIT D - PAGE 3 80 from time to time held by any beneficiary hereof, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by Transferee against any beneficiary hereof or (iii) any other circumstances whatsoever (with or without notice to or knowledge of Transferee or Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of Transferee for the Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any other instance. 4. Quiet Enjoyment. So long as no Event of Default shall have occurred and be continuing, Guarantor will not permit Transferee or Lessor to take or cause to be taken any action contrary to Lessee's rights under the Lease, including, without limitation, Lessee's rights to possession and use of the Aircraft. 5. No Discharge. The obligations of Guarantor hereunder are absolute, unconditional and irrevocable and will not be discharged by, and this Guaranty shall remain in full force and effect notwithstanding: (a) the assignment, conveyance or other transfer by Guarantor of any or all of its interest in or capital stock of Transferee, unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer); (b) the assignment, conveyance or other transfer by Transferee of any or all of its interest in the Trust Estate (as defined in the Trust Agreement), unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer) unless Guarantor guarantees the obligations of the transferee under Section 8(n) of the Participation Agreement; (c) the assignment, conveyance or other transfer by Lessor of any or all of its interest in the Aircraft; (d) any extension or renewal with respect to any obligation of Transferee or Lessor under the Guaranteed Agreements; (e) any modification of, or amendment or supplement to, any of the Guaranteed Agreements; (f) any furnishing or acceptance of additional security or any release of any security; (g) any waiver, consent or other action or inaction or any exercise or non-exercise of any right, remedy or power with respect to Transferee or Lessor, or any change in the structure of Transferee or Lessor; or (h) any insolvency, bankruptcy, reorganization, arrangement, composition, liquidation, dissolution, or similar proceedings with respect to the Trustee or Transferee; or any other occurrence whatsoever, except payment in full of all amounts payable by Transferee under the Guaranteed Agreements and performance in full of all Obligations of Transferee in accordance with the terms and conditions of the Guaranteed Agreements. 6. Reinstatement. Guarantor agrees that this Guaranty shall be automatically reinstated with respect to any payment made prior to any termination of the Guaranty by or on behalf of Transferee pursuant to the Participation Agreement or the other EXHIBIT D - PAGE 4 81 Operative Documents to which Transferee is a party if and to the extent that such payment is rescinded or must be otherwise restored, whether as a result of any proceedings in bankruptcy or reorganization or otherwise. 7. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any set-off or application of funds of Guarantor by any beneficiary hereof, Guarantor shall not be entitled to be subrogated to any of the rights of any beneficiary hereof against Transferee or any collateral, security or guarantee or right of set-off held by any beneficiary hereof for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payment made by Guarantor hereunder, until all amounts and performance owing to the beneficiaries hereof by Transferee on account of the Obligations are paid and performed in full. 8. Severability. Any provision of this Guaranty Agreement that 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. 9. Miscellaneous. This Guaranty shall: (a) be binding upon Guarantor, its successors and assigns; (b) inure to the benefit of, and be enforceable by, Lessee, Trust Company, Indenture Trustee, and Loan Participants, and their respective successors and assigns and each other holder from time to time of any interest in the Aircraft or the Operative Documents, but shall not, and is not intended to, create rights in any other third parties; (c) not be waived, amended or modified without the written consent of Lessee, Trust Company, Indenture Trustee, and Loan Participants; (d) BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; and (e) subject to Section 6 hereof, remain in full force and effect until, and shall be terminated upon (1) the payment in full of all sums payable by Transferee, as the case may be, under the Guaranteed Agreements, and by Guarantor hereunder, and performance in full of Transferee, in accordance with the terms and provisions of the Guaranteed Agreements and Guarantor in accordance with the terms of this Guaranty or (2) the date on which Transferee shall meet the requirements set forth in Section 8 of the Participation Agreement without benefit of this Guaranty; provided that Guarantor hereby covenants and agrees that if Transferee shall at any time thereafter (while Transferee shall be Owner Participant under the Participation Agreement) fail to meet such requirements, Guarantor shall immediately reinstate this Guaranty or execute and deliver to the addressees of this Guaranty a guaranty substantially identical hereto. All notices to, or requests of, demands on and other communications with Guarantor shall be made as set forth in the Participation Agreement. [rest of page intentionally left blank] EXHIBIT D - PAGE 5 82 Very truly yours, [GUARANTOR] By: ----------------------------------- Name: Title: [SIGNATURE PAGE] EXHIBIT D - PAGE 6 83 EXHIBIT E TO PARTICIPATION AGREEMENT FORM OF OPINION OF TRANSFEREE COUNSEL To Each of the Persons Named on Schedule A Attached Hereto Re: Transfer of Interest in one Boeing Model 757-251 Aircraft, and Operative Documents related to Acquisition Thereof on , Ladies and Gentlemen: We have acted as [special][internal] counsel to [Transferee], a corporation (the "Transferee"), in connection with the transfer by [Transferor], a corporation (the "Transferor") to Transferee, of all of its right, title and interest in and to the Aircraft and the Operative Documents to which the Transferor is a party or by which it is bound (collectively, the "Transferee Documents") and the assumption by the Transferee of the Transferor's obligations thereunder. The transfer is being accomplished by an Assignment and Assumption Agreement, dated as of , made by the Transferee and agreed to and acknowledged by the Transferor (the "Assumption Agreement"). Capitalized terms used but not otherwise defined herein are defined as set forth in or by reference in the Participation Agreement referred to in the Assumption Agreement. In connection with the opinions expressed herein, we have examined executed counterparts of the Transferee Documents. We have also examined and relied upon the accuracy of the originals or certified, conformed, photocopied or telecopied copies of such corporate records, certificates, instruments and other documents as we have deemed necessary or appropriate to enable us to render the opinions expressed herein. In all such examinations, we have assumed the genuineness of signatures (other than those of the Transferee) on original documents and the conformity to such original documents of all copies submitted to us as certified, conformed, photocopied or telecopied copies, and as to certificates and telegraphic and telephonic confirmations given by public officials, we have assumed the same to have been properly given and to be accurate. As to all matters of fact material to our opinions, we have, when relevant facts were not independently established, relied upon representations and warranties contained in the Operative Documents and upon the statements and certificates furnished to us. Based upon and subject to the foregoing and the matters hereinafter set forth, we are of the opinion that: EXHIBIT E - PAGE 1 84 1. The Transferee is a corporation duly organized, validly existing and in good standing under the laws of the State of . 2. The Transferee has full corporate power, authority and legal right to carry on its business as now conducted and is duly authorized and empowered to [execute and deliver] the Transferee Documents and to perform its obligations thereunder in accordance with the conditions and provisions thereof. 3. The execution, delivery and performance by the Transferee of the Transferee Documents have been duly authorized by the Transferee[, and each of the Transferee Documents has been duly executed and delivered by it]. 4. No filing with, notice to or authorization or approval from any governmental or public body or authority of the United States of America or the State of is required in connection with the execution, delivery and performance by the Transferee of the Transferee Documents. 5. There are no actions, suits or proceedings (whether or not purportedly on behalf of the Transferee) pending or, to our knowledge, threatened against or affecting the Transferee or any property rights of the Transferee at law or in equity or before any court, commission or other administrative agency or instrumentality, which, either individually or in the aggregate, if determined adversely would materially affect the condition, financial or otherwise, of the Transferee or its ability to perform its obligations under the Transferee Documents; and, to our knowledge, the Transferee is not in default with respect to any order or decree of any court or governmental commission, agency or instrumentality which would materially affect the condition, financial or otherwise, of the Transferee or its ability to perform its obligations under the Transferee Documents. 6. Neither the execution and delivery by the Transferee of the Transferee Documents nor the consummation of the transactions therein contemplated or the fulfillment of or compliance with, the terms and provisions thereof will conflict with or result in a breach of, any of the terms, conditions or provisions of (i) any law or regulation of the United States of America or the State of , or (ii) to the best of our knowledge, any order, injunction or decree of any court or governmental instrumentality binding upon the Transferee, or (iii) the Certificate of Incorporation or the By-Laws of the Transferee or (iv) to the best of our knowledge, any bond, debenture, note, mortgage, indenture, agreement or other instrument to which the Transferee is now a party or by which it or its property may be bound, or would constitute (with the giving of notice or the passage of time or both) a default thereunder or result in the creation or imposition of any lien, charge, security interest or other encumbrance (except as expressly contemplated by the Operative Documents) or any nature whatsoever upon the Aircraft pursuant to the terms of any such agreement or instrument. 7. Each of the Transferee Documents constitutes a legal, valid and binding obligation of the Transferee, enforceable against the Transferee in accordance with the terms thereof, except as the enforceability thereof may be limited by (a) general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), EXHIBIT E - PAGE 2 85 (b) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (c) public policy considerations (in the case of the indemnity provisions contained therein). 8. Neither the execution and delivery by the Transferee of the Transferee Documents, nor the consummation by the Transferee of any of the transactions contemplated thereby requires the consent or approval of, the giving of notice to, or the registration or filing with, or the taking of any other action with respect to, any governmental authority or agency of the United States of the State of . We express no opinion as to the laws of any jurisdiction other than the laws of the State of and the federal laws of the United States of America. We note that the Trust Agreement is governed by the laws of the State of Utah. Insofar as the foregoing opinions relate to the legality, validity, binding effect and enforceability of the Trust Agreement, we have assumed for purposes of such opinions (notwithstanding the express provisions of such agreements to the contrary) that such agreement is governed by the laws of the State of and we express no opinion as to the enforceability of the choice of law provisions in such agreement. In addition, we express no opinion herein as to (i) any federal or state securities laws, (ii) any tax laws, (iii) any aviation laws, (iv) any laws, statutes, rules or regulations applicable to the particular nature of the equipment acquired by the Owner Trustee pursuant to the Participation Agreement or the Purchase Agreement Assignment and (v) ERISA or any other pension and employee benefit laws, rules or regulations. In addition, we express no opinion as to title in or to the Trust Estate on the part of any Person. Insofar as our opinions expressed herein relate to the Tax Indemnity Agreement, such opinions are addressed and are being rendered solely to Lessee. In rendering the opinions expressed herein, we have assumed that (a) each of the Transferee Documents has been duly authorized, executed and delivered by the respective parties thereto (other than the Transferee) and constitutes a legal, valid and binding obligation of each of such parties (other than the Transferee) enforceable against each of such parties in accordance with the terms thereof, (b) each of such parties (other than the Transferee) has the requisite power, authority and legal right to enter into and perform its respective obligations under the Transferee Documents and (c) the transactions provided for in the Transferee Documents are not within the prohibitions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended. This opinion is furnished by us at the request of the Transferee, with their consent for the sole benefit of the addressees hereof, each of whom we understand and agree may rely upon the opinions set forth herein. No other person or entity is entitled to rely on this opinion without our express written consent. This opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated herein. Very truly yours, EXHIBIT E - PAGE 3 86 SCHEDULE A [Lessee] [Trust Company] [Indenture Trustee] [Loan Participants] SCHEDULE A - PAGE 1 EX-4.G8 58 FIRST AMENDMENT TO PARTICIPATION AGREEMENT-1996 C 1 FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 C] This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 C], dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) [ ], a [ ] corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (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 (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; W I T N E S S E T H: WHEREAS, Lessee, the Owner Participant, the Owner Trustee, [ ], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 C], dated as of April 26, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 C], dated as of April 26, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 C], dated April 29, 1996 2 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 C] relating to the Aircraft, dated as of April 26, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 C] dated April 29, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 C], dated as of April 26, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 C] relating to the Aircraft, dated as of April 26, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 C] dated as of April 26, 1996 (the "GUARANTEE"), pursuant to which the Guarantor guaranteed certain obligations of Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant Guarantor entered into the Owner Participant Guaranty [NW 1996 C] dated as of April 26, 1996 (the "OWNER PARTICIPANT GUARANTY"), pursuant to which the Owner Participant Guarantor guaranteed certain obligations of the Owner Participant under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent have entered into the Refunding Agreement [NW 1996 C], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"); -2- 3 WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 C], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1996 C], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 C] dated as of June 3, 1996 (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Participant and the Owner Trustee have entered into the First Amendment to Trust Agreement [NW 1996 C] dated as of the date hereof (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in Section 1 of the Refunding 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing 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 Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (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 -3- 4 Subordination Agent entered into the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Participation Agreement is amended as follows: SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 2. AMENDMENT OF SECTION 7(b)(i) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(i) of the Original Participation Agreement is hereby amended by (i) adding the words "or the Pass Through Certificates" (1) before and after the clause "or transfer of the Secured Certificates" in clause (E) thereof and (2) after the clause "the Secured Certificates" in clause (F) thereof and (ii) adding the words and punctuation "(including any Make-Whole Amount)" after the word "premium" in clause (F) thereof. SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation Agreement is hereby amended by (i) deleting the words "other than a Loan Participant" from clauses (1) and (3) thereof; (ii) deleting clauses (2) and (4) thereof in their entirety and substituting therefor "Intentionally Omitted", (iii) deleting the words "a Loan Participant" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (iv) deleting the words "any Loan Participant or any Certificate Holder" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (B) in clause (10) thereof and substituting therefor "or", (vi) deleting "(C)" in clause (10) thereof and substituting therefor "(B)", and (vii) deleting the parenthetical clause and the proviso from clause (12) thereof. SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation Agreement is hereby amended by (i) deleting the words "U.S. Withholding Taxes" where such words first appear in the second sentence of the first paragraph thereof and substituting therefor "any Income Tax imposed by the Unites States Federal government required to be withheld from payments on the Secured Certificates or the Pass Through Certificates (a "U.S. WITHHOLDING TAX")" and (ii) deleting the second sentence in the last paragraph thereof. SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement is hereby amended by (i) deleting the third and fourth sentences thereof and (ii) deleting the words "other than a Loan Participant" in the first sentence thereof. -4- 5 SECTION 6. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement is hereby amended by (i) deleting the word "and" between the words "expenses" and "Transaction Expenses" in the second parenthetical phrase of the first paragraph thereof and substituting a comma therefor, (ii) inserting after the phrase "to Section 16 hereof" in such second parenthetical phrase the words "and Refinancing Expenses to the extent not required to be paid by the Owner Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement", (iii) adding the words and punctuation "and, only in the case of an Indemnitee who is the Owner Participant and its Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents, the Intercreditor Agreement, the Liquidity Facilities and the Pass Through Trust Agreements and, only in the case of an Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words "respect thereof" in the first clause (A) thereof, and (iv) adding the words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after the words "Operative Documents" in the second clause (A) thereof and in the second clause (B) thereof. SECTION 7. [Reserved] SECTION 8. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby amended by deleting the words "each of the Loan Participants" and substituting therefor the words "the Indenture Trustee" in the first line thereof. SECTION 9. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", any Loan Participant's," from the first sentence thereof, (ii) deleting the words and punctuation "the Loan Participants," each time they appear in the second sentence thereof, (iii) deleting the "," between the words "Owner Trustee" and "the Indenture Trustee" in clause (N) of the third sentence thereof and substituting therefor "and", (iv) deleting the words "and the Loan Participants" from clause (N) of the third sentence thereof, and (v) deleting the words and punctuation "the Loan Participants," from the fifth sentence thereof. -5- 6 SECTION 10. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement is hereby amended by (i) deleting the word "Each" in the first sentence thereof and substituting therefor the words "The Owner" and (ii) adding a new sentence to the end thereof to read as follows: "The Pass Through Trustee agrees that it will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of the initial supplement (other than the initial supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust Agreement without the prior written consent of the Owner Participant.". SECTION 11. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is hereby amended by deleting the fourth and fifth sentences thereof. SECTION 12. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", each Loan Participant" therefrom and (ii) adding a new second paragraph thereto at the end thereof: 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. SECTION 13. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement is hereby amended by (i) deleting the words "each" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii) deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Indenture Trustee and the Owner", (iii) inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement Assignment", the words and punctuation ", the Refunding Agreement", (iv) deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and substituting therefor the words "the Owner", and (v) deleting the word "Participants" from Section 8(y)(A)(iv) and substituting therefor the words "the Indenture Trustee and the Owner Participant". SECTION 14. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. -6- 7 SECTION 15. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 16. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 17. AMENDMENT OF SECTION 8(ii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(ii) of the Original Participation Agreement is hereby amended to read in its entirety as follows: (ii) Lessee agrees and covenants that it shall not purchase, guarantee or acquire any interest in (i) any Secured Certificate (except as provided in Section 8(x)) or Pass Through Certificate or (ii) any Advance by the Liquidity Provider. SECTION 18. AMENDMENT OF SECTION 9 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 19. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", the Loan Participants" from clause (A) thereof, (ii) deleting the words "Loan Participants" the second time they appear in clause (B) thereof and substituting therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05" from clause (iii) of the second sentence thereof. SECTION 20. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby amended by deleting the words "at the foot of this Agreement" in clause (A) of the second sentence thereof and substituting therefor the words "on the signature pages to the Refunding Agreement". SECTION 21. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is hereby amended by (i) deleting the words "Loan Participants" each time they appear in clauses (A), (B), and (D) thereof and substituting therefor the words "Indenture Trustee", (ii) deleting the "," both times it appears between the words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and substituting therefor "and", and (iii) deleting the words "and the Loan Participants" both times they appear in clause (E) thereof. SECTION 22. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Section 15. Miscellaneous. (a) The Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent -7- 8 requested of the Owner Trustee, as Lessor, under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor. SECTION 23. AMENDMENT OF SECTION 17 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is hereby amended by adding the following new subclause (7) to clause (a) thereof: (7) in connection with any proposed refinancing, if, on the date which is two Business Days prior to the last date on which notice of revocation of redemption may be given pursuant to Section 2.12(b) of the Trust Indenture, the Owner Participant is not satisfied in its sole discretion that such refinancing will occur on the date specified for such refinancing in the notice provided pursuant to Section 2.11 of the Trust Indenture, then Lessee shall not effect such proposed refinancing and shall provide notice to such effect to the Indenture Trustee pursuant to Section 2.12(b) of the Trust Indenture. SECTION 24. AMENDMENT OF SECTION 18 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 25. RATIFICATION. Except as hereby modified, the Original Participation Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Participation Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Participation Agreement or any word or phrase referring to a section or provision of the Participation Agreement is deemed for all purposes to be a reference to the Participation Agreement or such section or provision as amended pursuant to this Amendment. SECTION 26. MISCELLANEOUS. (a) Without in any way affecting the provisions of the letter agreement dated April 29, 1996 between the Owner Participant and Lessee (which letter agreement shall remain in full force and effect) relating to future financings, each of the parties hereto agrees that the transactions contemplated hereby shall constitute one of the three refinancing operations permitted in Section 17 of the Participation Agreement. (b) Each party hereto acknowledges and agrees that the Purchaser is a Loan Participant under the Participation Agreement, the Lease and the other Operative Documents, and is entitled to the benefits of the covenants and other provisions therein running in favor of the Loan Participants, and to the security purported to be afforded by the Trust Indenture, but that (i) the Purchaser has no liability arising out of any actions or inactions of the Original Loan Participants or any prior Certificate Holder or any event or condition which occurred or existed prior to the Closing, (ii) the Purchaser is making no representations or warranties other than those set forth in the Refunding Agreement, and (iii) the Purchaser has no liability or obligation under any covenant in any of such agreements for any period prior to the Closing. -8- 9 (c) This Amendment 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 Amendment 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 Amendment shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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. THIS AMENDMENT 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 AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -9- 10 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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: ___________________________________ Name: Thomas S. Schreier, Jr. Title: Vice President-Finance and Assistant Treasurer FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: ___________________________________ Name: Greg A. Hawley Title: Vice President STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ___________________________________ Name: Donald E. Smith Title: Vice President [ ], as Owner Participant By: ___________________________________ Name: Title: -10- 11 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Subordination Agent By: ___________________________________ Name: Donald E. Smith Title: Vice President STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee By: ___________________________________ Name: Donald E. Smith Title: Vice President -11- 12 SCHEDULE I TO PARTICIPATION AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. -12- EX-4.G9 59 REFUNDING AGREEMENT-1996 C 1 REFUNDING AGREEMENT [NW 1996 C] This REFUNDING AGREEMENT [NW 1996 C], dated as of June 3, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii) [______________], a [__________] corporation (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Participation Agreement (as defined below) as if the Closing Date had occurred. W I T N E S S E T H: WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, [Bridge Lenders], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 C], dated as of April 26, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust 2 Indenture and Security Agreement [NW 1996 C], dated as of April 26, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 C], dated April 29, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Lessee entered into the Lease Agreement [NW 1996 C] relating to the Aircraft, dated as of April 26, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 C] dated April 29, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 C], dated as of April 26, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 C] relating to the Aircraft, dated as of April 26, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 C] dated as of April 26, 1996 (the "GUARANTEE") pursuant to which the Guarantor guaranteed certain obligations of the Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and the Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 C], dated as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; -3- 3 WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Trustee and the Lessee entered into the First Amendment to Lease Agreement [NW 1996 C], dated as of the date hereof (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"), containing amendments, modifications and additions necessary to give effect to the transactions described herein; WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into the First Amendment to Trust Agreement [NW 1996 C], dated as of the Refinancing Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT"); WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent will enter into the First Amendment to Participation Agreement [NW 1996 C], dated as of the Refinancing Date (the "PA AMENDMENT NO. 1"; the Original Participation Agreement, as amended by the PA Amendment No. 1, the "PARTICIPATION AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 C] dated as of the date hereof (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing Secured Certificates bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will enter 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 Refinancing Date (the "INTERCREDITOR AGREEMENT"); and -4- 4 WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on June 12, 1996 or on such other date agreed to by the parties hereto (the "REFINANCING DATE"): (i) immediately prior to the Closing, the Owner Participant shall pay to the Owner Trustee an amount equal to the unpaid interest on the Original Secured Certificates accrued up to but not including the Refinancing Date; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Refinancing Secured Certificates being issued to such Pass Through Trustee as set forth in clause (vii) below; (iii) the Owner Trustee shall pay to the Indenture Trustee for the benefit of the holders of the Original Secured Certificates an amount equal to the aggregate principal amount of Original Secured Certificates outstanding on the Refinancing Date, together with accrued and unpaid interest on the Original Secured Certificates up to but not including the Refinancing Date, and all other amounts payable to such holders by the Owner Trustee under the Original Indenture and the Original Participation Agreement; (iv) pursuant to the Indenture, the Indenture Trustee shall disburse to the holders of the Original Secured Certificates the amounts of principal and interest, and other amounts, if any, described in clause (iii) above, owing to them on the Refinancing Date with respect to the Original Secured Certificates as a prepayment of the Original Secured Certificates; (v) simultaneously with the disbursement by the Indenture Trustee of amounts described in clause (iv) above to the holders of the Original Secured Certificates, the Indenture Trustee shall receive the Original Secured Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture; (vii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Refinancing Secured Certificates of the -5- 5 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; and (viii) the Owner Trustee shall disburse to the Owner Participant the excess of the amounts received by it pursuant to clauses (i) and (ii) above over the amount paid by it pursuant to clause (iii) above. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) In case any Pass Through Trustee shall for any reason fail to purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on or prior to June 12, 1996 or such other date as shall be agreed in writing by the parties hereto, the written notice given by the Lessee pursuant to Section 17 of the Original Participation Agreement shall be deemed never to have been given, none of the Owner Participant, the Owner Trustee nor the Lessee shall have any obligation to pay to the holders of the Original Secured Certificates or the Indenture Trustee any amount in respect of the prepayment of the Original Secured Certificates, the Original Secured Certificates shall remain outstanding and in full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall not take place. (d) The closing (the "CLOSING") of the transactions described in this Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such other place as the parties hereto may agree. (e) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Refinancing Date. (f) In order to facilitate the transactions contemplated hereby, the Lessee and the Guarantor have entered into the Underwriting Agreement, dated the date hereof, among the Lessee, the Guarantor and the several underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to the terms and conditions hereof, the Lessee and the Guarantor will enter into each of the Pass Through Trust Agreements and will undertake to perform certain administrative and ministerial duties under such Pass Through Trust Agreements. SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured Certificates shall be payable as to principal in accordance with the terms of the Indenture, and the Refinancing Secured Certificates shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Refinancing Secured Certificates in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Refinancing Secured Certificates bearing the interest rate set forth opposite the name of such -6- 6 Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Refinancing Secured Certificates shall be dated and authenticated as of the Refinancing Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through Trustee to make the payments described in Section l(a)(ii) and the obligations of the Owner Trustee and the Owner Participant to make the payments and participate in the transactions contemplated by this Agreement on the Refinancing Date are subject to the fulfillment, prior to or on the Refinancing Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder, and paragraph (r) shall not be a condition precedent to the obligations of the Pass Through Trustee hereunder): (a) The Owner Trustee shall have tendered the Refinancing Secured Certificates to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Refinancing Secured Certificates and shall have tendered the Refinancing Secured Certificates to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts or conformed copies of the following documents: (1) this Agreement; (2) the Lease Amendment No. 1; (3) the Indenture; (4) the PA Amendment No. L; (5) the Trust Agreement Amendment No. 1; (6) each of the Pass Through Trust Agreements; (7) the Intercreditor Agreement; and (8) the Liquidity Facility for each of the Class A, Class B and Class C Trusts. -7- 7 (c) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Lessee and the Guarantor (as the case may be) as to the person or persons authorized to execute and deliver this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the TIA Amendment No. 1 and any other documents to be executed on behalf of the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Lessee and the Guarantor or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the 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 the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby; and (3) a copy of the certificate of incorporation of the Lessee and the Guarantor, certified by the Secretary of State of the State of Minnesota in the case of the 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 the Lessee and the Guarantor, certified by the Secretary or Assistant Secretary of the 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 the 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 Refinancing Date, as to the due incorporation and good standing of the Lessee or the Guarantor (as the case may be) in such state. (d) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received a certificate signed by an authorized officer of the Lessee (and, with respect to the matters set forth in clauses (4) and (5) below, of the Guarantor), dated the Refinancing Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Original Lease and has a current, valid certificate of airworthiness; (2) the FAA Bill of Sale, the Original Lease and the Original Indenture have been duly recorded, and the Original Trust Agreement -8- 8 has been duly filed, with the FAA pursuant to the sections of Title 49, United States Code, relating to aviation (the "FEDERAL AVIATION ACT"); (3) the Aircraft has been registered with the FAA in the name of the Owner Trustee and the Lessee has authority to operate the Aircraft; (4) the representations and warranties contained herein of the Lessee and the Guarantor are correct as though made on and as of the Refinancing Date, except to the extent that such representations and warranties (other than those contained in clause (v) of Section 8(d)) relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (5) there has been no material adverse change in the financial condition of the Guarantor and its subsidiaries, taken as a whole, since December 31, 1995. (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement, the Indenture, the PA Amendment No. 1, 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 and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary or an Assistant Secretary of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Refinancing 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). -9- 9 (f) The Pass Through Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and any other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the 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; (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 Refinancing Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Refinancing 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). (g) The Pass Through Trustee and the Owner Trustee each shall have received a certificate signed by an authorized officer of the Owner Participant, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Refinancing 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). (h) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an independent insurance broker's report as to the due compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (i) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for the Lessee and the Guarantor, and an -10- 10 opinion addressed to it from the Lessee's legal department, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee and the Owner Participant each shall have received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form and substance satisfactory to each of them. (l) The Pass Through Trustee and the Owner Trustee each shall have received an opinion addressed to it from Dewey Ballantine, special counsel for the Owner Participant, and an opinion addressed to it from corporate counsel to the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee shall have received an opinion of White & Case, special counsel for the Liquidity Provider, and in house German counsel for the Liquidity Provider, each in form and substance satisfactory to the Pass Through Trustee. (n) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The 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 Refinancing Secured Certificates to be purchased from the Owner Trustee. (p) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustees to make the payments described in Section l(a)(ii) or for the Owner Trustee or the Owner Participant to participate in the transactions contemplated by this Agreement on the Refinancing Date. (q) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee or the Guarantor which are required in connection with the Pass Through Trustee's making of the payments described in Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Refinancing Date shall have been duly obtained. -11- 11 (r) The Lessee and the Owner Participant shall each have executed and delivered to the other the TIA Amendment No. 1. Promptly following the recording of the Lease Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of the Lease Amendment No. 1 and the Indenture. SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in the transactions contemplated by this Agreement and to execute and deliver each of the Pass Through Trust Agreements and the PA Amendment No. 1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion referred to in subsections (j) through (n) of Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter from counsel rendering such opinion authorizing the Lessee and the Guarantor to rely on such opinion as if it were addressed to the Lessee and the Guarantor, (ii) each certificate referred to in subsections (e) through (g) of Section 3, (iii) executed counterparts or conformed copies of the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1 and (iv) such other documents and evidence with respect to each other party hereto as the Lessee, the Guarantor or their counsel 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) The respective obligation of each of the Lessee, the Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Pass Through Trustee are correct as though made on and as of the Refinancing 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), (ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) 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. SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Indenture. The -12- 12 Lessee and the Guarantor, by execution and delivery hereof, consent to such execution and delivery of the Indenture. The Indenture shall be effective as of the Refinancing Date. SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, by execution and delivery hereof, consent to the amendment to the Original Lease effected by, and request and instruct the Owner Trustee to execute and deliver the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to execute and deliver, the Lease Amendment No. 1. The Lease Amendment No. 1 shall be effective as provided therein. SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the execution and delivery of the PA Amendment No. 1 by each of the parties thereto, the Original Participation Agreement shall be amended as set forth in the PA Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall be a party thereto from and after the Refinancing Date to the extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing Date. SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) each of the 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 on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under (i) in the case of the Lessee, this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 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; -13- 13 (b) the 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; (c) the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, and the performance of the obligations of the Lessee or the Guarantor (as the case may be) under this Agreement, the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, have been duly authorized by all necessary corporate action on the part of the 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 the 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 the Lessee or the Guarantor (as the case may be) or the certificate of incorporation or by-laws of the 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 the Lessee or the Guarantor (as the case may be) under, any indenture, mortgage, contract or other agreement to which the 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; (d) neither the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 or any other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, nor the performance of the obligations of the Lessee or the Guarantor (as the case may be) hereunder or under the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement or the other Operative Documents to which the Lessee or the Guarantor (as the case may be) is a party, nor the consummation by the Lessee or the Guarantor (as the case may be) 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 in respect of, the Department of Transportation, the FAA, or any other federal, state or foreign -14- 14 governmental authority having jurisdiction, other than (i) 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, (ii) 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, (iii) the consents, approvals, notices, registrations and other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement, (iv) the registrations and filings referred to in Section 8(f), and (v) 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; (e) this Agreement constitutes, and each of the Participation Agreement, the Pass Through Trust Agreements, the Tax Indemnity Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment No. 1 and the Lease Amendment No. 1 shall have been executed and delivered by each of the parties thereto, will constitute, the legal, valid and binding obligations of the Lessee or the Guarantor (as the case may be) enforceable against the 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, 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; (f) except for the filings and registrations referred to in Section 7(a)(vi) of the Participation Agreement, such filings and registrations as shall have been made or effected subsequent thereto and the filing for recording pursuant to the Federal Aviation Act of the Indenture and the Lease Amendment No. 1, 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 the 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 other than the taking of possession by the Indenture Trustee of the original counterparts of -15- 15 the Original Lease and the Lease Amendment No. 1 (to the extent the Lease constitutes chattel paper) and the filing of continuation statements at periodic intervals with respect to the Uniform Commercial Code financing statements in effect on the Refinancing Date covering the security interests created by the Original Indenture or describing the Lease as a lease; (g) neither the 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; (h) neither the Lessee nor the Guarantor is an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (i) 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; and (j) 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. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the parties below represents, warrants and covenants to each of the other parties to this Agreement and to the Liquidity Provider as follows: (a) The Indenture Trustee in its individual capacity represents, warrants and covenants that: (1) 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 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 PA Amendment No. 1, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party; -16- 16 (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, the PA Amendment No. 1 and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party 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; (3) this Agreement constitutes, and the Participation Agreement, when the PA Amendment No. 1 has been executed and delivered by the Indenture Trustee, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) 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 (5) there are no Indenture Trustee Liens on the Aircraft or any portion of the Trust Estate. (b) The Owner Trustee, in its individual capacity (except as provided in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7) and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and (11) below) as Owner Trustee, represents and warrants that: (1) 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, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver the Original Trust Agreement, has the corporate -17- 17 power and authority to carry out the terms of the Trust Agreement, and has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of the Trust Agreement by the Owner Participant), as Owner Trustee, and to the extent expressly provided herein or therein, in its individual capacity, the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Refinancing Secured Certificates, the Lease, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) 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 and (assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant) this Agreement constitutes, and each of the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Indenture, when entered into, the Lease, when the Lease Amendment No. 1 shall have been entered into, and the Trust Agreement, when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, enforceable against it in its individual capacity or as Owner Trustee, as the case may be, in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, the Owner Trustee has duly authorized, and on the Refinancing Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Refinancing Secured Certificates pursuant to the terms and provisions hereof and of the Indenture, and each Refinancing Secured Certificate on the Refinancing Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Refinancing Secured Certificate and the Indenture; (4) neither the execution and delivery by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, the Original Participation Agreement, the PA Amendment No. 1, the Original Trust Agreement, the Trust Agreement Amendment No. 1, the Original Indenture, the Indenture, the Original Lease, the Lease Amendment No. 1, the Refinancing Secured Certificates or any other Operative Document to which it is a party, 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 hereby or 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 hereof and 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 -18- 18 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; (5) 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 Indenture, the Lease, the Refinancing 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 8(d); (6) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (7) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 -19- 19 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (8) 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 redemption of the Original Secured Certificates or the issuance of the Refinancing 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 (1), (2), (3) and (4) 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 of Utah, 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; (9) 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 (1), (2), (3) and (4) above; (10) 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; (11) the Owner Trustee has not, in its individual capacity or as Owner Trustee, directly or indirectly offered any Refinancing 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, the Original Loan Participants 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 Refinancing Secured Certificate, any Certificate or any interest in and to the Trust Estate, the Trust Agreement or any similar interest -20- 20 for sale to, or to solicit any offer to acquire any of the same from, any person; and (12) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) The Owner Participant is a corporation 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, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Original Participation Agreement, the Original Trust Agreement, the Tax Indemnity Agreement, the Trust Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; this Agreement has been duly authorized, executed and delivered by the Owner Participant; and this Agreement constitutes, and the Participation Agreement when the PA Amendment No. 1 shall have been entered into, the Tax Indemnity Agreement when the TIA Amendment No. 1 shall have been entered into, and the Trust Agreement when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their 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; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1, the Trust Agreement Amendment No. 1 or any other Operative Document to which it is a party nor (B) compliance by the Owner Participant with all of the provisions hereof or 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, 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; -21- 21 (3) 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 or was required, as the case may be, for the due execution, delivery or performance by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; (4) there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or arbitrator which would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Participation Agreement, the Tax Indemnity Agreement and the Trust Agreement; (5) 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 refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Refinancing 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 was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Refinancing 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 that 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 Indenture, (D) which the Owner Participant 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Massachusetts, -22- 22 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements, the Intercreditor Agreement and the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1, and (upon execution and delivery of the PA Amendment No. 1), the Participation Agreement, will 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; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the performance by the Pass Through Trustee of the Participation Agreement, the purchase by the Pass Through Trustee of the Refinancing 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; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby or by the Participation Agreement, 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 -23- 23 governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement or the Participation 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 Refinancing 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 as a grantor trust under subpart E, Part I of Subchapter J of the Code, such trusts will not be subject to any Taxes imposed by the Commonwealth of Massachusetts or any political subdivision thereof; (6) 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 Participation Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) 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, the Lessee or the Guarantor. -24- 24 (e) The Subordination Agent represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement and, when the PA Amendment No. 1 has been executed and delivered by each of the parties thereto, the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent each of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery by the Subordination Agent of the PA Amendment No. 1), the Participation Agreement will 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; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the Participation Agreement, or the performance by the Subordination Agent of the Participation 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; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby or by the Participation Agreement requires the consent or approval of, the giving of notice to, the -25- 25 registration with, or the taking of any other action with respect to, any Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement, the PA Amendment No. 1 or the Participation 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 Refinancing 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); (6) 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 PA Amendment No. 1, the Participation Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter, the Lessee or the Guarantor. SECTION 10. NOTICES. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and any such notice shall become effective upon being deposited in the United States -26- 26 mail, with proper postage for first-class registered or certified mail prepaid, or when delivered personally or, if promptly confirmed by mail as provided above, when dispatched by facsimile or other written telecommunication, addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement. SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Indenture Trustee and the Original Loan Participants in connection with the transactions contemplated by this 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) shall be paid promptly by the Owner Participant, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Refinancing Secured Certificates issued under the Indenture of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for the Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special counsel for the Original Loan Participants; (2) the fees, expenses and disbursements of Dewey Ballantine, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider; and (b) In the event that the transactions contemplated by this Section 11 and the agreements referred to herein are not consummated, the Lessee shall bear and pay all costs, expenses and fees referred to in this Section 11 at no after-tax cost to the Owner Trustee, Trust Estate or the Owner Participant; provided that if the transactions fail to be consummated -27- 27 as a result of the failure of the Owner Participant to act in good faith in consummating the transactions, or to otherwise comply with the terms hereof, the Owner Participant shall bear and pay its own fees, costs and expenses (including, without limitation, the fees and expenses of its special counsel) and the Lessee shall pay all other reasonable fees, costs and expenses as aforesaid. SECTION 12. 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. SECTION 13. MISCELLANEOUS. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations, warranties and agreements herein of the Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee, and the Lessee's, the Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the Subordination Agent's and the Pass Through Trustee's obligations under any and all thereof, shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. (b) This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only 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 each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and, subject to the terms of the Participation 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 Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject to the provisions of the Participation Agreement, its successors and permitted assigns. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. No purchaser or holder of any Refinancing Secured Certificates shall be deemed to be a successor or assign of any holder of the Original Secured Certificates. -28- 28 SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -29- 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. NORTHWEST AIRLINES, INC., Lessee By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -30- 30 NORTHWEST AIRLINES CORPORATION, Guarantor By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -31- 31 [ ] Owner Participant By: _______________________________________ Title: Address: Attn: Telecopy No.: -32- 32 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: ___________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -33- 33 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent, Subordination Agent By: __________________________________ Title: Address: c/o State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -34- 34 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee Indenture Trustee By: ___________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -35- 35 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: __________________________________ Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Facsimile: (801) 246-5053 -36- 36 SCHEDULE I TO REFUNDING AGREEMENT PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1A dated as of the Closing Date. 2. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1B dated as of the Closing Date. 3. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1C dated as of the Closing Date. 37 SCHEDULE II TO REFUNDING AGREEMENT REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
Interest Rate Purchaser and Maturity --------- ------------ Northwest Airlines Principal Purchase Pass Through Trust Amount Price --------- -------- 1996-1A [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1B [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1C [ _ ]% Refinancing Secured Certificates due [ ] $[ ]
EX-4.H1 60 TRUST AGREEMENT-1996 D 1 TRUST AGREEMENT [NW 1996 D] This TRUST AGREEMENT [NW 1996 D] dated as of April 29, 1996 between [ ], a [ ] corporation (the "ORIGINAL OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); W I T N E S S E T H : ARTICLE I DEFINITIONS AND TERMS SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall otherwise require and except as contained in this Section 1.01, the capitalized terms used herein shall have the respective meanings assigned thereto in the Lease (as hereinafter defined) for all purposes hereof. All definitions contained in this Section 1.01 shall be equally applicable to both the singular and plural forms of the terms defined. For all purposes of this Trust Agreement the following terms shall have the following meanings: "Excluded Payments" has the meaning ascribed to such term in the Trust Indenture. "Indenture Event of Default" has the meaning which the term "Event of Default" has in the Trust Indenture. "Lease" means that certain Lease Agreement [NW 1996 D], to be dated as of the date hereof, and to be entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of this Trust Agreement, as said Lease Agreement may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Trust Agreement. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Event of Default" has the meaning which the term "Event of Default" has in the Lease. 2 "Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns. "Owner Participant" means the Original Owner Participant and each Subsequent Owner Participant to the extent that the same shall, at the relevant time, have an Ownership Interest. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by this Trust Agreement. "Participation Agreement" has the meaning ascribed to such term in the Lease. "Replacement Airframe" has the meaning ascribed to such term in the Trust Indenture. "Replacement Engine" has the meaning ascribed to such term in the Trust Indenture. "Subsequent Owner Participant" means any Person to which the Original Owner Participant or any transferee from the Original Owner Participant or any Subsequent Owner Participant shall have transferred at any time after the Delivery Date its undivided right, title and interest originally held by the Original Owner Participant in this Trust Agreement, the Trust Estate and the Participation Agreement, to the extent permitted by Section 8.1 of this Trust Agreement and Section 8 of the Participation Agreement; provided that in the event of any such transfer so long as the Lease shall be in effect or any Secured Certificates remain unpaid, such transferee and its transferor shall have complied with all of the terms of Section 8(n) of the Participation Agreement. "Trust Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant, the Loan Participants or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its individual capacity, or to the Loan Participants or any other holder of a Secured Certificate, or to any of their respective directors, officers, employees, servants and agents, pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. 2 3 "Trust Indenture Estate" has the meaning ascribed to such term in the Trust Indenture. "Trust Office" shall mean the principal corporate trust office of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or the principal corporate trust office of any successor Owner Trustee. "Trust Supplement" means a supplement to the Trust Indenture and to this Trust Agreement in substantially the form of Exhibit A to the Trust Indenture which shall particularly describe the Aircraft, and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Trust Agreement. ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS; DECLARATION OF TRUST SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant hereby authorizes and directs the Owner Trustee to execute and the Owner Trustee agrees for the benefit of the Owner Participant that it will on or before the Delivery Date, execute and deliver the Operative Documents and any other agreements, instruments or documents to which the Owner Trustee is a party in the respective forms thereof in which delivered from time to time by the Owner Participant to the Owner Trustee for execution and delivery and, subject to the terms hereof, to perform its duties and, upon instructions from the Owner Participant, exercise its rights under said Operative Documents in accordance with the terms thereof. SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the Owner Participant, subject, however, to the provisions of and the Lien created by the Trust Indenture and to the provisions of the Lease and the Participation Agreement. ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF SECURED CERTIFICATES SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the 3 4 benefit of the Owner Participant that it will, on the Delivery Date, subject to due compliance with the terms of Section 3.02 hereof: (a) purchase the Aircraft pursuant to the Participation Agreement and the Bill of Sale; (b) accept from Lessee the delivery of the Bill of Sale and the FAA Bill of Sale; (c) cause the Aircraft to be leased to Lessee under the Lease, and in furtherance thereof execute and deliver a Lease Supplement covering the Aircraft; (d) execute and deliver the Trust Supplement covering the Aircraft; (e) issue to the Loan Participants Secured Certificates in the amounts and otherwise as provided in Section 1(a) of the Participation Agreement; (f) execute and deliver the financing statements referred to in Section 4(a)(vi) of the Participation Agreement, together with all other agreements, documents and instruments referred to in Section 4 of the Participation Agreement to which the Owner Trustee is a party; (g) effect the registration of the Aircraft in the name of the Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of Sale; (ii) an application for registration of the Aircraft in the name of the Owner Trustee (including without limitation an affidavit from the Owner Trustee in compliance with the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) this Trust Agreement; and (h) execute and deliver all such other instruments, documents or certificates and take all such other actions in accordance with the directions of the Owner Participant, as the Owner Participant may deem necessary or advisable in connection with the transactions contemplated hereby. SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation of the Owner Trustee to take the action required by Section 3.01 hereof with respect to the Aircraft shall be subject to the following conditions precedent: (a) the Original Owner Participant shall have made the full amount of its Commitment set forth in Schedule II of the Participation 4 5 Agreement available to the Owner Trustee, in immediately available funds, in accordance with Section 1 of the Participation Agreement; and (b) the Owner Participant shall have notified the Owner Trustee that the terms and conditions of Section 4 of the Participation Agreement, insofar as they relate to the Aircraft, shall have been complied with in a manner satisfactory to the Original Owner Participant. SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, take the actions specified to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in accordance with the provisions of such Section 8(x) provided Lessee shall have paid all amounts required by such Section 19(d) and 8(x). SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR REPLACEMENT ENGINES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of a Replacement Airframe and Replacement Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a Replacement Engine being substituted pursuant to Section 10(b) of the Lease, subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease, as the case may be: (a) to the extent not previously accomplished by a prior authorization, authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees of Lessee) to accept delivery of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engines; (b) accept from Lessee or other vendor of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine a bill of sale or bills of sale (if tendered), and the invoice, if any, with respect to the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine being furnished pursuant to Section 10(a) or (b) of the Lease; (c) in the case of a Replacement Airframe, make application to the Federal Aviation Administration for the registration in the name of the Owner Trustee of the Aircraft of which such Replacement Airframe is a part; 5 6 (d) execute and deliver a Lease Supplement and a Trust Supplement covering (i) the Aircraft of which such Replacement Airframe is part or (ii) such Replacement Engine, as the case may be; (e) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) the Airframe and Engines (if any) or the Engine being replaced to Lessee; (f) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Airframe and Engines or engines (if any) or the Engine or engine being replaced from the lien created under the Trust Indenture and release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such replaced Airframe and Engines, if any, or Engine) from the assignment and pledge under the Trust Indenture; and (g) upon instructions from the Owner Participant, take such further action as may be contemplated by clauses (A) and (B) of the third paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of Section 10(b) of the Lease, as the case may be. SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In the event of the substitution of a Replacement Airframe for the Airframe or the substitution of a Replacement Engine for any Engine or engine, all provisions of this Trust Agreement relating to such replaced Airframe or Engine or engine shall be applicable to such Replacement Airframe or Replacement Engine with the same force and effect as if such Replacement Airframe or Replacement Engine were the same airframe or engine as the Airframe or Engine being replaced but for the Event of Loss with respect to such Airframe or Engine. SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of an engine being transferred to the Owner Trustee pursuant to Section 5(b) of the Lease, subject to due compliance with the terms of such Section 5(b): (a) accept from Lessee the bill of sale with respect to such engine contemplated by such Section 5(b) (if tendered); (b) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would 6 7 be Lessor Liens but for the proviso in the definition of Lessor Liens) and to an Engine to Lessee as contemplated by such Section 5(b); and (c) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Engine being transferred to Lessee pursuant to such Section 5(b) from the lien of the Trust Indenture and to release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such Engine) from the assignment and pledge under the Trust Indenture. ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture Trustee. Until the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with the provisions of Article III of the Trust Indenture. (b) Payments to Owner Trustee; Other Parties. After the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, any payment of the type referred to in Section 4.01(a) hereof (other than Excluded Payments) received by the Owner Trustee, any payments received from the Indenture Trustee other than as specified in Section 4.01(d) hereof and any other amount received as part of the Trust Estate and for the application or distribution of which no provision is made herein, shall be distributed forthwith upon receipt by the Owner Trustee in the following order of priority: first, so much of such payment as shall be required to reimburse the Owner Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof shall be retained by the Owner Trustee; second, so much of the remainder for which provision as to the application thereof is contained in the Lease or any of the other Operative Documents shall be applied and distributed in accordance with the terms of the Lease or such other Operative Document; and third, the balance, if any, shall be paid to the Owner Participant. (c) Certain Distributions to Owner Participant. All amounts from time to time distributable by the Indenture Trustee to the Owner Participant pursuant to the Trust 7 8 Indenture shall, if paid to the Owner Trustee, be distributed by the Owner Trustee to the Owner Participant in accordance with the provisions of Article III of the Trust Indenture. (d) Excluded Payments. Any Excluded Payments received by the Owner Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded Payments are payable under the provisions of the Participation Agreement, the Tax Indemnity Agreement, the Lease and the Operative Documents on the day received (or on the next succeeding Business Day if the funds to be so distributed shall not have been received by the Owner Trustee by 12:00 noon, New York City time). (e) Multiple Owner Participants. If as a result of a transfer by an Owner Participant under Section 8.01 of this Trust Agreement, there is more than one Owner Participant hereunder, each such Owner Participant shall hold in proportion to its respective beneficial interest in the Trust Estate, an undivided beneficial interest in the entire Trust Estate and is entitled to receive ratably with any other Owner Participant payments distributable by the Owner Trustee hereunder. No Owner Participant shall have legal title to the Aircraft or any other portion of the Trust Estate. SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make distributions or cause distributions to be made to the Owner Participant pursuant to this Article IV by transferring by wire transfer in immediately available funds on the day received (or the next succeeding Business Day if the funds to be so distributed shall not have been received by the Owner Trustee by 12:00 noon, New York time, the amount to be distributed to such account or accounts of the Owner Participant as the Owner Participant may designate from time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner Trustee will, if so requested by the Owner Participant in writing, pay any or all amounts payable to the Owner Participant pursuant to this Article IV either (i) by crediting such amount or amounts to an account or accounts maintained by the Owner Participant with the Owner Trustee in its individual capacity in immediately available funds, (ii) by payment at the Trust Office of the Owner Trustee, in immediately available funds, or (iii) by mailing an official bank check or checks in such amount or amounts payable to the Owner Participant at such address as the Owner Participant shall have designated in writing to the Owner Trustee. ARTICLE V DUTIES OF THE OWNER TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall have knowledge of a Lease Event of Default or Indenture Event of Default (or an event which with the passage of time or the giving of notice or both would constitute a Lease Event of Default or an Indenture Event of Default) the Owner Trustee shall give to the 8 9 Owner Participant prompt telephonic or telecopy notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event. The notice shall set forth in reasonable detail the facts and circumstances known to it with respect to such Lease Event of Default or Indenture Event of Default. Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain from taking such action, not inconsistent with the provisions of the Trust Indenture, with respect to such Lease Event of Default, Indenture Event of Default or other event as the Owner Trustee shall be directed in writing by the Owner Participant. If the Owner Trustee shall not have received instructions as above provided within thirty (30) days after the mailing of such notice to the Owner Participant, the Owner Trustee until instructed otherwise in accordance with the preceding sentence may, but shall be under no duty to, take or refrain from taking such action with respect to such Lease Event of Default, Indenture Event of Default or other event, not inconsistent with the provisions of the Trust Indenture, as it shall deem advisable in the best interests of the Owner Participant. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by an officer of FSBU in the Corporate Trust Department, the Owner Trustee shall not be deemed to have knowledge of a Lease Event of Default, Indenture Event of Default or other event referred to in this Section 5.01 unless notified in writing by the Indenture Trustee, the Owner Participant or Lessee. SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of Sections 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of the Owner Participant, the Owner Trustee will take such of the following actions, not inconsistent with the provisions of the Trust Indenture, as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder or under any of the Operative Documents to which the Owner Trustee is a party or in respect of all or any part of the Trust Estate as shall be specified in such instructions; (ii) take such action to preserve or protect the Trust Estate (including the discharge of Liens) as may be specified in such instructions; (iii) approve as satisfactory to it all matters required by the terms of the Lease or the other Operative Documents to be satisfactory to the Owner Trustee, it being understood that without written instructions 9 10 of the Owner Participant, the Owner Trustee shall not approve any such matter as satisfactory to it (it being understood that the provisions of Sections 3.03, 3.04 and 3.06 hereof do not constitute instructions by the Owner Participant for the Owner Trustee to approve of or consent to the matters to be approved of or consented to by the Owner Trustee in the sections of the Lease referred to in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of Lessee under the Operative Documents, after the expiration or earlier termination of the Lease, deliver the Aircraft to the Owner Participant in accordance with such instructions, convey all of the Owner Trustee's right, title and interest in and to the Aircraft for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or net lease the Aircraft on such terms and to such lessee or lessees as shall be designated in such instructions. SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be required to take any action under Section 5.01 (other than the giving of the notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have been indemnified by the Owner Participant, in manner and form satisfactory to the Owner Trustee, against any liability, cost or expense (including reasonable counsel fees and disbursements) which may be incurred in connection therewith; and, if the Owner Participant shall have directed the Owner Trustee to take any such action or refrain from taking any action, the Owner Participant agrees to furnish such indemnity as shall be required and, in addition, to the extent not otherwise paid pursuant to the provisions of the Lease or of the Participation Agreement, to pay the reasonable compensation of the Owner Trustee for the services performed or to be performed by it pursuant to such direction and any reasonable fees and disbursements of counsel or agents employed by the Owner Trustee in connection therewith. The Owner Trustee shall not be required to take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably determine, or shall have been advised by counsel, that such action is contrary to the terms of any of the Operative Documents to which the Owner Trustee is a party, or is otherwise contrary to law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with any of the Operative Documents to which the Owner Trustee is a party, except as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, or (to the extent not inconsistent with the provisions of the Trust Indenture) as expressly provided by the terms hereof or in written instructions from the Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and no implied 10 11 duties or obligations shall be read into this Trust Agreement against the Owner Trustee. FSBU agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof) promptly take such action as may be necessary to duly discharge and satisfy in full all Lessor Liens attributable to it in its individual capacity which it is required to discharge pursuant to Section 8(h) of the Participation Agreement and otherwise comply with the terms of said Section binding on it. SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to the contrary notwithstanding, the Owner Trustee shall comply with the provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of special counsel for the Owner Trustee, of all the applicable conditions precedent specified in Section 3.02 hereof and in Section 4 of the Participation Agreement. SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to, and the Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate except (i) as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, (ii) as expressly provided by the terms hereof, or (iii) as expressly provided in written instructions from the Owner Participant pursuant to Section 5.01 or 5.02 hereof. ARTICLE VI THE OWNER TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts hereby created and agrees to perform the same but only upon the terms hereof applicable to it. The Owner Trustee also agrees to receive and disburse all monies received by it constituting part of the Trust Estate upon the terms hereof. FSBU shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence, (b) for performance of the terms of the last sentence of Section 5.04 hereof and the first sentence of Section 5.01 hereof, (c) for its or the Owner Trustee's failure to use ordinary care to disburse funds, (d) for liabilities that may result from the inaccuracy of any representation or warranty of it (or from the failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation Agreement and (e) for any Tax based on or measured by any fees, commissions or compensation received by it for acting as trustee in connection with any of the transactions contemplated by the Operative Documents. 11 12 SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with written instructions furnished pursuant to Section 5.02 hereof and except as provided in, and without limiting the generality of, Sections 3.01 and 5.04 hereof and the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU shall have any duty (i) to see to any recording or filing of any Operative Document or of any supplement to any thereof or to see to the maintenance of any such recording or filing or any other filing of reports with the Federal Aviation Administration or other governmental agencies, except that FSBU, in its individual capacity, shall comply with the reporting requirements set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall, to the extent that information for that purpose is supplied by Lessee pursuant to any of the Operative Documents, complete and timely submit (and furnish the Owner Participant with a copy of) any and all reports relating to the Aircraft which may from time to time be required by the Federal Aviation Administration or any government or governmental authority having jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, other than to forward to the Owner Participant copies of all reports and other written information which the Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against any part of the Trust Indenture Estate or the Trust Estate, except as provided in Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and records with respect to the Aircraft at any time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease or any other Operative Document. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity warrants that on the Delivery Date the Owner Trustee shall have received whatever title was conveyed to it by Lessee and that the Aircraft shall during the Term be free of Lessor Liens attributable to it, or (b) any representation or warranty as to the validity, legality or enforceability of this Trust Agreement or any Operative Document to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof except to the extent that any such statement is expressly made herein or therein as a representation by FSBU in its individual capacity or by the Owner Trustee and except that FSBU in its individual capacity hereby represents and warrants that this Trust Agreement has been, and (assuming due 12 13 authorization, execution and delivery by the Original Owner Participant of this Trust Agreement) the Operative Documents to which it or the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by it or the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of itself or the Owner Trustee, as the case may be and that this Trust Agreement constitutes the legal, valid and binding obligation of FSBU or the Owner Trustee, as the case may be, enforceable against FSBU or the Owner Trustee, as the case may be, in accordance with its terms. SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as provided in Section 22 of the Lease, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law, and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The Owner Trustee shall incur no liability to anyone in acting in reliance upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Unless other evidence in respect thereof is specifically prescribed herein, any request, direction, order or demand of the Owner Participant or Lessee mentioned herein or in any of the Operative Documents to which the Owner Trustee is a party shall be sufficiently evidenced by written instruments signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director and in the name of the Owner Participant or Lessee, as the case may be. The Owner Trustee may accept a copy of a resolution of the Board of Directors or Executive Committee of Lessee, certified by the secretary or any assistant secretary of Lessee as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or Committee and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Owner Trustee may for all purposes hereof rely on a certificate signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. In the administration of trusts hereunder, the Owner Trustee may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may, at the expense of the Trust Estate, consult with counsel, accountants and other skilled persons to be selected and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by 13 14 it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such agent, attorney, counsel, accountant or other skilled person appointed by it with due care hereunder. SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder, the Owner Trustee acts solely as trustee and not in its individual capacity except as otherwise expressly provided herein; and, subject to the terms of the Participation Agreement and the Trust Indenture, all persons, other than the Owner Participant, as provided herein, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Trust Estate for payment or satisfaction thereof. SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the Owner Participant or (subject to the provisions of the Trust Indenture) the Trust Estate for any fee as compensation for its services hereunder; provided, however, that the Owner Trustee shall have a lien upon the Trust Estate (subject, however, to the lien of the Trust Indenture) for any such fee not paid by Lessee as contemplated by the last paragraph of Section 7(c) of the Participation Agreement. Pursuant to Section 7(c) of the Participation Agreement and subject to Section 16 thereof, Lessee shall be required to pay the reasonable fees and expenses of the Owner Trustee comprising the compensation and reimbursement of expenses to which the Owner Trustee is entitled under this Section 6.07. SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all monies under this Trust Agreement or any agreement contemplated hereby. The Owner Participant shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Owner Participant. The Owner Trustee shall be responsible for causing to be prepared, at the request and expense of the Owner Participant, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. The Owner Participant or the Owner Trustee, as the case may be, upon request, will furnish the Owner Trustee or the Owner Participant, as the case may be, with all such information as may be reasonably required from the Owner Participant or the Owner Trustee, as the case may be, in connection with the preparation of such income tax returns. The Owner Trustee will give to the Owner Participant, upon request, such periodic information concerning receipts and disbursements by it with respect to the Trust Estate as would be helpful to the Owner Participant in preparing its tax returns. SECTION 6.09. FIXED INVESTMENT TRUSTS. Notwithstanding anything herein to the contrary, the Owner Trustee shall not be authorized and shall have no power to "vary the investment" of the Owner Participant within the meaning of Treasury Regulations Section 301.7701-4(c)(1). 14 15 ARTICLE VII INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner Participant hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and hereby indemnify, protect, save and keep harmless FSBU in its individual capacity and its successors, assigns, legal representatives, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its individual capacity on or measured by any compensation received by FSBU in its individual capacity for its services hereunder or in connection with the transactions contemplated by the Operative Documents or otherwise excluded in subclause (e) below), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and including, without limitation, any liability of an owner, any strict liability and any liability without fault) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against FSBU in its individual capacity (whether or not also indemnified against by Lessee under the Lease or under the Participation Agreement or also indemnified against by any other person but only to the extent not otherwise paid or reimbursed by Lessee or such other person) in any way relating to or arising out of this Trust Agreement or any of the Operative Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of the Owner Trustee or FSBU in its individual capacity hereunder, except (a) in the case of willful misconduct or gross negligence on the part of the Owner Trustee or FSBU in its individual capacity in the performance or non-performance of its duties hereunder or under any of the other Operative Documents to which the Owner Trustee is a party or (b) those resulting from the inaccuracy of any representation or warranty of FSBU in its individual capacity (or from the failure of FSBU in its individual capacity to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture or, with respect to representations or warranties of FSBU in its individual capacity only, in Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the Participation Agreement or in any of the other Operative Documents or (c) as may result from a breach by FSBU in its individual capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in the case of the failure to use ordinary care on the part of the Owner Trustee or FSBU in its individual capacity in the disbursement of funds or (e) those claims arising under any circumstances or upon any terms where Lessee would not have been required to indemnify the Owner Trustee in its individual capacity pursuant to Section 7(b) or 7(c) of the Participation Agreement (disregarding, for this purpose, 15 16 Sections 7(b)(ii)(3) (to the extent that such disposition referred to therein results from the Owner Trustee acting in accordance with written instructions of the Owner Participant), 7(b)(ii)(5)(i) (to the extent that it results from the willful misconduct or gross negligence of the Owner Participant to the extent imposed on the Owner Trustee), 7(b)(ii)(8), 7(c)(B) (to the extent that such failure referred to therein results from the Owner Trustee's acting in accordance with written instructions of the Owner Participant), 7 (c)(D) (to the extent such disposition therein results from the Owner Trustee's acting in accordance with written instructions of the Owner Participant), 7(c)(F),7(c)(H), 7(c)(I) and 7(c)(J) of the Participation Agreement and disregarding, for this purpose, those claims arising or resulting from any action taken by or inaction of the Owner Trustee in accordance with written instructions of the Owner Participant). The indemnities contained in this Section 7.01 extend to FSBU only in its individual capacity and shall not be construed as indemnities of the Trust Indenture Estate or the Trust Estate (except to the extent, if any, that FSBU in its individual capacity has been reimbursed by the Trust Indenture Estate or the Trust Estate for amounts covered by the indemnities contained in this Section 7.01). The indemnities contained in this Section 7.01 shall survive the termination of this Trust Agreement. In addition, if necessary, FSBU in its individual capacity shall be entitled to indemnification from the Trust Estate, subject to the Lien of the Trust Indenture, for any liability, obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee, the Owner Participant or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same FSBU in its individual capacity shall have a Lien on the Trust Estate, subject to the Lien of the Trust Indenture, which shall be prior to any interest therein of the Owner Participant. The payor of any indemnity under this Article VII shall be subrogated to any right of the person indemnified in respect of the matter as to which such indemnity was paid. ARTICLE VIII TRANSFER OF THE OWNER PARTICIPANT'S INTEREST SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n) of the Participation Agreement shall (with the same force and effect as if set forth in full, mutatis mutandis, in this Section 8.01) be applicable to any assignment, conveyance or other transfer by any Owner Participant of its right, title or interest in and to the Participation Agreement, the Trust Estate or this Trust Agreement. If there is more than one Owner Participant, no assignment, conveyance or other transfer by an Owner Participant of any of its right, title or interest in and to this Trust Agreement or the Trust Estate shall be valid unless each other Owner Participant's prior written consent (which consent may be withheld in the sole discretion of such other Owner Participants) is given to such assignment, conveyance or other transfer. 16 17 SECTION 8.02. ACTIONS OF THE OWNER PARTICIPANTS. If at any time prior to the termination of this Trust Agreement there is more than one Owner Participant, then during such time, if any action is required to be taken by all Owner Participants and whenever any direction, authorization, approval, consent, instruction, or other action is permitted to be given or taken by the Owner Participant it shall be given or taken only upon unanimous agreement of all Owner Participants; provided, however, that the termination of this Trust Agreement pursuant to Section 11.01 hereof may be effected upon the election of any Owner Participant. ARTICLE IX SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the Participation Agreement and (ii) may resign at any time without cause by giving at least sixty (60) days' prior written notice to the Owner Participant, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such resignation to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In addition, the Owner Participant may at any time remove the Owner Trustee without cause by a notice in writing delivered to the Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such removal to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or removal of the Owner Trustee, the Owner Participant may appoint a successor Owner Trustee by an instrument signed by the Owner Participant. If a successor Owner Trustee shall not have been appointed within thirty (30) days after such notice of resignation or removal, the Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor shall have been appointed as above provided. Any successor Owner Trustee so appointed by such court shall immediately and without further act be superseded by any successor Owner Trustee appointed as above provided. (b) Execution and Delivery of Documents, etc. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee and the Owner Participant an instrument accepting such appointment, and thereupon such successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts 17 18 hereunder with like effect as if originally named the Owner Trustee herein; but nevertheless, upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to such successor Owner Trustee all monies or other property then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will execute such documents as are provided to it by such successor Owner Trustee and will take such further actions as are requested of it by such successor Owner Trustee as are reasonably required to cause registration of the Aircraft included in the Trust Estate to be transferred upon the records of the Federal Aviation Administration, or other governmental authority having jurisdiction, into the name of the successor Owner Trustee. (c) Qualification. Any successor Owner Trustee, however appointed, shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement and shall also be a bank or trust company organized under the laws of the United States or any state thereof having a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. (d) Merger, etc. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee may be transferred, shall, subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without further act. SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee shall have been directed to do so by the Owner Participant, the Owner Trustee and the Owner Participant shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement) approved by the Owner Trustee and the Owner Participant, either to act as co-trustee, jointly with the Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as an "ADDITIONAL TRUSTEE"). In the event an Indenture 18 19 Event of Default not arising from a Lease Event of Default shall occur and be continuing, the Owner Trustee may act under the foregoing provisions of this Section 9.02 without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 9.02 in such contingency. Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; (E) the Owner Participant, at any time, by an instrument in writing may remove any such additional trustee unless such additional trustee was appointed by the Owner Trustee without the concurrence of the Owner Participant during the occurrence of an Indenture Event of Default not arising from a Lease Event of Default, in which case the Owner Trustee shall have the power to remove any such additional trustee without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its 19 20 agent and attorney-in-fact for it in such connection in such contingency; and (F) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, the Trust Indenture or affect the interests of the Indenture Trustee or the holders of the Secured Certificates in the Trust Indenture Estate. ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS SECTION 10.01 SUPPLEMENTS AND AMENDMENTS. (a) Supplements and Amendments. This Trust Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Owner Trustee and the Owner Participant. Subject to Section 10.02 hereof and the first sentence of Section 10 of the Participation Agreement, the Owner Trustee will execute any amendment, supplement or other modification of this Trust Agreement or of any other Operative Document to which the Owner Trustee is a party which it is requested to execute by the Owner Participant, except that the Owner Trustee shall not execute any such amendment, supplement or other modification which, by the express provisions of any of the above documents, requires the consent of any other party unless such consent shall have been obtained. (b) Delivery of Amendments and Supplements to Certain Parties. A signed copy of each amendment or supplement referred to in Section 10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each holder of a Secured Certificate. SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to executing any document required to be executed by it pursuant to the terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its counsel to the effect that the execution of such document is authorized hereunder. If in the opinion of the Owner Trustee any such document adversely affects any right, duty, immunity or indemnity in favor of the Owner Trustee hereunder or under any other Operative Document to which the Owner Trustee is a party, the Owner Trustee may in its discretion decline to execute such document. 20 21 SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be necessary for any written request furnished pursuant to Section 10.01 hereof to specify the particular form of the proposed documents to be executed pursuant to such Section, but it shall be sufficient if such request shall indicate the substance thereof. SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the execution by the Owner Trustee of any document entered into pursuant to Section 10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof to the Owner Participant, but the failure of the Owner Trustee to mail such conformed copy shall not impair or affect the validity of such document. SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be required to enable the Owner Trustee to enter into the Lease Supplement covering the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and Section 3.01 hereof. ARTICLE XI MISCELLANEOUS SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement and the trusts created hereby shall be of no further force or effect upon the earlier of (a) both the final discharge of the Trust Indenture pursuant to Section 10.01 thereof and the sale or other final disposition by the Owner Trustee of all property constituting part of the Trust Estate and the final distribution by the Owner Trustee of all monies or other property or proceeds constituting part of the Trust Estate in accordance with Article IV hereof, provided that at such time Lessee shall have fully complied with all of the terms of the Lease and the Participation Agreement or (b) twenty-one years less one day after the death of the last survivor of all of the descendants of the grandparents of David Rockefeller living on the date of the earliest execution of this Trust Agreement by any party hereto, but if this Trust Agreement and the trusts created hereby shall be or become authorized under applicable law to be valid for a period commencing on the 21st anniversary of the death of such last survivor (or, without limiting the generality of the foregoing, if legislation shall become effective providing for the validity of this Trust Agreement and the trusts created hereby for a period in gross exceeding the period for which this Trust Agreement and the trusts created hereby are hereinabove stated to extend and be valid), then this Trust Agreement and the trust created hereby shall not terminate under this subsection (b) but shall extend to and continue in effect, but only if such nontermination and extension shall then be valid under applicable law, until the day preceding such date as the same shall, under applicable law, cease to be valid; otherwise this Trust Agreement and the trusts created hereby shall continue in full force and effect 21 22 in accordance with the terms hereof, subject to the Owner Participant's right to revoke such trusts and cause the Trust Estate (subject to the Lien of the Trust Indenture) to be distributed. SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE. The Owner Participant shall not have legal title to any part of the Trust Estate. [No transfer, by operation of law or otherwise, of any right, title and interest of the Owner Participant in and to the Trust Estate hereunder shall operate to terminate] this Trust Agreement or the trusts hereunder or entitle any successors or transferees of the Owner Participant to an accounting or to the transfer of legal title to any part of the Trust Estate. SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment, sale, transfer or other conveyance of its interest in the Aircraft by the Owner Trustee made pursuant to the terms hereof or of the Lease or the Participation Agreement shall bind the Owner Participant and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Owner Participant in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY. Except for the terms of Section 8(n) of the Participation Agreement incorporated in Article VIII hereof and except as otherwise provided in Articles IX and X hereof, nothing herein, whether expressed or implied, shall be construed to give any Person other than the Owner Trustee and the Owner Participant any legal or equitable right, remedy or claim under or in respect of this Trust Agreement; but this Trust Agreement shall be held to be for the sole and exclusive benefit of the Owner Trustee and the Owner Participant. SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. a. All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 11.05(a). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.05(a), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the Owner Participant, to the respective addresses set forth below the signatures of such parties on the signature page of the Participation Agreement, or (B) if to a Subsequent Owner Participant, addressed to such Subsequent Owner Participant at such address as such Subsequent Owner Participant shall have furnished by notice to the 22 23 parties hereto or (C) if to any subsequent Certificate Holder, addressed to such Certificate Holder at its address set forth in the secured certificate register maintained pursuant to Section 2.07 of the Trust Indenture. (b) Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Trust Agreement, the Participation Agreement, 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 the Participation 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. SECTION 11.06. SEVERABILITY. Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.07. WAIVERS, ETC. No term or provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing entered into in compliance with the terms of Article X hereof; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. SECTION 11.08. COUNTERPARTS. This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.09. BINDING EFFECT, ETC. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII hereof, its assigns. Any request, notice, direction, consent, waiver or other instrument or action by the Owner Participant shall bind its successors and assigns. Any Owner Participant which shall cease to have any Ownership Interest shall thereupon cease to be a party hereto or an Owner Participant for any reason and shall have no further obligations hereunder. 23 24 SECTION 11.10. HEADINGS; REFERENCES. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. SECTION 11.12. PERFORMANCE BY THE OWNER PARTICIPANT. Any obligation of the Owner Trustee in its individual capacity or as Owner Trustee hereunder or under any other Operative Document or other document contemplated herein, may be performed by the Owner Participant and any such performance shall not be construed as a revocation of the trust created hereby. 24 25 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [Owner Participant] By --------------------------------------------- Title: ----------------------------------------- FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By --------------------------------------------- Title: ----------------------------------------- 25 EX-4.H2 61 FIRST AMENDMENT TO TRUST AGREEMENT-1996 D 1 FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 D] This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 D], dated as of June 12, 1996, between [____________], a [__________] corporation (the "OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Trust Agreement (as defined below); W I T N E S S E T H: WHEREAS, Northwest Airlines, Inc. (the "LESSEE"), the Owner Participant, the Owner Trustee, [____________________], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and State Street Bank and Trust Company, as Indenture Trustee (the "INDENTURE TRUSTEE") entered into the Participation Agreement [NW 1996 D], dated as of April 29, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 D], dated as of April 29, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 D] relating to the Aircraft, dated as of April 29, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 D] dated April 30, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to 2 Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 D], dated as of April 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 D], dated April 30, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, Lessee, Northwest Airlines Corporation, as Guarantor, the Owner Trustee, State Street Bank and Trust Company, as Pass Through Trustee, the Owner Participant, the Indenture Trustee and State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent, have entered into the Refunding Agreement [NW 1996 D], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"), providing for a refinancing operation as contemplated by Section 17 of the Original Participation Agreement; WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 D], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1996 D], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); and WHEREAS, the Owner Participant and the Owner Trustee wish to amend the Original Trust Agreement as set forth herein to give effect to the transactions contemplated by the Refunding Agreement; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Trust Agreement is amended as follows: SECTION 1. AMENDMENT OF SECTION 11.01 OF THE ORIGINAL TRUST AGREEMENT. Section 11.01 of the Original Trust Agreement is hereby amended by adding the following clause to the end thereof after the word "distributed": "provided, however, such right is subject to the provisions of Section 10 of the Participation Agreement." SECTION 2. AMENDMENT OF SECTION 11.05(a) OF THE ORIGINAL TRUST AGREEMENT. Section 11.05(a) of the Original Trust Agreement is hereby amended by deleting -2- 3 the word "Participation" in clause (A) of the second sentence thereof and substituting therefor the word "Refunding". SECTION 3. DIRECTION. Pursuant to and in conformity with Section 10.01(a) of the Trust Agreement, the Owner Participant hereby requests the Owner Trustee to execute this Amendment. SECTION 4. RATIFICATION. Except as hereby modified, the Original Trust Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Trust Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Trust Agreement or any word or phrase referring to a section or provision of the Trust Agreement is deemed for all purposes to be a reference to the Trust Agreement or such section or provision as amended pursuant to this Amendment. SECTION 5. MISCELLANEOUS. This Amendment 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. The terms of this Amendment shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII of the Original Trust Agreement as amended hereby, its assigns. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. -3- 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [Owner Participant] By: ------------------------------ Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, By: ------------------------------ Name: Title: -4- EX-4.H3 62 TRUST INDENTURE-1996 D 1 AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 D] AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 D], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Owner Trustee under the Trust Agreement referred to below (together with its successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity, except as expressly stated herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE"). W I T N E S S E T H WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and the Owner Trustee have entered into the Trust Agreement whereby, among other things, (i) the Owner Trustee has established a certain trust for the use and benefit of the Owner Participant subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of, and with the priority of payment to, the holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has been authorized and directed to execute and deliver this Trust Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 D] dated as of April 29, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the Trust Agreement and Indenture Supplement [NW 1996 D] (the "SUPPLEMENT") dated April 30, 1996 to the Original Indenture, (iii) the Original Indenture and the Supplement were recorded by the Federal Aviation Administration on May 3, 1996 and were assigned Conveyance No. E21278 and (iv) the Lease Agreement [NW 1996 D] dated as of even date with the Original Indenture between the Owner Trustee and Lessee and the Lease Supplement No. 1 [NW 1996 D] were recorded by the Federal Aviation Administration on May 1, 1996 and were assigned Conveyance No. P06566 and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Loan Participants Secured Certificates (as defined in the Original Indenture); WHEREAS, the parties have agreed that subject to certain conditions, Lessee shall have the right to cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Secured Certificates issued to the Loan Participants pursuant to the Original Indenture shall be redeemed and new Secured Certificates (the "REFINANCING SECURED CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Trust Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Refinancing Secured Certificates and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of all of the Owner Trustee's right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Certificate Holders, subject to Section 2.15 and Article III hereof; 2 WHEREAS, all things have been done to make the Secured Certificates, when executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid, binding and enforceable obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Trust Indenture the valid, binding and legal obligation of the Owner Trustee for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened: -2- 3 GRANTING CLAUSE NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Secured Certificates from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions herein and in the Participation Agreement and the Secured Certificates contained, for the benefit of the Certificate Holders and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Certificate Holders by the Owner Trustee and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Secured Certificates by the holders thereof, and for other good and valuable consideration the receipt and adequacy whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors in trust and assigns, for the security and benefit of the Certificate Holders, a first priority security interest in and mortgage lien on all right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges, other than Excluded Payments (which collectively, excluding Excluded Payments but including all property hereafter specifically subjected to the Lien of this Trust Indenture by the Trust Agreement and Indenture Supplement or any mortgage supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire title as provided herein and in the Lease), all as more particularly described in the Trust Agreement and Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture; (2) the Lease and any Lease Supplement and all Rent thereunder (including, without limitation, all amounts of Interim Rent, Basic Rent, Supplemental Rent and payments of any kind thereunder (excluding any Excluded Payments)), and the Guarantee; (3) the Purchase Agreement (to the extent specified in the Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent and Agreement and the Bill of Sale; (4) all rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the lien of this Indenture; (5) all insurance and requisition proceeds with respect to the Aircraft, including but not limited to the insurance required under Section 11 of the Lease, but excluding insurance proceeds described in clauses (ii) and (iii) of the definition of Excluded Payments; -3- 4 (6) all rights of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under the Participation Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder, but excluding all Excluded Payments; (7) all monies and securities from time to time deposited or required to be deposited with the Indenture Trustee pursuant to any terms of this Indenture or the Lease or required hereby or by the Lease to be held by the Indenture Trustee hereunder (other than Excluded Payments); and (8) all proceeds of the foregoing. Concurrently with the delivery of the Original Indenture, the Owner Trustee has delivered to the Indenture Trustee the original executed counterpart of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt is attached), and executed copies of the Participation Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and its successors and assigns, in trust for the benefit and security of the Loan Participants and the Certificate Holders, except as provided in Section 2.15 and Article III hereof without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (8) inclusive above, subject to the terms and provisions set forth in this Trust Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Owner Trustee shall remain liable under the Indenture Agreements to perform all of the obligations assumed by it thereunder, except to the extent prohibited or excluded from doing so pursuant to the terms and provisions thereof, and the Indenture Trustee and the Certificate Holders shall have no obligation or liability under the Indenture Agreements, by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to the Indenture Agreements, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. Subject to the terms hereof, the Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, and with full power (in the name of the Owner Trustee or otherwise) to ask for, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds but in all cases excluding Excluded Payments) due and to become due under or arising out of the Indenture Agreements, and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Without limiting the generality of the foregoing, but subject to the rights of the Owner Trustee and the Owner Participant hereunder, during the continuance of any Event of Default under this Trust Indenture, the Indenture Trustee shall have the right under such power of attorney to accept any offer in connection with the exercise of remedies as set forth herein of any purchaser to purchase the Airframe and Engines and upon such purchase to execute and deliver in the name of and on behalf of the Owner Trustee an appropriate bill of sale and other instruments of transfer relating to the Airframe and Engines, when purchased by such purchaser, and to perform all other necessary or appropriate acts with respect to any such purchase, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or -4- 5 appropriate to protect and preserve the right, title and interest of the Indenture Trustee in and to such Rents (other than Excluded Payments) and other sums and the security intended to be afforded hereby; provided, however, that no action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or liabilities of the Owner Trustee to any Person beyond those obligations and liabilities specifically set forth in this Trust Indenture and in the other Operative Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture shall not have been fully discharged, to make all payments of Rent (other than Excluded Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to, or as directed by, the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Trust Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Trust Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem necessary or desirable to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be created hereby or to obtain for the Indenture Trustee the full benefits of the assignment hereunder and of the rights and powers herein granted. The parties hereto acknowledge that neither the Owner Trustee nor the Owner Participant shall have any obligation as to any recording, filing, refiling or re-recording of any documents or instruments in regard to maintaining the perfection of the security interests created hereunder, in the Trust Indenture Estate or any security interest that may be claimed to have been created by the Lease or the ownership interest of the Owner Trustee in the Aircraft. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants and agrees that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that it will not, except as otherwise provided in this Trust Indenture and except with respect to Excluded Payments, (i) accept any payment from Lessee under any Indenture Agreement, (ii) enter into any agreement amending or supplementing any Indenture Agreement, (iii) execute any waiver or modification of, or consent under, the terms of, or exercise any rights, powers or privileges under, any Indenture Agreement, (iv) settle or compromise any claim (other than those relating to an Excluded Payment) arising under any Indenture Agreement or (v) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any Indenture Agreement to arbitration thereunder. The Owner Trustee does hereby further agree that it will not without the written consent of the Indenture Trustee: (a) except as set forth in Section 8(bb) of the Participation Agreement, collect or agree to the receipt or collection of any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease but excluding any Excluded Payment prior to the due date for the payment thereof provided for by the Lease or assign, transfer or hypothecate (other than to the Indenture Trustee hereunder) any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease but excluding any Excluded Payment, then due or to accrue in the future under the Lease in respect of the Airframe and Engines; or (b) except as contemplated by the Trust Agreement in connection with the appointment of a successor owner trustee, sell, mortgage, transfer, assign or hypothecate (other than to the Indenture Trustee hereunder) its interest in the Airframe and Engines or any part -5- 6 thereof or in any amount to be received by it from the use or disposition of the Airframe and Engines, other than amounts distributed to it pursuant to Article III hereof. It is hereby further agreed that any and all property described or referred to in the granting clauses hereof which is hereafter acquired by the Owner Trustee shall ipso facto, and without any further conveyance, assignment or act on the part of the Owner Trustee or the Indenture Trustee, become and be subject to the Lien herein granted as fully and completely as though specifically described herein, but nothing contained in this paragraph shall be deemed to modify or change the obligations of the Owner Trustee contained in the foregoing paragraphs. Notwithstanding the Granting Clause or any of the foregoing paragraphs, there is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excluded Payments. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "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. "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 hereof. "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 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. "Cash Equivalents" shall mean the investments specified in Section 22(a) of the Lease. "Certificate Holder" shall mean any holder from time to time of one or more Secured Certificates. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Continuous Stay Period" shall have the meaning specified in Section 4.04(a) hereof. -6- 7 "Corporate Trust Department" or "Trust Office" means the principal corporate trust office of the Owner Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, 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 and each Certificate Holder. "Corporate Trust Office" shall mean the principal office of the Indenture Trustee located at Two International Place, 4th Floor, Boston, Massachusetts 02110, 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 and each Certificate Holder. "Debt" shall mean any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments or for the deferred purchase price of property, goods or services. "Debt 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" means any event or condition that with the giving of notice or the lapse of time or both would become an Event of Default. "Dollars" and "$" shall mean the lawful currency of the United States of America. "Enforcement Date" shall have meaning specified in Section 4.03 hereof. "Event of Default" shall have the meaning specified in Section 4.02 hereof. "Excess Amount" shall have the meaning specified in Section 2.03(b) hereof. "Excluded Payments" shall mean (i)(A) 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) and 7(c) of the Participation Agreement and (B) any other payment to the Owner Participant pursuant to any provision of any Operative Document, (ii) proceeds of public liability insurance (or proceeds of governmental indemnities in lieu thereof) 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) 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) all Indemnity Adjusted Payments, (vi) fees payable to the Owner Trustee or the Indenture Trustee pursuant to the last sentence of Section 7(c) of the Participation Agreement, (vii) provided that the Secured Certificates shall have been duly assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the Owner Trustee pursuant to the third sentence of Section 19(d) of the Lease, (viii) any payment of the foregoing under the Guarantee, (ix) interest accrued on any of the above, and (x) any right to enforce the payment of any amount described in clauses (i) through (ix) above. "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 Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Guarantor" shall have the meaning specified in the Lease. -7- 8 "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 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. "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" shall mean that certain Lease Agreement [NW 1996 D], dated as of April 29, 1996, entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of the Original Trust Indenture, as said Lease Agreement has been, or may from time to time be, supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Indenture. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Default" shall mean any event or condition that with the giving of notice or the lapse of time or both would become a Lease Event of Default. "Lease Event of Default" shall mean an "Event of Default" as defined in the Lease. "Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Lessee Operative Documents" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. "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 hereof (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 (plus, in the case of Series C Secured Certificates, 75 basis points) 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, -8- 9 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. "Mortgaged Property" shall have the meaning specified in Section 3.03 hereof. "Owner Indemnitee" shall have the meaning specified in the definition of Excluded Payments herein. "Owner Participant" shall mean [ ], so long as such party shall have any interest in the Trust Estate, and transferees thereof as permitted by Section 8 of the Participation Agreement. "Participants" shall mean and include the Loan Participants and the Owner Participant. "Participation Agreement" shall mean that certain Participation Agreement [NW 1996 D], dated as of April 29, 1996, among the Owner Trustee, the Indenture Trustee, Lessee and the Participants, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Past Due Rate" shall mean, with respect to the Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in effect from time to time. "Payment Date" shall mean each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Secured Certificates have been paid in full. "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. "QIB" shall have the meaning specified in Section 2.08 hereof. "Replacement Airframe" shall mean any airframe substituted for the Airframe pursuant to Section 5.06 hereof. "Replacement Engine" shall mean any engine substituted for an Engine pursuant to Section 5.06 hereof. "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. "Section 1110 Period" shall have the meaning specified in Section 4.04(a) hereof. -9- 10 "Secured Certificates" shall mean and include any Secured Certificates issued hereunder, and issued in exchange therefor or replacement thereof. "Secured Obligations" shall have the meaning specified in Section 2.06 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Holder" shall have the meaning specified in Section 2.15(c) hereof. "Series A" or "Series A Secured Certificates" means Secured Certificates issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A." "Series B" or "Series B Secured Certificates" means Secured Certificates issued and designated as "Series B" hereunder, 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" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series C." "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. "Transactions" means the transactions contemplated by the Participation Agreement and the other Operative Documents. "Trust Agreement and Indenture Supplement" shall mean a supplement to the Trust Agreement and to this Indenture, in substantially the form of Exhibit A hereto, 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. "Trust Indenture", "this Trust Indenture", "the Trust Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this Amended and Restated Trust Indenture and Security Agreement [NW 1996 D] as it may from time to time be supplemented or amended as herein provided, including supplementing by the Trust Agreement and Indenture Supplement pursuant hereto. "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 this Trust Indenture, excluding Excluded Payments. SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this Trust Indenture the terms used but not defined herein are used as defined in the Lease. ARTICLE II THE SECURED CERTIFICATES SECTION 2.01. FORM OF SECURED CERTIFICATES. The Secured Certificates shall be substantially in the form set forth below: -10- 11 THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [NW 1996 D] DATED AS OF APRIL 29, 1996. SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N540US. No.____ Date: [______,__] $__________________ INTEREST RATE MATURITY DATE [________] [________,_______] FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 D], dated as of April 29, 1996, between the Owner Participant named therein and the Owner Trustee (herein as such Trust Agreement may be supplemented or amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Interest Rate indicated above. The Principal Amount of this Secured Certificate shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Secured Certificate set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including _______, _____. Notwithstanding the foregoing, the final payment made on this Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Secured Certificate. Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "TRUST INDENTURE" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 D], dated as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Secured Certificate and not defined herein shall have the respective meanings assigned in the Trust Indenture. This Secured Certificate shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Trust Indenture or the Participation Agreement -11- 12 shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Trust Indenture and each holder hereof, by its acceptance of this Secured Certificate, agrees that (A) it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the holder hereof as above provided, (B) neither the Owner Trustee nor the Indenture Trustee is personally liable or liable in any manner to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Trust Indenture or in the Participation Agreement, for any liability under the Trust Indenture or the Participation Agreement, and (C) the Owner Participant is not personally liable or liable in any manner to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Participation Agreement, for any liability under the Participation Agreement; provided, however, that nothing herein contained shall limit, restrict or impair the right of the Indenture Trustee, subject always to the terms and provisions of the Trust Indenture, to accelerate the maturity of this Secured Certificate upon occurrence of an Event of Default under the Trust Indenture in accordance with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment against the Owner Trustee on this Secured Certificate for purposes of realizing upon the Trust Indenture Estate and to exercise all rights and remedies provided under the Trust Indenture or otherwise realize upon the Trust Indenture Estate. There shall be maintained a Secured Certificate Register for the purpose of registering transfers and exchanges of Secured Certificates at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Trust Indenture. The Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Trust Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Secured Certificate, except that in the case of any final payment with respect to this Secured Certificate, the Secured Certificate shall be surrendered promptly thereafter by the Indenture Trustee to the Owner Trustee for cancellation. The holder hereof, by its acceptance of this Secured Certificate, agrees that, except as provided in the Trust Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts hereunder) to the date of such payment, second, to the payment of the Principal Amount of this Secured Certificate then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of Principal Amount of this Secured Certificate remaining unpaid in the inverse order of their normal maturity. This Secured Certificate is one of the Secured Certificates referred to in the Trust Indenture which have been or are to be issued by the Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Secured Certificates. The provisions of this Secured Certificate are subject to the Trust Indenture. Reference is hereby made to the Trust Indenture and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Secured Certificate and the rights and obligations of the holders of, and the nature and extent of the security for, any other Secured Certificates executed and delivered under the Trust Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust Indenture, to all of which terms and conditions in the Trust Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Secured Certificate. As provided in the Trust Indenture and subject to certain limitations therein set forth, this Secured Certificate is exchangeable for a like aggregate Principal Amount of Secured Certificates of different authorized denominations, as requested by the holder surrendering the same. -12- 13 Prior to due presentment for registration of transfer of this Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Secured Certificate is registered as the owner hereof for all purposes whether or not this Secured Certificate be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Secured Certificate is subject to redemption as provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This Secured Certificate is also subject to assumption by Lessee as provided in Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.14 of the Trust Indenture but not otherwise. [The indebtedness evidenced by this Secured Certificate is, to the extent and in the manner provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Trust Indenture) in respect of [Series A Secured Certificates] (1) [Series A and Series B Secured Certificates] (2), and this Secured Certificate is issued subject to such provisions. The Certificate Holder of this Secured Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]** Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Secured Certificate shall not be entitled to any benefit under the Trust Indenture or be valid or obligatory for any purpose. THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. * * * - ------------------------ (1) To be inserted in the case of a Series B Secured Certificate. (2) To be inserted in the case of a Series C Secured Certificate. ** To be inserted for each Secured Certificate other than any Series A Secured Certificate. -13- 14 IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Certificate to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By ___________________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Secured Certificates referred to in the within-mentioned Trust Indenture. STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By ___________________________________ Name: Title: -14- 15 SCHEDULE I SECURED CERTIFICATE AMORTIZATION Percentage of Principal Amount Payment Date to be Paid ------------------ ---------------------- [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES. The Secured Certificates shall be dated the date of issuance thereof, shall be issued in three separate series consisting of Series A, Series B and Series C and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Agreements as set forth in Schedule II hereto in connection therewith and (ii) the Secured Certificates issued under the Original Indenture shall be concurrently redeemed. The Secured Certificates shall be issued in registered form only. The Secured Certificates shall be issued in denominations of $1,000 and integral multiples thereof, except that one Secured Certificate of each Series may be in an amount that is not an integral multiple of $1,000. Each Secured Certificate shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Secured Certificate shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Secured Certificates. Notwithstanding the foregoing, the final payment made under each Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Secured Certificate. Each Secured Certificate shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Certificate Holders, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case pursuant to Section 7 of the Participation Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Advances (as -15- 16 defined in the Liquidity Facilities) under any Liquidity Facility except to the extent included in Net Interest and Related Charges, and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used in this Section, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes, plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Secured Certificate a fraction, the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes issued under Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any Series D Secured Certificates or Series D Equipment Notes. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to the Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount which would be payable if such drawings bore interest at the Designated Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding Liquidity Facility) which result from any Interest Drawing, Final Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities). As used in this Section "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) except with respect to that portion of any Final Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section, a Payment Default when used in connection with a Secured Certificate or Equipment Note means a default in the payment of principal thereof or interest thereon other than a default in the payment of principal or interest on a Series D Equipment Note which has not been cured other than solely because of acceleration. The following terms are used in this Section as defined in the Intercreditor Agreement without regard to any amendment, modification or supplement thereto after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and Series D Equipment Notes. The Secured Certificates shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Secured Certificates bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Secured Certificates or did not hold such offices at the respective dates of such Secured Certificates. The Owner Trustee may from time to time execute and deliver Secured Certificates with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Secured Certificates shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Secured Certificates to be authenticated hereunder on original issue with respect to the Aircraft. No Secured Certificate shall be secured by or entitled to any benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears on such Secured Certificate a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Secured Certificates shall be conclusive evidence, and the only evidence, that such Secured Certificate has been duly authenticated and delivered hereunder. -16- 17 SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY. (a) Without impairing any of the other rights, powers, remedies, privileges, liens or security interests of the Certificate Holders under this Trust Indenture, each Certificate Holder, by its acceptance of a Secured Certificate, agrees that as between it and the Owner Trustee, except as expressly provided in this Trust Indenture, the Participation Agreement or any other Operative Document, (i) the obligation to make all payments of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Secured Certificates, and the performance by the Owner Trustee of every obligation or covenant contained in this Trust Indenture and in the Participation Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Trust Indenture and any agreement referred to herein other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Trust Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Owner Trustee is responsible for, or is making, in its individual capacity, for which there would be personal liability of the Owner Trustee), no recourse shall be had with respect to this Trust Indenture 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, and (ii) none of the Owner Trustee, in its individual capacity, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable hereunder, under the Participation Agreement or any of the other Operative Documents or under the Secured Certificates except as expressly provided herein or in the Participation Agreement; provided, however, that nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Trust Indenture or such other agreements of rights and remedies against the Trust Estate. These provisions are not intended as any release or discharge of the indebtedness represented by the Secured Certificates and the Trust Indenture, but are intended only as a covenant not to sue the Owner Trustee or the Indenture Trustee in their individual capacities, except as expressly provided herein or in the Participation Agreement, or the Owner Participant, except as expressly provided in the Participation Agreement, for a deficiency with respect to such indebtedness, the indebtedness represented by this Trust Indenture and the Secured Certificates to remain in full force and effect as fully as though these provisions were not contained in this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders have expressly reserved all their rights and remedies against the Trust Indenture Estate, including the right, in the event of a default in the payment of all or part of the Principal Amount of, interest on, Make-Whole Amount, if any, or any other amount due with respect to any Secured Certificate within the periods provided for in Section 4.02(b) hereof, or upon the occurrence and continuation of any other Event of Default under this Trust Indenture, to foreclose upon this Trust Indenture, and/or to receive the proceeds from the Trust Indenture Estate and otherwise to enforce any other right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner Participant from personal liability, or constitute a covenant not to sue the Owner Participant, for any breach by it of any of its covenants, representations or warranties contained in the Participation Agreement for the benefit of the Indenture Trustee or the Certificate Holders or for any of the payments it has agreed to make to the Indemnitee Trustee or the Certificate Holders pursuant to the Participation Agreement or (y) release the Owner Trustee or constitute a covenant not to sue the Owner Trustee for any breach by it of any representations, warranties or covenants of the Owner Trustee contained in the Operative Documents for the benefit of the Indenture Trustee or the Certificate Holders or (z) release the Owner Trustee in its individual capacity from personal liability, or constitute a covenant not to sue the Owner Trustee in its individual capacity for any breach by it of any representations, warranties or covenants of the Owner Trustee made in its individual capacity in the Operative Documents for the benefit of the Indenture Trustee or the Certificate Holders. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant -17- 18 to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, 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 any Certificate Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of (x) the Owner Trustee (in its individual capacity) under the Participation Agreement or this Trust Indenture or by separate agreement or (y) the recourse liability of the Owner Participant under the Participation Agreement), to make payment on account of any amount payable as principal, Make-Whole Amount, if any, interest or other amounts on the Secured Certificates, (iii) the Certificate Holders shall have or shall have been permitted to foreclose the Lien of this Trust Indenture, and (iv) any Certificate Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Owner Trustee (in its individual capacity) or the Owner Participant on account of clause (ii) above, then such Certificate Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Trustee (in its individual capacity) or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a Certificate Holder 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 clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Certificate Holder 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 the Participation Agreement or this Trust Indenture (and any exhibits or annexes hereto or thereto) or by separate agreement or from retaining any amount paid by Owner Participant under Section 2.14 or 4.03 hereof. SECTION 2.04. METHOD OF PAYMENT. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Secured Certificate or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Certificate Holders in the manner provided herein. The Owner Trustee shall not have any responsibility for the distribution of such payment to any Certificate Holder. Notwithstanding the foregoing or any provision in any Secured Certificate to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such holder's Secured Certificate or Secured Certificates to such holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such holder with a bank located in the continental United States the amount to be distributed to such holder, for credit to the account of such holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate such holders for loss of use of funds at the Debt Rate until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Secured Certificate, except that, in the case of the final payment in respect of any Secured Certificate, such Secured Certificate shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Secured Certificate is registered on the Secured Certificate Register as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable with respect to such Secured Certificate and for all other purposes, and none of the Owner Trustee or the Indenture Trustee shall be affected by any notice to the contrary. So long as any signatory to the Participation Agreement or nominee thereof shall be a -18- 19 registered Certificate Holder, all payments to it shall be made to the account of such Certificate Holder specified in Schedule I thereto and otherwise in the manner provided in or pursuant to the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Secured Certificate (and such exclusion and withholding shall constitute payment in respect of such Secured Certificate) any and all United States withholding taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Secured Certificates, to withhold such amounts and timely pay the same to the appropriate authority in the name of and on behalf of the Certificate Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Certificate Holder (with a copy to the Owner Trustee and Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Certificate Holder may reasonably request from time to time. The Indenture Trustee and each Certificate Holder agree that (i) no such withholding or action with respect thereto shall constitute or give rise to any Event of Default and (ii) in the event of the failure of the Indenture Trustee to withhold and pay over any such taxes to the appropriate taxing authority, no indemnity will be sought from the Owner Trustee, the Owner Participant or the Trust Estate. If a Certificate Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Secured Certificate(s) held by such holder is made (but prior to the making of such payment), or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by Law (after taking into account any applicable exemptions claimed by the Certificate Holder) to be withheld from payments hereunder or under the Secured Certificates held by such holder in respect of United States federal income tax. If a Certificate Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Secured Certificates held by such holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Certificate Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Secured Certificates held by such holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Certificate Holder withholding taxes at the appropriate rate under Law and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. The Indenture Trustee and each Certificate Holder agree that (i) no such withholding or action with respect thereto shall constitute or give rise to any Event of Default and (ii) in the event of the failure of the Indenture Trustee to withhold and pay over any such taxes to the appropriate taxing authority, no indemnity will be sought from the Owner Trustee, the Owner Participant or the Trust Estate. -19- 20 SECTION 2.05. APPLICATION OF PAYMENTS. In the case of each Secured Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Secured Certificate (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Secured Certificate; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Secured Certificate remaining unpaid (provided that such Secured Certificate shall not be subject to redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Secured Certificate in the inverse order of their normal maturity. SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE. A Certificate Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Secured Certificates held by such Certificate Holder and all other sums then payable to such Certificate Holder hereunder and under the other Operative Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall have been paid in full. SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED CERTIFICATES. The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the registration of Secured Certificates and the registration of transfers of Secured Certificates. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Secured Certificate Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the purpose of registering Secured Certificates and transfers of Secured Certificates as herein provided. A holder of any Secured Certificate intending to exchange such Secured Certificate shall surrender such Secured Certificate to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Secured Certificate, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Secured Certificate, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Secured Certificates of a like aggregate Principal Amount and of the same series. At the option of the Certificate Holder, Secured Certificates may be exchanged for other Secured Certificates of any authorized denominations of a like aggregate Principal Amount, upon surrender of the Secured Certificates to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Secured Certificates are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Secured Certificates which the Certificate Holder making the exchange is entitled to receive. All Secured Certificates issued upon any registration of transfer or exchange of Secured Certificates (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Trust Indenture, -20- 21 as the Secured Certificates surrendered upon such registration of transfer or exchange. Every Secured Certificate presented or surrendered for registration of transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Certificate Holder or such holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of any applicable state. The Indenture Trustee shall make a notation on each new Secured Certificate of the amount of all payments of Principal Amount previously made on the old Secured Certificate or Secured Certificates with respect to which such new Secured Certificate is issued and the date to which interest on such old Secured Certificate or Secured Certificates has been paid. Interest shall be deemed to have been paid on such new Secured Certificate to the date on which interest shall have been paid on such old Secured Certificate, and all payments of the Principal Amount marked on such new Secured Certificate, as provided above, shall be deemed to have been made thereon. The Owner Trustee shall not be required to exchange any surrendered Secured Certificates as provided above during the ten-day period preceding the due date of any payment on such Secured Certificate. The Owner Trustee shall in all cases deem the Person in whose name any Secured Certificate shall have been issued and registered as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable by the Owner Trustee with respect to such Secured Certificate and for all purposes until a notice stating otherwise is received from the Indenture Trustee and such change is reflected on the Secured Certificate Register. The Indenture Trustee will promptly notify the Owner Trustee and Lessee of each registration of a transfer of a Secured Certificate. Any such transferee of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to the provisions of the Participation Agreement applicable to Certificate Holders, including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(ff), 13(b), 13(c), 15(b), 15(c) and 16, and shall be deemed to have represented and warranted (except as provided above), and covenanted, to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by the original Loan Participants in the Participation Agreement. Subject to compliance by the Certificate Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates upon transfer or exchange within 10 Business Days of the date a Secured Certificate is surrendered for transfer or exchange. SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED CERTIFICATES. If any Secured Certificate shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the holder of such Secured Certificate, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Secured Certificate, payable in the same Principal Amount dated the same date and captioned as issued in connection with the Aircraft. The Indenture Trustee shall authenticate each replacement Secured Certificate on request by the Owner Trustee and shall make a notation on each replacement Secured Certificate of the aggregate amount of all payments of Principal Amount previously made on the mutilated, destroyed, lost or stolen Secured Certificate with respect to which the replacement Secured Certificate is issued and the date to which interest on such mutilated, destroyed, lost or stolen Secured Certificate has been paid. If the Secured Certificate being replaced has become mutilated, such Secured Certificate shall be surrendered to the Indenture Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the Secured Certificate being replaced has been destroyed, lost or stolen, the holder of such Secured Certificate shall furnish to the Owner Trustee and the Indenture Trustee such security or indemnity as may be required by them to save the Owner Trustee and the Indenture Trustee harmless and evidence satisfactory to the Owner Trustee and the Indenture Trustee of the destruction, loss or theft of such Secured Certificate and of the ownership thereof. If a "qualified institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen Secured Certificate, then the written indemnity of such QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Lessee, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Secured Certificate. Subject to compliance by the Certificate Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates within 10 Business Days of the date of the written request therefor from the Certificate Holder. -21- 22 SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION. (a) No service charge shall be made to a Certificate Holder for any registration of transfer or exchange of Secured Certificates, but the Indenture Trustee, as Secured Certificate Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Secured Certificates; provided, however, that neither the Owner Trustee nor the Owner Participant shall bear any such costs of registration, transfer or exchange including, without limitation, in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Secured Certificates surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Secured Certificates. SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES. (a) On the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders but without Make-Whole Amount. (b) If the Lease is terminated with respect to the Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13 hereof and to Section 8(x) of the Participation Agreement, on the date the Lease is so terminated all the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES. All of the Secured Certificates may be redeemed by the Owner Trustee in connection with a transaction described in, and subject to the terms and conditions of, Section 17 of the Participation Agreement upon at least 30 days' revocable prior written notice to the Indenture Trustee and the Certificate Holders, and the Secured Certificates shall, as provided in Section 17 of the Participation Agreement, be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION. (a) Neither any redemption of any Secured Certificate nor any purchase by the Owner Trustee of any Secured Certificate may be made except to the extent and in the manner expressly permitted by this Trust Indenture. No purchase of any Secured Certificate may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Secured Certificates shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Certificate Holder of such Secured Certificates to be redeemed or purchased, at such Certificate Holder's address appearing in the Secured Certificate Register; provided that, in the case of a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be deemed revoked in the event that the Lease does not in fact terminate on the specified termination date or if notice of such redemption shall have been given in connection with a refinancing of Secured Certificates and the Indenture Trustee receives written notice of such revocation from Lessee or the Owner Trustee not later than three days prior to the redemption date. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and -22- 23 payable upon each such Secured Certificate, and that, if any such Secured Certificates are then outstanding, interest on such Secured Certificates shall cease to accrue on and after such redemption date, and (4) the place or places where such Secured Certificates are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Secured Certificates to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption date in immediately available funds the redemption price of the Secured Certificates to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid (and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee or at any office or agency maintained for such purposes pursuant to Section 2.07, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Secured Certificates then outstanding shall cease to bear interest. Upon surrender of any such Secured Certificate for redemption or purchase in accordance with said notice, such Secured Certificate shall be redeemed at the redemption price. If any Secured Certificate called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Secured Certificate as of such redemption date. SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE. If, in accordance with Section 8(x) of the Participation Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a full recourse basis) all of the obligations of the Owner Trustee hereunder, under the Secured Certificates and all other Operative Documents by supplemental indenture satisfactory to the Indenture Trustee (which shall contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease and (ii) other provisions necessary or advisable to effectuate such assumption), then upon delivery of such supplemental indenture, payment by Lessee of all expenses (including reasonable fees and expenses of counsel) for the Owner Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of the Secured Certificates and other amounts owing to the Certificate Holders substantially in the form of the Guarantee, and delivery of an opinion of counsel for Lessee that such assumption has been duly and validly effected, the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Secured Certificates and all other Operative Documents and the Owner Participant shall be released and discharged from any further obligations under the Participation Agreement and any other Operative Document to which it is a party, except with respect to any such obligations that accrued prior thereto. SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES. The Owner Trustee and the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.14, purchase all but not less than all of the Secured Certificates outstanding hereunder, and each Certificate Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind other than (i) of title to the Secured Certificates so conveyed and (ii) against Liens on such Secured Certificates arising by, through or under such holder), all of the right, title and interest of such Certificate Holder in and to the Secured Certificates held by it, and such purchaser or its nominee shall assume all of such holder's obligations under the Participation Agreement and hereunder. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Participation Agreement to the holder thereof. Such option to purchase the Secured Certificates may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there -23- 24 shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default, the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Trustee or the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Secured Certificates shall become irrevocable upon the sixteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Certificate Holders will comply with all the provisions of Section 2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes, charges and expenses required pursuant to Section 2.09 in connection with the issuance of such new Secured Certificate shall be borne by the Owner Participant. SECTION 2.15. SUBORDINATION. (a) The Owner Trustee and, by acceptance of its Secured Certificates of any Series, each Certificate Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g) hereof, except as expressly provided in Article III hereof. (b) By the acceptance of its Secured Certificates of any Series (other than Series A), each Certificate Holder of such Series agrees that in the event that such Certificate Holder, in its capacity as a Certificate Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.15 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article III hereof. (c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured Obligations in respect of Series A Secured Certificates have been paid in full and (ii) after the Secured Obligations in respect of Series A Secured Certificates have been paid in full, the Certificate Holders of Series B until the Secured Obligations in respect of Series B Secured Certificates have been paid in full. SECTION 2.16. DEFEASANCE. (a) The Owner Trustee will be deemed to have paid and will be discharged from any and all obligations in respect of the Secured Certificates on the 90th day (or such other period as may be specified in the relevant provision of the United States Bankruptcy Code) (such period being the "Preference Period") after the date of the deposit referred to in clause (i) of this Section 2.16(a) if: (i) with reference to this Section 2.16(a), the Owner Trustee has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee (or another trustee satisfying the requirements of Section 8.02) and conveyed all right, title and interest for the benefit of the Certificate Holders, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Indenture Trustee, which provides irrevocable instructions therein to apply such money or the proceeds of -24- 25 such U.S. Government Obligations to the payment of such principal and interest with respect to the Secured Certificates, as trust funds in trust, specifically entrusted to the Indenture Trustee for the benefit of the Certificate Holders for payment of the principal of and interest, if any, on the Secured Certificates, and dedicated solely to, the benefit of the Certificate Holders, in and to (A) money in an amount, (B) U.S. Government Obligations that, through the payment of interest, and principal in respect thereof in accordance with their terms, will provide, not later than one day before the due date of any payment referred to in this clause (i), money in an amount or (C) a combination thereof in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Indenture Trustee, to pay and discharge, without consideration of the reinvestment of such interest and after payment of all federal, state and local withholding taxes or other similar charges and assessments in respect thereof payable by the Indenture Trustee with respect to the amounts deposited pursuant to clause (A), (B) or (C), the principal of and accrued interest on the outstanding Secured Certificates at the maturity of such principal or interest; (ii) the Owner Trustee shall have delivered to the Indenture Trustee (A) either (1) a ruling directed to the Indenture Trustee received from the Internal Revenue Service to the effect that the Certificate Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Owner Trustee's exercise of its option under this Section 2.16(a) and will be subject to federal income tax on that same amount and in the same manner and at the same times as would have been the case if such option had not been exercised or (2) an Opinion of Counsel to the same effect as the ruling described in clause (1) above accompanied by a ruling to that effect published by the Internal Revenue Service, unless there has been a change in the applicable federal income tax law since the date of this Indenture such that a ruling from the Internal Revenue Service is no longer required and (B) an Opinion of Counsel to the effect that (1) the creation of the defeasance trust does not violate the Investment Company Act of 1940 and (2) after the passage of the Preference Period, the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code (or any successor or replacement provision) in a case commenced by or against the Owner Trustee or Lessee under either such statute, and either (I) the trust funds will no longer remain the property of the Owner Trustee or Lessee (and therefore will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally) or (II) if a court were to rule under any such law in any case or proceeding that the trust funds remained the property of the Owner Trustee or Lessee (y) assuming such funds remained in the possession of the Indenture Trustee prior to such court ruling to the extent not paid to the Certificate Holders, the Indenture Trustee will hold, for the benefit of the Certificate Holders, a valid and perfected security interest in such trust funds that is not avoidable in bankruptcy or otherwise except for the effect of Section 552(b) of the United States Bankruptcy Code (or any successor or replacement provision) on interest on the trust funds accruing after the commencement of a case under such statute and (z) the Certificate Holders will be entitled to receive adequate protection of their interests in such trust funds if such trust funds are used in such case or proceeding; and (iii) the Owner Trustee shall have made arrangements reasonably satisfactory to the Indenture Trustee for payment or satisfaction of all amounts due under the third paragraph of Section 2.02. After any such irrevocable deposit and satisfaction of the condition precedent provided in clause (ii) of this Section 2.16(a), the Indenture Trustee upon request shall execute and deliver appropriate instruments to release the Lien of this Trust Indenture in accordance with Section 10.01 and shall acknowledge in writing the discharge of the Owner Trustee's obligations under the Secured Certificates and this Trust Indenture except for those surviving obligations in the immediately succeeding paragraph. Notwithstanding the foregoing, prior to the end of the Preference Period, none of the Owner Trustee's obligations under this Trust Indenture shall be discharged. Subsequent to the end of the Preference Period, the Owner Trustee's obligations in Sections 2.07 and 2.08 shall survive until the Secured Certificates are no longer outstanding. -25- 26 (b) In lieu of satisfying its obligations set forth in Section 2.16(a), the Owner Trustee may elect, in its sole discretion, to satisfy the conditions specified in clauses (i) and (ii) of Section 2.16(a) without regard to the requirement described in Section 2.16(a)(ii)(A) and may, in lieu of satisfying the requirements set forth in Section 2.16(a)(ii)(A), provide only an Opinion of Counsel to the effect that the Certificate Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Owner Trustee's providing of the deposit referred to in Section 2.16(a)(i) and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit had not been made. If the Owner Trustee elects such option, then the Indenture Trustee upon request shall execute and deliver appropriate instruments to release the Lien of this Trust Indenture in accordance with Section 10.01 and the Owner Trustee shall be released from its obligations set forth in Section 4.01 (other than Section 4.01(a)). All other obligations of the Owner Trustee hereunder shall remain in full force and effect. For the avoidance of doubt, the effect of the Owner Trustee's exercise of its option set forth in this subsection (b) shall be to create an economic defeasance rather than the legal defeasance that would result if the option set forth in subsection (a) above were to be exercised. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. BASIC RENT DISTRIBUTION. Except as otherwise provided in Section 3.03 hereof, each installment of Basic Rent or Interim Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly distributed in the following order of priority: FIRST, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Secured Certificates shall be distributed to the Certificate Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Secured Certificate bears to the aggregate amount of the payments then due under all Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Secured Certificates shall be distributed to the Certificate Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Secured Certificate bears to the aggregate amount of the payments then due under all Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series C Secured Certificates shall be distributed to the Certificate Holders of Series C ratably, -26- 27 without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Secured Certificate bears to the aggregate amount of the payments then due under all Series C Secured Certificates; and SECOND, the balance, if any, of such installment remaining thereafter shall be distributed to the Owner Trustee; provided, however, that if an Event of Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "Second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 5.09 hereof until whichever of the following shall first occur: (i) all Events of Default shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "Second", (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of such Section 3.03, or (iii) the 120th day after the receipt of such payment in which case such payment shall be distributed as provided in this clause "Second". SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION; REFINANCING. Except as otherwise provided in Section 3.03 hereof, any payments received by the Indenture Trustee (i) with respect to the Aircraft as the result of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a refinancing of the Secured Certificates pursuant to Section 17 of the Participation Agreement shall be applied to redemption of the Secured Certificates and to all other amounts payable hereunder or to the Indenture Trustee or any Certificate Holder under the Participation Agreement by applying such funds in the following order of priority: FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for any reasonable costs or expenses incurred in connection with such redemption for which they are entitled to reimbursement, or indemnity by Lessee, under the Operative Documents and then (b) to pay any other amounts then due to the Indenture Trustee and the Certificate Holders under this Trust Indenture, the Participation Agreement or the Secured Certificates; SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, to pay the amounts specified in paragraph (ii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, to pay the amounts specified in paragraph (iii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series C Secured Certificates; and THIRD, as provided in clause "Fourth" of Section 3.03 hereof; provided, however, that if a Replacement Airframe or Replacement Engine shall be substituted for the Airframe or Engine subject to such Event of Loss as provided in Section 10 of the Lease and in accordance with Section 5.06 hereof, any insurance, condemnation or similar proceeds which result from such Event of Loss and are paid over to the Indenture Trustee shall be held by the Indenture Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be invested as provided in Section 5.09 hereof) as additional security for the obligations of Lessee under the Lessee Operative Documents and, unless otherwise applied pursuant to the Lease, such proceeds (and -27- 28 such investment earnings) shall be released to Lessee at Lessee's written request upon the release of such damaged Airframe or Engine and the replacement thereof as provided in the Lease. SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT. Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Section 15 of the Lease or Article IV hereof) after an Event of Default shall have occurred and be continuing and after the occurrence of an Indenture Trustee Event, as well as all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly distributed by the Indenture Trustee in the following order of priority: FIRST, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate (all such property being herein called the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) , but other than income tax on, or measured by, fees payable to the Indenture Trustee in its individual capacity pursuant to the Operative Documents to which it is a party incurred by the Indenture Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Certificate Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or any Certificate Holder, liquidated or otherwise, upon such Event of Default shall be applied by the Indenture Trustee as between itself and the Certificate Holders in reimbursement of such expenses and any other expenses for which the Indenture Trustee or the Certificate Holders are entitled to reimbursement under any Operative Document and in the case the aggregate amount to be so distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as shall be required to reimburse the then existing or prior Certificate Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to such then existing or prior Certificate Holders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Certificate Holder pursuant to said Section 5.03 hereof; THIRD, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series A Secured Certificates (other than Make-Whole Amount) to the date of distribution, shall be distributed to the Certificate Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount) to the date of distribution; -28- 29 (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series B Secured Certificates [(other than Make-Whole Amount)] to the date of distribution, shall be distributed to the Certificate Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than the Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than the Make-Whole Amount) to the date of distribution; and (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series C Secured Certificates (other than Make-Whole Amount) to the date of distribution, shall be distributed to the Certificate Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than the Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than the Make-Whole Amount) to the date of distribution; and FOURTH, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee. No Make-Whole Amount shall be due and payable on the Secured Certificates as a consequence of the acceleration of the Secured Certificates. SECTION 3.04. CERTAIN PAYMENTS. (a) Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in this Trust Indenture and for which such provision is made in the Lease, the Participation Agreement or any other Operative Document shall be applied forthwith to the purpose for which such payment was made in accordance with the terms of the Lease, the Participation Agreement or such other Operative Document, as the case may be. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of the Participation Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the third paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the -29- 30 Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the third paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) [Intentionally Omitted] (d) Notwithstanding anything to the contrary contained in this Trust Indenture, any amounts received by the Indenture Trustee which constitute Excluded Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. (e) Notwithstanding any provision of this Trust Indenture to the contrary, any amounts held by the Indenture Trustee that would, but for the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall, notwithstanding the provisions of said Section, be distributed to Lessee unless and until a Lease Event of Default shall have occurred and be continuing. SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any other Operative Document shall be distributed by the Indenture Trustee to the extent received or realized at any time (i) prior to the payment in full of all Secured Obligations due the Certificate Holders, in the order of priority specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in full of all Secured Obligations due the Certificate Holders, in the following order of priority: FIRST, to the extent payments or amounts described in clause "First" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "First" of Section 3.03 hereof, and SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof. Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04 hereof, all payments received and amounts realized by the Indenture Trustee under the Lease or otherwise with respect to the Aircraft (including, without limitation, all amounts realized upon the sale or release of the Aircraft after the termination of the Lease with respect thereto), to the extent received or realized at any time after payment in full of all Secured Obligations due the Certificate Holders, shall be distributed by the Indenture Trustee in the order of priority specified in clause (ii) of the immediately preceding sentence of this Section 3.05. SECTION 3.06. PAYMENTS TO OWNER TRUSTEE. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account (within the time limits contemplated by Section 2.04(a)) specified in Schedule I to the Participation Agreement. SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE. -30- 31 All payments received by the Indenture Trustee pursuant to the Guarantee shall be distributed forthwith by the Indenture Trustee in the same order of priority, and in the same manner, as it would have distributed the payment in respect of which such payment under the Guarantee was received. ARTICLE IV COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. COVENANTS OF OWNER TRUSTEE. The Owner Trustee hereby covenants and agrees (the covenants and agreements only in clause (b) below being made by the Owner Trustee in its individual capacity) as follows: (a) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Secured Certificates and hereunder in accordance with the terms of the Secured Certificates and this Trust Indenture and all amounts, if any, payable by it to the Certificate Holders under the Participation Agreement; (b) the Owner Trustee in its individual capacity covenants and agrees that it shall not, directly or indirectly, cause or permit to exist a Lessor Lien attributable to it in its individual capacity with respect to the Aircraft or any other portion of the Trust Estate; that it will promptly, at its own expense, take such action as may be necessary to duly discharge such Lessor Lien attributable to it in its individual capacity; and that it will make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Lessor Liens attributable to it in its individual capacity; (c) in the event the Owner Trustee shall have Actual Knowledge of an Event of Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Event of Default or Event of Loss to the Indenture Trustee, each Certificate Holder, Lessee and the Owner Participant; (d) the Owner Trustee will furnish to the Certificate Holders and the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of any Termination Notice and a copy of each report or notice received pursuant to Section 9(a) and 11(c) of the Lease to the extent that the same shall not have been furnished to the Certificate Holders or the Indenture Trustee pursuant to the Lease; (e) except with the consent of the Indenture Trustee (acting pursuant to instructions given in accordance with Section 9.01 hereof), the Owner Trustee will not contract for, create, incur, assume or suffer to exist any Debt (other than the Secured Certificates), and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the Debt of any other person; and (f) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. EVENT OF DEFAULT. "EVENT OF DEFAULT" means any of the following events (whatever the reason for such Event of Default and whether such event shall be voluntary or involuntary or come about or be effected by operation of Law -31- 32 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): (a) any Lease Event of Default (provided that any such Lease Event of Default caused solely by a failure of Lessee to pay to the Owner Trustee or the Owner Participant when due any amount that is included in the definition of Excluded Payments shall not constitute an Event of Default unless notice is given by the Owner Trustee to the Indenture Trustee that such failure shall constitute an Event of Default); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due and payable under any Secured Certificate or hereunder (other than any such failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof or as a result of a Lease Event of Default or a Lease Default) and such failure shall have continued unremedied for ten Business Days in the case of any payment of Principal Amount or interest or Make-Whole Amount, if any, thereon and, in the case of any other amount, for ten Business Days after the Owner Trustee or the Owner Participant receives written demand from the Indenture Trustee or any Certificate Holder; or (c) any Lien required to be discharged by the Owner Trustee, in its individual capacity pursuant to Section 4.01(b) hereof or in its individual or trust capacity pursuant to Section 8(h) of the Participation Agreement, or by the Owner Participant pursuant to Section 8(h) of the Participation Agreement shall remain undischarged for a period of 30 days after the Owner Trustee or the Owner Participant, as the case may be, shall have received written notice from the Indenture Trustee or any Certificate Holder of such Lien; or (d) any representation or warranty made by the Owner Participant or the Owner Trustee herein, in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in any certificate furnished by the Owner Participant or the Owner Trustee to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents shall prove to have been false or incorrect when made in any material respect and continues to be material; and if such misrepresentation is capable of being corrected and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 60 days (or, without affecting Section 4.02(f) hereof, in the case of the representations made in Section 8(c) of the Participation Agreement as to the citizenship of the Owner Trustee in its individual capacity or of the Owner Participant, respectively, as soon as is reasonably practicable but in any event within 60 days) following notice thereof from the Indenture Trustee or any Certificate Holder to the Owner Trustee or the Owner Participant, as the case may be; or (e) other than as provided in (c) above or (f) below, any failure by the Owner Trustee or Owner Participant to observe or perform in any material respect any other covenant or obligation of the Owner Trustee or Owner Participant, as the case may be, for the benefit of the Indenture Trustee or the Certificate Holders contained in the Participation Agreement, Section 4.01(a) of the Trust Agreement, the Secured Certificates or this Trust Indenture which is not remedied within a period of 60 days after notice thereof has been given to the Owner Trustee and the Owner Participant (or, if such failure cannot be remedied during such 60-day period and the Owner Trustee and/or the Owner Participant have been and are diligently proceeding to remedy such failure, such additional period not in excess of 120 days, if such failure is capable of being remedied during such additional period, as may be necessary to remedy such failure); or (f) if at any time when the Aircraft is registered under the laws of the United States, the Owner Participant shall not be a Citizen of the United States, and as the result thereof the registration of the Aircraft under the Federal Aviation Act, and regulations then applicable thereunder, shall cease to be effective; provided that no Event of Default shall be deemed to have occurred under this paragraph (f) -32- 33 unless such circumstances continue unremedied for more than 60 days after the Owner Participant has Actual Knowledge of the state of facts that resulted in such ineffectiveness and of such loss of citizenship; or (g) at any time either (i) the commencement of an involuntary case or other proceeding in respect of the Owner Participant, the Owner Trustee or the Trust Estate 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 seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii) the commencement by the Owner Participant, the Owner Trustee or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee or the Trust Estate to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or the making by the Owner Participant, the Owner Trustee or the Trust Estate of any assignment for the benefit of creditors or the Owner Participant or the Owner Trustee shall take any action to authorize any of the foregoing; provided, however, that an event referred to in this Section 4.02(g) with respect to the Owner Participant shall not constitute an Event of Default if within 30 days of the commencement of the case or proceeding (A) a final non-appealable order, judgment or decree shall be entered in such case or proceeding by a court or a trustee, custodian, receiver or liquidator, or (B) an opinion of counsel, reasonably satisfactory to the Indenture Trustee, shall be provided by the Owner Participant, in each case to the effect that, no part of the Trust Estate (except for the Owner Participant's beneficial interest therein) and no right, title or interest under the Trust Indenture Estate shall be included in, or be subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 4.02(g); provided further that an event referred to in this Section 4.02(f) with respect to the Owner Participant shall not constitute an Event of Default if, not later than 90 days following such event, the Owner Participant has been replaced with an entity eligible to act as Owner Participant in accordance with Section 8(n) of the Participation Agreement. SECTION 4.03. CERTAIN RIGHTS. The Indenture Trustee shall give the Certificate Holders, the Owner Trustee and the Owner Participant prompt written notice of any Event of Default of which the Indenture Trustee has Actual Knowledge and, if any such Event of Default results from a Lease Event of Default that can be cured by the payment of money (it being understood that defaults requiring action such as the obtaining of insurance and the procuring of maintenance services can be so remedied), shall give the Certificate Holders, the Owner Trustee and the Owner Participant not less than ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence and consummate the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the provisions of Section 15 of the Lease. If an Event of Default shall have occurred and be continuing, the Owner Trustee shall have the following rights hereunder, any of which may be exercised directly by the Owner Participant. If as a result of the occurrence of an Event of Default in respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease, the Indenture Trustee shall have insufficient funds to make any payment of Principal Amount and interest on any Secured Certificate on the day it becomes due and payable, the Owner Trustee may, without the consent or concurrence of any Certificate Holder, but shall not be obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the manner provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an amount equal to the portion of the Principal Amount and interest (including interest, if any, on any overdue payments of such portion of Principal Amount and interest) then due and payable on the Secured Certificates, and, unless the Owner Trustee has cured Events of Default in respect of -33- 34 payments of Basic Rent on each of the three immediately preceding Basic Rent payment dates, or the Owner Trustee has cured six previous Events of Default in respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any Event of Default which would otherwise have arisen on account of the nonpayment by Lessee of such installment of Interim Rent or Basic Rent (but not any other Default or Event of Default which shall have occurred and be continuing). If any Event of Default (other than in respect of the nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured by the payment of money (it being understood that defaults requiring action such as the obtaining of insurance and the procuring of maintenance services can be so remedied) has occurred, the Owner Trustee may, without the consent or concurrence of any Certificate Holder, but shall not be obligated to, cure such Event of Default by making such payment prior to the Enforcement Date as is necessary to accomplish the observance or performance of the defaulted covenant, condition or agreement to the party entitled to the same. Except as hereinafter in this Section 4.03 provided, the Owner Trustee shall not, as a result of exercising the right to cure any such Event of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable under the Lease for or on account of costs or expenses incurred in connection with the exercise of such right, nor shall any claim of the Owner Trustee against Lessee or any other party for the repayment of such costs or expenses impair the prior right and security interest of the Indenture Trustee in and to the Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the first or second preceding paragraphs of this Section 4.03, the Owner Trustee shall be subrogated to the rights of the Indenture Trustee and the Certificate Holders in respect of the Interim Rent or Basic Rent which was overdue at the time of such payment and interest payable by Lessee on account of its being overdue and any Supplemental Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant to the immediately preceding paragraph (but in either case shall have no rights as a secured party hereunder), and thereafter, the Owner Trustee shall be entitled to receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt thereof by the Indenture Trustee; provided, however, that (i) if the Principal Amount and interest on the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to all Secured Certificates shall have been paid in full, be subordinate to the rights of the Indenture Trustee and the Certificate Holders in respect of such payment of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and (ii) the Owner Trustee shall not be entitled to seek to recover any such payment (or any payment in lieu thereof) except pursuant to the foregoing right of subrogation until payment of the Principal Amount and interest that has become due in accordance with Section 4.04(b) hereof. SECTION 4.04. REMEDIES. (a) If an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, then and in every such case the Indenture Trustee may, subject to the second paragraph of this Section 4.04(a), exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article IV and shall have and may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and, in the event such Event of Default is also a Lease Event of Default, any and all of the remedies pursuant to Section 15 of the Lease and may take possession of all or any part of the properties covered or intended to be covered by the Lien created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee and Lessee and all persons claiming under any of them wholly or partly therefrom, provided, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft or foreclose the Lien of this Trust Indenture. Unless an Event of Default not resulting from or relating to a Lease Event of Default has occurred and is continuing, the Owner Participant may bid at any public sale and become the purchaser. Without limiting any of the foregoing but subject to the immediately succeeding paragraph, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Trust Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder as a result of an Event of Default which arises solely by reason of one -34- 35 or more events or circumstances which constitute a Lease Event of Default unless the Indenture Trustee as security assignee of the Owner Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 15 of the Lease to terminate the Lease (so long as the Aircraft is not subsequently re-leased to Lessee or an Affiliate thereof) or take possession and/or sell the Aircraft with respect to the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any person. In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any rights or remedy of the Indenture Trustee hereunder) to participate in such proceedings. It is expressly understood and agreed that, subject only to the immediately preceding paragraph, the inability, described in such paragraphs, of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising any or all of its rights, powers and remedies under this Trust Indenture, including, without limitation, this Article IV. (b) If an Event of Default shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery of written notice or notices to the Owner Trustee and the Owner Participant, declare all the Secured Certificates to be due and payable, whereupon the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued but unpaid interest thereon (without Make-Whole Amount) and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. This Section 4.04(b), however, is subject to the condition that, if at any time after the Principal Amount of the Secured Certificates shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Secured Certificates and all other amounts payable under the Secured Certificates (except the Principal Amount of the Secured Certificates which by such declaration shall have become payable) shall have been duly paid, and every other Default and Event of Default with respect to any covenant or provision of this Trust Indenture shall have been cured, then and in every such case a Majority in Interest of Certificate Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. (c) The Certificate Holders shall be entitled, at any sale pursuant to Section 15 of the Lease or this Section 4.04, to credit against any purchase price bid at such sale by such holder all or any part of the unpaid obligations owing to such Certificate Holder and secured by the Lien of this Trust Indenture (but only to the extent that such purchase price would have been paid to such Certificate Holder pursuant to Article III hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c) were not given effect). -35- 36 (d) In the event of any sale of the Trust Indenture Estate, or any part thereof, pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Trust Indenture, the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued interest thereon (without Make-Whole Amount), and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement (or its designee) is a Certificate Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any Mortgaged Property or take any action with respect to any Mortgaged Property so acquired by it if such acquisition or action would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. RETURN OF AIRCRAFT, ETC (a) If an Event of Default shall have occurred and be continuing and the Indenture Trustee shall have foreclosed, or shall concurrently be foreclosing, the Lien of this Trust Indenture and shall be taking steps for the sale or repossession of the Aircraft, subject to Section 4.03 hereof, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Mortgaged Property included in the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents to the fullest extent permitted by applicable law, and (ii) pursue all or part of such Mortgaged Property wherever it may be found and, in the event that a Lease Event of Default has occurred and is continuing, may enter any of the premises of Lessee wherever such Mortgaged Property may be or be supposed to be and search for such Mortgaged Property and take possession of and remove such Mortgaged Property. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Trust Indenture. (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Mortgaged Property, make all such expenditures for maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modifications or alterations to and of the Mortgaged Property, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the Mortgaged Property and to carry on the business and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Mortgaged Property, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modification or alteration of the Mortgaged Property or any part thereof as the Indenture Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Mortgaged Property and every part thereof, except Excluded Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Trust Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, improvement, modification or alteration of the Mortgaged Property and of conducting the business thereof, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Mortgaged Property or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Trust Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee with respect hereto. -36- 37 SECTION 4.06. REMEDIES CUMULATIVE. Subject to the other provisions of Article IV hereof, each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or Lessee or to be an acquiescence therein. SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS. In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Trust Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Owner Trustee, the Owner Participant, the Indenture Trustee and Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Mortgaged Property, and all rights, remedies and powers of the Owner Trustee, the Owner Participant, the Indenture Trustee or Lessee shall continue as if no such proceedings had been instituted. SECTION 4.08. WAIVER OF PAST DEFAULTS. Upon written instruction from a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Default or Event of Default hereunder and its consequences and upon any such waiver such Default or Event of Default shall cease to exist and any Event of Default arising from any such Default shall be deemed to have been cured for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon; provided, that in the absence of written instructions from all the Certificate Holders, the Indenture Trustee shall not waive any Default or Event of Default (i) in the payment of the Principal Amount, Make-Whole Amount, if any, and interest and other amounts due under any Secured Certificate then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Certificate Holder. SECTION 4.09. APPOINTMENT OF RECEIVER. The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee thereof) for all or any part of the Mortgaged Property, whether such receivership be incidental to a proposed sale of the Mortgaged Property or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Mortgaged Property shall be entitled to exercise all the rights and powers of the Indenture Trustee with respect to the Mortgaged Property. SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC. The Owner Trustee irrevocably appoints the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture, whether pursuant to foreclosure or power of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Owner Trustee hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing -37- 38 and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Trust Indenture, the right of any Certificate Holder to receive payment of principal of, and premium, if any, and interest on a Secured Certificate on or after the respective due dates expressed in such Secured Certificate, or to bring suit for the enforcement of any such payment on or after such respective dates in accordance with the terms hereof, shall not be impaired or affected without the consent of such Certificate Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default arising from a failure to pay Rent, the Indenture Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms of Sections 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default or Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture Trustee shall not have received instructions as above provided within 20 days after mailing notice of such Event of Default to the Certificate Holders, the Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default or Default as it shall determine advisable in the best interests of the Certificate Holders. If the Indenture Trustee shall at any time declare the Lease to be in default pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall forthwith notify the Owner Participant, the Certificate Holders, the Owner Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall not be deemed to have knowledge of a Default or an Event of Default (except, in the case of the Indenture Trustee, the failure of Lessee to pay any installment of Interim Rent or Basic Rent within one Business Day after the same shall become due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee, the Owner Participant or one or more Certificate Holders. SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, subject to the terms of this Section 5.02, take such of the following actions as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder as shall be specified in such instructions; (ii) give such notice or direction or exercise such right, remedy or power under the Lease, the Participation Agreement, the Purchase Agreement, or any other part of the Trust Indenture Estate as shall be specified in such instructions; and (iii) after the occurrence and during the continuance of an Event of Default, approve as satisfactory to the Indenture Trustee all matters required by the terms of the Lease to be satisfactory to the Owner Trustee, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall not approve any such matter as satisfactory to the Indenture Trustee; provided, -38- 39 that anything contained in this Trust Indenture, the Lease or the other Operative Documents to the contrary notwithstanding: (1) the Owner Trustee or the Owner Participant may, at all times without the consent of the Indenture Trustee, (A) to the exclusion of the Indenture Trustee demand, collect, sue for or otherwise obtain all amounts included in Excluded Payments from Lessee, (B) unless the Lien of this Trust Indenture shall have been foreclosed upon, grant or withhold its consent to amendments or supplements to Indenture Agreements required in accordance with Article IX hereof and (C) seek legal or equitable remedies to require Lessee to maintain the insurance coverage referred to in Section 11 of the Lease; provided, that the rights referred to in this clause (1) shall not be deemed to include the exercise of any remedies provided for in Section 15 of the Lease other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by Lessee of such amounts included in Excluded Payments or performance by Lessee of such insurance covenant or to recover damages for the breach thereof; (2) at all times prior to the foreclosure of the Lien of this Trust Indenture, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be unreasonably withheld if no right or interest of the Owner Trustee or the Owner Participant shall be diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; (3) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, each of the Owner Trustee, the Owner Participant and, except with respect to clauses (iii) and (iv), the Indenture Trustee shall have the right (i) to receive from Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which any thereof is permitted or required to give or furnish to the Owner Trustee or Lessor pursuant to any Operative Document (including pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 11(e) of the Lease specifically confers on Lessor, and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of Lessor under Section 21 of the Lease; (4) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee shall at all times, to the exclusion of the Indenture Trustee, have the right to adjust Rent, Stipulated Loss Values and Termination Values as provided in Section 3(d) of the Lease; (5) unless an Indenture Trustee Event shall have occurred, to exercise all of the rights of Lessor under Section 7(b) of the Lease; (6) whether or not a Default or Event of Default shall have occurred and is continuing, the Owner Trustee may, without the consent of the Indenture Trustee, (i) solicit and make bids with respect to the Aircraft under Section 9 of the Lease in respect of a termination of the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales value" and "fair market rental value" under Section 19 of the Lease for all purposes except following an Event of Default pursuant to Section 15 of the Lease, and (iii) make an election pursuant to and in accordance with the provisions of Section 9(c) of the Lease; and (7) so long as no Event of Default shall have occurred and be continuing, all other rights of the "Lessor" under the Lease shall be exercised by the Owner Trustee to the exclusion of the Indenture Trustee including, without limitation, the right to (i) exercise all rights with respect to Lessee's use and -39- 40 operation, modification or maintenance of the Aircraft and any Engine which the Lease specifically confers on Lessor, (ii) consent to and approve any assignment pursuant to Section 13 of the Lease and (iii) request further assurances pursuant to Section 16 of the Lease; provided that the foregoing shall not limit (A) any rights separately granted to the Indenture Trustee under the Operative Agreements or (B) the right of the Indenture Trustee to receive any funds to be delivered to the "Lessor" under the Lease (except with respect to Excluded Payments) and under the Purchase Agreement. Notwithstanding anything to the contrary contained herein (including this Section 5.02), the Indenture Trustee shall have the right, to the exclusion of the Owner Trustee and the Owner Participant (other than with respect to Excluded Payments), to (A) declare the Lease to be in default under Section 15 thereof and (B) subject only to the provisions of Sections 4.03, 4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15 (other than in connection with Excluded Payments) at any time that a Lease Event of Default shall have occurred and be continuing. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as specified by Lessee pursuant to Section 8(e) of the Participation Agreement or as may be specified from time to time in written instructions of a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee will furnish to each Certificate Holder (and, during the continuation of an Indenture Trustee Event, to the Owner Trustee and Owner Participant), promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder, including, without limitation, a copy of any Termination Notice (as defined in the Lease) and a copy of each report or notice received pursuant to Sections 9(a) and 11(c) of the Lease, respectively, to the extent that the same shall not have been furnished to such Certificate Holder pursuant hereto or to the Lease. (b) If any Lease Event of Default shall have occurred and be continuing and the Owner Trustee shall not have cured fully such Lease Event of Default under and in accordance with Section 4.03 hereof, on request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall declare the Lease to be in default pursuant to Section 15 thereof and exercise those remedies specified by such Certificate Holders. The Indenture Trustee agrees to provide to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with such declaration by the Indenture Trustee, notice of such declaration by the Indenture Trustee. SECTION 5.03. INDEMNIFICATION. The Indenture Trustee shall not be under any obligation to take any action under this Trust Indenture or any other Operative Document and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds or otherwise incur the risk of any financial liability in the performance of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (the written indemnity of any Certificate Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Indenture Trustee shall be accepted as reasonable assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture or any other Operative Document be deemed to impose a duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or of the Lease or is otherwise contrary to Law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR INSTRUCTIONS. The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Trust Indenture or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Trust Indenture or as expressly provided in -40- 41 written instructions from Certificate Holders as provided in this Trust Indenture; and no implied duties or obligations shall be read into this Trust Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof), promptly take such action as may be necessary duly to discharge all liens and encumbrances on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the ownership of the Aircraft or the administration of the Trust Indenture Estate or any other transaction pursuant to this Trust Indenture or any document included in the Trust Indenture Estate. SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR INSTRUCTIONS. The Owner Trustee and the Indenture Trustee agree that they will not use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate except (i) as required by the terms of the Lease or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Trust Indenture and in accordance with the express terms hereof. SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES. At any time an Airframe or Engine is to be replaced under or pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of Default is continuing, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid, but only upon compliance by Lessee with the applicable provisions of Section 10 of the Lease and upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee, requesting such release specifically describing the Airframe and/or Engine(s) so to be released. (2) A certificate signed by a duly authorized officer of Lessee stating the following: A. With respect to any Replacement Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe to be received (including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number) as consideration for the Airframe to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of such Replacement Airframe free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Airframe will on such date be in good working order and condition, and that such Replacement -41- 42 Airframe has been or, substantially concurrently with such withdrawal, will be duly registered in the name of the Owner Trustee under the Federal Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and that Lessee will have the full right and authority to use such Replacement Airframe; (iv) the existence of the insurance required by Section 11 of the Lease with respect to such Replacement Airframe and the payment of all premiums then due thereon; (v) that the Replacement Airframe is of the same or an improved model as the Airframe requested to be released from this Indenture; (vi) the fair market value of the Replacement Airframe as of the date of such certificate (which in the judgment of Lessee shall be not less than the then fair market value of the Airframe requested to be released (assuming such Airframe was in the condition and repair required to be maintained under the Lease)); (vii) the fair market value of the Airframe immediately prior to the date the Airframe suffered an Event of Loss (assuming that such Airframe was in the condition and repair required under the Lease); (viii) that no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default, has occurred which has not been remedied or waived, and that Lessee will not be in default, by the making and granting of the request for release and the addition of a Replacement Airframe, in the performance of any of the terms and covenants of the Lease; and (ix) that the release of the Airframe so to be released will not be in contravention of any of the provisions of this Indenture; or B. with respect to the replacement of any Engine: (i) a description of the Engine which shall be identified by manufacturer's serial number; -42- 43 (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) as consideration for the Engine to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Engine will on such date be in good working order and condition and that such Replacement Engine is substantially the same as the Engine to be released (or as improved model); (iv) the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then fair market value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease)); (v) the fair market value of the Engine to be released (immediately prior to any Event of Loss suffered by such Engine and assuming that such Engine was in the condition and repair required under the Lease); (vi) that each of the conditions specified in Section 10(b) of the Lease with respect to such Replacement Engine have been satisfied and that Lessee will not be in default, by the making and granting of the request for release and the addition of the Replacement Engine, in the performance of any of the terms and covenants of the Lease; (vii) that, with respect to the replacement of an Engine pursuant to Section 9(d) of the Lease, no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default has occurred which has not been remedied or waived; and (viii) that the release of the Engine so to be released will not be in contravention of any of the provisions of this Indenture. (3) (a) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting -43- 44 such Replacement Airframe or Replacement Engine and any related warranty rights to the lien of this Indenture. (b) With respect to the replacement of any Engine, such Uniform Commercial Code financing statements covering the lien created by this Indenture as deemed necessary or desirable by counsel for the Indenture Trustee to protect the lien under the Indenture in the Replacement Engine. (4) A certificate from either an aircraft engineer (who may be an employee of Lessee) or a firm of independent aircraft appraisers selected by Lessee confirming the accuracy of the information set forth in clause (2)A(vi) of this Section 5.06. (5) The opinion of in-house counsel to Lessee, or other counsel satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Trust Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be lawfully released from the lien of this Trust Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Trust Indenture, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate and interest of the Owner Trustee to and the lien of this Trust Indenture on such Replacement Aircraft or Replacement Engine. SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS. If a Replacement Airframe or Replacement Engine is being substituted as contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Certificate Holders and Lessee, subject to fulfillment of the conditions precedent and compliance by Lessee with its obligations set forth in Section 10 of the Lease and the requirements of Section 5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to execute and deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease. -44- 45 SECTION 5.08. EFFECT OF REPLACEMENT. In the event of the substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced and (b) the provisions of this Trust Indenture shall no longer be applicable to the Airframe or Engine or Engines being replaced, which shall be released from the Lien of this Indenture. SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of the Lease shall be held in accordance with the terms of such Section and the Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of the Owner Trustee under such Section. Any amounts held by the Indenture Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee may acquire the same using its best efforts. Unless otherwise expressly provided in this Trust Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Trust Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever such sale is necessary to make a distribution required by this Trust Indenture. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse all monies constituting part of the Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its individual capacity, and the Indenture Trustee, in its individual capacity, shall not be answerable or accountable under any circumstances, except (i) for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be willful misconduct or negligence), (ii) in the case of the Indenture Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii) for liabilities that may result, in the case of the Owner Trustee, from the inaccuracy of any representation or warranty of the Owner Trustee expressly made in its individual capacity in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents) or, in the case of the Indenture Trustee (in its individual capacity), from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable for any action or -45- 46 inaction of the other or of the Owner Participant. The Owner Trustee shall not be deemed to be a trustee for the Certificate Holders for any purpose. SECTION 6.02. ABSENCE OF DUTIES. In the case of the Indenture Trustee, except in accordance with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the Lease or of this Trust Indenture or any other document, or to see to the maintenance of any such registration, recording or filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Lessee's covenants under the Lease with respect to the Aircraft. The Owner Participant shall not have any duty or responsibility hereunder, including, without limitation, any of the duties mentioned in clauses (i) through (v) above; provided, that nothing contained in this sentence shall limit any obligations of the Owner Participant under the Participation Agreement or relieve the Owner Participant from any restriction under Section 4.03 hereof. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR DOCUMENTS. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its individual capacity warrants that (i) the Owner Trustee has received on the Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Trustee in its individual capacity. Neither the Owner Trustee, in its individual capacity or as Owner Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual or trust capacities, makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Trust Indenture, the Trust Agreement, the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Owner Trustee made in its individual capacity and the representations and warranties of the Indenture Trustee in its individual capacity, in each case expressly made in this Trust Indenture or in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement). The Loan Participants, the Certificate Holders and the Owner Participant make no representation or warranty hereunder whatsoever. SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the Certificate Holders, Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by Law or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under such general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for any interest thereon (except that the Indenture Trustee shall invest -46- 47 all monies held as directed by Lessee so long as no Lease Event of Default or Lease Default has occurred and is continuing (or in the absence of such direction, by the Majority In Interest of Certificate Holders) in Cash Equivalents; provided, however, that any payments received, or applied hereunder, by the Indenture Trustee shall be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL. Neither the Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors (or Executive Committee thereof) of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Secured Certificates outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to Lessee the manner of ascertainment of which is not specifically described herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee and the Indenture Trustee for any action taken or omitted to be taken by them in good faith in reliance thereon. The Indenture Trustee shall assume, and shall be fully protected in assuming, that the Owner Trustee is authorized by the Trust Agreement to enter into this Trust Indenture and to take all action to be taken by it pursuant to the provisions hereof, and shall not inquire into the authorization of the Owner Trustee with respect thereto. In the administration of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled persons. SECTION 6.06. CAPACITY IN WHICH ACTING. The Owner Trustee acts hereunder solely as trustee as herein and in the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein, in the Trust Agreement and in the Participation Agreement. SECTION 6.07. COMPENSATION. The Indenture Trustee shall be entitled to reasonable compensation, including expenses and disbursements (including the reasonable fees and expenses of counsel), for all services rendered hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by Lessee, and shall have the right, on and subsequent to an Event of Default hereunder, to use or apply any monies held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against the Loan Participants, the Certificate Holders, the Owner Trustee or the Owner Participant for any fee as compensation for its services as trustee under this Trust Indenture. SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS. In the administration of the trusts created hereunder, the Indenture Trustee shall have the right to seek instructions from a Majority in Interest of Certificate Holders should any provision of this Trust Indenture appear to conflict with any other provision herein or should the Indenture Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no liability in refraining from acting until it receives such -47- 48 instructions. The Indenture Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.08. ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. SCOPE OF INDEMNIFICATION. The Owner Trustee, not in its individual capacity, but solely as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its individual and trust capacities), and its successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Trust Indenture), claims, actions, suits, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever, which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also indemnified against by any other Person under any other document) in any way relating to or arising out of this Trust Indenture or any other Operative Document to which it is a party or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder except only in the case of willful misconduct or gross negligence (or negligence in the case of handling funds) of the Indenture Trustee in the performance of its duties hereunder or resulting from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in Section 8 of the Participation Agreement or Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities under such Sections; provided that, so long as the Lease is in effect, the Indenture Trustee, unless otherwise prohibited by law, shall not make any claim under this Section 7.01 for any claim or expense without first making demand on Lessee for the payment on behalf of Lessor of such claim or expense pursuant to the Lease or the Participation Agreement, including, without limitation, Section 7(b) or 7(c) of the Participation Agreement. In addition, if necessary, the Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement including upon any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee, Lessee and the Certificate Holders. SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In -48- 49 addition, a Majority in Interest of Certificate Holders may at any time (but only with the consent of Lessee, which consent shall not be unreasonably withheld, except that such consent shall not be necessary if a Lease Event of Default is continuing) remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Certificate Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so long as no Lease Event of Default shall have occurred and be continuing, shall be subject to Lessee's reasonable approval. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as above provided. (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee an instrument accepting such appointment and assuming the obligations of the Indenture Trustee under the Participation Agreement arising from and after the time of such appointment, and thereupon such successor Indenture Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee herein; but nevertheless upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all monies or other property then held by such predecessor Indenture Trustee hereunder. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having its principal place of business in the Borough of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations under the Operative Documents are guaranteed by an affiliated entity having) a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. (d) Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Indenture Trustee may be transferred, shall, subject to the terms of paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the Indenture Trustee under this Trust Indenture without further act, except that such Person shall give prompt subsequent notice of such transaction to the Owner Trustee and the Owner Participant. SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Trust Indenture Estate shall be situated or to make any claim or bring any suit with respect to or in connection with the Trust Indenture Estate, this Trust Indenture, any other Indenture Agreement, the Secured Certificates or any of the transactions contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interests of the Certificate Holders (and the Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture Trustee shall have been requested to do so by a Majority in Interest of Certificate Holders, then in any such case, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and such other instruments as may from time to time be necessary or advisable either (1) to constitute one or more bank or trust companies or -49- 50 one or more persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as additional trustee or trustees of all or any part of the Trust Indenture Estate, or to act as separate trustee or trustees of all or any part of the Trust Indenture Estate, in each case with such rights, powers, duties and obligations consistent with this Trust Indenture as may be provided in such supplemental indenture or other instruments as the Indenture Trustee or a Majority in Interest of Certificate Holders may deem necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional and separate trustee, subject in each case to the remaining provisions of this Section 8.03. If the Owner Trustee shall not have taken any action requested of it under this Section 8.03(a) that is permitted or required by its terms within 15 days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing provisions of this Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and perform any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee. In case any additional or separate trustee appointed under this Section 8.03(a) shall die, become incapable of acting, resign or be removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to the Indenture Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.03(a). (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Trust Indenture Estate or otherwise payable under any Operative Document to the Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights, powers, duties and obligations conferred or imposed upon any additional or separate trustee shall be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly except to the extent that applicable Law of any jurisdiction in which any particular act is to be performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of the Indenture Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Indenture Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.03 shall be subject to, and shall have the benefit of Articles IV through VIII and Article X hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. (c) If at any time the Indenture Trustee shall deem it no longer necessary or desirable in order to conform to any such law or take any such action or shall be advised by such counsel that it is no longer so necessary or desirable in the interest of the Certificate Holders, or in the event that the Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Certificate Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when and to the extent it could so act under Section 8.03(a) hereof. -50- 51 ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS. (a) Except as provided in Section 5.02 hereof, the Owner Trustee agrees it shall not enter into any amendment of or supplement to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee and a Majority in Interest of Certificate Holders. Anything to the contrary contained herein notwithstanding, without the necessity of the consent of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter into amendments of or additions to the Lease to modify Section 5 (except to the extent that such amendment would affect the rights or exercise of remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such amendments, modifications and changes do not and would not affect the time of, or reduce the amount of, Rent payments (other than Excluded Payments) until after the payment in full of all Secured Obligations or otherwise adversely affect the Certificate Holders. (b) Without limiting the provisions of Section 9.01(a) hereof, the Indenture Trustee agrees with the Certificate Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Certificate Holders, or does not adversely effect the Certificate Holders, but upon the written request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each holder of an affected Secured Certificate then outstanding, no such amendment of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11 or 2.15 or Article III or Section 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an Event of Default) of the Lease, the definitions of "Event of Default", "Default", "Lease Event of Default", "Lease Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Secured Certificate, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in favor of the Owner Trustee, the Indenture Trustee or the Certificate Holders (except that the Owner Trustee (in its individual capacity) or the Indenture Trustee, as the case may be, may consent to any waiver or reduction of an indemnity payable to it), (iv) consent to any change in the Trust Indenture or the Lease which would permit redemption of Secured Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as permitted by Section 2.14 hereof, (v) except as contemplated by the Lease or the Participation Agreement, reduce the amount or extend the time of payment of Interim Rent, Basic Rent, Stipulated Loss Value, or Termination Value for the Aircraft in each case as set forth in the Lease, or modify, amend or supplement the Lease or consent to any assignment of the Lease, in either case releasing Lessee from its obligations in respect of the payment of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections -51- 52 3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. So long as no Lease Event of Default has occurred and is continuing, without the consent of Lessee no amendment or supplement to this Trust Indenture or waiver or modification of the terms hereof shall adversely affect Lessee. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Certificate Holder for any of the following purposes: (i) (a) to cure any defect or inconsistency herein or in the Secured Certificates, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Certificate Holders in its capacity solely as Certificate Holder; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Trust Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Certificate Holders, or to surrender any rights or power herein conferred upon the Owner Trustee, the Owner Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and (vii) to include on the Secured Certificates any legend as may be required by law. SECTION 9.02. TRUSTEES PROTECTED. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of Section 9.01 hereof adversely affects any right, duty, immunity or indemnity with respect to such institution under this Trust Indenture or the Lease, such institution may in its discretion decline to execute such document. SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to Section 9.01 hereof, the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each Certificate Holder at its address last set forth in the Secured Certificate Register, but the failure of the Indenture Trustee to mail such copies shall not impair or affect the validity of such document. SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST AGREEMENT AND INDENTURE SUPPLEMENT. No written request or consent of the Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof shall be required to enable the Owner Trustee to enter into any Lease Supplement specifically required by the terms of the Lease or to execute and deliver a Trust Agreement and Indenture Supplement specifically required by the terms hereof. -52- 53 ARTICLE X MISCELLANEOUS SECTION 10.01. TERMINATION OF TRUST INDENTURE. Upon (or at any time after) payment in full of the Principal Amount of, Make-Whole Amount, if any, and interest on and all other amounts due under all Secured Certificates and provided that there shall then be no other Secured Obligations due to the Certificate Holders and the Indenture Trustee hereunder or under the Participation Agreement, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft and the Engines from the Lien of this Trust Indenture and releasing the Lease, the Bill of Sale, the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto from the assignment and pledge thereof hereunder and the Indenture Trustee shall execute and deliver such instrument as aforesaid and give written notice thereof to Lessee; provided, however, that this Trust Indenture and the trusts created hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property constituting part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all monies or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE HOLDERS. No holder of a Secured Certificate shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Secured Certificate or other right, title and interest of any Certificate Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Trust Indenture or entitle such holder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Trust Indenture Estate. SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING. Any sale or other conveyance of the Trust Indenture Estate, or any part thereof (including any part thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind the Certificate Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders in and to such Trust Indenture Estate or part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS. Nothing in this Trust Indenture, whether express or implied, shall be construed to give any person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or equitable right, remedy or claim under or in respect of this Trust Indenture. SECTION 10.05. NOTICES. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), with a copy to the Owner Participant addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee, -53- 54 addressed to it at its office at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to any Participant, Lessee or any Certificate Holder, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party (if any) set forth on the signature pages to the Refunding Agreement or in the Secured Certificate Register. Whenever any notice in writing is required to be given by the Owner Trustee, any Participant or the Indenture Trustee or any Certificate Holder or Lessee to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after being mailed, addressed as provided above. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Trust Indenture. SECTION 10.06. SEVERABILITY. Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS. No term or provision of this Trust Indenture or the Secured Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Owner Trustee and the Indenture Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any Secured Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 10.08. SUCCESSORS AND ASSIGNS. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the permitted successors and assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificate Holder shall bind the successors and assigns of such holder. This Trust Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby, thereby and by the Participation Agreement. Each Certificate Holder by its acceptance of a Secured Certificate agrees to be bound by this Trust Indenture and all provisions of the Participation Agreement applicable to a Loan Participant or a Certificate Holder. SECTION 10.09. HEADINGS. The headings of the various Articles and sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.10. NORMAL COMMERCIAL RELATIONS. Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or any bank or other Affiliate of such Participant may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Lessee, fully to the same extent as if this Trust Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. -54- 55 SECTION 10.11. GOVERNING LAW; COUNTERPART FORM. THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the parties hereto in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.12. VOTING BY CERTIFICATE HOLDERS. All votes of the Certificate Holders shall be governed by a vote of a Majority in Interest of Certificate Holders, except as otherwise provided herein. SECTION 10.13. BANKRUPTCY. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee hereunder), shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14. NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any of the provisions of this Trust Indenture or the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner Trustee will take any action contrary to Lessee's rights under the Lease, including the right to possession and use of, and the quiet enjoyment of, the Aircraft, except in accordance with provisions of the Lease. -55- 56 IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to be duly executed by their respective officers thereof duly authorized as of the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, as Owner Trustee By: __________________________________ Name: __________________________________ Title: STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By: __________________________________ Name: __________________________________ Title: -56- 57 EXHIBIT A TO TRUST INDENTURE AND MORTGAGE TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 D] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 D], dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 D] dated as of April 29, 1996 (the "TRUST AGREEMENT"), between the Owner Trustee and the Owner Participant named therein. W I T N E S S E T H: WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 D], dated as of June 12, 1996 (as amended and supplemented to the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft (such term and other terms used but not defined herein having the respective meanings ascribed thereto in the Trust Indenture), and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for recordation on the date hereof with the FAA as one document; NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust Indenture Estate covers all of Owner Trustee's right, title and interest in and to the following described property: 58 AIRFRAME One airframe identified as follows:
FAA Registration Manufacturer's Manufacturer Model Number Serial Number ------------ ----- ------ -------------
together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Two aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number ------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to any of such engines. Together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts). As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Loan Participants and of the Certificate Holders, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under the Lease Supplement [of even date herewith] covering the property described above subject, however, to all of the terms of the Trust Indenture including, without limitation, the rights of the Owner Trustee and the Owner Participant under Section 5.02 of the Trust Indenture. Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Certificate Holders, except EXHIBIT A-2 59 as provided in Section 2.15 and Article III of the Trust Indenture without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Trust Indenture Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. EXHIBIT A-3 60 IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, Owner Trustee By: ___________________________________ Name: Title: EXHIBIT A-4 61 SCHEDULE I
PRINCIPAL AMOUNT INTEREST RATE ---------------- ------------- Series A $25,255,419 7.67% Series B $ 8,282,397 8.07% Series C $ 6,462,184 8.97%
62 SECURED CERTIFICATES AMORTIZATION SERIES A AIRCRAFT: N540US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ----------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 1.61637786% Jul 2, 1998 0.00000000% Jan 2, 1999 2.04965912% Jul 2, 1999 0.00000000% Jan 2, 2000 2.04965912% Jul 2, 2000 0.00000000% Jan 2, 2001 2.04965912% Jul 2, 2001 0.00000000% Jan 2, 2002 2.04965912% Jul 2, 2002 0.00000000% Jan 2, 2003 2.04965912% Jul 2, 2003 0.00000000% Jan 2, 2004 2.04965912% Jul 2, 2004 0.00000000% Jan 2, 2005 2.04965912% Jul 2, 2005 0.00000000% Jan 2, 2006 2.04965912% Jul 2, 2006 0.00000000% Jan 2, 2007 2.04965912% Jul 2, 2007 0.00000000% Jan 2, 2008 2.04965912% Jul 2, 2008 0.00000000% Jan 2, 2009 2.04965912% Jul 2, 2009 0.00000000% Jan 2, 2010 11.69834482% Jul 2, 2010 0.00000000% Jan 2, 2011 12.72737942% Jul 2, 2011 0.00000000% Jan 2, 2012 13.70356992% Jul 2, 2012 17.07826744% Jan 2, 2013 15.79303040% Jul 2, 2013 0.87716620% Jan 2, 2014 3.95961358%
63 SERIES B AIRCRAFT: N540US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ----------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.08333409% Jul 2, 1999 0.00000000% Jan 2, 2000 2.08333409% Jul 2, 2000 0.00000000% Jan 2, 2001 2.08333409% Jul 2, 2001 0.00000000% Jan 2, 2002 2.08333409% Jul 2, 2002 0.00000000% Jan 2, 2003 2.08333409% Jul 2, 2003 0.00000000% Jan 2, 2004 2.08333409% Jul 2, 2004 0.00000000% Jan 2, 2005 2.08333409% Jul 2, 2005 0.00000000% Jan 2, 2006 2.08333409% Jul 2, 2006 0.00000000% Jan 2, 2007 2.08333409% Jul 2, 2007 0.00000000% Jan 2, 2008 11.46938501% Jul 2, 2008 0.00000000% Jan 2, 2009 26.33173706% Jul 2, 2009 0.00000000% Jan 2, 2010 0.37180058% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 38.03291487% Jul 2, 2014 4.77498241% Jan 2, 2015 0.26917328%
64 SERIES C AIRCRAFT: N540US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ----------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.55481738% Jul 2, 1999 0.00000000% Jan 2, 2000 3.61387110% Jul 2, 2000 0.00000000% Jan 2, 2001 4.76790819% Jul 2, 2001 0.00000000% Jan 2, 2002 6.02548612% Jul 2, 2002 0.00000000% Jan 2, 2003 7.39584326% Jul 2, 2003 0.00000000% Jan 2, 2004 8.88914646% Jul 2, 2004 0.00000000% Jan 2, 2005 10.51638270% Jul 2, 2005 0.00000000% Jan 2, 2006 5.39156731% Jul 2, 2006 0.00000000% Jan 2, 2007 11.71413565% Jul 2, 2007 0.00000000% Jan 2, 2008 12.33483912% Jul 2, 2008 0.00000000% Jan 2, 2009 0.00000000% Jul 2, 2009 0.00000000% Jan 2, 2010 0.00000000% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 0.00000000% Jul 2, 2014 0.00000000% Jan 2, 2015 26.79600271%
65 SCHEDULE II 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. EX-4.H4 63 LEASE AGREEMENT-1996 D 1 LEASE AGREEMENT [NW 1996 D] This LEASE AGREEMENT [NW 1996 D], dated as of April 29, 1996, between FIRST SECURITY BANK OF UTAH, 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. The following terms shall have the following meanings for all purposes of this Lease Agreement [NW 1996 D] and shall be equally applicable to both the singular and the plural forms of the terms herein defined: "Administrative Agent" means [_______________], a [_______] banking corporation, as administrative agent pursuant to the Participation Agreement, and any successor acting as administrative agent. "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. "After-Tax Basis" means an additional amount which when added to the amount of payment otherwise required to be made on an After-Tax Basis, after deduction of all Federal, state, local and foreign taxes required to be paid by or on behalf of a Person in respect of the receipt or realization of any such amounts, results in a sum equal to the payment required under the provisions of the Operative Documents to be made on an After-Tax Basis. Any payment under the Operative Documents which does not actually result in an increase (or a decrease in a refund) of the Owner Participant's Federal, state, local or foreign income tax liability for the year of the accrual or receipt of such payment but which reduces any net operating loss or business credit or foreign tax credit carryover of the recipient shall be treated as giving rise to an actual increase in (or a decrease in a refund of) tax liability for the year in which such tax attribute if not reduced thereby would have given rise to a reduction in such recipient's tax liability (or such recipient's allowable refund in respect of any 2 such taxes). With respect to the Owner Participant, for purposes of this definition, it shall be assumed that United States federal, state, local and foreign income taxes are payable at the Highest Marginal Rate (as defined in the Tax Indemnity Agreement) then applicable to the Owner Participant. "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 two 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 Boeing 757-251 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. "Assumed Interest Rate" has the meaning set forth in Section 3(c) hereof. "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 - 2 - 3 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 Commencement Date and ending on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. "Bill of Sale" means a full warranty bill 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 Bill of Sale shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good title to the Airframe and each Engine described in such Bill 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 New York, New York; Boston, Massachusetts; Salt Lake City, Utah; or Minneapolis, Minnesota and, in connection with any payment of Rent and so long as any Secured Certificate is a Eurodollar Loan (as defined in the Trust Indenture), such day is also a day for trading by and between banks in the interbank Eurodollar market. "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. "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. - 3 - 4 "Commencement Date" means January 2, 1997. "Commitment" means the commitment of a Loan Participant 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 1996 D], 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. "Credit Agreement" means the Credit Agreement, dated as of November 2, 1995, among Lessee, the banks, financial institutions and other institutional lenders listed on the signature pages thereof, [_____________], as documentation agent, [_______________], as administrative agent, and [________________], as syndication agent, as the same may be amended, supplemented or otherwise modified from time to time. "Debt Rate" has the meaning set forth in the Trust Indenture. "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, 2003, provided, however, that if the chief legal officer or chief tax officer of Lessee has actual knowledge that the Depreciation Period is other than the period specified in the Tax Assumptions as a result of an "Operative Event" (as defined in the Tax Indemnity Agreement), then ending on the last day of the Owner Participant's taxable year in which a depreciation or cost recovery deduction is allowed or allowable with respect to the Aircraft. "Documentation Agent" means [_______________], a bank organized under the laws of [_______________], as documentation agent pursuant to the Participation Agreement, and any successor acting as documentation agent. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of the two Pratt & Whitney Model PW2037 engines listed by manufacturer's serial number in the initial Lease Supplement, - 4 - 5 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 two 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 hereunder. The term "Engines" means, as of any date of determination, all Engines then leased hereunder. "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 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government) 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 for a period in excess of 180 consecutive days or, if earlier, until the end of the Term or, in the case of a requisition of title by the United States Government or any other government of registry of the Aircraft which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government, as the case may be, the requisition of title shall not have been reversed within 90 days from the date of such requisition of title or, if earlier, at the end of the Term (it being understood that a requisition of title by any government other than as expressly provided above shall constitute an immediate Event of Loss); (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, prior to the - 5 - 6 expiration of such 180 day period, shall have undertaken and shall be diligently carrying forward in a manner that does not discriminate against the Aircraft all steps which are necessary or desirable to permit the normal use of such property by Lessee, and, within one year of such prohibition, Lessee 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, provided, notwithstanding any of the foregoing, such prohibition shall constitute an Event of Loss if such use shall have been prohibited for a period of two 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any instrumentality or agency of any thereof whose obligations are backed by the full faith and credit of such government, which shall have occurred during the Basic Term (or the Interim 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; (vi) any divestiture of title to or interest in an Engine treated as an Event of Loss pursuant to Section 7(b) hereof; and (vii) the operation of or location of the Aircraft, while under requisition for use by any government, in an area excluded from coverage by any insurance policy in effect with respect to the Aircraft required by this Agreement, unless in the case of a requisition by the United States Government or any other government of registry of the Aircraft which is listed on Exhibit C to the Participation Agreement and is designated a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government, Lessee shall have obtained an indemnity in lieu thereof from such government or such agency or instrumentality. 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 the Transition 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 the Transition Date; provided, however, that, to the extent that the aggregate amount of interest due and payable on the Transition Date on the Secured Certificates for the period from and including the Delivery Date to but excluding the Transition Date is less than the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Transition Date if such Secured Certificates had borne interest at the Assumed Interest Rate for such period, the - 6 - 7 corresponding percentage set forth in Exhibit B shall be decreased by the amount which when multiplied by Lessor's Cost will equal such differential. "Expenses" has the meaning specified in Section 7(c) of the Participation Agreement. "FAA Bill of Sale" means a bill 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. "Funding Loss Amount" has the meaning assigned to that term in the Trust Indenture. "Guarantee" means the Guarantee [NW 1996 D], dated as of the date hereof, made by the Guarantor in favor of the Parties, 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 the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Administrative Agent, the Documentation Agent, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents. "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. - 7 - 8 "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. "Interest Period" means Interest Period as defined in the Trust Indenture. "Interim Rent" means the rent payable for the Aircraft for the Interim Term pursuant to Section 3(b) hereof. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions hereof. "Lease Agreement", "this Lease Agreement", "this Lease", "this Agreement", "herein", "hereof", "hereunder", "hereby" or other like words mean this Lease Agreement [NW 1996 D] 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 semi-annual periods throughout the Basic Term and any Renewal Term ending on a Lease Period Date, the first such period commencing on and including the Commencement Date and each succeeding period commencing on the date immediately following the preceding Lease Period Date. "Lease Period Date" means July 2, 1997 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 - 8 - 9 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 Bill of Sale, the Bill 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 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 of Utah, 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 of Utah, 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 risk of interference with the payment of Rent (other than Excluded Payments in favor of First Security Bank of Utah, 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. - 9 - 10 "Lien" means any mortgage, pledge, lien, charge, claim, encumbrance, lease, sublease, sub-sublease or security interest. "Loan Participant" means each institution executing the Participation Agreement as a Loan Participant, and its respective successors and assigns, and any Certificate Holder; at any time when there is only one Certificate Holder, "each Loan Participant" shall mean such 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 assigned to that term in the Trust Indenture. "Manufacturer" means The Boeing Company, a Delaware corporation. "Manufacturer Documents" means the Purchase Agreement and the Consent and Agreement. "Moody's" means Moody's Investors Service, Inc. "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 after-tax present value, as of the Delivery Date, of Basic Rent set forth in Exhibit B hereto through and including the date on which the Special Purchase Price is payable pursuant to Section 19(d) hereof, and the Special Purchase Price payable as of such date, computed on the basis of the same methodology, constraints and assumptions as were utilized in determining Basic Rent, the Special Purchase Price, Stipulated Loss Value and Termination Value percentages as of the Delivery Date. "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 Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Guarantee, the Owner Participant Guaranty, the Purchase Agreement Assignment and the Consent and Agreement. - 10 - 11 "Overall Transaction" means all the transactions contemplated by the Operative Documents. "Owner Participant" means the corporation executing the Participation Agreement as the Owner Participant and 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 Participant Guarantor" means the entity executing the Owner Participant Guaranty as guarantor thereunder. "Owner Participant Guaranty" means the Owner Participant Guaranty [NW 1996 D], dated as of the date hereof, made by the Owner Participant Guarantor in favor of Lessee, Lessor, the Loan Participants and the Indenture Trustee, as such Owner Participant Guaranty may be amended or supplemented from time to time pursuant to the applicable provisions thereof. "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 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 1996 D], dated as of the date hereof, among Lessee, the Loan Participants, the Indenture Trustee, the 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. - 11 - 12 "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. "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 (calculated based on the actual number of days elapsed in a year consisting of 365 days or 366 days, as the case may be) equal to (x) 1% over the Base Rate for the first 5 Business Days from the date such payment became due, and (y) 3% over the Base Rate thereafter. "Permitted Carrier" means an air carrier domiciled and principally based in a country set forth on Exhibit C to the Participation Agreement and designated therein as a "Specified Country". "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 C to the Participation Agreement. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Prepaid Rent" has the meaning assigned in Section 3(g) hereof. "Purchase Agreement" means the Purchase Agreement No. 1631, dated December 1, 1989, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1996 D], 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. - 12 - 13 "Reimbursement Amount" has the meaning set forth in Section 3(g) hereof. "Renewal Term" means any Fixed Renewal Term or Fair Market Renewal Term as those terms are defined in Section 19 hereof. "Rent" means Interim Rent, Basic Rent and Supplemental Rent, collectively. "Rent Differential Amount" has the meaning set forth in Section 3(c) hereof. "Restricted Country" has the meaning set forth on Exhibit C to the Participation Agreement. "Return Site" means a major airport on Lessee's route system located within the forty-eight contiguous states of the United States. "S&P" means Standard & Poor's Corporation. "Secured Certificates" has the meaning assigned to that term in the Trust Indenture. "Special Purchase Price" shall mean the amount denominated as such in Exhibit B hereto. "Specified Country" has the meaning set forth on Exhibit C to the Participation Agreement. "Stipulated Loss Value" with respect to the Aircraft as of any date through and including January 2, 2019, 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). To the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Interim Term or the Lease Period in which such Stipulated Loss Value Date occurs up to and including such Stipulated Loss Value Date is greater or less than the amount included in calculating the percentage set forth in Exhibit C with respect to such Stipulated Loss Value Date on account of such interest, the corresponding percentage set forth in Exhibit C shall be adjusted appropriately to compensate for such differential. "Stipulated Loss Value" as of any date after January 2, 2019 shall be the amount determined as provided in Section 19(a) hereof. - 13 - 14 "Stipulated Loss Value Date" means the 2nd calendar day of each calendar month during the Interim Term, 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. "Supplemental Rent" means all amounts, liabilities and obligations (other than Interim Rent and Basic Rent) which Lessee assumes or agrees to pay to Lessor or others hereunder, under the Participation Agreement, under the Tax Indemnity Agreement or under any of the other Operative Documents. The parties acknowledge that Supplemental Rent is a general category and, accordingly, agree that any provision of any Operative Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment. "Tax Indemnitee" means the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors and permitted assigns. "Tax Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1996 D], dated as of the date hereof, 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, 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 Interim Term, 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 January 2, 2019, means, but subject always to the provisions of - 14 - 15 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). In the event that the Termination Date with respect to which Termination Value is determined is a date on which Basic Rent is payable in advance as indicated on Exhibit B, to the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Lease Period ending on such Termination Date is greater or less than the amount included in calculating the corresponding percentage set forth in Exhibit D with respect to such Termination Date on account of such interest, the corresponding percentage set forth in Exhibit D shall be adjusted appropriately to compensate for such differential. "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker, special counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Vedder, Price, Kaufman & Kammholz, special counsel to the Loan Participants, such information to be furnished by the Documentation Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee and Guarantor, such information to be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements (but excluding any sales, use and other transfer taxes which apply to the Aircraft), such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, and the reasonable out-of-pocket expenses of the Owner Participant, such information to be furnished by the Owner Participant, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust Indenture, such information to be furnished by the Indenture Trustee, (v) the fees of Aeroeconomics, Inc. and BK Associates, Inc. with respect to the appraisals of the Aircraft pursuant to Sections 4(a)(xx) and 4(a)(xxix), respectively, of the Participation Agreement, such information to be furnished by the Owner Participant in the case of Aeroeconomics, Inc. and by the Documentation Agent in the case of BK Associates, Inc., (vi) the reasonable and actual fees, expenses and disbursements of Dewey Ballantine, special counsel to the Owner Participant, such information to be furnished by the Owner Participant, (vii) the fee and reasonable disbursements of Babcock and Brown Financial Corporation, such information to be furnished by Lessee, and (viii) the fee payable to the Loan Participants on the Delivery Date. - 15 - 16 "Transition Date" means the date designated as such in Exhibit B hereto. "Trust Agreement" means that certain Trust Agreement [NW 1996 D], dated as of the date hereof, between the Owner Participant and First Security Bank of Utah, 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 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 1996 D], dated as of the date hereof, between Lessor and the Indenture Trustee, as originally executed or as modified, amended or supplemented in accordance with the provisions thereof. "Trust Supplement" means a supplement to the Trust Agreement and the Trust Indenture, substantially in the form of Exhibit A to the Trust Indenture. "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 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. SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to satisfaction of the conditions set forth in Section 4(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 Section 4(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 - 16 - 17 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) Interim Term and Basic Term. The Interim Term shall commence on the Delivery Date and end on and include the day immediately preceding the Commencement Date unless earlier terminated pursuant to the provisions hereof. The Basic Term shall commence on the Commencement Date and end on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. (b) Interim Rent. Lessee shall pay Interim Rent on the Commencement Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for Interim Rent on the Commencement Date. Although the Interim Rent percentage set forth in Exhibit B hereto has been computed on the assumption that the rate of interest on the Secured Certificates will be the Assumed Interest Rate, Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, the Interim Rent payable on the Commencement Date shall be increased or decreased (but not below zero) by the difference between (i) the aggregate amount of interest due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to but excluding the Commencement Date and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to the Commencement Date if such Secured Certificates had borne interest at the Assumed Interest Rate. If the amount determined in accordance with clause (i) of the preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be increased by such difference. If the amount determined in accordance with clause (i) of the preceding sentence shall be less than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be decreased (but not below zero) by such difference. (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 applicable Lease Period Date specified in Exhibit B hereto. Although the Basic Rent percentages set forth in Exhibit B hereto have been computed on the assumption that the rate of interest on the Secured Certificates throughout the Term will be 6.5% per annum, computed on the basis of a 360-day year of twelve 30-day - 17 - 18 months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, each installment of Basic Rent shall be increased or decreased (but not below zero), as the case may be, by the Rent Differential Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with respect to the Basic Term, the difference between (i) the aggregate amount of interest due and payable on such Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on such Lease Period Date if such Secured Certificates had borne interest at the Assumed Interest Rate, in each case for the period from and including the Lease Period Date (or the Commencement Date in the case of the first Lease Period) next preceding such Lease Period Date to but excluding such Lease Period Date. If, as of any Lease Period Date, the amount determined in accordance with clause (i) of the immediately preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Basic Rent payable on such Lease Period Date shall be increased by the Rent Differential Amount. If, as of any Lease Period Date, the amount determined in accordance with such clause (ii) shall exceed the amount determined in accordance with such clause (i), the amount of Basic Rent due on such Lease Period Date shall be decreased (but not below zero) by the Rent Differential Amount. (d) Adjustments to Basic Rent. (i) In the event that (A) the Delivery Date occurs other than on April 30, 1996, or (B) Transaction Expenses paid by Lessor pursuant to Section 16 of the Participation Agreement are determined to be other than 1.0% 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, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated on or prior to November 15, 1996 using the same methods and assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and Special Purchase Price, 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. (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, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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, subject to the Owner Participant's consent, which the Owner - 18 - 19 Participant may withhold in its sole discretion, 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, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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 and the Special Purchase Price 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 Amount set forth in Exhibit B in a manner consistent with such recalculation. In addition, (X) any recalculation of Basic Rent, Stipulated Loss Value or Termination Value percentages made pursuant to this Section 3(d) shall take into account any decrease in the Excess Amount with respect to the Transition Date required by the proviso to the definition of "Excess Amount", (Y) after January 31, 1997 but prior to July 2, 1997, the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C and the Termination Value percentages set forth in Exhibit D shall be recalculated to take into account any decrease in Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) of this sentence, and (Z) at the time of any payment of Stipulated Loss Value or Termination Value, the Stipulated Loss Value percentage set forth in Exhibit C or the Termination Value percentage set forth in Exhibit D, by reference to which the amount of such payment is determined shall be recalculated to take into account any decrease in the Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) or clause (Y) of this sentence. (iv) Any recalculation of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price 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. In addition, notwithstanding any other provisions herein, in no event shall the Special Purchase Price be adjusted to an amount that is less than the greater of (A) the Termination Value as of July 2, 2012, (B) the estimated fair market value of the Aircraft on July 2, 2012, determined as of the Delivery Date and set forth in the opinion received from Aeroeconomics, Inc. pursuant to Section - 19 - 20 4(a)(xx) of the Participation Agreement (the "APPRAISAL"), and (C) 101% multiplied by the present value as of July 2, 2012 of (x) the remaining scheduled Basic Rent through the end of the Basic Term plus (y) 42.2% of Lessor's Cost (i.e., the fair market value of the Aircraft as of the end of the Basic Term as set forth in the Appraisal) (the present value calculation described in this clause (C) shall utilize a semi-annual compounded discount rate no lower than that utilized by the Owner Participant in determining the Special Purchase Price as of the Delivery Date, but in no event shall such discount rate be less than 11.8% per annum). Such recalculated Basic Rent, Excess Amount and Stipulated Loss Value and Termination Value percentages and the Special Purchase Price 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 Interim Rent and 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 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), 4.07 and 4.08(1) of Rev. Proc. 75-28 and with Section 467 of the Internal Revenue Code of 1986, as amended, as each is then in effect as long as the Schedule of Basic Rent was in compliance with Section 467 of the Code as in effect on the Closing Date, it being understood that, to the extent that any grandfather, effective date, or similar provisions in any regulations under Section 467 or other administrative pronouncement interpreting Section 467 promulgated or issued after the Closing - 20 - 21 Date causes such regulations or pronouncement not to be applicable to the Schedule of Basic Rent in effect on the Closing Date, such Schedule shall be deemed to be in compliance with Section 467 as in effect on the Closing Date (provided that the test of Rev. Proc. 75-28 Section 4.08(1) and Section 467 shall be applied on a prospective basis from the date of such adjustment if and to the extent permitted by applicable law, as then in effect) 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, on behalf of Lessor, as Supplemental Rent when due any amount of premium payable when due under the Trust Indenture and shall pay on behalf of Lessor amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when the same shall become due and payable. 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 Interim Rent and 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 of Utah, National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW 1996 D (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, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1996 D (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 10 Business Days prior to the date such payment of Rent is due). 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 - 21 - 22 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 the Transition Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall on the Transition Date, prepay on the Transition 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 shall, under all circumstances and whether or not an Event of Default shall be continuing on the Transition Date, pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount equal to the excess, if any, of the interest on the Secured Certificates relating to the period from and including the Delivery Date to but excluding the Transition Date over the Excess Amount payable on the Transition Date; provided, further, 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 equal to the Base Rate as in effect from time to time plus 5% per annum 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 - 22 - 23 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 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 Interim Rent or 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 of Utah, 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 that 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 - 23 - 24 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, 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 Return Site then being serviced by Lessee's 757-200 aircraft, which Return Site shall be chosen by Lessor and reasonably acceptable to Lessee (provided, that at Lessor's request, Lessee will consider in good faith a Return Site not then being serviced by Lessee's 757-200 aircraft, provided, further, that, in the case of a return to a Return Site not then being serviced by Lessee's 757-200 aircraft, Lessee is able to return the Airframe immediately following a revenue passenger flight with the Airframe to such Return Site), and Lessor will give Lessee at least ten (10) days' prior written notice of the Return Site; 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 and not due to any act or failure to act on the part of Lessee; the Airframe will be fully equipped with the Engines (or other Pratt & Whitney Model PW2037 engines or two engines of the same or another manufacturer of not less than equivalent utility, fair market sales 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 both 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 without the necessity of any further expense being incurred by Lessor, (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 - 24 - 25 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 Exhibit F. Lessor agrees to pay Lessee those amounts specified in Exhibit F to be for the cost, expense or account of Lessor. 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 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) bill 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 bill 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 bill 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 that 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) Lessee shall invoice Lessor, and 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 thirty (30) 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 - 25 - 26 facilities for the Aircraft (maintenance costs and other out-of-pocket costs other than parking fees incurred by Lessee in connection with such storage 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 that 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 Sublessee) either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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, the 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 forty-five (45) days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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 - 26 - 27 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 Boeing 757-200 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 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 or such manner as shall have been approved by the Owner Participant pursuant to Section 7(b)(x) and without in any way discriminating against the Aircraft, by reason of its leased status, including, without limitation, the termination of airworthiness directives; 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 (which records, logs and other materials, as between Lessor and Lessee and all parties claiming through Lessee, shall be the property of Lessor but shall be maintained by Lessee during the Term and shall become the property of Lessee upon Lessee's purchase of the Aircraft pursuant to the terms of this Lease or upon the occurrence of an Event of Loss and Lessee's compliance with Section 10 hereof); 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, - 27 - 28 rule, regulation or order in any reasonable manner which does not materially adversely affect Lessor or the Owner Participant 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 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 Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee 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 any 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 Permitted 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 - 28 - 29 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; (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; - 29 - 30 (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 (which, if entered into with tax-exempt entities during the Depreciation Period, may not exceed three years) 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 (the term of which, during the Depreciation Period, may not exceed three years), 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 the Owner Participant and the Indenture Trustee in their sole discretion, 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 the Sublessee under such sublease is a foreign air carrier (other than a foreign air carrier principally based and domiciled in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Sublessee is principally based and domiciled 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 domiciled and principally based in a country listed on Exhibit C to the Participation Agreement and designated therein as a "Restricted Country", Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee to the effect that (I) the terms of the proposed - 30 - 31 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 and domiciled, (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, (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 Lessor (or Lessee, as "lessee", or the proposed Sublessee, as "sublessee", as appropriate) and to the Lien of the Trustee Indenture, (V) such Sublease will not result in a risk of unindemnified Taxes to Lessor or the Owner Participant (it being agreed that in the event such opinion cannot be given in a form reasonably satisfactory to the Owner Participant, such opinion will be waived if (A) the Owner Participant has received assurances satisfactory to it to the effect that such Sublease will not result in any such risk, or (B) Lessee shall have entered into a binding agreement to indemnify in a manner satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant for such unindemnified Taxes; provided, however, that if (a) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (b) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such subleasing or (c) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee), (VI) none of the Owner Trustee, the Owner Participant or the Indenture Trustee will be required to register to do business in such country as a result of such sublease, after (A) taking into account any other contacts of the Owner Trustee and the Owner Participant with such jurisdiction (provided, that upon request by Lessee (such request having been acknowledged by the Owner Participant's general counsel), the Owner Trustee and the Owner Participant must respond - 31 - 32 within fourteen (14) Business Days after receipt of such request describing its contacts in such jurisdiction, or else such party shall be deemed for purposes of this clause (VI) to have no such contacts) and (B) assuming that the Indenture Trustee has no other contacts with such jurisdiction, and (VII) there is no tort liability for owners not in possession of aircraft in such country more onerous than under the laws of the United States or any state thereof (it being agreed that in the event such opinion cannot be given in a form reasonably satisfactory to the Owner Participant, such opinion will be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover the risk of such tort liability), 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; provided, further, that in the event the Sublessee's maintenance program for the Airframe will be a block overhaul program, a sublease entered into pursuant to this clause (x) to such Sublessee shall not extend beyond the date which is six months prior to the expiration of the Basic Term or any Renewal Term then in effect (and Lessee, if the last Sublessee was not a U.S. Air Carrier, shall upon expiration of the sublease to such Sublessee (1) incorporate the Aircraft into Lessee's approved maintenance program for aircraft of the same make and model and in active commercial service and (2) place the Aircraft into active passenger service or, in lieu thereof, upon the return of the Aircraft to Lessor pursuant to Section 5, Lessee shall comply with those return conditions that would have been applicable had Lessee adopted a block overhaul program) unless either the Owner Participant shall have previously approved in writing the maintenance procedures of the Sublessee or Lessee shall have irrevocably committed to purchase the Aircraft at, or extend the Term of this Lease by a period of at least six months from, the end of the Basic Term or such Renewal Term, as the case may be. 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 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 - 32 - 33 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 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 (A) fifteen (15) days prior to entering into any Sublease with a term of more than one (1) year, (B) five (5) Business Days prior to entering into any Sublease with a term equal to or less than one (1) year with a Permitted Sublessee and (C) five (5) days prior to entering into any Sublease with a term equal to or less than one (1) year with any proposed Sublessee other than a Permitted Sublessee, 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 of Utah, 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 - 33 - 34 (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 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 - 34 - 35 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) 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, the Owner Participant, 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 diminish the value, utility or remaining useful life of the Airframe or such Engine, or materially impair the condition or airworthiness thereof, below the value, utility, remaining useful life, condition or airworthiness 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 original cost of all Obsolete Parts which shall have been removed and not replaced shall not exceed $500,000. 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 - 35 - 36 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, remaining useful life, condition or airworthiness 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]. (2) Lessee shall have the right to elect to terminate this Lease on any Lease Period Date occurring on or after January 2, 2003 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 its best efforts to obtain bids in Dollars 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, lease or ownership 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 - 36 - 37 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 cash bid therefor (net of any brokerage commissions) 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 that 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 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 sale price of the Aircraft sold by Lessor after deducting the reasonable expenses incurred by Lessor, the Owner Participant or the Indenture Trustee 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) on behalf of Lessor, the premium and Funding Loss 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 that 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. 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 premium and Funding Loss Amount, if any, due on the Secured Certificates and, so long as - 37 - 38 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 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, if Lessee revokes its Termination Notice or, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that payment by Lessee of the amount specified in clause (3)(A) above in connection with a termination where Lessor has not elected to retain title will not constitute a preference under applicable U.S. bankruptcy laws, a Default or an Event of Default of the type referred to in Section 14(e) hereof shall exist on such Termination Date (unless, in the case of any such Default or Event of Default, Lessee has obtained an order from the applicable bankruptcy court approving the payment of any such amount), 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, the Indenture Trustee 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, in which case Lessee shall pay only the reasonable costs and expenses of the Indenture Trustee), 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, Basic Rent or any other amounts hereunder arising subsequent to such date of sale or retention shall cease to accrue, Lessee shall have no further obligation in this respect 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 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 and a Termination Notice may be given not more than once during any 365-day period. If (x) there is a sale of the Aircraft pursuant to this Section 9(c), (y) an Event of Default of the type described in Section 14(c) relating to Section 7(a) or Section 8 shall have occurred and be continuing on the date of such sale and (z) the fair market sales value of the Aircraft on the date of such sale is lower than it would have been had no such Event of Default occurred, Lessee shall pay to Lessor, in addition to any other amounts due hereunder, the amount in excess of Termination Value that Lessor would have received had no such Event of Default occurred. Lessor and Lessee shall confer in good faith with a view to reaching agreement on what the fair market sales value of the Aircraft would have been in the absence of such Event of Default. If Lessor and Lessee have not so agreed within 10 days after notice by Lessor or the Owner Participant of the occurrence of such Event of Default, the question - 38 - 39 shall be determined by an appraisal in accordance with the procedures described in Section 19(c). (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 Interim Rent or 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) the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence) (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 the Commencement Date or 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 Interim Rent or Basic Rent that would have been due on the Commencement Date or such Lease Period Date as if such Event of Loss had not occurred, or (ii) 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, 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 - 39 - 40 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. 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, if Basic Rent is payable in arrears on the date of such payment as indicated on Exhibit B hereto, Basic Rent due on such payment date, and all Supplemental Rent), under the Participation Agreement and under the Tax Indemnity Agreement, (1) Basic Rent, Supplemental Rent, Stipulated Loss Value, Termination Value or any other amount due hereunder shall cease to accrue, and Lessee shall have no further obligation in any such respect, provided, that the obligations of Lessee under the other Operative Documents which, by their express terms, are stated to survive shall not be terminated, (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 that 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 bill 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. Notwithstanding anything to the contrary contained in the foregoing, in the event that any payment of Stipulated Loss Value is to be made pursuant to this Section 10(a) on a date that is subsequent to the scheduled expiration of the Term, then Lessee shall, in addition to any other amounts payable pursuant to this Section 10(a), pay on the relevant Loss Payment Date such additional amount as is necessary to preserve the Owner Participant's Net Economic Return. Any calculation of any such additional amount shall be made by the Owner Participant and shall be subject to the verification procedures set forth in Exhibit E hereto. 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 (Lessee shall in connection therewith provide the certificate or the appraisal described in Section 5.06(4) of the Trust Indenture) 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 any airframe so substituted hereunder shall have a year of manufacture after December 31, 1994 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 bill of sale and a - 40 - 41 Federal Aviation Administration bill 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 that 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 bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft 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, (7)(x) furnish Lessor with an opinion of tax counsel chosen by the Owner Participant and reasonably acceptable to Lessee to the effect that such substitution will not result in any adverse tax consequences to the Owner Participant or (y) indemnify the Owner Participant as to such tax consequences in a manner reasonably satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (a) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB+/Baa1" or better from either S&P or Moody's so long as the rating by the other agency is not less than "BBB" or "Baa2", as the case may be, or (b) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such substitution or (c) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the - 41 - 42 Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee, and (8) 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 Interim Rent or 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 Pratt & Whitney Model PW2037 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, and Lessee shall in connection therewith provide the certificate or appraisal described in Section 5.06(2)(B)(iv) of the Trust Indenture; provided that both 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) bill 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 that 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 bill 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 - 42 - 43 "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 Interim Rent or 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) and the Owner Participant 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 to Lessor and Lessee, as their interests may appear; 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) and the Owner Participant 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 which is a Specified Country. 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any instrumentality or agency of any thereof whose obligations are backed by the full faith and credit of such government, 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, instrumentality or agency, as the case may be, prior to the end of the Term, Lessee shall be obligated to return the Airframe and such Engines or engines to Lessor - 43 - 44 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, instrumentality or agency. 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 Exhibit F) 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) bill 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 bill 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens), against receipt from Lessor of a bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 which is a Specified Country. 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government (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. (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 - 44 - 45 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 or a Default of the type referred to in Section 14(a) or 14(e) 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 or 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 any 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 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 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 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 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 - 45 - 46 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 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 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, any 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 by Lessee 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 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 - 46 - 47 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 or a Default of the type referred to in Section 14(a) or 14(e) 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 - 47 - 48 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 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) and the Owner Participant 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) and the Owner Participant 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 - 48 - 49 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). (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 by Lessee 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, 1996, a report, signed by Marsh & McLennan, Incorporated 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 - 49 - 50 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. (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. (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 or a Default of the type referred to in Section 14(a) or 14(e) 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 - 50 - 51 any such Event of Default or 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 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 unless an Event of Default shall have occurred and be continuing) 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; 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: - 51 - 52 (a) Lessee shall not have made a payment of Interim Rent, Basic Rent or Stipulated Loss Value within ten (10) 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 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 and in clauses (i)(B) and (ii) of the first sentence of second paragraph of Exhibit F) 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 one hundred eighty (180) 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 the representations and warranties in, or in connection with, the Credit Agreement) 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 - 52 - 53 (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 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 Section 14(c) or (d) hereof, 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 - 53 - 54 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, if any, 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 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 Stipulated Loss Value Date not earlier than ten days from the date of such notice, may demand that the 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 Interim Rent or Basic Rent for the Aircraft due on or after the payment date specified in such notice), any unpaid Interim Rent or Basic Rent due on the payment date so specified (unless Basic Rent is payable in advance on such date but 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 Stipulated Loss Value Date specified as the payment date in - 54 - 55 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 Stipulated Loss Value Date specified as the payment date in such notice at an annual rate equal to the Base Rate plus 3%; or (ii) an amount equal to the excess, if any, of the Stipulated Loss Value for such Aircraft, computed as of the Stipulated Loss Value Date specified as the payment date in such notice over the fair market sales value of such Aircraft (computed as hereafter in this Section provided) as of the Stipulated Loss Value 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 Interim Rent or Basic Rent for the Aircraft due on or after such date), any unpaid Interim Rent or 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 and an all cash, contemporaneous sale, 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 - 55 - 56 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 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 will endeavor 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 and any such public sale shall be conducted in general so as to afford Lessee (and any Sublessee) a commercially reasonable opportunity to bid (it being understood that Lessor shall - 56 - 57 incur no liability for its failure to provide any such notice). 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 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 at its expense 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 1997, 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 - 57 - 58 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 telecopy 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President-Finance and Treasurer (Telecopy No. (612) 726-0665), 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 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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. This Lease is a net lease. 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, - 58 - 59 (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, upon compliance with the notice provisions set forth in Section 19(e) hereof, to renew this Lease for up to three 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"). 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. At the expiration of the third Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have the option, upon compliance with the notice provisions set forth in Section 19(e) hereof, to renew this Lease for a renewal term of not less than one year and not more than three 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"). The aggregate length of all Fair Market Renewal Terms pursuant to this Section 19(a)(2) may not exceed five years. (3) If no written notice is delivered by Lessee to Lessor pursuant to Section 19(e) 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), 14(e) or 14(f) 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 - 59 - 60 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 any portion of Basic Rent during the Basic Term was payable in advance, in which case the same proportion of Basic Rent (i.e., the total Basic Rent payable during the Basic Term divided into the total Basic Rent payable in advance during the Basic Term) shall be payable in advance during such Renewal Term, 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 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 compliance with the notice provisions set forth in Section 19(e) hereof, to purchase the Aircraft on the last Business Day of the Basic Term or any Renewal Term for a purchase price equal to the fair market sales value of the Aircraft; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the purchase price by Lessee will not constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled to purchase the Aircraft if there shall exist on such last Business Day of the Basic Term or any Renewal Term, as the case may be, a Default of the type referred to in Section 14(e) hereof. 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 that 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. 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 - 60 - 61 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 this Lease, including the purchase and renewal options of 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 a notice from Lessee pursuant to Section 19(e) hereof, 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, 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 July 2 , 2012 (or, if July 2, 2012 is not a Business Day, the Business Day immediately succeeding July 2, 2012), Lessee shall have the - 61 - 62 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; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the Special Purchase Price by Lessee will not constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled to purchase the Aircraft if there shall exist on July 2, 2012 (or, if July 2, 2012 is not a Business Day, on the Business Day immediately succeeding July 2, 2012) a Default of the type referred to in Section 14(e) hereof. 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 2.15 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 that 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. (e) In order to exercise any right pursuant to Sections 19(a) or 19(b) hereof, Lessee shall, no earlier than 540 days and no later than 270 days prior to the expiration of the Basic Term or any Renewal Term, as the case may be, deliver to Lessor a notice in writing stating that it intends to exercise one of the options set forth in Sections 19(a) or 19(b) hereof. Any such notice shall be revocable until the date that is 270 days prior to the expiration of the Basic Term or such Renewal Term, as the case may be. Failure to revoke any such notice prior to such 270th day prior to the end of the Basic Term or such Renewal Term, as the case may be, shall constitute a binding and irrevocable election by Lessee to exercise one of the options set forth in Sections 19(a) or 19(b) hereof. In the event that any such notice has so been provided to Lessor, Lessee shall, no earlier than the 270th day and no later than the 90th day prior to the expiration of the Basic Term or such Renewal Term, as the case may be, specify which of the options in Sections 19(a) or 19(b) Lessee intends to elect. For the avoidance of doubt, the parties agree and acknowledge that Lessee may not specify which of the options in Sections 19(a) or 19(b) it intends to elect prior to the date that is 270 days earlier than the expiration of the Basic Term or such Renewal Term, as the case may be. 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 - 62 - 63 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 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 Moody's or AA or better by S&P and having a final maturity of ninety (90) days or less from date of purchase thereof; and (iii) commercial paper - 63 - 64 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 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 a Default of the type referred to in Section 14(a) or 14(e) or an Event of Default shall have occurred and be continuing. If a Default of the type referred to in Section 14(a) or 14(e) or an Event of Default shall have occurred and be continuing, Lessor, or if the Trust Indenture shall not have been discharged, the Indenture Trustee as assignee of Lessor, shall hold any such gain as security for the obligations of Lessee under this Lease and apply it against such obligations as and when due, and once all such Defaults and Events of Default have been remedied, any gain not so applied shall be remitted to Lessee. 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 - 64 - 65 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. 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 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. SECTION 27. HOLDOVER RENT. In the event that Lessee shall fail to return the Aircraft in accordance with Section 5 hereof at the scheduled expiration of the Term, then, unless such failure shall occur as a result of (x) the Aircraft having suffered an Event of Loss or (y) Lessee having purchased the Aircraft pursuant to Section 19 hereof and, in the case of either clauses (x) or (y) above, Lessee shall have made all payments required to be made pursuant to such Sections, Lessee shall pay to Lessor, for each such day beyond the scheduled expiration of the Term during which the Aircraft is not returned to Lessor in accordance with Section 5 hereof, an amount equal to the higher of (A) the daily fair market rental value of the Aircraft during such period, computed in accordance with Section 19(c) hereof, and (B) the average daily Basic Rent payable by Lessee during the Term. - 65 - 66 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 OF UTAH, 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: Senior Vice President- Finance and Treasurer 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 - 67 EXHIBIT A TO LEASE AGREEMENT [NW 1996 D] LEASE SUPPLEMENT NO. [NW 1996 D] LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement [NW 1996 D], dated as of April 29, 1996, 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 1996 D], dated as of April 29, 1996, relating to one Boeing 757-251 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 Boeing 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the date hereof consists of the following components: - -------------------- (1) This language for Lease Supplement No. 1. (2) This language for other Lease Supplements. 68 (i) Airframe: FAA Registration No. ______; manufacturer's serial no. _____; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P______ and P______ (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 January 2, 2019. 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 The Boeing Company, or any subcontractor or supplier of The Boeing Company, 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 69 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 OF UTAH, 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 70 EXHIBIT B TO LEASE AGREEMENT [NW 1996 D] INTERIM RENT, 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. Interim Rent, Basic Rent and Excess Amount: Excess Amount Transition (Percentage of Date Lessor's Cost) --------------------- ------------------------ Interim Rent Commencement (Percentage of Date Lessor's Cost) --------------------- ------------------------ * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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. 71 INTERIM RENT, 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 (Percentage of Lease Period Date Lessor's Cost) --------------------- ------------------------ * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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 5 of 5 72 Lessor's Cost for the Aircraft: Special Purchase Price: Transition Date: EXHIBIT B - Page 5 of 5 73 EXHIBIT C TO LEASE AGREEMENT [NW 1996 D] 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 ---------------------- ---------------------- 74 EXHIBIT D TO LEASE AGREEMENT [NW 1996 D] 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 ------------------- ----------------- 75 FASB 13 earnings constraint shall be not less than 94% for calendar year 1997 with respect to the first refinancing pursuant to Section 17 of the Participation Agreement. EXHIBIT E - PAGE 2 76 EXHIBIT F TO LEASE AGREEMENT [NW 1996 D] 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 the Basic Term or 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) the Aircraft 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) the Aircraft shall have no outstanding airworthiness directives issued by the FAA requiring terminating action by the date of return, (v) the Aircraft shall be in Lessee's or such Sublessee's customary passenger configuration, and (vi) in the event that any changes were made to the Aircraft that reduced the Aircraft's range or take-off weight from the Aircraft's range and take-off weight in effect at the Delivery Date, the Aircraft shall be restored to the range and take-off weight in effect at the Delivery Date unless such changes were required by (x) any applicable governmental authority not caused by any action or inaction of Lessee or (y) the applicable manufacturer not caused by any action or inaction of Lessee. In the event the FAA shall issue any directive which would require improvements to the Aircraft in order for 77 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 Boeing 757-200 aircraft in its fleet affected by such directive. 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) the fair market cost to a financial lessor of obtaining at such time an airframe block overhaul of the type referred to in said clause (i) at a location in the United States that has been approved by the FAA for such work 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) two by (bb) the fair market cost to a financial lessor of obtaining at such time the scheduled engine heavy maintenance under the maintenance program then used by Lessee for an engine of the same model as the Engines at a location in the United States that has been approved by the FAA for such work 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. In addition, the following conditions shall be complied with at the time of the return of the Aircraft at the expiration of the Basic Term or any Renewal Term: (i) Lessee shall deliver to Lessor any "no cost" modification kits designated for the Aircraft that Lessee has in its possession and that have not been incorporated at the time of the return of the Aircraft, (ii) Lessor may purchase from Lessee at Lessee's cost any service bulletin kits purchased or manufactured by Lessee for the Aircraft (provided that Lessee shall not be obligated to sell to Lessor any service bulletin kit manufactured by Lessee to the extent Lessee, in its reasonable judgment, considers the same proprietary), and (iii) without limiting the obligations of Lessee set forth in the third preceding paragraph, in the event the FAA shall issue any directive which requires termination thereof prior to the return date, then such directive shall be terminated prior to the return date, and if Lessee shall have not been required to terminate such directive in the normal course of its operations without discriminating against the Aircraft by reason of its leased status or otherwise prior to the return of the Aircraft, but such directive must be terminated on or before ninety (90) days EXHIBIT F - PAGE 2 78 following such return, then Lessee shall, at the sole cost and expense of Lessor, comply with such directive but only if (x) at least 540 days prior to the return of the Aircraft Lessee receives from Lessor a written request to comply with such directive at Lessor's sole cost and expense (determined on the basis of what a third party would reasonably charge for comparable services) and (y) after receipt by Lessee of such request, the Aircraft is subject to a maintenance check of the type at which such modification is made, in accordance with Lessee's general maintenance program, and Lessee has, or can obtain using commercial reasonable efforts taking into account the 540 day prior notice received by Lessee, the personnel, parts, facilities and other resources available to accomplish the modification and the modification can be made without materially disrupting the operations of Lessee's maintenance facility or Lessee's operations. EXHIBIT F - PAGE 3 EX-4.H5 64 FIRST AMENDMENT TO LEASE AGREEMENT - 1996 D 1 FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 D] This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 D], dated as of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee under the Trust Agreement [NW 1996 D], dated as of April 29, 1996 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a certain Lease Agreement [NW 1996 D], dated as of April 29, 1996 (the "ORIGINAL Lease"), between Lessee and Lessor (the Original Lease, as supplemented by Lease Supplement No. 1 [NW 1996 D] ("LEASE SUPPLEMENT NO. 1") between Lessor and Lessee, dated April 30, 1996, herein called the "LEASE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; WITNESSETH: WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the Aircraft, which consists of the following components: (i) Airframe: FAA Registration No. N540US; manufacturer's serial No. 26487; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P727170 and P727171; WHEREAS, Section 17 of the Participation Agreement [NW 1996 D], dated as of April 29, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee, [ ] (the "OWNER PARTICIPANT"), the loan participants named therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured Certificates issued by the Owner Trustee under the Trust Indenture and Security Agreement [NW 1996 D], dated as of April 29, 1996, between Lessor (not in its individual capacity except as expressly provided therein but as trustee) and the Indenture Trustee may be refinanced under certain circumstances; WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW 1996 D], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State Street Bank and Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines Corporation (the "GUARANTOR"); WHEREAS, Lessor and Lessee desire to recalculate the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price in order to reflect, among other things, the interest rate of the refinanced Secured Certificates; 2 WHEREAS, in connection with the recalculation of the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, Lessor and Lessee desire to amend the Lease; WHEREAS, a counterpart of the Original Lease, to which were attached and made a part thereof counterparts of Lease Supplement No. 1, the Trust Indenture and Security Agreement [NW 1996 D], dated as of April 29, 1996, and the Trust Agreement and Indenture Supplement [NW 1996 D], dated April 30, 1996, was recorded by the Federal Aviation Administration (the "FAA") on May 1, 1996, and assigned Conveyance No. P06566; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE. (a) The definitions of "Business Day", "Excess Amount", "Indemnitee", "Loan Participant", "Operative Documents", "Stipulated Loss Value", "Supplemental Rent", "Tax Indemnitee", and "Termination Value" in Section 1 of the Lease are hereby amended applicable on and after the Closing Date to read as follows: "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. "EXCESS AMOUNT" for the Closing Date or the Commencement 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 the Closing Date or the Commencement Date. "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) 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). "LOAN PARTICIPANT" means for any period prior to the Closing, the Original Loan Participants and their successors and assigns, and from and after the Closing, the Purchasers and their successors and registered assigns, including any Certificate Holder. -2- 3 "OPERATIVE DOCUMENTS" means each of the Participation Agreement, the documents referred to in Section 4(a)(v) of the Participation Agreement (including any amendments, modifications or supplements thereto), the Refunding Agreement, the Trust Indenture Amendment and the Refinancing Secured Certificates, collectively, and "Operative Document" shall mean each of the Operative Documents, individually. "STIPULATED LOSS VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v) hereof, the amount determined by multiplying Lessor's Cost 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 January 2, 2019 shall be the amount determined as provided in Section 19(a) hereof. "SUPPLEMENTAL RENT" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Interim Rent or 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 the Other Pass Through Trust Agreement, 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 and 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. "TERMINATION VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v), the amount determined by multiplying Lessor's Cost by the percentage specified in Exhibit D hereto opposite the Termination Date with -3- 4 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). (b) The following definitions are hereby inserted in Section 1 of the Lease in alphabetical order to be applicable on and after the Closing Date: "CLOSING" means the consummation of the refinancing operation contemplated by Section 1 of the Refunding Agreement. "CLOSING DATE" means the date on which the Closing shall occur. "INDEMNITY ADJUSTED PAYMENT" means any indemnity payment made pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Provider and the Subordination Agent. "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 Westdeutsche Landesbank Girozentrale, acting through its New York branch, as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider under the Liquidity Facilities, or any successor thereto. "MAKE-WHOLE AMOUNT" has the meaning assigned to that term in the Trust Indenture. "ORIGINAL LOAN PARTICIPANTS" means each institution executing the Participation Agreement as a Loan Participant. "ORIGINAL TRUST INDENTURE" means the Trust Indenture and Security Agreement [NW 1996 D], dated as of April 29, 1996, between the Owner Trustee and State Street Bank and Trust Company, as amended, modified and supplemented prior to the Closing Date. "OTHER PASS THROUGH TRUST AGREEMENT" means the pass through trust agreement and supplement pursuant to which the Class D pass through trust certificates are issued. -4- 5 "PASS THROUGH CERTIFICATES" means the pass through certificates to be issued by the Pass Through Trustee in connection with the Refinancing 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 Refunding Agreement to be entered into by and between Lessee and the Pass Through Trustee in connection with the Refinancing Transaction. "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. "PURCHASERS" means the Pass Through Trustees under each Pass Through Trust Agreement. "REFINANCING CERTIFICATE" means a certificate of an authorized representative of the Owner Participant delivered pursuant to Section 17(a)(1) of the Participation Agreement, setting forth, among other things, the Refinancing Date, the principal amount of debt to be issued by the Owner Trustee on the Refinancing Date, and the proposed revised schedules of Excess Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages, and the proposed Amortization Schedules. "REFINANCING DATE" means the proposed date on which the outstanding Secured Certificates will be redeemed and refinanced pursuant to Section 17 of the Participation Agreement. "REFINANCING EXPENSES" means the costs, fees, commissions and other expenses payable by the Owner Participant pursuant to Section 11(a) of the Refunding Agreement. "REFINANCING SECURED CERTIFICATES" means the Secured Certificates to be issued by Lessor to the Purchasers pursuant to the Trust Indenture Amendment and the Refunding Agreement on the Closing Date. "REFINANCING TRANSACTION" means a refinancing transaction pursuant to Section 17 of the Participation Agreement involving, among other things, (i) the redemption of the Secured Certificates issued on the Refinancing Date and the concurrent issuance and sale of the Refinancing Secured Certificates to the Pass Through Trustees (or their designee) and (ii) the issuance and sale of the Pass Through Certificates by the Pass Through Trustees. -5- 6 "REFUNDING AGREEMENT" means that certain Refunding Agreement [NW 1996 D], dated as of June 3, 1996, among Lessor, Lessee, the Owner Participant, the Purchasers, the Indenture Trustee, the Subordination Agent, and the Guarantor, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "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. "TRUST INDENTURE AMENDMENT" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 D], dated as of the Closing Date, 1996, between Lessor and State Street Bank and Trust Company, as Indenture Trustee. "TRUST INDENTURE ESTATE" has the meaning assigned to that term in the Trust Indenture. (c) The definitions of "Administrative Agent", "Assumed Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in Section 1 of the Lease are hereby deleted on and after the Closing Date. SECTION 2. AMENDMENT OF SECTION 3 OF THE LEASE. (a) Section 3(b) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (b) Section 3(c) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (c) Section 3(d)(i) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (i) In the event that (A) the Closing Date occurs other than on June 12, 1996, (B) Transaction Expenses paid by Lessor pursuant to Section 16 of the Participation Agreement are determined to be other than 1.0% of Lessor's Cost, or (C) Refinancing Expenses paid by Lessor or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement are determined to be other than 1.3281% of Lessor's Cost, then in each case, the Basic Rent percentages set forth in Exhibit B and the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated by the Owner Participant, on or prior to November 15, 1996 using the same methods and assumptions used to -6- 7 calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, 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. (d) Section 3(d)(ii) of the Lease is hereby amended by (i) deleting on and after the Closing Date "(A)" at the beginning thereof, (ii) deleting on and after the Closing Date the word "and" at the end of clause (A) thereof and substituting a period therefor, and (iii) deleting on and after the Closing Date clause (B) thereof in its entirety. (e) Section 3(d)(iii) of the Lease is hereby amended by deleting on and after the Closing Date the second sentence thereof. (f) The second sentence of Section 3(e) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "Lessee shall pay, on behalf of Lessor, 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 such Section 2.10(b) or Section 2.11." (g) Section 3(f) of the Lease is hereby amended by deleting on and after the Closing Date the numbers and punctuation "124-000-12" in the first sentence thereof and substituting therefor the numbers and punctuation "124-0000-12". (h) Section 3(g) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (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 the Commencement Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall, on the Commencement Date, prepay on the Commencement 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 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 -7- 8 rate per annum equal to the Base Rate as in effect from time to time plus 5% per annum 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 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 to 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 Interim Rent or 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 Make-Whole Amount, if any, due with respect to) the Secured Certificates then outstanding. (i) The following new Section 3(h) shall be added to the end of Section 3 of the Lease to be applicable on and after the Closing Date: (h) In the event that Lessee exercises its option to satisfy any indemnity obligation under the Tax Indemnity Agreement pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement, Lessee shall pay, in addition to any other payments due hereunder, (i) on each Lease Period Date, the portion of the Indemnity Adjusted Payments then due and payable on such date as set forth in an appropriate schedule to the Tax Indemnity Agreement and (ii) on the date that Stipulated Loss Value, Termination Value or the Special Purchase Price becomes due and payable, as the case may be, the Indemnity Adjusted Payment then due and payable by reference to the date as of which such Stipulated Loss Value, Termination Value or Special Purchase Price is payable as set forth in an appropriate schedule to the Tax Indemnity Agreement. -8- 9 SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE. Section 7(b)(x)(2) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the Owner Participant and the Indenture Trustee" and substituting therefor the word "Lessor", and (ii) deleting on and after the Closing Date the word "their" and substituting therefor the word "its". SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE. Section 9(c) of the Lease is hereby amended by deleting on and after the Closing Date the word "premium" each time it appears therein and substituting therefor the words "Make-Whole Amount" and by deleting on and after the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount" each time such words and such words and punctuation appear. SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE. Section 10(a) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier that thirty (30) days after such occurrence)" in clause (i)(y) thereof and substituting therefor the words "an earlier Business Day irrevocably specified fifteen days in advance by notice from Lessee to Lessor and the Indenture Trustee" and (ii) inserting on and after the Closing Date the words and punctuation ", which appraisal shall be from a firm of independent aircraft appraisers satisfactory to the Owner Participant," after the words "the certificate or the appraisal" in the third parenthetical phrase of clause (A) of the third paragraph thereof. SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE. Section 14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date the words and punctuation ", the Refunding Agreement" after the words "Participation Agreement" and (ii) adding on and after the Closing Date the words "and except for representations or warranties contained in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in the Refunding Agreement) or any document or instrument furnished pursuant to either thereof" after the word "Agreement" at the end of the first parenthetical phrase therein. SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "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: -9- 10 (i) if to Lessee, for U.S. Mail at 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President - Finance and Treasurer, (Telecopy No. (612) 726-0665), or to such other address, telex number or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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 on the signature pages of the Refunding Agreement." SECTION 8. AMENDMENT OF SECTION 19(D) OF THE LEASE. The second sentence of Section 19(d) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: 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. SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the Lease is hereby amended by (i) deleting on and after the Closing Date the word "or" between the words "Trust Agreement" and the words "the Trust Indenture" and substituting a comma therefor and (ii) inserting on and after the Closing Date the words "or the Refunding Agreement" after the words "Trust Indenture". SECTION 10. AMENDMENT OF EXHIBITS. (a) Exhibits B, C and D to the Lease attached hereto are applicable on and after the Closing Date. Exhibits B, C and D to the Lease are applicable until the Closing Date. -10- 11 (b) The parties hereto agree that Exhibits B, C and D attached hereto reflect the recalculation of Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price to take into account the interest rates borne by the Secured Certificates as of the Closing Date. SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease set forth in Sections 1 through 10 hereof shall be effective as of the date hereof. SECTION 12. RATIFICATION. Except as amended hereby, the Lease as heretofore supplemented continues and shall remain in full force and effect in all respects. SECTION 13. MISCELLANEOUS. Any provision of this Amendment 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 Amendment 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. Nothing contained herein shall be construed as conveying to Lessee any right, title or interest in the Aircraft except as a lessee. The section and paragraph headings in this Amendment 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 Amendment. THIS AMENDMENT 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 Amendment 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. To the extent, if any, that this Amendment 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 Amendment 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 as mortgagee under the Trust Indenture on the signature page thereof. -11- 12 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment to be duly executed on the day and year first above written. FIRST SECURITY BANK OF UTAH, 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: (1) Receipt of this original counterpart of the foregoing Amendment is hereby acknowledged this _____ day of ______________, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: ____________________________________________ Title: - -------------------- (1) This language contained in the original counterpart only. EX-4.H6 65 GUARANTEE-1996 D 1 GUARANTEE [NW 1996 D] This GUARANTEE [NW 1996 D], dated as of April 29, 1996 (as amended, modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I hereto (collectively, together with their successors and permitted assigns, the "PARTIES", and, individually, a "PARTY"). WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to enter into a Lease Agreement [NW 1996 D], dated as of the date hereof (as amended, modified or supplemented from time to time, the "LEASE"), between the Lessee and First Security Bank of Utah, National Association, not in its individual capacity but solely as Owner Trustee (as defined therein), except as expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing 757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines (such aircraft and engines, and any substitute Airframe and Engines under the Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation Agreement [NW 1996 D], dated as of the date hereof (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), among the Lessee and the Parties; and WHEREAS, it is a condition precedent to the obligations of the Parties to consummate the transactions contemplated by the Participation Agreement that the Guarantor execute and deliver this Guarantee; and WHEREAS, the Lessor will assign by way of collateral security certain of its right, title and interest in and to this Guarantee to the Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and Security Agreement [NW 1996 D], dated as of the date hereof, between the Lessor and the Indenture Trustee (as amended, modified or supplemented from time to time, the "TRUST INDENTURE"), as security for the obligations of the Lessor referred to therein; and WHEREAS, the capitalized terms used herein that are not defined herein are used herein as defined in the Lease; NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and to induce the other Parties referred to above to enter into the Participation Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. GUARANTEE. (a) The Guarantor does hereby acknowledge that it is fully aware of the terms and conditions of the Lease, the Participation Agreement and the other Operative 2 Documents and the transactions and the other documents contemplated thereby, and does hereby irrevocably and fully and unconditionally guarantee, as primary obligor and not as surety merely, to the Parties, as their respective interests may appear, the payment by the Lessee of all payment obligations when due under the Lease (including, without limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement and the other Operative Documents to which the Lessee is a party (such obligations of the Lessee guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative Documents, and the timely performance of all other obligations of the Lessee thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby agree that in the event that the Lessee fails to pay any Financial Obligation when due for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within five days after the date on which such Financial Obligation became due and payable and the applicable grace period has expired, the Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Financial Obligation was not paid when due and for five days after the applicable grace period has expired, the amount of such Financial Obligation. The Guarantor hereby agrees that in the event the Lessee fails to perform any Nonfinancial Obligation for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within 10 Business Days after the date on which such Nonfinancial Obligation is required to be performed (for avoidance of doubt, to include any applicable grace period), the Guarantor shall cause such Nonfinancial Obligation to be performed within 10 Business Days following the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Nonfinancial Obligation was not performed when so required and that any applicable grace period has expired. (b) The obligations of the Guarantor hereunder shall not be, to the fullest extent permitted by law, affected by: the genuineness, validity, regularity or enforceability (or lack thereof) of any of the Lessee's obligations under the Lease or any other Operative Document to which the Lessee is a party, any amendment, waiver or other modification of the Lease or such other Operative Document (except that any such amendment or other modification in writing shall be given effect in determining the obligations of the Guarantor hereunder), or by any substitution, release or exchange of collateral for or other guaranty of any of the Obligations (except to the extent that such substitution, release or exchange is -2- 3 undertaken in accordance with the terms of the Operative Documents) without the consent of the Guarantor, or by any priority or preference to which any other obligations of the Lessee may be entitled over the Lessee's obligations under the Lease and the other Operative Documents to which the Lessee is a party, or by any other circumstance that might otherwise constitute a legal or equitable defense to or discharge of the obligations of a surety or guarantor including, without limitation, any defense arising out of any laws of the United States of America or any State thereof which would excuse, discharge, exempt, modify or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not, to the fullest extent permitted by law, affect the liability of the Guarantor hereunder: (a) the extension of the time for or waiver of, at any time or from time to time, without notice to the Guarantor, the Lessee's performance of or compliance with any of its obligations under the Operative Documents (except that such extension or waiver in writing shall be given effect in determining the obligations of the Guarantor hereunder)), (b) any assignment, transfer, sublease or other arrangement by which the Lessee transfers possession or loses control of the use of the Aircraft, (c) any defect in the title, condition, design, operation or fitness for use of, or damage to or loss or destruction of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or with any other Person, or any sale, transfer, lease or disposal of any of its assets or (e) any change in the ownership of any shares of capital stock of the Lessee. (c) This Guarantee is an absolute, present and continuing guaranty of payment and performance and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Lessee any unpaid amounts due or otherwise to enforce performance by the Lessee. The Guarantor specifically agrees, to the fullest extent permitted by law, that it shall not be necessary or required, and that the Guarantor shall not be entitled to require, that any Party (i) file suit or proceed to obtain or assert a claim for personal judgment against the Lessee for the Obligations, or (ii) make any effort at collection of the Obligations from the Lessee, or (iii) foreclose against or seek to realize upon any security now or hereafter existing for the Obligations, including the Trust Estate or the Trust Indenture Estate (as such term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations, or make any effort at collection of the Obligations from any such other Person, or exercise or assert any other right or remedy to which any Party is or may be entitled in connection with the Obligations or any security or other guaranty therefor, or (v) assert or file any claim against the assets of the Lessee or any other guarantor or other Person liable for the Obligations, or any part thereof, before or as a condition of enforcing the liability of the Guarantor under this Guarantee or requiring payment of said Obligations by the Guarantor hereunder, or at any time thereafter. (d) The Guarantor agrees, to the fullest extent permitted by law, that, without limiting the generality of this Guarantee, if an Event of Default shall have occurred and be continuing and the Lessor (or any assignee thereof including, without limitation, the Indenture Trustee) shall be prevented by applicable law from exercising its remedies (or any of -3- 4 them) under Section 15 of the Lease, the Lessor (or any assignee thereof, including, without limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive hereunder from the Guarantor, upon demand therefor the sums that would otherwise have been due from the Lessee under the Lease had such remedies been able to be exercised. The Guarantor hereby unconditionally waives, to the fullest extent permitted by law, any requirement that, as a condition precedent to the enforcement of the obligations of the Guarantor hereunder, the Lessee or all or any one or more of any other guarantors of any of the Obligations be joined as parties to any proceedings for the enforcement of any provision of this Guarantee. 2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be deemed to create any right in any Person except a Party and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person. 3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives notice of the acceptance of this Guarantee and of the performance or nonperformance by the Lessee, demand for payment from the Lessee or any other Person, notice of nonpayment or failure to perform on the part of the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent permitted by law, all other demands or notices whatsoever, other than the request for payment hereunder and notice provided for in Section 1 hereof. The obligations of the Guarantor shall be absolute and unconditional and shall remain in full force and effect until satisfaction of all Obligations hereunder and, without limiting the generality of the foregoing, to the extent not prohibited by applicable law, shall not be released, discharged or otherwise affected by the existence of any claims, set-off, defense or other rights that the Guarantor may have at any time and from time to time against any Party, whether in connection herewith or any unrelated transactions. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Financial Obligation is rescinded or must otherwise be returned by any Party upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding with respect to the Lessee or otherwise, all as though such payment had not been made. The Guarantor, by virtue of any payment or performance hereunder to a Party, shall be subrogated to such Party's claim against the Lessee or any other Person relating thereto; provided, however, that the Guarantor shall not be entitled to receive payment from the Lessee in respect of any claim against the Lessee arising from a payment by the Guarantor: (a) while an Event of Default shall have occurred and be continuing, in which case no such payment in respect of such a claim by the Guarantor may be made by the Lessee; or (b) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings relating to the Lessee, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Lessee, whether or not involving insolvency or bankruptcy proceedings, in which case the Obligations shall be paid and performed in full before any payment in respect of a claim by the Guarantor shall be made by or on behalf of the Lessee. -4- 5 4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or waiver or modification of, or consent under, the terms hereof, shall be effective unless evidenced by an instrument in writing signed by the Guarantor and each Party against whom such amendment, supplement, waiver, modification or consent is to be enforced. 5. PAYMENTS. All payments by the Guarantor hereunder in respect of any Obligation shall be made in Dollars and otherwise as provided in the Lease, the Participation Agreement or any other Operative Document in which such Obligation is contained; provided that the Guarantor consents to all the terms of the Trust Indenture and agrees to make all payments hereunder directly to the Indenture Trustee until such time as the Indenture Trustee shall give notice to the Guarantor that the Lien of the Trust Indenture has been fully discharged and thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay directly to the Lessor, in its individual capacity, or to the Owner Participant or another Party, as the case may be, any amount owing to such Person as Supplemental Rent for indemnities provided in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or otherwise not constituting part of the Trust Indenture Estate (as such term is defined in the Trust Indenture). 6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust Indenture, the Lessor will assign, and create a security interest in, certain of its rights hereunder to and for the benefit of the Indenture Trustee. From and after the execution and delivery of the Trust Indenture, and until receipt by the Guarantor of a written notice from the Indenture Trustee to the effect that the Trust Indenture has been fully satisfied and discharged, no remedy or election hereunder may be exercised by the Lessor or consent given by the Lessor, except by or with the prior written consent of the Indenture Trustee, and the Guarantor will make payment of all amounts hereunder that are assigned to the Indenture Trustee directly to the Indenture Trustee, and such payments shall discharge the obligations of the Guarantor to the Lessor to the extent of such payments. 7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Parties as follows: (a) It is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware. It has all requisite corporate power and authority to own and operate its properties, to carry on its business as presently conducted and to enter into and perform its obligations under this Guarantee. (b) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with or the taking of any other action in respect of, any Federal, state, municipal or other governmental department, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, is now, or under existing law in the future will be, required or necessary on its behalf to authorize the execution, delivery and performance (other than as contemplated by the Operative Documents in the case of the -5- 6 performance of the Non-Financial Obligations) by it of this Guarantee, or for the legality, validity, binding effect or enforceability hereof. (c) Neither the execution and delivery of this Guarantee, the performance of its obligations hereunder, nor its consummation of the transactions contemplated hereby, will conflict with or result in any breach of, or constitute a default under, or result in any creation or imposition of any Lien upon any of its property or assets under, any applicable laws or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject, or its Articles of Incorporation or by-laws. (d) The execution, delivery and performance by it of this Guarantee have been duly authorized by all necessary corporate action. This Guarantee has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 8. JURISDICTIONAL MATTERS. The Guarantor (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 Guarantee brought by any party, 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 Guarantee may not be enforced in or by such courts. The Guarantor hereby generally consents to service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of the Guarantor in New York City as from time to time may be designated by the Guarantor in writing to the Parties. 9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Parties, with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and (c) shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of, and shall be enforceable by, each of the Parties to the fullest extent permitted by applicable laws. The headings in this Guarantee are for purposes of reference only, and shall not limit or otherwise affect the meanings hereof. -6- 7 10. NOTICES. All requests, notices or other communications hereunder shall be in writing, addressed as follows: If to the Guarantor: Northwest Airlines Corporation for U.S. Mail: 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 for Overnight courier: 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President -- Finance and Treasurer Telecopy No.: (612) 726-0665 If to a Party: to the address or telecopy number set forth in the Participation Agreement All requests, notices or other communications shall be given in the manner, and shall be effective at the times and under the terms, set forth in Section 13(b) of the Participation Agreement. 11. NO WAIVERS. No failure on the part of any Party to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder or under the Lease, the Participation Agreement or the other Operative Documents, and any other agreement or instrument relating thereto will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise of such right or remedy or the exercise of any other right or remedy or under the Lease, the Participation Agreement or the other Operative Documents, and any other agreement or instrument relating thereto. 12. SURVIVAL. All representations and warranties contained herein or made in writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee regardless of any investigation made by any Party or any other Person. 13. SEVERABILITY. To the fullest extent permitted by applicable law, any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or any provision in any other Operative Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. -7- 8 14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES 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 GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK. 15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by such Party in enforcing, or collecting under, this Guarantee. 16. TERMINATION. Subject to the provisions of Section 3 hereof, this Guarantee shall terminate upon the indefeasible payment and performance in full of all of the Obligations. 17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to the Obligations described in Section 1 and nothing in this Guarantee shall be deemed to constitute a guarantee of payment of any of the Secured Certificates or shall give rise to any inference that the Lessee or the Guarantor has so guaranteed such payment. -8- 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed as of the date first hereinabove set forth. NORTHWEST AIRLINES CORPORATION By: ------------------------------------ Name: Joseph E. Francht, Jr. Title: Senior Vice President-Finance and Treasurer Accepted as of the above date: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION in its individual capacity and as Owner Trustee By: ----------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY in its individual capacity and as Indenture Trustee By: ----------------------------- Name: Title: -9- 10 SCHEDULE I TO GUARANTEE [NW 1996 D] PARTIES First Security Bank of Utah, National Association, in its individual capacity and as Owner Trustee State Street Bank and Trust Company, as Indenture Trustee [Owner Participant] [Bridge Lenders] EX-4.H7 66 PARTICIPATION AGREEMENT-1996 D 1 PARTICIPATION AGREEMENT [NW 1996 D] THIS PARTICIPATION AGREEMENT [NW 1996 D] dated as of April 29, 1996, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of the State of Minnesota (herein called "LESSEE"), (ii) the institution listed on Schedule I hereto and identified therein as the "OWNER PARTICIPANT" which executes and delivers a counterpart of this Agreement and of the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date referred to below, (iii) the institutions listed on Schedule I and identified therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, 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"), and (v) State Street Bank and Trust Company, a Massachusetts trust company, in its individual capacity and as Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein, in such latter capacity together with any successor indenture trustee, called the "INDENTURE TRUSTEE"); W I T N E S S E T H: WHEREAS, pursuant to the Purchase Agreement (as such term is defined in the Lease hereinafter referred to) between Lessee and the Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things, certain Boeing 757-251 aircraft, including the Aircraft which has been delivered by the Manufacturer to Lessee and is the subject of this Agreement; WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Lessee and the Owner Trustee are entering into a Purchase Agreement Assignment [NW 1996 D], dated as of the date hereof (herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to the Owner Trustee certain rights and interests of Lessee under the Purchase Agreement with respect to the Aircraft; and (ii) the Manufacturer has executed the Consent and Agreement [NW 1996 D] (herein called the "CONSENT AND AGREEMENT"), substantially in the form attached to the Purchase Agreement Assignment (herein called the "CONSENT AND AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996 D], 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 2 Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE") for the use and benefit of the Owner Participant; WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with the execution and delivery of this Agreement are entering into the Trust Indenture and Security Agreement [NW 1996 D], 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 issues to each of the Loan Participants one or more secured certificates (herein called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan Participants arising from the Loan Participants' making secured loans to the Owner Trustee to finance a portion of the Owner Trustee's purchase of the Aircraft, which Secured Certificates are to be secured by the mortgage and security interests created by the Owner Trustee in favor of the Indenture Trustee, and 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; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1996 D], dated as of the date hereof (such Lease Agreement, as the same may be amended or supplemented from time to time to the extent permitted by the terms thereof and this Agreement, herein called the "LEASE", such term to include, unless the context otherwise requires, the Lease Supplement referred to below), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft is sold and delivered by Lessee to the Owner Trustee under the Bill 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; WHEREAS, certain terms are used herein as defined in Section 13(a) hereof; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and conditions of this agreement, each Loan Participant agrees to finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule II opposite the name of such Loan Participant. Each Loan Participant shall make such Loan to the Owner Trustee on a date to be designated pursuant to Section 2 hereof, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not -2- 3 later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite such Loan Participant's name in Schedule II hereto. Upon the occurrence of the above transfers by the Loan Participants to the Owner Trustee, to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon, the Owner Trustee shall issue and the Indenture Trustee shall authenticate Secured Certificates which shall be delivered simultaneously to the Loan Participants under the Trust Indenture to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon. The Owner Trustee agrees to pay the Secured Certificates in installments in the amounts and on the dates provided in the Trust Indenture together with interest thereon and all other amounts payable with respect thereto, all as more fully provided in the Trust Indenture. (b) Participation by Owner Participant. Subject to the terms and conditions of this Agreement, the Owner Participant hereby agrees to participate in the payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft on a date to be designated pursuant to Section 2 hereof, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite the Owner Participant's name in Schedule II hereto. (c) General Provisions. The amount of the participation of each of the Loan Participants and the Owner Participant to be made as provided above in the payment of Lessor's Cost for the Aircraft is hereinafter called such party's "COMMITMENT" for the Aircraft. In case any of the Loan Participants or the Owner Participant shall default in its obligation under the provisions of this Section 1, no other such party shall have any obligation to make any portion of such defaulted amount available or to increase the amount of its Commitment and the obligation of such nondefaulting party shall remain subject to the terms and conditions set forth in this Agreement. Upon receipt by the Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant to this Section 1 and the satisfaction of the conditions set forth in Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take title to and accept delivery of the Aircraft. In consideration of the transfer of title to and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall, simultaneously with such transfer of title and delivery, pay to Lessee from the amounts so furnished it by the Participants, the Lessor's Cost. (d) Determination of Interest Period. The length of each Interest Period shall be determined by Lessee on behalf of the Owner Trustee in accordance with Section 2.02 of the Trust Indenture. SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each Participant, the Owner Trustee and the Indenture Trustee at least two Business Days' telecopy -3- 4 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 and the amount of each Participant's Commitment for the Aircraft. As to each Participant, the making of its Commitment for the Aircraft available in the manner required by Section 1 shall constitute a waiver of such notice. SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant agrees that its releasing the amount of its Commitment for the Aircraft to the account of the Owner Trustee in accordance with the terms of Section 1 shall constitute, subject to satisfaction or waiver of the conditions set forth in Section 4(a), without further act, authorization and direction by the Owner Participant to the Owner Trustee: (i) to pay to Lessee the Lessor's Cost for the Aircraft; (ii) to the extent not previously accomplished by a prior authorization, to authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees, or an agent or agents, of Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant to the Acceptance Certificate; (iii) to accept from Lessee the Bill of Sale and the FAA Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9); (iv) to execute an Aircraft Registration Application, the Lease Supplement and the Trust Supplement, in each case covering the Aircraft; (v) to borrow from the Loan Participants to finance a portion of the Lessor's Cost for the Aircraft and to issue to the Loan Participants Secured Certificates in aggregate principal amount equal to the amount borrowed, pursuant hereto and to the Trust Indenture; and (vi) to take such other action as may be required to be taken by the Owner Trustee on the Delivery Date by the terms of any Operative Document. SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations in the Aircraft. It is agreed that the obligations of each of the Loan Participants and the Owner Participant to participate in the payment of Lessor's Cost and to make available the amount of its respective Commitment are subject to the satisfaction prior to or on the Delivery Date of the following conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it relates to representations and warranties only contained in the Tax Indemnity Agreement), (xx), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and (xxvii) shall not be a condition precedent to the obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a condition precedent to the obligations of the Owner Participant: -4- 5 (i) The Loan Participants 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 applicable law or regulations or guidelines or interpretations thereof by appropriate regulatory authorities shall be in effect which, in the opinion of such Loan Participant or the Owner Participant, as the case may be, or their respective counsel, would make it a violation of law or regulations or guidelines for such Loan Participant or the Owner Participant to make its Commitment available in accordance with Section 1 hereof or, in the case of such Loan Participant, to acquire a Secured Certificate or to realize the benefits of the security afforded by the Trust Indenture. (iii) In the case of the Owner Participant, the Loan Participants shall have made available the amount of their Commitments for the Aircraft in accordance with Section 1 hereof. (iv) In the case of the Loan Participants, 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 Documentation Agent and the Owner Participant and shall be in full force and effect and executed counterparts shall have been delivered to the Loan Participants and the Owner Participant, or their respective counsel, provided that only each Loan Participant shall receive an executed original of its respective Secured Certificate and provided, further, that an excerpted copy of the Purchase Agreement shall only be delivered to and retained by the Owner Trustee and the Owner Participant (but the Indenture Trustee shall also retain an excerpted copy of the Purchase Agreement which may be inspected by the Documentation Agent and its counsel before the Delivery Date and subsequent to the Delivery Date may be inspected and reviewed by the Indenture Trustee, any Loan Participant and their respective counsel if and only if there shall occur and be continuing an Event of Default), 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 shall only be delivered to Lessee and the Owner Participant and their respective counsel: (1) an excerpted copy of the Purchase Agreement (insofar as it relates to the Aircraft); (2) the Purchase Agreement Assignment; (3) the Lease; -5- 6 (4) a Lease Supplement covering the Aircraft dated the Delivery Date; (5) the Tax Indemnity Agreement; (6) the Trust Agreement; (7) a Trust Supplement covering the Aircraft dated the Delivery Date; (8) the Bill of Sale; (9) the FAA Bill of Sale; (10) an acceptance certificate covering the Aircraft in the form agreed to by the Documentation Agent, 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; (12) the Secured Certificates; (13) the Consent and Agreement; (14) the Guarantee; and (15) the Owner Participant Guaranty. All of the foregoing documents, together with this Agreement, are sometimes referred to herein, collectively, as the "OPERATIVE DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT". (vi) A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the Granting Clause of the Trust Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Owner 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 Owner Participant or the Documentation Agent shall have been executed and delivered by Lessee or the Owner Trustee and duly filed. (vii) The Loan Participants and the Owner Participant shall have received the following, in each case in form and substance satisfactory to the Documentation Agent and the Owner Participant: -6- 7 (1) a certified copy of the Certificate of Incorporation and By-Laws of Lessee and a copy of resolutions of the board of directors of Lessee, certified by a Vice President, the Secretary or an Assistant Secretary of Lessee, duly authorizing the sale of the Aircraft and the lease by Lessee of the Aircraft under the Lease and the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the Purchase Agreement Assignment, the Tax Indemnity Agreement and each other document required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof, and a certified copy of the Certificate of Incorporation and By-Laws of the Guarantor and a copy of resolutions of the Board of Directors of the Guarantor, certified by a Vice President, the Secretary or an Assistant Secretary of the Guarantor, duly authorizing the execution, delivery and performance by the Guarantor of the Guarantee; (2) such other documents and evidence with respect to Lessee, the Guarantor, the Manufacturer, the Owner Trustee, the Owner Participant, the Owner Participant Guarantor, the Indenture Trustee, and the Loan Participants as the Loan Participants or the Owner Participant, or the respective counsel for the Loan Participants or the Owner Participant, may reasonably request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; and (3) a certificate of Lessee as to the person or persons authorized to execute and deliver this Agreement, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft and any other documents to be executed on behalf of Lessee in connection with the transactions contemplated hereby and as to the signatures of such person or persons, and a certificate of the Guarantor as to the person or persons authorized to execute and deliver the Guarantee and as to the signatures of such person or persons. (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 following statements shall be true, and the Documentation Agent and the Owner Participant shall have received evidence satisfactory to it to the effect that: -7- 8 (1) the Owner Trustee has good title (subject to filing and recording the FAA Bill of Sale with the Federal Aviation Administration) to the Aircraft on such Delivery Date, free and clear of Liens other than the rights of Lessee under the Lease and Lease Supplement covering the Aircraft, the mortgage and security interests created by the Trust Indenture, the rights of the Owner Participant under the Trust Agreement and the Trust Supplement, and Liens permitted by clause (v) of Section 6 of the Lease; (2) the Aircraft has been duly certified by the Federal Aviation Administration (or there shall have been received adequate assurances from the Federal Aviation Administration that the certification will be issued as soon as the registration of the Aircraft is complete) as to type and airworthiness in accordance with the terms of the Lease; (3) the FAA Bill of Sale, the Lease, the Lease Supplement, the Trust Indenture and the Trust Supplement covering the Aircraft shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the Federal Aviation Administration, and the Trust Agreement shall have been filed (or shall be in the process of being so filed) with the Federal Aviation Administration; and (4) application for registration of the Aircraft in the name of the Owner Trustee has been duly made with the Federal Aviation Administration. (x) On the Delivery Date, (A) the representations and warranties of Lessee, the Owner Participant and the Owner Trustee contained in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing, or would result from the purchase, sale, lease or mortgage of the Aircraft, which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default. (xi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for Lessee and the Guarantor, as to New York and certain federal law matters, and Lessee's and the Guarantor's in-house or other counsel, as to Minnesota and certain federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota and has the corporate power and authority to carry on its business as now conducted and to enter into and -8- 9 perform its obligations under the Lessee Documents. Lessee is a Certificated Air Carrier. The Guarantor is a corporation duly organized and validly existing pursuant to the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under the Guarantee; (2) the execution, delivery and performance of the Lessee Documents by Lessee and of the Guarantee by the Guarantor have been duly authorized by all necessary corporate action on the part of Lessee and the Guarantor, as the case may be, do not require any approval of stockholders of Lessee or the Guarantor, as the case may be, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of Lessee or the Guarantor, as the case may be (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of any thereof by Lessee or the Guarantor, as the case may be, nor the performance by Lessee or the Guarantor, as the case may be, of its respective obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on Lessee or the Guarantor, as the case may be, or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Permitted Liens) upon any property of Lessee or the Guarantor, as the case may be, under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter, by-law or permit issued by any Minnesota or United States governmental authority to which Lessee or the Guarantor, as the case may be, is a party or by which Lessee or the Guarantor, as the case may be, or its properties may be bound or affected; (3) neither the execution and delivery by Lessee of the Lessee Documents or by the Guarantor of the Guarantee nor the performance by Lessee or the Guarantor of their respective 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, except for (A) the registration of the Aircraft (including the placement on board of the owner's copy of the application for registration of the Aircraft and, if necessary, a flying time wire), recordations and other actions referred to in paragraph 5 below and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents or the Guarantee after the Delivery Date; (4) the Guarantee has been duly entered into and delivered by the Guarantor, the Purchase Agreement (insofar as it relates to the Aircraft) has been duly entered into and delivered by Lessee, and each of the other Lessee Documents has been duly entered into and delivered by Lessee and each of such -9- 10 other Lessee Documents and the Guarantee constitutes 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 its respective terms, except as limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally, (C) applicable laws which may affect the remedies provided in the Lease, which laws, however, do not in the opinion of such counsel make the remedies provided in the Lease inadequate for the practical realization of the benefits provided thereby, but no opinion is expressed as to the amount or priority of any recovery under any particular circumstances and, in particular, no opinion is expressed as to the effect on such remedies of Section 1-201(37) of the Uniform Commercial Code, as in effect in any jurisdiction, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations; (5) subject to the registration of the Aircraft with the Federal Aviation Administration in the name of the Owner Trustee, and assuming the due and timely filing for recordation in accordance with the provisions of the Federal Aviation Act of (A) the FAA Bill of Sale, (B) the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and made a part thereof and (C) the Trust Indenture with the Trust Supplement attached thereto and made a part thereof, with respect to such portion of the Aircraft as is covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code by virtue of the same constituting an "aircraft" or an "aircraft engine" as defined in the Federal Aviation Act, no further filing or recording of any document (including any financing statement with respect to the Lease under Article 9 of the Uniform Commercial Code of Minnesota or Utah), is necessary in any applicable jurisdiction within the United States in order (x) to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee or any third parties or (y) to create and perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee or any third parties. With respect to such portion of the Aircraft, if any, as may not be deemed to constitute an "aircraft" or "aircraft engine" as defined in the Federal Aviation Act, except for the filing of financing statements in appropriate filing offices in the States of Minnesota and Utah and such other states as may be specified in such counsel's opinion, and for the filings of periodic continuation statements with respect to such filings as and when required, (x) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary under Article 9 of the Uniform Commercial Code in order to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee and any third parties in any applicable jurisdiction within the United States, and (y) under the federal laws of the United States and -10- 11 the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary or advisable under Article 9 of the Uniform Commercial Code in order to create or perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee and any third parties in any applicable jurisdiction within the United States; and (6) there are no legal or governmental proceedings pending or, to the best knowledge of such in-house counsel, threatened to which Lessee or Guarantor or any of their respective subsidiaries is a party or to which any of the properties of Lessee or Guarantor or any of their respective subsidiaries is subject other than those proceedings summarized in the Guarantor's publicly filed annual, quarterly and other reports filed with the Securities and Exchange Commission, and proceedings which such in-house counsel believes would not reasonably be expected to have a material adverse effect on Lessee and its subsidiaries, taken as a whole, or on the power or ability of Lessee to perform its obligations under the Lessee Documents. The opinion contemplated by this paragraph (xi) shall be to such further effect with respect to such other matters as the Documentation Agent or the Owner Participant may reasonably request. Such opinion with respect to the matters specified in this paragraph (xi) may rely exclusively (A) upon the opinion of special counsel in Oklahoma City, Oklahoma, referred to in paragraph (xv) of this Section 4(a) with respect to the matters stated therein, and (B) upon the opinion of Ray, Quinney & Nebeker with respect to the opinion in paragraph (5) above insofar as it relates to the laws of the State of Utah and (C) upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, with respect to matters of fact, and may state that no opinion is expressed as to laws other than laws of the State of New York (in the case of such special counsel's opinion), the State of Minnesota and the Delaware General Corporation Law (in the case of Lessee's in-house or other counsel's opinion) and the Federal laws of the United States. Such counsel may assume that, except for the filings and recordations contemplated herein, there are no filings or recordations with respect to the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement or the Trust Indenture with the Federal Aviation Administration, or of Uniform Commercial Code financing statements naming the Owner Trustee as a debtor in the filing offices of the Secretary of State of Minnesota, the Secretary of State of Utah or in any other filing office in the States of Minnesota or Utah, or in such other filing offices in such other jurisdictions as shall be identified in such counsel's opinion. (xii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from a counsel to the Manufacturer, with respect to the -11- 12 Manufacturer Documents and such other matters as such parties may reasonably request. (xiii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, to the effect that: (1) First Security Bank of Utah, National Association is a national banking association duly organized, validly existing and in good standing under the laws of the United States, is a Citizen of the United States and has under the laws of the State of Utah and federal banking law the power, authority and legal right to execute, deliver and carry out in its capacity as Owner Trustee or in its individual capacity, as the case may be, the terms of the Owner Trustee Documents, including the Secured Certificates; (2) each of the Owner Trustee Documents has been duly authorized, executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, and each of the Owner Trustee Documents constitutes the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations, and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (3) the execution, delivery and performance by the Owner Trustee and by First Security Bank of Utah, National Association, in its individual capacity, or both, as the case may be, of the Owner Trustee Documents and the consummation of the transactions by the Owner Trustee and by First Security Bank of Utah, National Association in its individual capacity contemplated thereby are not and will not be in violation of the articles of association or By-Laws of First Security Bank of Utah, National Association or of any indenture, mortgage, credit agreement, license or other agreement or instrument known to -12- 13 such counsel after due inquiry to which First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee is a party or by which it is bound, or of any Federal or Utah law, governmental rule or regulation applicable to First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee or any judgment or order applicable to it and known to such counsel after due inquiry; (4) neither the execution and delivery by the Owner Trustee and, where appropriate, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, of the Owner Trustee's Documents nor the consummation of any of the transactions by the Owner Trustee, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing Federal law governing the banking and trust powers of First Security Bank of Utah, National Association or Utah law (except for filings pursuant to the Uniform Commercial Code, and except for compliance with requirements of the Federal Aviation Act as to which such counsel may express no opinion); (5) the Trust Agreement, as supplemented by the Trust Supplement, duly creates for the benefit of the Owner Participant the trust interest in the Trust Estate which the Trust Agreement by its terms purports to create; (6) assuming that Utah law were to govern the perfection of the security interests in the Trust Indenture Estate under the Trust Indenture, except for (i) the Indenture Trustee's taking of possession of the original counterparts of the Lease and the Lease Supplement covering the Aircraft (insofar as the Lease and the Lease Supplement covering the Aircraft may constitute chattel paper (as such term is defined in the Uniform Commercial Code as in effect in Utah)) and all monies and securities (including instruments) required to be deposited with the Indenture Trustee, and (ii) the filing of Uniform Commercial Code financing statements with the office of the Division of Corporations and Commercial Code of the State of Utah with respect to the security interests created in the Trust Indenture Estate under the Trust Indenture, naming the Owner Trustee as debtor and the Indenture Trustee as secured party, which filing has been duly effected, no other filing or recording or refiling or rerecording is necessary in the State of Utah to create, perfect or maintain the perfected status of such security interest (except for the timely filing of continuation statements in respect of such financing statements); (7) assuming that the Operative Documents were negotiated to a substantial degree in the State of New York and that the closing of a substantial portion of the transactions contemplated by the Operative Documents occurred -13- 14 in the State of New York, the choice of New York law to govern the Participation Agreement, the Lease, and each other Operative Document (other than the Trust Agreement) to which the Owner Trustee or First Security Bank of Utah, National Association in its individual capacity, or both, is a party is, under the laws of the State of Utah, a valid choice of law and should, in a properly presented case, be honored by the courts of the State of Utah; (8) the Owner Trustee has received from Lessee such title to the Aircraft as Lessee had immediately prior to the conveyance to the Owner Trustee, subject to the rights of the Owner Trustee and Lessee under the Lease and the security interest created pursuant to the Trust Indenture and the Trust Supplement; (9) no taxes, fees or other charges, except taxes imposed on fees payable to the Owner Trustee, will be imposed by Salt Lake City or the State of Utah or any political subdivision or taxing authority thereof on or with respect to the execution, delivery or performance of any of the Operative Documents and the trust created pursuant to the Trust Agreement will not be subject to any such taxes, fees or other charges on, based on or measured by the net income of the Trust Estate (as distinguished from the net income of the Owner Participant) solely by reason of the Owner Trustee's location in Salt Lake City or the State of Utah (assuming for purposes of this opinion that the Owner Participant, the Owner Trustee and the Trust Estate would not be subject to any such tax, fee or other charge if the Owner Trustee performed its duties under the Trust Agreement and the Trust Indenture from an office located outside Utah); and (10) there are no pending or, to the knowledge of such counsel after due inquiry, threatened proceedings against or affecting the Owner Trustee before any court or administrative agency, individually or in the aggregate, which, if determined adversely to it, would materially adversely affect the power or ability of the Owner Trustee to perform its obligations under the Owner Trustee Documents. Such opinion shall be to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Indenture Trustee or Lessee may reasonably request. Such opinion may state that (A) no opinion is expressed as to laws other than the laws of the State of Utah, the Federal laws of the United States governing the banking and trust powers of First Security Bank of Utah, National Association, and the Federal Aviation Act as it relates to paragraph (1) and (B) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. Such opinion may assume (M) the due authentication of the Secured Certificates by the Indenture Trustee, (N) that the Operative Documents (other than the Trust Agreement) are legal, valid and binding under the laws of the State of New York and (O) the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and of the other Operative -14- 15 Documents by each of the parties thereto other than First Security Bank of Utah, National Association in its individual capacity and as the Owner Trustee. (xiv) The Loan Participants shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Trustee and Lessee, from Dewey Ballantine, special counsel for the Owner Participant and the Owner Participant Guarantor, and the Owner Participant's in-house counsel, to the collective effect that: (1) the Owner Participant is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Documents; the Owner Participant Guarantor is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Guaranty; (2) the Owner Participant Documents have been duly authorized, executed and delivered by the Owner Participant and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitute legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations; the Owner Participant Guaranty has been duly authorized, executed and delivered by the Owner Participant Guarantor and constitutes the legal, valid and binding obligation of the Owner Participant Guarantor, enforceable against the Owner Participant Guarantor in accordance with its terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; (3) neither the execution and delivery by the Owner Participant of the Owner Participant Documents or by the Owner Participant Guarantor of the Owner Participant Guaranty nor the consummation of any of the transactions by the Owner Participant or the Owner Participant Guarantor contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency of the United States, the State of Delaware or the State in -15- 16 which the principal office of the Owner Participant or the Owner Participant Guarantor is located (or any governmental subdivision of any thereof) (except as shall have been duly obtained or given, specifying the same); (4) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the other parties, if any, thereto (other than the Owner Participant in the case of this Agreement), and the due authentication of the Secured Certificates by the Indenture Trustee, the Owner Trustee Documents (other than the Trust Agreement) constitute legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (5) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the Indenture Trustee as aforesaid, the Trust Indenture duly creates for the benefit of the Indenture Trustee the security interests which the Trust Indenture purports to create and the Indenture Trustee is entitled to the benefits and security afforded by the Trust Indenture; (6) the execution, delivery and performance of the Owner Participant Documents by the Owner Participant does not require any approval of stockholders of the Owner Participant, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Documents by the Owner Participant nor the performance by the Owner Participant of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on the Owner Participant or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any New York, Delaware or United States governmental authority to which the Owner Participant is a party or by which it or its properties may be bound or affected; the execution, -16- 17 delivery and performance of the Owner Participant Guaranty by the Owner Participant Guarantor does not require any approval of stockholders of the Owner Participant Guarantor, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant Guarantor (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Guaranty by the Owner Participant Guarantor, nor the performance by the Owner Participant Guarantor of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on the Owner Participant Guarantor or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant Guarantor under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any New York, Delaware or United States governmental authority to which the Owner Participant Guarantor is a party or by which it or its properties may be bound or affected; and (7) there are no pending or, to the best knowledge of such counsel, threatened actions or proceedings against or affecting the Owner Participant before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant, would have a material adverse effect on the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; there are no pending or, to the best knowledge of such counsel, threatened actions or proceedings against or affecting the Owner Participant Guarantor before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant Guarantor, would have a material adverse effect on the Owner Participant Guarantor or the ability of the Owner Participant Guarantor to perform its obligations under the Owner Participant Guaranty; and to such further effect with respect to such other matters or documents relating to the Owner Participant's or the Owner Participant Guarantor's obligations in connection with this Agreement as the Documentation Agent, the Indenture Trustee, the Owner Trustee or Lessee may reasonably request. Such opinion may rely upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, as to matters of fact. Such opinion may state that (M) no opinion is expressed as to laws other than the General Corporation Law of the State of Delaware, the laws of the State of New York and the Federal laws of the United States, and (N) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. -17- 18 (xv) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to the effect that: (1) the FAA Bill of Sale, the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and the Trust Indenture with the Trust Supplement attached thereto are in due form for recording by and have been duly filed for recordation with the Federal Aviation Administration in accordance with the provisions of Section 44107 of Title 49 of the United States Code; (2) proper application for registration of the Aircraft in the name of the Owner Trustee together with the affidavits of the Owner Trustee and the Owner Participant required by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations and the Trust Agreement have been duly filed with the Federal Aviation Administration in accordance with the Federal Aviation Act, and such counsel is of the opinion that the Federal Aviation Administration will issue a Certificate of Aircraft Registration (AC Form 8050-3) in response to said application; (3) the Owner Trustee is the owner of the legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interests created by the Trust Indenture and such other Liens as are permitted by the Lease or this Agreement; (4) the Aircraft is eligible for registration in the name of the Owner Trustee and will be duly registered in due course in the name of the Owner Trustee pursuant to and in accordance with the provisions of Sections 44102 and 44103 of Title 49 of the United States Code; (5) the Trust Indenture as supplemented by the Trust Supplement creates a duly and validly perfected first priority security interest in the Aircraft and a duly perfected assignment of all the right, title and interest of the Owner Trustee in, to and under the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), subject only to the Lease and to Liens permitted by the Lease and the Trust Indenture, it being understood that no opinion need be expressed as to the validity or enforceability of such security interest under local law or as against third parties in respect of the Aircraft when the same is outside the United States; -18- 19 (6) none of the Trust Indenture, the Trust Agreement, the Trust Supplement, the Lease or the Lease Supplement is required to be filed or recorded in any other place within the United States in order to perfect the security interest in the Aircraft and the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), under the applicable laws of any jurisdiction within the United States; (7) no authorization, approval, consent, license or order of, or registration with, or giving of notice to, the FAA Aircraft Registry is required for the valid authorization, delivery or performance of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture and the Trust Supplement except for such authorizations, approvals, consents, licenses, orders, registrations, and notices as have been effected; and (8) no other registration of the Aircraft and no filings or recordings (other than the filings and recordings with the FAA referred to above) are necessary to provide constructive notice to third parties in any jurisdiction within the United States of the Owner Trustee's title to the Aircraft or the beneficial interest of the Owner Participant in the Aircraft. Such opinion may state that no opinion is expressed as to laws other than the Federal laws of the United States. Said opinion may also contain a statement to the effect that such opinion is limited to the records maintained by the Federal Aviation Administration Aircraft Registry and does not cover liens that are perfected without the filing of notice thereof with the Federal Aviation Administration, such as Federal tax liens, liens arising under Section 1368(a) of Title 29 of the United States Code and possessory artisans' liens, and is subject to the accuracy of FAA personnel in the filing, indexing and recording of instruments filed with the FAA and in the search for encumbrance cross-reference index cards for the Engines. Said opinion may also rely on the opinion obtained by such counsel from counsel for the Aeronautical Center of the FAA, satisfactory in form and scope to such counsel, and on past practice of the FAA which is consistent with such Aeronautical Center counsel's opinion. (xvi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, to the effect that: (1) State Street Bank and Trust Company is a Massachusetts trust company, duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the full corporate power, -19- 20 authority and legal right to enter into and perform its obligations under the Indenture Trustee Documents and, in its capacity as Indenture Trustee, to authenticate the Secured Certificates to be delivered on the Delivery Date; (2) the execution, delivery and performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the Indenture Trustee Documents and the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby and compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with the terms thereof including, without limitation, the authentication of the Secured Certificates to be delivered on the Delivery Date, have been duly authorized by all necessary corporate action on the part of State Street Bank and Trust Company, and neither the execution and delivery thereof nor the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby nor compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with any of the terms and provisions thereof (i) does or will contravene any law or governmental rule or regulation of the United States governing the banking or trust powers of State Street Bank and Trust Company or the Commonwealth of Massachusetts or any order or judgment known to such counsel and applicable to or binding on State Street Bank and Trust Company, or (ii) does or will contravene or result in any breach of, or constitute any default under, the charter documents or By-Laws of State Street Bank and Trust Company or the provisions of any indenture, mortgage, contract or other agreement, in each case known to such counsel, to which State Street Bank and Trust Company is a party or by which it or any of its properties is or may be bound or affected; (3) neither the execution and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, of the Indenture Trustee Documents or the certificates of authentication on the Secured Certificates to be delivered on the Delivery Date, nor the performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the transactions contemplated thereby requires or required the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or Massachusetts governmental authority or agency governing the banking or trust powers of State Street Bank and Trust Company or under any Massachusetts law; (4) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each -20- 21 such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; (5) the Secured Certificates to be issued and dated the Delivery Date have been duly authenticated and delivered by the Indenture Trustee pursuant to the terms of the Indenture Trustee Documents; (6) to the best knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting State Street Bank and Trust Company before any court or administrative agency or arbitration board or tribunal which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of State Street Bank and Trust Company to perform its obligations under the Indenture Trustee Documents; and (7) there are no taxes, fees or other governmental charges ("TAXES") payable under the laws of the Commonwealth of Massachusetts with respect to the execution of and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the Indenture Trustee Documents (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts. Neither State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, the Owner Participant, the Owner Trustee, nor the trust created by the Trust Agreement will, as a result of the transactions contemplated thereby, be subject to any taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would have not been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts, and there are no taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) upon or with respect to the Aircraft or any Engine or any part of any interest therein, or the purchase, ownership, delivery, lease, sublease, possession, presence, use, operation, condition, storage, maintenance, -21- 22 modification, alteration, repair, sale, return, transfer or other disposition of the Aircraft or any Engine which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts; and to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee may reasonably request. Such opinion may state that no opinion is expressed as to laws other than the internal substantive laws of the Commonwealth of Massachusetts and the Federal laws of the United States. Such opinion may further state that with respect to paragraph (4) in connection with the opinion relating to legality, validity and binding effect of the documents there referred to, such counsel has assumed that the laws of the jurisdictions whose laws govern such documents are not materially different from the internal substantive laws of the Commonwealth of Massachusetts. (xvii) The Loan Participants shall have received from Vedder, Price, Kaufman & Kammholz, special counsel for the Loan Participants, a favorable opinion satisfactory in substance and form to the Documentation Agent, as to such matters incident to the transactions contemplated hereby as the Documentation Agent may reasonably request. (xviii) The Loan Participants and the Owner Participant shall have received a certificate signed by the President, any Executive Vice President, any Senior Vice President or any Vice President of Lessee, dated the Delivery Date, addressed to the Loan Participants and the Owner Participant and certifying as to the matters stated in paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this Section 4(a). Copies of the orders, permits, waivers, authorizations, exemptions and approvals referred to in Section 4(a)(viii) shall have been furnished to the Loan Participants and the Owner Participant. (xix) The Owner Participant and the Loan Participants shall, by making their Commitments available as provided in Section 1(b) of this Agreement, be deemed to have reaffirmed the representations and warranties made by them in Section 8 of this Agreement. (xx) The Owner Participant shall have received an opinion, in form and substance satisfactory to the Owner Participant, from Aeroeconomics, Inc., independent aircraft appraisers, or such other recognized aircraft appraiser, to the effect, among other relevant matters, that (A) the Aircraft will have, at the end of the third Fixed Renewal Term, (i) at least 20% of its original economic life remaining and (ii) a fair market value of at least 20% of Lessor's Cost (without taking into account any increase or decrease for inflation or deflation during the Interim Term, the Basic Term and the Fixed Renewal Terms or the terms of any purchase option provided in -22- 23 the Lease) and taking into account any costs to the Owner Trustee or the Owner Participant of removal and delivery of the Aircraft to the Owner Trustee at the end of the third Fixed Renewal Term; (B) the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost; and (C) it will be commercially feasible for a third party to utilize the Aircraft at the end of the third Fixed Renewal Term. (xxi) The Loan Participants and Owner Participant shall have received an independent insurance broker's report, in form and substance satisfactory to the Documentation Agent 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. (xxii) On the Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to the Airframe or any Engine has occurred. (xxiii) Lessor's Cost for the Aircraft shall be $50,000,000. (xxiv) 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. (xxv) The representations and warranties of the Indenture Trustee and the Loan Participants contained in Section 8 shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and each Participant shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President of the Indenture Trustee addressed to such Participant and certifying as to the foregoing matters with respect to the Indenture Trustee. (xxvi) The Owner Participant shall have received from Dewey Ballantine, special counsel to the Owner Participant, 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. (xxvii) In the opinion of the Owner Participant and its special counsel, there shall have been, since the date hereof, 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 -23- 24 hereof, 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. (xxviii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants and the Owner Participant, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for 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. (xxix) The Loan Participants shall have received an opinion, in form and substance reasonably satisfactory to the Documentation Agent, from BK Associates, Inc., independent aircraft appraisers, to the effect that the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost. (xxx) Lessee shall have executed and delivered to the Owner Participant a letter from the Owner Participant to Lessee relating to Lessee's weighted average cost of capital. 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 Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to the due and valid registration of the Aircraft in the name of the Owner Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement, such Trust Supplement, the Lease and 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. It is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are all subject to the fulfillment to the satisfaction of Lessee 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, -24- 25 exemptions, authorizations and approvals shall be in full force and effect on the Delivery Date. (ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii) and 4(a)(iv) hereof shall have been satisfied. (iii) Those documents described in Section 4(a)(v) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Lessee and the Guarantor) in the manner specified in Section 4(a)(v), shall each be satisfactory in form and substance to Lessee, shall be in full force and effect on the Delivery Date, and an executed counterpart of each thereof (other than the Secured Certificates) shall have been delivered to Lessee or its special counsel. (iv) Lessee shall have received a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant, or other evidence of authority satisfactory to Lessee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing or evidencing authority for the execution, delivery and performance by the Owner Participant of all of the Owner Participant Documents, a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant Guarantor, certified as of the Delivery Date by the Secretary or Assistant Secretary of the Owner Participant Guarantor, duly authorizing the execution, delivery and performance by the Owner Participant Guarantor of the Owner Participant Guaranty, and a copy of the general authorizing resolutions of the boards of directors of the Indenture Trustee and the Owner Trustee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Indenture Trustee and the Owner Trustee, respectively, which authorize the execution, delivery and performance by the Indenture Trustee of the Indenture Trustee Documents and the Secured Certificates and by the Owner Trustee of the Owner Trustee Documents, together with such other documents and evidence with respect to the Indenture Trustee, the Owner Participant, the Owner Participant Guarantor and the Owner Trustee as Lessee or its special counsel may reasonably request in order to establish the 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) The representations and warranties of the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, contained in Section 8 hereof shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and Lessee shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President or other authorized representative of the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively, addressed to Lessee and -25- 26 certifying as to the foregoing matters with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively. (vi) Lessee shall have received the opinions set forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case addressed to Lessee and dated the Delivery Date and in each case in scope and substance reasonably satisfactory to Lessee and Lessee's special counsel. (vii) 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. (viii) No applicable law or regulations or guidelines or interpretations by appropriate regulatory authorities shall be in effect which, in the opinion of Lessee or its special counsel, would make it a violation of law or regulations or guidelines for Lessee to enter into any transaction contemplated by the Operative Documents. (ix) 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. (x) Lessee shall have been paid Lessor's Cost for the Aircraft. SECTION 5. PUBLICITY. Each party hereto agrees that it will use its best efforts not to disclose, or permit any of its employees or agents to disclose, the identity of the Owner Participant or the terms of the Operative Documents in connection with the issuance or release for external publication of any article or advertising or publicity matter relating to the terms and conditions of any of the Operative Documents or the transactions contemplated thereby without the prior written consent of the Owner Participant and Lessee, provided that nothing in this Section 5 shall prevent the Loan Participants from publishing a tombstone which may include the initial principal amount of the Secured Certificates, provided, further, that no such tombstone shall disclose the identity of the Owner Participant without the prior written consent of the Owner Participant. SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate Holder (as defined in the Trust Indenture) shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Trust Indenture when and if the principal of and interest on all Secured Certificates held by such holder and all other sums -26- 27 payable to such holder hereunder, under the Trust Indenture and under such Secured Certificates shall have been paid in full. Each of the Loan Participants 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 Loan Participants 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. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and the Owner Participant that as of the Delivery Date: (i) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires, other than failures to qualify which would not have a material adverse effect on the consolidated business, assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents; is a Certificated Air Carrier; has its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) located at Eagan, Minnesota; holds all licenses, certificates, permits and franchises from the appropriate agencies of the United States and/or all other governmental authorities having jurisdiction necessary to authorize Lessee to engage in air transport and to carry on scheduled passenger service as presently conducted (other than those licenses, certificates, permits and franchises which, if not obtained, would not have a material adverse effect on the consolidated business assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents); and has the corporate power and authority to own or hold under lease its properties wherever located or used and to enter into and perform its obligations under the Lessee Documents; (ii) the execution, delivery and performance by Lessee of the Lessee Documents will, on the Delivery Date, have been duly authorized by all necessary corporate action on the part of Lessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Lessee except such as have been duly obtained or by the Delivery Date will have been duly obtained, and none of such agreements contravenes any law, judgment, government rule, regulation or order binding on Lessee or the certificate of incorporation or By-Laws of Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its properties may be bound or affected; -27- 28 (iii) neither the execution and delivery by Lessee of the Lessee Documents nor the performance by Lessee of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, any Federal, State or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee 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 will on the Delivery Date 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), (B) the registration of the Aircraft referred to in Section 4(a)(ix)(4) and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Delivery Date; (iv) on the Delivery Date the Lessee Documents will each constitute legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof (subject to the qualifications set forth in clause (4) of the form of opinion of counsel to Lessee in Section 4(a)(xi)); (v) there are no pending or, to the best of Lessee's knowledge, threatened actions, suits or proceedings before any court or administrative agency which might materially adversely affect the business, condition (financial or otherwise), operations or properties of Lessee and its subsidiaries taken as a whole or Lessee's ability to perform its obligations under the Operative Documents; (vi) except for (A) the registration of the Aircraft pursuant to the Federal Aviation Act, (B) the filing for recording pursuant to said 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 Bill of Sale, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such documents under the Uniform Commercial Code of Minnesota and Utah and such other states as may be specified in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the taking of possession by the Indenture Trustee of the original counterpart of each of the Lease and the Lease Supplement covering the Aircraft, no further action, including any 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 in order to establish and perfect the Owner Trustee's title to and the Indenture Trustee's security interest in the Aircraft as against Lessee and any third parties in any applicable jurisdictions in the United States; (vii) there has not occurred any event which constitutes an Event of Default under the Lease (or any event which with the giving of notice or the passage of time or -28- 29 both would constitute an Event of Default under the Lease) which is presently continuing; (viii) 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; (ix)(a) The consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of December 31, 1995 and the related consolidated statements of operations, cash flows and common stockholders' equity of the Guarantor and its consolidated subsidiaries for the year then ended, which have been audited by independent certified public accountants, copies of which have been furnished to the Owner Participant and each Loan Participant, fairly present the consolidated financial condition of the Guarantor and its consolidated subsidiaries as at such date and the results of operations and cash flow of the Guarantor and its consolidated subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied and since December 31, 1995 there has been no material adverse change in the consolidated financial condition, cash flow or results of operations of the Guarantor and its consolidated subsidiaries; (x) on the Delivery Date, the Owner Trustee will receive good title to the Aircraft free and clear of all Liens, except Liens permitted by clause (v) of Section 6 of the Lease, the rights of Lessee under the Lease and the Lease Supplement covering the Aircraft, the Lien of the Trust Indenture and the beneficial interest of the Owner Participant in the Aircraft; (xi) 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 or U of the Board of Governors of the Federal Reserve System; (xii) Lessee is not in default in the performance of any term or condition of the Purchase Agreement which materially adversely impairs the transactions contemplated hereby; (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 or any interest therein; -29- 30 (xiv) On the Delivery Date, the Aircraft will be duly certified by the FAA as to type and airworthiness, will be insured by Lessee in accordance with the terms of the Lease and will be in the condition and state of repair required under the terms of the Lease; and (xv) neither Lessee nor any subsidiary of Lessee is an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended. (b) General Tax Indemnity. [Reserved] -30- 31 (c) General Indemnity. [Reserved] -31- 32 (d) Income Tax. For purposes of this Section 7, the term "INCOME TAX" means any Tax based on or measured by gross or net income or receipts (other than taxes in the nature of sales, use, license, property or value added Taxes (except value added taxes in the nature of any income, franchise, capital, doing business, excess profits or net worth tax) (including, without limitation, capital gains taxes, minimum taxes, income taxes collected by withholding and taxes on tax preference items), and Taxes which are capital, doing business, excess profits or net worth taxes and interest, additions to tax, penalties, or other charges in respect thereof. SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner Participant represents that it is acquiring its interest in the Trust Estate for investment and not with a present intent as to any resale or distribution thereof (subject nonetheless to any requirement of law that the disposition of its properties shall at all times be and remain within its control) and that neither it nor anyone acting on its behalf has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended, or the securities laws, rules and regulations of any state. (b) Lessee represents and warrants that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended, or the securities laws, rules and regulations of any state. (c) Each of the Owner Participant and First Security Bank of Utah, National Association, in its individual capacity, represents and warrants to the other parties to this Agreement that it is, and on the Delivery Date will be, a Citizen of the United States without making use of any voting trust, voting powers agreement or similar arrangement. The Owner Participant agrees, solely for the benefit of Lessee and the Loan Participants, that if (i) it shall -32- 33 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 hereto 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 in the first sentence of this Section 8(c) 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 Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). First Security Bank of Utah, 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 of Utah, National Association, shall obtain actual knowledge that First Security Bank of Utah, National Association, has ceased to be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under the Federal Aviation Act as in effect at such time or, if it is not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Loan Participants, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or First Security Bank of Utah, National Association, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an event which would constitute an Event of Default but for lapse of time or the giving of notice or both) shall not have occurred and be continuing under the Lease due to non-compliance by Lessee with the registration requirements in the Lease. (d) First Security Bank of Utah, 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 of Utah, 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 of Utah, 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 -33- 34 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 of Utah, National Association, in its individual capacity, represents that it has not offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire the same from, anyone, and that no officer or responsible employee of the Corporate Trust Department of First Security Bank of Utah, 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 or any similar securities related to the Aircraft 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 or the securities laws, rules and regulations of any state. (f) The Owner Participant and each of the Loan Participants agree that, at any time after the Depreciation Period, as long as no Event of Default or a Default of the type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and be continuing, Lessee may elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit A hereto (or such other country as the Owner Participant 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 qualified in the laws of the relevant jurisdiction and reasonably satisfactory to the Owner Participant, 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, -34- 35 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) none of the Owner Trustee, the Owner Participant or the Indenture Trustee will be required to register to do business in the country in which the Aircraft is to be registered as a result of such reregistration, after (1) taking into account any other contacts of the Owner Trustee and the Owner Participant with such jurisdiction (provided, that upon request by Lessee (such request having been acknowledged by the Owner Participant's general counsel), the Owner Trustee and the Owner Participant must respond within fourteen (14) Business Days after receipt of such request describing its contacts in the jurisdiction of reregistration, or else such party shall be deemed for purposes of this clause (D) to have no such contacts) and (2) assuming that the Indenture Trustee has no other contacts with such jurisdiction, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), and (F) (unless Lessee shall have agreed to provide insurance covering the risk of requisition of use of such Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use. In addition, as a condition precedent to any such change in registration, (a) Lessee shall furnish to the Owner Trustee and the Indenture Trustee an Officer's Certificate to the effect that the insurance required by Section 11 of the Lease shall be in full force and effect at the time of such change in registration after giving effect to such change in registration and that the new country of registry imposes aircraft maintenance standards not materially different from those of the United States, France, Germany, Japan, the Netherlands or the United Kingdom and (b) the Owner Participant shall have received assurances satisfactory to it that (i) the original indemnities in favor of it under this Agreement afford it substantially the same protection as provided prior to such change in registry, and (ii) such change will not result in the risk of, or the imposition of, or increase the amount of, any Tax for which Lessee is not required to indemnify under the Operative Documents, or is not then willing to enter into a binding agreement to indemnify in a manner satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (A) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (B) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional -35- 36 adverse tax consequences resulting from such reregistration or (C) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee. Lessee shall pay all costs, expenses, fees, recording and registration taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. (g) The Owner Participant represents and warrants to Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in its capacity as such and in its individual capacity, as follows: (i) the Owner Participant is a corporation duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under the Owner Participant Documents; (ii) the Owner Participant Documents have been duly authorized by all necessary corporate action on the part of the Owner Participant, do not require any approval not already obtained of stockholders of the Owner Participant or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of the Owner Participant, and have been duly executed and delivered by the Owner Participant, and, subject to and in reliance upon the representations made by the Loan Participants and Lessee in Section 8(q) hereof, neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by the Owner Participant with any of the terms and provisions thereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order 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 financing or the citizenship requirements of the Owner Participant under applicable aviation law) or contravene or result in any breach of or constitute any 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, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Owner Participant is a party or by which it or its properties may be bound or affected provided, that no representation or warranty as to ERISA (as hereinafter defined) is made by the Owner Participant except as set forth in Section 8(q)(A); (iii) each of the Owner Participant Documents constitutes a legal, valid and binding obligation of the Owner Participant -36- 37 in accordance with the terms thereof (subject to the qualifications set forth in clause (2) of the opinion of counsel to the Owner Participant in Section 4(a)(xiv)); (iv) there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which, if determined adversely to the Owner Participant, would materially adversely affect the financial condition of the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; (v) upon the execution and delivery of the Trust Indenture, the Trust Indenture Estate will be free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Participant; (vi) neither the execution and delivery of the Owner Participant Documents nor the performance by the Owner Participant of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, state or foreign government authority or agency except for those exceptions referred to in Section 7(a)(iii) which may be applicable to the Owner Participant and the Owner Participant Documents (it being understood that no representation or warranty is made with respect to the 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 aviation law); and (vii) the Owner Participant is not an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended. (h) Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from Lessor Liens (including for this purpose Liens that 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. -37- 38 (i) State Street Bank and Trust Company, in its individual capacity, covenants and agrees that it shall not cause or permit to exist any Lien, arising as a result of (A) claims against the Indenture Trustee not related to its interest in the Aircraft or the administration of the Trust Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not permitted by, or failure of the Indenture Trustee to take any action required by, the Operative Documents to the extent such acts arise or such failure arises from or constitutes gross negligence or willful misconduct, (C) claims against the Indenture Trustee relating to Taxes or Expenses which are excluded from the indemnification provided by Section 7 pursuant to said Section 7, or (D) claims against the Indenture Trustee arising out of the transfer by the Indenture Trustee of all or any portion of its interest in the Aircraft, the Trust Estate, the Trust Indenture Estate or the Operative Documents other than a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9 hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of Default is continuing and prior to the time that the Indenture Trustee has received all amounts due pursuant to the Trust Indenture. (j) Each Loan Participant represents, warrants, covenants and agrees as to itself: (i) that this Agreement has been duly authorized, executed and delivered by such Loan Participant and this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of its jurisdiction of organization; and (iii) that such Loan Participant has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. (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, and which is consistent with the applicable provisions of the Credit Agreement and subject to the provisions hereof. (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 -38- 39 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) under this Agreement or the Trust Indenture (and any exhibits or annexes thereto) or the Owner Participant under this Agreement. (m) State Street Bank and Trust Company represents and warrants, in its individual capacity, to Lessee, the Owner Trustee and each Participant as follows: (i) it is a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other 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 trust agreement or other similar arrangement, is likely to change and that it will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other similar arrangement; (ii) it is a Massachusetts trust company duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the requisite corporate power and authority to enter into and perform its obligations under the Trust Indenture and this Agreement and to authenticate the Secured Certificates to be delivered on the Delivery Date; (iii) the Indenture Trustee Documents and the authentication of the Secured Certificates to be delivered on the Delivery Date have been duly authorized by all -39- 40 necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or state law or governmental rule or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its charter or By-Laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (iv) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. (n) So long as the Aircraft shall be subject to the Lease and at all times prior to the release of the Lien of the Trust Indenture, the Owner Participant will not, directly or indirectly, sell, assign, convey or otherwise transfer any of its right, title or interest in and to the Aircraft, this Agreement, the Trust Estate, the Tax Indemnity Agreement, or the Trust Agreement or any proceeds therefrom to any person or entity, unless the proposed transferee is a "Transferee" (as defined below), and such sale, assignment, conveyance or transfer is with respect to all, but not less than all, of such Transferee's right, title and interest to a single entity (except that the Owner Participant may transfer to one or more Transferees all or any portion of its interest, if any, in the residual value of the Aircraft (which interest shall not include any of the Owner Participant's right, title or interest in any of the Operative Documents); provided that such transfer of residual value shall result in no increase, decrease or change in any of Lessee's, any Loan Participant's, or the Indenture Trustee's obligations, rights or responsibilities under the Operative Documents and that such Transferee or Transferees of residual value shall have no right to consent or object to any matter or decision under, or relating to, the Aircraft or any of the Operative Documents and provided, further, that no Lien shall result from such transfer). A "TRANSFEREE" shall mean either (A) a bank or other financial institution or insurance company with a combined capital, surplus and undivided profits of at least $50,000,000 or a corporation whose tangible net worth is at least $50,000,000, 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, insurance company, or corporation, provided that such bank, financial institution, insurance company, or corporation furnishes to the Owner Trustee, the Loan Participants, 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 Loan Participants, 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 the form attached as Exhibit D hereto; provided, however, that any Transferee shall not be -40- 41 (i) an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or (ii) 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 (unless such entity is General Electric Company, International Lease Finance Corporation, any similar entity or any of their respective Affiliates, provided, that (I) such entity is not included within the immediately preceding clause (i) of this subsection (n) and (II) no such entity has, through ownership of common or preferred stock, effective voting control of an entity described in such immediately preceding clause (I)). 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 (or has effected a voting trust agreement, voting powers agreement or other similar arrangement so as not to affect the then continued (if applicable) United States registration of the Aircraft), and has full power and authority to enter into the transactions contemplated hereby, (N) the Transferee has the requisite power and authority to enter into and carry out the transactions contemplated hereby and such Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants an opinion of counsel in the form attached as Exhibit E hereto, (O) the Transferee enters into (i) an agreement in the form attached as Exhibit B hereto or (ii) such other form approved by 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 each other Operative Document to which the Owner Participant is a party 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 and makes the representations and warranties comparable to those made by the Owner Participant thereunder provided that with respect to ERISA, the Transferee makes the representations and warranties contained in Section 7(h) of the agreement in the form attached as Exhibit B hereto, (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 (provided that the term "applicable Federal law" shall not include ERISA), (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 unless such transfer is effected in connection with the exercise of remedies as a result of and during the continuance of an Event of Default in which case any expenses incurred by Lessee in connection with such transfer shall not be reimbursed, 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 -41- 42 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 20 days' prior written notice thereof to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, specifying the name and address of the proposed Transferee. Upon any such transfer, Lessee shall, at the Transferee's expense, use its reasonable efforts promptly to cause to be obtained new insurance certificates (consistent with the provisions of Section 11 of the Lease) that reflect the interest of the Transferee in the Aircraft. (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 of Utah, 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)(A) Each Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Secured Certificate or any interests represented thereby with the assets of any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1) of the Code or of any entity the assets of which constitute "plan" assets under ERISA. 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 as set forth in the preceding sentence and a covenant as set forth in this sentence. (B) Lessee represents and warrants that: none of (i) the execution and delivery of this Agreement and the other Operative Documents, (ii) the initial purchase by the Loan Participants of the Secured Certificates, and (iii) the initial acquisition by the Owner Participant of its beneficial interest in the Trust Estate will involve any non-exempt prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation being made in reliance upon and subject to the accuracy of the representations contained in subparagraph (A) of this Section 8(q)). -42- 43 (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 and not specifically reserved to Lessee under Section 1 thereof, 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 Loan Participants 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. (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. Each Loan Participant agrees that Lessee may, on behalf of the Owner Trustee and upon notice to the affected Certificate Holder, arrange for another institution (which may be a Certificate Holder) to purchase the Secured Certificates of the affected Certificate Holder by paying the affected Certificate Holder an amount equal to the unpaid principal amount of the Secured Certificates held by the affected Certificate Holder plus accrued but unpaid interest thereon to the date of payment of such principal amount plus all other amounts owed to such affected Certificate Holder under the Operative Documents (including any Funding Loss Amount payable as a result of the applicable purchase occurring on a day other than the last day of an Interest Period). For purposes of this Section 8(t), "AFFECTED CERTIFICATE HOLDER" shall mean a Certificate Holder which has asserted claims -43- 44 against the Owner Trustee or Lessee under or sought rights or remedies provided by Section 7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture. (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) First Security Bank of Utah, National Association, in its individual capacity, represents and warrants that: (i) the Trust Agreement and, assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, each of the other Owner Trustee Documents has been duly executed and delivered by one of its officers who is duly authorized to execute and deliver such instruments on behalf of First Security Bank of Utah, National Association or the Owner Trustee, as the case may be; (ii) the Trust Estate is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to First Security Bank of Utah, National Association, in its individual capacity, and there are no Liens affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Trust Indenture Estate resulting from any act or claim against First Security Bank of Utah, National Association, in its individual capacity, arising out of any event or condition not related to the ownership, leasing, use or operation of the Aircraft or to any other transaction contemplated by this Agreement or any of the Operative Documents, including any such Lien resulting from the nonpayment by First Security Bank of Utah, National Association, in its individual capacity, of any Taxes imposed or measured by its net income; (iii) there has not occurred any event which constitutes (or to the best of its knowledge would, with the passage 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 First Security Bank of Utah, National Association, in its individual capacity, and which is presently continuing; (iv) it is a national banking association duly organized, validly existing and in good standing under the laws of the United States and has the full corporate power, authority and legal right to enter into and perform its obligations under each of the Owner Trustee Documents; (v) each of the Owner Trustee Documents has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof -44- 45 nor its performance of any of the terms and provisions thereof will violate any Federal law governing the banking and trust powers of First Security Bank of Utah, National Association, or Utah law or regulation or contravene or result in any breach of the provisions of its articles of association or By-Laws or any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (vi) each of the Owner Trustee Documents has been duly executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, each thereof is the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (vii) there are no Taxes payable by it (either in its individual capacity or as Owner Trustee), the Trust Estate, the Owner Participant, Lessee, the Indenture Trustee or the Loan Participants to the State of Utah in connection with the execution, delivery and performance of the Operative Documents solely because First Security Bank of Utah, National Association is a national banking association with its principal office in the State of Utah and will perform its obligations under the Operative Documents in the State of Utah, other than franchise or other taxes based on or measured by any fees or compensation received or accrued by First Security Bank of Utah, National Association for services rendered in connection with the transactions contemplated by the Operative Documents. (w) The Owner Participant covenants and agrees that if (i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to Lessee written notice of Lessor's election to retain title to the Aircraft and (iii) the Owner Trustee has failed to make, on or before the Termination Date, any payment required to be made by the Owner Trustee pursuant to Section 9(c) in connection with its retention of title to the Aircraft, the Owner Participant will indemnify Lessee for any losses, damages, costs or expenses of any kind (including any additional rents paid by Lessee and any fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a consequence of such failure by the Owner Trustee. The Owner Participant further covenants and agrees to pay those costs and expenses specified to be paid by the Owner Participant pursuant to Exhibit E to the Lease. (x) Each of the Owner Participant, the Owner Trustee, the Indenture Trustee, each Loan Participant and Lessee covenants and agrees that if Lessee elects (a) to -45- 46 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. (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 each Participant an agreement in form and substance reasonably satisfactory to such 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; (iv) Lessee shall have delivered to the Owner Trustee, the Indenture Trustee and each 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 Participants, 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; and (v) 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, shall make such filings and recordings with the FAA pursuant -46- 47 to the Federal Aviation Act, as shall be necessary or desirable to evidence such consolidation, merger, conveyance, transfer or lease with or to such entity. Upon any such consolidation or merger or any such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety in accordance with this subparagraph (A) of Section 8(y), the successor corporation or Person formed by such consolidation or into which Lessee is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, Lessee under this Agreement with the same effect as if such successor corporation or Person had been named as Lessee herein. No such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety shall have the effect of releasing Lessee or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this subparagraph (A) of Section 8(y) from its liability in respect of any Operative Document to which it is a party. (B) Lessee shall at all times maintain its corporate existence except as permitted by subparagraph (A) of this Section 8(y). (z) Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust Supplement and any financing statements or other instruments as are necessary to maintain, so long as the Trust Indenture or the Lease is in effect, the perfection of the security interests created by the Trust Indenture and any security interest that may be claimed to have been created by the Lease and the interest of the Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the Indenture Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable them to take such action. Lessee will notify the Owner Trustee, the Owner Participant and the Indenture Trustee of any change in the location of its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) promptly after making such change or in any event within the period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. (aa) Section 3 of the Lease contemplates that, under certain circumstances, the Owner Participant will make certain recalculations of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the Owner Participant hereby agrees to make such recalculations as and when contemplated by the Lease and subject to all the terms and conditions of the Lease and promptly to take such further actions as may be necessary or desirable to give effect to and to cause the Owner Trustee to give effect to the provisions of Section 3 of the Lease. (bb) To the extent that any Excess Amount is due on the Commencement Date, the Owner Participant shall have the right to prepay to the Indenture Trustee all or a portion of such Excess Amount on the last Business Day occurring in 1996, and the Indenture Trustee agrees that it shall invest such amount in accordance with the terms set forth in the -47- 48 Trust Indenture. The Owner Participant hereby agrees with Lessee, and only with Lessee, and not for the benefit of any other party to this Participation Agreement, that it will pay in full to Lessee upon termination of the Lease the Reimbursement Amount for which Lessee has not previously received an offset pursuant to Section 3(g) of the Lease. (cc) The Owner Participant hereby agrees to notify Lessee or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York time on the third Business Day prior to the day for which an Excess Amount is indicated stating whether or not the Owner Participant intends to pay such Excess Amount in full by 10:30 A.M. (New York time) on the due date. (dd) [_____________] agrees to act as Administrative Agent hereunder. The Administrative Agent agrees to notify each of the Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual interest expected to accrue on the Secured Certificates during each Interest Period promptly after the commencement of such Interest Period and after the occurrence of any event that would cause such actual interest expected to accrue during such Interest Period to change from the amount previously notified. The Administrative Agent further agrees to perform all of the functions that are required to be performed by the Administrative Agent pursuant to the terms of the Trust Indenture. (ee) The Owner Participant hereby agrees with Lessee that it will pay, or cause to be paid, all costs and expenses that are for the account of the Owner Trustee pursuant to Sections 5(a) and 5(d) of the Lease. The Owner Participant further agrees with Lessee that it will provide the information contemplated to be provided by it pursuant to clause (VI) of Section 7(b)(x) of the Lease within the time period contemplated therein. (ff) 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(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture). (gg) [______________] agrees to act as Documentation Agent hereunder and to perform all of the functions that are required to be performed by the Documentation Agent hereunder. (hh) [______________], [_________________] and [_____________] each agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate (as defined in the Trust Indenture). (ii) Lessee agrees and covenants that it shall not purchase or guarantee or acquire any interest in any Secured Certificate or any other certificate for which a Secured Certificate is security except as provided in Section 8(x). -48- 49 SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall, pursuant to this Section 9 and in accordance with the requirements of Section 3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt payment structures. Within forty-five Business Days after the need for an adjustment to Rent has been established pursuant to Section 3 of the Lease, the Owner Participant shall deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of debt amortization and Basic Rent, Excess Amounts, Special Purchase Price, Stipulated Loss Value and Termination Value percentages. Within forty-five days of its receipt of the Reoptimization Certificate, Lessee may demand a verification, pursuant to Exhibit E of the Lease, of the information set forth in the Reoptimization Certificate. Upon the acceptance by Lessee of the accuracy of the information set forth in the Reoptimization Certificate or the determination pursuant to such verification procedures of such information, the Owner Participant will cause the Owner Trustee (M) to execute a Lease Supplement setting forth the reoptimized Basic Rent, Excess Amounts, Special Purchase Price, Stipulated Loss Value and Termination Value percentages, and (N) to exchange new Secured Certificates containing reoptimized amortization schedules for the Secured Certificates outstanding immediately prior to such reoptimization. (b) In connection with reoptimization adjustments of Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree to changes in the amortization schedule of the Secured Certificates, and (N) each Loan Participant will exchange the Secured Certificates held by it immediately prior to such reoptimization for new Secured Certificates containing reoptimized amortization schedules; provided that such changes do not (X) change the final maturity of any Secured Certificates to beyond twenty years from the Delivery Date or (Y) increase the weighted average lives of the Secured Certificates as of the Delivery Date to more than 15 years. SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the Owner Trustee hereby (A) agrees with Lessee, the Loan Participants 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 (B) agrees with Lessee and the Loan Participants not to revoke the Trust Agreement without the prior written consent of Lessee and the Loan Participants so long as the Lease or the Lien of the Trust Indenture remain in effect. 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 10.05 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 -49- 50 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 Bill 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 Bill of Sale, second, the Lease, with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the Trust Indenture, with the Trust Supplement attached. (c) Lessee agrees that it will consummate, with Owner Participant, on terms substantially identical to those set forth in the Operative Documents, leveraged lease transactions in respect of the first three Boeing 757-251 aircraft delivered by the Manufacturer to Lessee subsequent to the date of this Agreement. 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 -50- 51 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 attributed thereto in the Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set forth in the Trust Indenture. Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it may be amended from time to time. (b) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto or to the Guarantor shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier (only if such communication is also given or made by an additional method herein permitted), 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 Owner Trustee, the Loan Participants, the Administrative Agent, the Documentation 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, or (D) if to the Guarantor, addressed to the Guarantor at such address as the Guarantor shall have furnished by notice to the parties hereto. (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, Wickersham & Taft, 100 Maiden Lane, New York, New -51- 52 York 10038, Attention: Managing Attorney, or such office of Lessee in New York City as from time to time may be designated by Lessee in writing to the Owner Participant, the Owner Trustee and the Indenture Trustee. SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant agrees that if, at any time, the Trust Estate becomes subject to any Taxes for which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States from the state in which it is then located, the situs of the trust may be moved with the written consent of the Owner Participant (which consent shall not be unreasonably withheld) and the Owner Participant will take 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 Loan Participants may reasonably request in form and substance satisfactory to such parties, (B) the rights and obligations under the Operative Documents of the Owner Participant and the Loan Participants 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 Loan Participants shall have received an opinion or opinions of counsel (satisfactory to the Owner Participant and the Loan Participants), in scope, form and substance satisfactory to the Owner Participant and the Loan Participants 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 Loan Participants, 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 Loan Participants and to the Owner Participant covering the matters described in Section 4(a)(xiii) hereof and such other matters as the Loan Participants and the Owner Participant may reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner Participant, the Indenture Trustee and the Loan Participants on an 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, the Indenture Trustee and the Loan Participants in connection with such change of situs. SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, or the Indenture Trustee under the -52- 53 terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture Trustee. (b) The representations, warranties, indemnities and agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee, the Administrative Agent, the Documentation Agent and the Owner Participant provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan Participants', the Indenture Trustee's, the Administrative Agent's, the Documentation Agent's and the Owner Participant's obligations under any and all thereof, shall survive the making available of the respective Commitments by the Loan Participants and 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, and shall be enforceable by, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and assigns, each Certificate Holder and its successors and registered assigns, the Indenture Trustee and its successors as Indenture Trustee under the Trust Indenture, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, the Administrative Agent and the Documentation Agent. 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 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 -53- 54 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 Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan Participants shall promptly submit to the Owner Trustee and Lessee for their review 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 July 15, 1996). The Owner Participant agrees to transfer to the Owner Trustee promptly but in any event no later than August 15, 1996 such amount as shall be necessary in order to enable the Owner Trustee to pay Transaction Expenses. To the extent of funds received by it, the Owner Trustee agrees to pay all invoices of Transaction Expenses that have been approved by it and Lessee promptly upon receipt thereof. Notwithstanding the foregoing, to the extent that Transaction Expenses exceed 1% of Lessor's Cost, Lessee at its sole option shall have the right to pay directly its special counsel fees and the fee and reasonable disbursements of Babcock and Brown Financial Corporation. SECTION 17. REFINANCINGS. (a) So long as no Event of Default or a Default of the type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and be continuing, Lessee shall have the right to refinance all (but not less than all) of the Secured Certificates with Dollar denominated debt 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 (including the terms of any debt to be issued in connection with such refinancing); provided that no such refinancing shall subject the Owner Participant to any adverse, or the risk of any adverse, tax consequence unless Lessee agrees to indemnify the Owner Participant for such unindemnified adverse tax consequence (any such indemnity to be satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (1) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (2) Lessee provides the Owner -54- 55 Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such refinancing or (3) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee); provided further that (x) the Owner Participant agrees that it will not be entitled to any indemnity from Lessee for any failure of the debt in such refinancing to constitute "qualified nonrecourse indebtedness" within the meaning of Treasury Regulation Section 1.861-10T(b) with respect to the first refinancing described in the next paragraph, provided it is satisfactory to, or has no adverse tax consequences for, the Owner Participant and (y) no offering material related to any public refinancing shall disclose the identity of the Owner Participant. The Owner Participant has been informed by Lessee that the debt to be issued in connection with such refinancing may be issued in several classes, each of which may have a different interest rate, final maturity date and priority of payment. The Owner Participant acknowledges that it has been informed that one or more of such classes may be entitled to the benefit of a liquidity facility which shall not be provided by Lessee or a Person who is an Affiliate of Lessee, and which will entitle the Indenture Trustee (or a collateral agent therefor) to make drawings thereunder to pay interest on a current basis on the enhanced classes of debt for up to three semi-annual interest payments following a payment default with respect to such enhanced classes. The Owner Participant acknowledges being informed that under such a structure drawings of the entire amount available under the liquidity facility for any class (and the deposit of the proceeds thereof into a cash collateral account) will be required in the event of a ratings decline with respect to the related liquidity provider or in the event that the liquidity facility is not extended or replaced prior to its scheduled expiration and that amounts owed to the liquidity facility provider for both drawings and interest thereon will generally be senior to all Loan Participant claims. The Owner Participant agrees that in any refinancing operation it will consider in good faith these and any other conditions which do not impair the customary rights of an owner participant in a leveraged lease transaction. In the event that any such agreement is concluded: (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 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 proposed date on which the outstanding Secured Certificates will be redeemed (such date, 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 increased or decreased and (D) the proposed revised -55- 56 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 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 (such debt securities, the "NEW DEBT") except that the principal amount of New Debt may exceed by no more than 105% 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; (5) the Owner Participant shall pay all of the expenses of the first refinancing (including, but not limited to, the fees, expenses and disbursements of counsel and any placement or underwriting fees) and such expenses shall be treated as Transaction Expenses; 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 -56- 57 assumptions and constraints 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 and constraints 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 Section Section 4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc. 75-28 Section 4.08(1) shall be applied on a prospective basis from the date of such adjustment) and Section 467 of the Code as then in effect as long as the Schedule of Basic Rent was in compliance with Section 467 of the Code as in effect on the Closing Date, it being understood that, to the extent that any grandfather, effective date, or similar provisions in any regulations under Section 467 or other administrative pronouncement interpreting Section 467 promulgated or issued after the Closing Date causes such regulations or pronouncement not to be applicable to the Schedule of Basic Rent in effect on the Closing Date, such Schedule shall be deemed to be in compliance with Section 467 as in effect on the Closing Date. (b) The final maturity and weighted average life of the New Debt on an aggregate basis shall not exceed by more than six months those of the Secured Certificates. (c) 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. (d) The Owner Participant, at the time of the closing of the second or third refinancing pursuant to this Section 17, if any, shall be paid a fee of $25,000 in respect of each such refinancing provided, that in the event that a similar refinancing is concurrently being effected on identical terms under any of the other transactions entered into in 1996 by the Owner Participant and Lessee for the lease of Boeing 757-251 aircraft pursuant to which a fee is payable pursuant to the corresponding provisions of the applicable participation agreement, Lessee shall not be required to pay a separate fee of $25,000 for each such refinancing, it being the intent of the parties that a total fee of $50,000 shall be paid by Lessee for all such concurrent refinancings on identical terms for which a fee is otherwise payable pursuant to the corresponding provisions of the applicable participation agreement. SECTION 18. AGENTS. (a) Each Loan Participant hereby appoints and authorizes each of the Administrative Agent and the Documentation Agent (each, an "AGENT") to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Operative Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. Each Agent shall have no duties or responsibilities except those expressly set forth in the Operative Documents. As to any matters not expressly provided for hereby or by the Trust Indenture, each Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining -57- 58 from acting) upon the instructions of the Majority in Interest of Certificate Holders (as defined in the Trust Indenture), and such instructions shall be binding upon all Loan Participants and all Certificate Holders; provided, however, that such Agent shall not be required to take any action that exposes such Agent to personal liability or that is contrary to the Operative Documents or applicable law. Each Agent agrees to give to each Loan Participant prompt notice of each notice given to it by the Owner Trustee pursuant to the terms of the Operative Documents with respect to which such Loan Participant has not otherwise received such notice. (b) No Agent nor such Agent's directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the Trust Indenture, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Loan Participant and shall not be responsible to any Loan Participant for any statements, warranties or representations (whether written or oral) made in or in connection with the Operative Documents; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Operative Documents on the part of any party thereto or to inspect the property (including the books and records) of any such party; (iv) shall not be responsible to any Loan Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Operative Documents or any other instrument or document furnished pursuant thereto; and (v) shall incur no liability under or in respect of the Operative Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. (c) With respect to their Loans and any Secured Certificates issued to them, [ ] and [ ] shall have the same rights and powers under the Operative Documents as any other Loan Participant and may exercise the same as though they were not Agents and the term "Loan Participant" or "Certificate Holder" shall, unless otherwise expressly indicated, include [ ] and [ ] in their individual capacity. [ ] and its Affiliates and [ ] and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Owner Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any Person who may do business with or own securities of any of such Persons, all as if [ ] and [ ] were not Agents and without any duty to account therefor to the Loan Participants. (d) Each Loan Participant acknowledges that it has, independently and without reliance upon the Agents or any other Loan Participant and based on the financial statements referred to in Section 7(a)(ix) of this Agreement and such other documents and -58- 59 information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Loan Participant also acknowledges that it will, independently and without reliance upon the Agents or any other Loan Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. (e) Subject to the appointment and acceptance of a successor agent as provided below, any Agent may resign at any time by giving written notice thereof to the Loan Participants, the Owner Trustee and Lessee and may be removed at any time with or without cause by the Majority in Interest of Certificate Holders (as defined in the Trust Indenture). Upon any such resignation or removal, the Majority in Interest of Certificate Holders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority in Interest of Certificate Holders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or removal of the retiring Agent by the Majority in Interest of Certificate Holders, then the retiring Agent may, on behalf of the Loan Participants, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the Trust Indenture. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section 18 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the Trust Indenture. Notwithstanding anything contrary herein, the Administrative Agent and the Documentation Agent hereunder and under the Trust Indenture shall be the same institution, respectively, as the Administrative Agent and the Documentation Agent under (and as defined in) the Credit Agreement. -59- 60 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: ----------------------------------- Title: Sr. Vice President-Finance and Treasurer Address: U.S. Mail 5101 Northwest Drive (A4010) St.Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 [ ] Owner Participant By: ----------------------------------- Title: Address: Attn: Telecopy No.: -Signature Page- 61 State Street Bank and Trust Company, Indenture Trustee By: ----------------------------------- Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: ----------------------------------- Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 -Signture Page- 62 [Bridge Lenders] By: ------------------------------------ Title: By: ------------------------------------ Title: Address: Attn: Telecopy No.: 63 SCHEDULE I NAMES AND ADDRESSES Lessee: Northwest Airlines, Inc. U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 Wire Transfer First Bank, N.A., Minneapolis ABA No. 091000022 Acct. No. 150250099440 Owner Participant: Payments made to the Owner Participant as provided in Section 3.06 of the Trust Indenture shall be made to: 64 Indenture Trustee: State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 Wire Transfer State Street Bank and Trust Company ABA No. 011-00-0028 for credit to State Street Bank and Trust Company Acct. No. 9903-943-0 Attn: Corporate Trust Department Reference: Northwest/NW 1996 D Owner Trustee: First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 Payments made to the Owner Trustee as provided in Section 3(f) of the Lease shall be made to: First Security Bank of Utah, National Association ABA No. 124-0000-12 Acct. No. 051-0922115 Attn: Corporate Trust Department Credit: Northwest/NW 1996 D SCHEDULE I- PAGE 2 65 SCHEDULE II COMMITMENTS
Percentage of Loan Participants: Lessor's Cost - ----------------- -------------
66
Percentage of Loan Participants: Lessor's Cost - ----------------- ------------- Owner Participant: - ----------------- -------------- Total Commitments: 100%
SCHEDULE II-PAGE 2 67 EXHIBIT A TO PARTICIPATION AGREEMENT [NW 1996 D] SCHEDULE OF COUNTRIES FOR REREGISTRATION Argentina Japan Australia Luxembourg Austria Malaysia Belgium Mexico Brazil Netherlands Canada New Zealand Chile Norway Denmark People's Republic of China Finland Portugal France Republic of China (Taiwan) Germany Singapore Greece South Africa Hungary South Korea Iceland Spain India Sweden Indonesia Switzerland Ireland Thailand Italy United Kingdom
68 EXHIBIT B TO PARTICIPATION AGREEMENT [NW 1996 D] ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 D] ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 D], dated as of __________, ____, between ____________________________________, a _____________ corporation (the "ASSIGNOR"), and __________________________, a __________ corporation (the "ASSIGNEE"). W I T N E S S E T H: WHEREAS, the parties hereto desire to effect (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Participation Agreement [NW 1996 D], dated as of April 29, 1996, among Northwest Airlines, Inc., the Assignor, each Loan Participant named therein, First Security Bank of Utah, National Association, and State Street Bank and Trust Company (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), including, without limitation, any indemnity payments payable to the Assignee directly or indirectly thereunder, (ii) the Trust Agreement identified in the Participation Agreement (the "TRUST AGREEMENT"), (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Tax Indemnity Agreement identified in the Participation Agreement, and (v) the proceeds therefrom and (b) the assumption by the Assignee of the obligations of the Assignor accruing from and after the Effective Time; and WHEREAS, such documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Participation Agreement): 1. ASSIGNMENT. The Assignor has sold, assigned, conveyed, transferred and set over, and does hereby sell, assign, convey, transfer and set over, unto the Assignee as of the date hereof all of its present and future right, title and interest in, under and with respect to the Trust Estate, the Aircraft, the Participation Agreement, the Trust Agreement, the Tax Indemnity Agreement and all other Operative Documents to which the Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which the Assignor is bound, and any proceeds therefrom, together with all other documents and 69 instruments evidencing any of such right, title and interest, except such rights of the Assignor as have accrued to the Assignor prior to the Effective Time (as subsequently defined) (including specifically, but without limitation, the right to receive any amounts due or accrued to the Assignor under the Trust Agreement prior to the Effective Time and the right to receive any indemnity payment pursuant to the Participation Agreement or the Tax Indemnity Agreement with respect to events occurring prior to the Effective Time). 2. ASSUMPTION. The Assignee hereby undertakes all of the duties and obligations of the "Owner Participant" accruing on or subsequent for the Effective Time (for the avoidance of doubt, excluding any duties, obligations and liabilities of the Assignor required to be performed by it on or prior to the date hereof under the Participation Agreement, the Trust Agreement, any of the other Operative Documents to which the Assignor is a party or by which it is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which the Assignor is a party or by which the Assignor is bound), pursuant to the Participation Agreement, the Trust Agreement, and each other Operative Document to which the Assignor is a party, each contract, agreement, document or instrument hereby assigned and each other contract, agreement, document or instrument relating to the Trust Estate by which the Assignor is bound, and hereby confirms that it shall be deemed a party to the Participation Agreement, the Trust Agreement and each other Operative Document to which the Assignor is a party or by which it is bound and each such other contract, agreement, document and instrument, and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Owner Participant. The assignment and assumption contemplated hereby shall not release the Assignor from its obligations under the Participation Agreement or the Trust Agreement except to the extent expressly assumed by the Assignee pursuant to this Section 2, provided, that Assignor's rights under Section 7 of the Participation Agreement and under the Tax Indemnity Agreement to the extent relating to acts, conditions or events occurring or existing prior to the date hereof shall be retained in full by Assignor. 3. APPOINTMENT AS ATTORNEY-IN-FACT. In furtherance of the within assignment, the Assignor hereby constitutes and appoints the Assignee, and its successors and assigns, the true and lawful attorneys of the Assignor, with full power of substitution, in the name of the Assignee or in the name of the Assignor but on behalf of and for the benefit of and at the expense of the Assignee, to collect for the account of the Assignee all items sold, transferred or assigned to the Assignee pursuant hereto; to institute and prosecute, in the name of the Assignor or otherwise, but at the expense of the Assignee, all proceedings that the Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and compromise at the expense of the Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by the Assignee; and to do all such acts and things in relation thereto at the expense of the Assignee as the Assignee shall reasonably deem advisable. The Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by the Assignor in any manner or for any reason or by virtue of any dissolution of the Assignor. EXHIBIT B - PAGE 2 70 4. PAYMENTS. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee, and the Assignee hereby covenants and agrees to pay over to the Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignee that, under Section 1 hereof, belong to the Assignor. 5. FURTHER ASSURANCES. Each party hereto shall, at any time and from time to time, upon the request of any other party hereto, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the other party may reasonably request to obtain the full benefits of this Assignment and of the right and powers herein granted. 6. INVESTMENT PURPOSE. The Assignee hereby represents that it is acquiring the trust and other interests hereby assigned to it for its own account for the purpose of investment and not with a view to the distribution or resale of either thereof. 7. REPRESENTATIONS AND WARRANTIES. The Assignee represents and warrants that: (a) it is duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations and the obligations of the Owner Participant under the Operative Documents to which it is or will be a party; (b) this Assignment and Assumption Agreement has been duly authorized by all necessary action on its part, does not require any approval not already obtained of its stockholders or any approval or consent not already obtained of any trustee or holders of any of its indebtedness or obligations, and has been duly executed and delivered by the Assignee, and neither the execution and delivery thereof, nor the consummation of the transactions contemplated hereby, nor compliance by the Assignee with any of the terms and provisions hereof or of any of the Operative Documents to which it will become a party or by which it will be bound, will contravene any United States Federal or state law, judgment, governmental rule, regulation or order applicable to or binding on the Assignee (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA (except as set forth in subsection 7(h) below) or aviation or to the nature of the equipment to be owned by the Owner Trustee, other than such laws, rules, or regulations relating to lease transactions generally or to the citizenship requirements of the Assignee under the Federal Aviation Act) or contravene or result in any breach of or constitute any default under, or result in the creation of any Lien (other EXHIBIT B - PAGE 3 71 than Liens provided for in the Operative Documents) upon any property of the Assignee or, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Assignee is a party or by which it or its properties may be bound or affected; (c) each of the Operative Documents to which it will become a party, assuming such document is the legal, valid and binding obligation of each other party thereto, will constitute the legal, valid and binding obligation of the Assignee, enforceable in accordance with its terms; (d) there are no pending or, to the knowledge of the Assignee, threatened actions or proceedings against the Assignee before any court or administrative agency which, if determined adversely to the Assignee, would materially adversely affect the ability of the Assignee to perform its obligations under any Operative Document to which it will become a party; (e) upon the execution and delivery of this Assignment and Assumption Agreement, the Trust Estate and the Trust Indenture Estate will be free and clear of Lessor Liens (including for the this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Assignee; (f) neither the execution and delivery by the Assignee of this Assignment and Assumption Agreement, nor the consummation by it of any of the transactions contemplated hereby, requires the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or other governmental authority or agency (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 lease transactions generally or to the citizenship requirements of the Assignee under applicable aviation law); (g) the Assignee is not an "investment company" or a company controlled by an "investment company" required to register as such under the Investment Company Act of 1940, as amended; (h) either (x) no part of the funds to be used by it to acquire any right, title or interest in the Trust Estate, or in this Agreement, the Trust Agreement, the Tax Indemnity Agreement or any other of the Operative Documents to which the Assignee is a party or by which the Owner Participant is bound, directly or indirectly constitutes, or may be deemed under the Code, ERISA or any applicable state law or any rulings or regulations thereunder to be, the assets of any "employee benefit plan" as defined in Section 3(3) of EXHIBIT B - PAGE 4 72 ERISA or of any "plan" within the meaning of Section 4975(e)(1) of the Code or of any entity the assets of which constitute "plan" assets under ERISA, or (y) the transfer to and ownership of such right, title and interest by the Assignee is and will continue to be covered by Prohibited Transaction Class Exemption 91-38 or 95-60. (i) on the date hereof [it is a Citizen of the United States (without use of a voting trust agreement or voting powers agreement)] [it has entered into a voting powers or voting trust agreement which has been approved by the FAA (to the extent required by the Federal Aviation Act or the FAA)]; (j) the transfer to it of all of the Assignor's right, title and interest as Owner Participant will not adversely affect the continued registration of the Aircraft in the name of the Owner Trustee or violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or violate any provisions of the Securities Act of 1933, as amended, or any other applicable Federal or state law (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA (except as set forth in subsection 7(h) above)); and (k) [it is a "Transferee" satisfying the conditions set forth in Section 8(n) of the Participation Agreement] [alternatively, guaranty meeting the requirements of Section 8(n) of the Participation Agreement to be provided]; and (l) such Transferee is not (i) an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or (ii) 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 (unless such entity is General Electric Company, International Lease Finance Corporation, any similar entity or any of their respective Affiliates, provided, that (I) such entity is not included within the immediately preceding clause (i) of this subsection (l) and (II) no such entity has, through ownership of common or preferred stock, effective voting control of an entity described in such immediately preceding clause (i). 8. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor represents and warrants that: (a) it is a corporation duly organized and validly existing in good standing under the laws of the State of ____________ and has the requisite power, authority and legal right to enter into and carry out the transactions contemplated hereby; EXHIBIT B - PAGE 5 73 (b) this Agreement has been duly authorized, executed and delivered by it and constitutes the legal, valid and binding obligation of Assignor, enforceable against it in accordance with its terms; (c) no action or proceeding is pending, has been instituted or, to the knowledge of Assignor, is threatened, before any court or governmental agency, nor has any order, judgment or decree been issued or, to the knowledge of Assignor, is threatened, by any court or governmental agency which would materially adversely affect the ability of Assignor to complete and consummate its obligations contemplated hereby; (d) the Trust Estate is free of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to it; (e) it has fully performed all of its obligations under the Participation Agreement and under each other Operative Document to which it is a party or by which it is bound, which obligations by their terms are required to be satisfied or performed prior to the Effective Time or prior to the consummation of the transactions contemplated hereby; (f) neither the execution, delivery and performance by it of this Agreement, nor compliance by it with any of the provisions thereof requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness obligations of it or contravenes or will contravene any law or any order of any court or governmental authority of agency applicable to or binding on it (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA) or contravenes or will contravene the provisions of, or constitute a default under, its [Certificate of Incorporation] or [By-Laws] or any indenture, mortgage, contract or any agreement or instrument to which it is a party or by which it or any of its property may be bound or affected; (g) the transfer to Assignee of all of the Assignor's right, title and interest as Owner Participant will not violate, or affect registration of the Aircraft under, any provision of the Federal Aviation Act (or any rules or regulations promulgated thereunder), violate the Securities Act of 1933, as amended (and no registration pursuant to such Act or the rules and regulations thereunder shall be required in connection with such transfer), or violate any other applicable Federal or state law (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA); and (h) Assignor has assumed the risk of any loss of Interest Deductions, Amortization Deductions and MACRS Deductions and the risk of any Inclusion EXHIBIT B - PAGE 6 74 Event (each as defined in the Tax Indemnity Agreement) resulting from the transfer to Assignee pursuant to the Assignment. 9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE. 10. COUNTERPARTS. This Assignment may be executed in any number of counterparts, all of which together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 11. THIRD PARTY BENEFICIARIES. Each party hereto agrees, for the benefit of the Owner Trustee, each Loan Participant, each Certificate Holder, the Indenture Trustee and Lessee (collectively, the "BENEFICIARIES"), that the representations, warranties and covenants of such party contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. 12. EFFECTIVENESS. This Agreement shall be effective upon its execution and delivery by each of Assignor and Assignee, the exact time of occurrence of which (the "EFFECTIVE TIME") shall be agreed in a writing signed by Assignor and Assignee addressed to Lessee, the Owner Trustee and the Indenture Trustee. EXHIBIT B - PAGE 7 75 IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. [ASSIGNOR] By ------------------------------------ Title [ASSIGNEE] By ------------------------------------ Title EXHIBIT B - PAGE 8 76 EXHIBIT C TO PARTICIPATION AGREEMENT [NW 1996 D] SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES ** Argentina * Japan * Australia * Luxembourg * Austria ** Malaysia * Belgium ** Mexico ** Brazil * Netherlands * Canada * New Zealand ** Chile * Norway * Denmark ** People's Republic of China * Finland Portugal * France ** Republic of China (Taiwan)*** * Germany Singapore ** Greece ** South Africa ** Hungary South Korea * Iceland Spain ** India * Sweden ** Indonesia * Switzerland * Ireland ** Thailand * Italy * United Kingdom
* Designates "Specified Country". ** Designates "Restricted Country". *** 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 C - PAGE 1 77 EXHIBIT D TO PARTICIPATION AGREEMENT FORM OF GUARANTY [LETTERHEAD OF GUARANTOR] PARENT GUARANTY Dated as of ____________ ____, ______ [Lessee] [Trust Company] [Indenture Trustee] [Loan Participants] One Boeing Model 757-251 Aircraft Manufacturer's Serial Number [ ] Ladies and Gentlemen: Reference is hereby made to the Participation Agreement [NW 1996 D] (as from time to time amended or supplemented, the "Participation Agreement"), dated as of April 29, 1996, among Northwest Airlines, Inc. ("Lessee"), [ ] (the "Owner Participant"), First Security Bank of Utah, National Association, not in its individual capacity, except as expressly provided therein, but solely as trustee (the "Owner Trustee" and "Lessor") under the Trust Agreement, dated as of April 29_, 1996, between the Trustee and the Owner Participant (the "Trust Agreement"), State Street Bank and Trust Company (the "Indenture Trustee") and the Loan Participants listed on Schedule I thereto. Capitalized terms used herein without definition have the respective meanings ascribed thereto in the Participation Agreement. Pursuant to Section 8 of the Participation Agreement and in connection with the transfer of the Interest (as defined in the Assignment and Assumption Agreement dated as of the date hereof between [Transferor], a ____________ corporation ("Transferor") and [Transferee], a ____________ corporation ("Transferee") (the "Assumption Agreement'')) to be consummated as of the date hereof from Transferor to Transferee, the wholly-owned subsidiary of _________________________ ("Guarantor"), and the execution by Guarantor of the guaranty of Transferee's obligations as contemplated by the Assumption Agreement (this "Guaranty"), Guarantor represents and warrants to, and covenants with, Lessee, First Security Bank of Utah, National Association, in its individual capacity ("Trust Company"), Indenture Trustee and Loan Participants, as follows: EXHIBIT D - PAGE 1 78 1. Ownership of Transferee. Guarantor directly or indirectly owns and holds all of the issued and outstanding shares of capital stock of Transferee. 2. Additional Representations and Warranties. (i) Guarantor is a corporation duly organized and validly existing pursuant to the laws of ___________________, and has the corporate power and authority to enter into and perform this Guaranty. (ii) The execution, delivery and performance by Guarantor of this Guaranty has been duly authorized by all necessary corporate action on the part of Guarantor, does not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Guarantor except such as have been duly obtained, and this Guaranty will not contravene any applicable law or corporate charter or by-law, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien upon the property of Guarantor under, any indenture, mortgage, contract or other agreement to which Guarantor is a party or by which it may be bound or affected. (iii) Neither the execution and delivery by Guarantor of this Guaranty, nor the consummation of the transactions by Guarantor contemplated hereby, nor the performance of the obligations hereunder or under any other documents contemplated hereby or thereby by Guarantor requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, United States Federal, state, or foreign governmental authority or agency. (iv) This Guaranty has been duly executed and validly delivered by Guarantor and constitutes the legal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its terms except as the enforcement of this Guaranty may be affected by applicable bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally. (v) There are no pending or, to Guarantor's knowledge, threatened actions or proceedings before any court or administrative agency which might materially adversely affect the consolidated financial condition, business or operations of Guarantor, or the ability of Guarantor to perform its obligations under this Guaranty. (vi) No broker's or finder's fees or commissions or advisory fees are or may become payable in connection with this Guaranty or the Assumption Agreement or, if any such fee is payable, such fee will be the responsibility of Guarantor. (vii) On the date hereof the Trust Estate will be free of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to Guarantor. (viii) Guarantor is (A) a Citizen of the United States (or has effected a voting trust agreement, voting powers agreement or other similar arrangement) and (B) a bank, EXHIBIT D - PAGE 2 79 insurance company, financial institution or domestic corporation the net worth of which is at least $50,000,000. 3. Guaranty. (a) Guarantor hereby unconditionally and irrevocably guarantees, not merely as surety but as obligor: (i) the due and punctual payment of any and all sums which are payable by Transferee pursuant to any provision of the Assumption Agreement (and in particular, Section 4 thereof) and the Participation Agreement, the Tax Indemnity Agreement and any other Operative Document assumed by Transferee pursuant to the Assumption Agreement (collectively, the "Guaranteed Agreements"), and (ii) the due and punctual performance of and compliance with and observance of all other obligations, covenants, warranties and undertakings of or conditions contained in or arising under the Guaranteed Agreements binding upon or made by Transferor and assumed by Transferee under the Assumption Agreement, in each case, whether or not Guarantor shall have contributed funds to Lessor or Transferee, as the case may be, for such payment or performance by Lessor or Transferee (such payments and other obligations guaranteed hereunder hereinafter referred to as the "Obligations"). (b) Guarantor agrees that this Guaranty is an unconditional and absolute guaranty of payment and performance (not merely enforceability) and that its undertakings hereunder are not contingent upon your bringing any action against Transferee or resorting to any security and hereby expressly waives any claim that its undertakings hereunder are so contingent. (c) Guarantor hereby waives promptness, diligence, demand and all notices whatsoever as to the obligations and covenants guaranteed hereby and acceptance of this Guaranty, and waives any other circumstance which might otherwise constitute a defense available to, or a discharge of, the undersigned, and agrees that it shall not be required to consent to, or receive any notice of, any amendment or modification of, or waiver, consent or extension with respect to, the Guaranteed Agreements that may be made or given as provided therein. (d) Guarantor agrees to pay any costs and expenses (including reasonable fees and disbursements of counsel) that may be paid or incurred by the beneficiaries hereof in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty. (e) Guarantor understands and agrees that its obligations hereunder shall be construed as continuing, absolute and unconditional without regard to (i) the validity, regularity or enforceability of any Operative Document, any of the Obligations or any collateral security therefor or guaranty or right of offset with respect thereto at any time or EXHIBIT D - PAGE 3 80 from time to time held by any beneficiary hereof, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by Transferee against any beneficiary hereof or (iii) any other circumstances whatsoever (with or without notice to or knowledge of Transferee or Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of Transferee for the Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any other instance. 4. Quiet Enjoyment. So long as no Event of Default shall have occurred and be continuing, Guarantor will not permit Transferee or Lessor to take or cause to be taken any action contrary to Lessee's rights under the Lease, including, without limitation, Lessee's rights to possession and use of the Aircraft. 5. No Discharge. The obligations of Guarantor hereunder are absolute, unconditional and irrevocable and will not be discharged by, and this Guaranty shall remain in full force and effect notwithstanding: (a) the assignment, conveyance or other transfer by Guarantor of any or all of its interest in or capital stock of Transferee, unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer); (b) the assignment, conveyance or other transfer by Transferee of any or all of its interest in the Trust Estate (as defined in the Trust Agreement), unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer) unless Guarantor guarantees the obligations of the transferee under Section 8(n) of the Participation Agreement; (c) the assignment, conveyance or other transfer by Lessor of any or all of its interest in the Aircraft; (d) any extension or renewal with respect to any obligation of Transferee or Lessor under the Guaranteed Agreements; (e) any modification of, or amendment or supplement to, any of the Guaranteed Agreements; (f) any furnishing or acceptance of additional security or any release of any security; (g) any waiver, consent or other action or inaction or any exercise or non-exercise of any right, remedy or power with respect to Transferee or Lessor, or any change in the structure of Transferee or Lessor; or (h) any insolvency, bankruptcy, reorganization, arrangement, composition, liquidation, dissolution, or similar proceedings with respect to the Trustee or Transferee; or any other occurrence whatsoever, except payment in full of all amounts payable by Transferee under the Guaranteed Agreements and performance in full of all Obligations of Transferee in accordance with the terms and conditions of the Guaranteed Agreements. 6. Reinstatement. Guarantor agrees that this Guaranty shall be automatically reinstated with respect to any payment made prior to any termination of the Guaranty by or on behalf of Transferee pursuant to the Participation Agreement or the other EXHIBIT D - PAGE 4 81 Operative Documents to which Transferee is a party if and to the extent that such payment is rescinded or must be otherwise restored, whether as a result of any proceedings in bankruptcy or reorganization or otherwise. 7. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any set-off or application of funds of Guarantor by any beneficiary hereof, Guarantor shall not be entitled to be subrogated to any of the rights of any beneficiary hereof against Transferee or any collateral, security or guarantee or right of set-off held by any beneficiary hereof for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payment made by Guarantor hereunder, until all amounts and performance owing to the beneficiaries hereof by Transferee on account of the Obligations are paid and performed in full. 8. Severability. Any provision of this Guaranty Agreement that 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. 9. Miscellaneous. This Guaranty shall: (a) be binding upon Guarantor, its successors and assigns; (b) inure to the benefit of, and be enforceable by, Lessee, Trust Company, Indenture Trustee, and Loan Participants, and their respective successors and assigns and each other holder from time to time of any interest in the Aircraft or the Operative Documents, but shall not, and is not intended to, create rights in any other third parties; (c) not be waived, amended or modified without the written consent of Lessee, Trust Company, Indenture Trustee, and Loan Participants; (d) BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; and (e) subject to Section 6 hereof, remain in full force and effect until, and shall be terminated upon (1) the payment in full of all sums payable by Transferee, as the case may be, under the Guaranteed Agreements, and by Guarantor hereunder, and performance in full of Transferee, in accordance with the terms and provisions of the Guaranteed Agreements and Guarantor in accordance with the terms of this Guaranty or (2) the date on which Transferee shall meet the requirements set forth in Section 8 of the Participation Agreement without benefit of this Guaranty; provided that Guarantor hereby covenants and agrees that if Transferee shall at any time thereafter (while Transferee shall be Owner Participant under the Participation Agreement) fail to meet such requirements, Guarantor shall immediately reinstate this Guaranty or execute and deliver to the addressees of this Guaranty a guaranty substantially identical hereto. All notices to, or requests of, demands on and other communications with Guarantor shall be made as set forth in the Participation Agreement. [rest of page intentionally left blank] EXHIBIT D - PAGE 5 82 Very truly yours, [GUARANTOR] By:______________________________ Name: Title: [SIGNATURE PAGE] EXHIBIT D - PAGE 6 83 EXHIBIT E TO PARTICIPATION AGREEMENT FORM OF OPINION OF TRANSFEREE COUNSEL _____________ ___, _______ To Each of the Persons Named on Schedule A Attached Hereto Re: Transfer of Interest in one Boeing Model 757-251 Aircraft, and Operative Documents related to Acquisition Thereof on Ladies and Gentlemen: We have acted as [special][internal] counsel to [Transferee], a _____________ corporation (the "Transferee"), in connection with the transfer by [Transferor], a __________________ corporation (the "Transferor") to Transferee, of all of its right, title and interest in and to the Aircraft and the Operative Documents to which the Transferor is a party or by which it is bound (collectively, the "Transferee Documents") and the assumption by the Transferee of the Transferor's obligations thereunder. The transfer is being accomplished by an Assignment and Assumption Agreement, dated as of ____________ ____, _____ made by the Transferee and agreed to and acknowledged by the Transferor (the "Assumption Agreement"). Capitalized terms used but not otherwise defined herein are defined as set forth in or by reference in the Participation Agreement referred to in the Assumption Agreement. In connection with the opinions expressed herein, we have examined executed counterparts of the Transferee Documents. We have also examined and relied upon the accuracy of the originals or certified, conformed, photocopied or telecopied copies of such corporate records, certificates, instruments and other documents as we have deemed necessary or appropriate to enable us to render the opinions expressed herein. In all such examinations, we have assumed the genuineness of signatures (other than those of the Transferee) on original documents and the conformity to such original documents of all copies submitted to us as certified, conformed, photocopied or telecopied copies, and as to certificates and telegraphic and telephonic confirmations given by public officials, we have assumed the same to have been properly given and to be accurate. As to all matters of fact material to our opinions, we have, when relevant facts were not independently established, relied upon representations and warranties contained in the Operative Documents and upon the statements and certificates furnished to us. Based upon and subject to the foregoing and the matters hereinafter set forth, we are of the opinion that: EXHIBIT E - PAGE 1 84 1. The Transferee is a corporation duly organized, validly existing and in good standing under the laws of the State of ______________. 2. The Transferee has full corporate power, authority and legal right to carry on its business as now conducted and is duly authorized and empowered to [execute and deliver] the Transferee Documents and to perform its obligations thereunder in accordance with the conditions and provisions thereof. 3. The execution, delivery and performance by the Transferee of the Transferee Documents have been duly authorized by the Transferee[, and each of the Transferee Documents has been duly executed and delivered by it]. 4. No filing with, notice to or authorization or approval from any governmental or public body or authority of the United States of America or the State of ____________ is required in connection with the execution, delivery and performance by the Transferee of the Transferee Documents. 5. There are no actions, suits or proceedings (whether or not purportedly on behalf of the Transferee) pending or, to our knowledge, threatened against or affecting the Transferee or any property rights of the Transferee at law or in equity or before any court, commission or other administrative agency or instrumentality, which, either individually or in the aggregate, if determined adversely would materially affect the condition, financial or otherwise, of the Transferee or its ability to perform its obligations under the Transferee Documents; and, to our knowledge, the Transferee is not in default with respect to any order or decree of any court or governmental commission, agency or instrumentality which would materially affect the condition, financial or otherwise, of the Transferee or its ability to perform its obligations under the Transferee Documents. 6. Neither the execution and delivery by the Transferee of the Transferee Documents nor the consummation of the transactions therein contemplated or the fulfillment of or compliance with, the terms and provisions thereof will conflict with or result in a breach of, any of the terms, conditions or provisions of (i) any law or regulation of the United States of America or the State of ____________, or (ii) to the best of our knowledge, any order, injunction or decree of any court or governmental instrumentality binding upon the Transferee, or (iii) the Certificate of Incorporation or the By-Laws of the Transferee or (iv) to the best of our knowledge, any bond, debenture, note, mortgage, indenture, agreement or other instrument to which the Transferee is now a party or by which it or its property may be bound, or would constitute (with the giving of notice or the passage of time or both) a default thereunder or result in the creation or imposition of any lien, charge, security interest or other encumbrance (except as expressly contemplated by the Operative Documents) or any nature whatsoever upon the Aircraft pursuant to the terms of any such agreement or instrument. 7. Each of the Transferee Documents constitutes a legal, valid and binding obligation of the Transferee, enforceable against the Transferee in accordance with the terms thereof, except as the enforceability thereof may be limited by (a) general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), EXHIBIT E - PAGE 2 85 (b) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (c) public policy considerations (in the case of the indemnity provisions contained therein). 8. Neither the execution and delivery by the Transferee of the Transferee Documents, nor the consummation by the Transferee of any of the transactions contemplated thereby requires the consent or approval of, the giving of notice to, or the registration or filing with, or the taking of any other action with respect to, any governmental authority or agency of the United States of the State of _______________. We express no opinion as to the laws of any jurisdiction other than the laws of the State of ______________ and the federal laws of the United States of America. We note that the Trust Agreement is governed by the laws of the State of Utah. Insofar as the foregoing opinions relate to the legality, validity, binding effect and enforceability of the Trust Agreement, we have assumed for purposes of such opinions (notwithstanding the express provisions of such agreements to the contrary) that such agreement is governed by the laws of the State of ______________ and we express no opinion as to the enforceability of the choice of law provisions in such agreement. In addition, we express no opinion herein as to (i) any federal or state securities laws, (ii) any tax laws, (iii) any aviation laws, (iv) any laws, statutes, rules or regulations applicable to the particular nature of the equipment acquired by the Owner Trustee pursuant to the Participation Agreement or the Purchase Agreement Assignment and (v) ERISA or any other pension and employee benefit laws, rules or regulations. In addition, we express no opinion as to title in or to the Trust Estate on the part of any Person. Insofar as our opinions expressed herein relate to the Tax Indemnity Agreement, such opinions are addressed and are being rendered solely to Lessee. In rendering the opinions expressed herein, we have assumed that (a) each of the Transferee Documents has been duly authorized, executed and delivered by the respective parties thereto (other than the Transferee) and constitutes a legal, valid and binding obligation of each of such parties (other than the Transferee) enforceable against each of such parties in accordance with the terms thereof, (b) each of such parties (other than the Transferee) has the requisite power, authority and legal right to enter into and perform its respective obligations under the Transferee Documents and (c) the transactions provided for in the Transferee Documents are not within the prohibitions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended. This opinion is furnished by us at the request of the Transferee, with their consent for the sole benefit of the addressees hereof, each of whom we understand and agree may rely upon the opinions set forth herein. No other person or entity is entitled to rely on this opinion without our express written consent. This opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated herein. Very truly yours, EXHIBIT E - PAGE 3 86 SCHEDULE A [Lessee] [Trust Company] [Indenture Trustee] [Loan Participants] SCHEDULE A - PAGE 1 EX-4.H8 67 FIRST AMENDMENT TO PARTICIPATION AGREEMENT-1996 D 1 FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 D] This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 D], dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) [ ], a [ ] corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (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 (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; W I T N E S S E T H: WHEREAS, Lessee, the Owner Participant, the Owner Trustee, [____________________________________________], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 D], dated as of April 29, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 D], dated as of April 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 D], dated April 30, 1996 2 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 D] relating to the Aircraft, dated as of April 29, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 D] dated April 30, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 D], dated as of April 29, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 D] relating to the Aircraft, dated as of April 29, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 D] dated as of April 29, 1996 (the "GUARANTEE"), pursuant to which the Guarantor guaranteed certain obligations of Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant Guarantor entered into the Owner Participant Guaranty [NW 1996 D] dated as of April 29, 1996 (the "OWNER PARTICIPANT GUARANTY"), pursuant to which the Owner Participant Guarantor guaranteed certain obligations of the Owner Participant under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent have entered into the Refunding Agreement [NW 1996 D], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"); -2- 3 WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 D], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1996 D], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 D] dated as of June 3, 1996 (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Participant and the Owner Trustee have entered into the First Amendment to Trust Agreement [NW 1996 D] dated as of the date hereof (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT") WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in Section 1 of the Refunding 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing 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 Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (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 -3- 4 Subordination Agent entered into the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Participation Agreement is amended as follows: SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 2. AMENDMENT OF SECTION 7(b)(i) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(i) of the Original Participation Agreement is hereby amended by (i) adding the words "or the Pass Through Certificates" (1) before and after the clause "or transfer of the Secured Certificates" in clause (E) thereof and (2) after the clause "the Secured Certificates" in clause (F) thereof and (ii) adding the words and punctuation "(including any Make-Whole Amount)" after the word "premium" in clause (F) thereof. SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation Agreement is hereby amended by (i) deleting the words "other than a Loan Participant" from clauses (1) and (3) thereof; (ii) deleting clauses (2) and (4) thereof in their entirety and substituting therefor "Intentionally Omitted", (iii) deleting the words "a Loan Participant" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (iv) deleting the words "any Loan Participant or any Certificate Holder" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (B) in clause (10) thereof and substituting therefor "or", (vi) deleting "(C)" in clause (10) thereof and substituting therefor "(B)", and (vii) deleting the parenthetical clause and the proviso from clause (12) thereof. SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation Agreement is hereby amended by (i) deleting the words "U.S. Withholding Taxes" where such words first appear in the second sentence of the first paragraph thereof and substituting therefor "any Income Tax imposed by the Unites States Federal government required to be withheld from payments on the Secured Certificates or the Pass Through Certificates (a "U.S. WITHHOLDING TAX")" and (ii) deleting the second sentence in the last paragraph thereof. SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement is hereby amended by (i) deleting the third and fourth sentences thereof and (ii) deleting the words "other than a Loan Participant" in the first sentence thereof. -4- 5 SECTION 6. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL PARTICIPATION AGREEMENT . Section 7(c) of the Original Participation Agreement is hereby amended by (i) deleting the word "and" between the words "expenses" and "Transaction Expenses" in the second parenthetical phrase of the first paragraph thereof and substituting a comma therefor, (ii) inserting after the phrase "to Section 16 hereof" in such second parenthetical phrase the words "and Refinancing Expenses to the extent not required to be paid by the Owner Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement", (iii) adding the words and punctuation "and, only in the case of an Indemnitee who is the Owner Participant and its Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents, the Intercreditor Agreement, the Liquidity Facilities and the Pass Through Trust Agreements and, only in the case of an Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words "respect thereof" in the first clause (A) thereof, and (iv) adding the words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after the words "Operative Documents" in the second clause (A) thereof and in the second clause (B) thereof. SECTION 7. [Reserved] SECTION 8. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby amended by deleting the words "each of the Loan Participants" and substituting therefor the words "the Indenture Trustee" in the first line thereof. SECTION 9. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", any Loan Participant's," from the first sentence thereof, (ii) deleting the words and punctuation "the Loan Participants," each time they appear in the second sentence thereof, (iii) deleting the "," between the words "Owner Trustee" and "the Indenture Trustee" in clause (N) of the third sentence thereof and substituting therefor "and", (iv) deleting the words "and the Loan Participants" from clause (N) of the third sentence thereof, and (v) deleting the words and punctuation "the Loan Participants," from the fifth sentence thereof. -5- 6 SECTION 10. AMENDMENT OF SECTION 8(Q)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement is hereby amended by (i) deleting the word "Each" in the first sentence thereof and substituting therefor the words "The Owner" and (ii) adding a new sentence to the end thereof to read as follows: "The Pass Through Trustee agrees that it will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of the initial supplement (other than the initial supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust Agreement without the prior written consent of the Owner Participant.". SECTION 11. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is hereby amended by deleting the fourth and fifth sentences thereof. SECTION 12. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", each Loan Participant" therefrom and (ii) adding a new second paragraph thereto at the end thereof: 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. SECTION 13. AMENDMENT OF SECTION 8(Y)(a) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement is hereby amended by (i) deleting the words "each" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii) deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Indenture Trustee and the Owner", (iii) inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement Assignment", the words and punctuation ", the Refunding Agreement", (iv) deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and substituting therefor the words "the Owner", and (v) deleting the word "Participants" from Section 8(y)(A)(iv) and substituting therefor the words "the Indenture Trustee and the Owner Participant". SECTION 14. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. -6- 7 SECTION 15. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 16. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 17. AMENDMENT OF SECTION 8(ii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(ii) of the Original Participation Agreement is hereby amended to read in its entirety as follows: (ii) Lessee agrees and covenants that it shall not purchase, guarantee or acquire any interest in (i) any Secured Certificate (except as provided in Section 8(x)) or Pass Through Certificate or (ii) any Advance by the Liquidity Provider. SECTION 18. AMENDMENT OF SECTION 9 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 19. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", the Loan Participants" from clause (A) thereof, (ii) deleting the words "Loan Participants" the second time they appear in clause (B) thereof and substituting therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05" from clause (iii) of the second sentence thereof. SECTION 20. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby amended by deleting the words "at the foot of this Agreement" in clause (A) of the second sentence thereof and substituting therefor the words "on the signature pages to the Refunding Agreement". SECTION 21. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is hereby amended by (i) deleting the words "Loan Participants" each time they appear in clauses (A), (B), and (D) thereof and substituting therefor the words "Indenture Trustee", (ii) deleting the "," both times it appears between the words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and substituting therefor "and", and (iii) deleting the words "and the Loan Participants" both times they appear in clause (E) thereof. SECTION 22. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Section 15. Miscellaneous. (a) The Owner Participant covenants and agrees that it shall not unreasonably withhold its consent -7- 8 to any consent requested of the Owner Trustee, as Lessor, under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor. SECTION 23. AMENDMENT OF SECTION 17 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is hereby amended by adding the following new subclause (7) to clause (a) thereof: (7) in connection with any proposed refinancing, if, on the date which is two Business Days prior to the last date on which notice of revocation of redemption may be given pursuant to Section 2.12(b) of the Trust Indenture, the Owner Participant is not satisfied in its sole discretion that such refinancing will occur on the date specified for such refinancing in the notice provided pursuant to Section 2.11 of the Trust Indenture, then Lessee shall not effect such proposed refinancing and shall provide notice to such effect to the Indenture Trustee pursuant to Section 2.12(b) of the Trust Indenture. SECTION 24. AMENDMENT OF SECTION 18 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 25. RATIFICATION. Except as hereby modified, the Original Participation Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Participation Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Participation Agreement or any word or phrase referring to a section or provision of the Participation Agreement is deemed for all purposes to be a reference to the Participation Agreement or such section or provision as amended pursuant to this Amendment. SECTION 26. MISCELLANEOUS. (a) Without in any way affecting the provisions of the letter agreement dated April 30, 1996 between the Owner Participant and Lessee (which letter agreement shall remain in full force and effect) relating to future financings, each of the parties hereto agrees that the transactions contemplated hereby shall constitute one of the three refinancing operations permitted in Section 17 of the Participation Agreement. (b) Each party hereto acknowledges and agrees that the Purchaser is a Loan Participant under the Participation Agreement, the Lease and the other Operative Documents, and is entitled to the benefits of the covenants and other provisions therein running in favor of the Loan Participants, and to the security purported to be afforded by the Trust Indenture, but that (i) the Purchaser has no liability arising out of any actions or inactions of the Original Loan Participants or any prior Certificate Holder or any event or condition which occurred or existed prior to the Closing, (ii) the Purchaser is making no representations or warranties other than those set forth in the Refunding Agreement, and (iii) the Purchaser has no liability or obligation under any covenant in any of such agreements for any period prior to the Closing. -8- 9 (c) This Amendment 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 Amendment 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 Amendment shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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. THIS AMENDMENT 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 AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -9- 10 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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: ------------------------------- Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: ------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ------------------------------- Name: Title: [ ], as Owner Participant By: ------------------------------- Name: Title: -10- 11 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Subordination Agent By: ------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee By: ------------------------------- Name: Title -11- 12 SCHEDULE I TO PARTICIPATION AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. -12- EX-4.H9 68 REFUNDING AGREEMENT-1996 D 1 REFUNDING AGREEMENT [NW 1996 D] This REFUNDING AGREEMENT [NW 1996 D], dated as of June 3, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii) [___________], a [__________] corporation (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Participation Agreement (as defined below) as if the Closing Date had occurred. W I T N E S S E T H: WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, [Insert Bridge Lenders], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 D], dated as of April 29, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust 2 Indenture and Security Agreement [NW 1996 D], dated as of April 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 D], dated April 30, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Lessee entered into the Lease Agreement [NW 1996 D] relating to the Aircraft, dated as of April 29, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 D] dated April 30, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 D], dated as of April 29, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 D] relating to the Aircraft, dated as of April 29, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 D] dated as of April 29, 1996 (the "GUARANTEE") pursuant to which the Guarantor guaranteed certain obligations of the Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and the Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 D], dated as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; -3- 3 WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Trustee and the Lessee entered into the First Amendment to Lease Agreement [NW 1996 D], dated as of the date hereof (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"), containing amendments, modifications and additions necessary to give effect to the transactions described herein; WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into the First Amendment to Trust Agreement [NW 1996 D], dated as of the Refinancing Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT"); WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent will enter into the First Amendment to Participation Agreement [NW 1996 D], dated as of the Refinancing Date (the "PA AMENDMENT NO. 1"; the Original Participation Agreement, as amended by the PA Amendment No. 1, the "PARTICIPATION AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 D] dated as of the date hereof (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing Secured Certificates bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will enter 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 Refinancing Date (the "INTERCREDITOR AGREEMENT"); and -4- 4 WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on June 12, 1996 or on such other date agreed to by the parties hereto (the "REFINANCING DATE"): (i) immediately prior to the Closing, the Owner Participant shall pay to the Owner Trustee an amount equal to the unpaid interest on the Original Secured Certificates accrued up to but not including the Refinancing Date; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Refinancing Secured Certificates being issued to such Pass Through Trustee as set forth in clause (vii) below; (iii) the Owner Trustee shall pay to the Indenture Trustee for the benefit of the holders of the Original Secured Certificates an amount equal to the aggregate principal amount of Original Secured Certificates outstanding on the Refinancing Date, together with accrued and unpaid interest on the Original Secured Certificates up to but not including the Refinancing Date, and all other amounts payable to such holders by the Owner Trustee under the Original Indenture and the Original Participation Agreement; (iv) pursuant to the Indenture, the Indenture Trustee shall disburse to the holders of the Original Secured Certificates the amounts of principal and interest, and other amounts, if any, described in clause (iii) above, owing to them on the Refinancing Date with respect to the Original Secured Certificates as a prepayment of the Original Secured Certificates; (v) simultaneously with the disbursement by the Indenture Trustee of amounts described in clause (iv) above to the holders of the Original Secured Certificates, the Indenture Trustee shall receive the Original Secured Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture; (vii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Refinancing Secured Certificates of the -5- 5 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; and (viii) the Owner Trustee shall disburse to the Owner Participant the excess of the amounts received by it pursuant to clauses (i) and (ii) above over the amount paid by it pursuant to clause (iii) above. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) In case any Pass Through Trustee shall for any reason fail to purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on or prior to June 12, 1996 or such other date as shall be agreed in writing by the parties hereto, the written notice given by the Lessee pursuant to Section 17 of the Original Participation Agreement shall be deemed never to have been given, none of the Owner Participant, the Owner Trustee nor the Lessee shall have any obligation to pay to the holders of the Original Secured Certificates or the Indenture Trustee any amount in respect of the prepayment of the Original Secured Certificates, the Original Secured Certificates shall remain outstanding and in full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall not take place. (d) The closing (the "CLOSING") of the transactions described in this Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such other place as the parties hereto may agree. (e) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Refinancing Date. (f) In order to facilitate the transactions contemplated hereby, the Lessee and the Guarantor have entered into the Underwriting Agreement, dated the date hereof, among the Lessee, the Guarantor and the several underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to the terms and conditions hereof, the Lessee and the Guarantor will enter into each of the Pass Through Trust Agreements and will undertake to perform certain administrative and ministerial duties under such Pass Through Trust Agreements. SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured Certificates shall be payable as to principal in accordance with the terms of the Indenture, and the Refinancing Secured Certificates shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Refinancing Secured Certificates in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Refinancing Secured Certificates bearing the interest rate set forth opposite the name of such -6- 6 Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Refinancing Secured Certificates shall be dated and authenticated as of the Refinancing Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee and the Owner Participant to make the payments and participate in the transactions contemplated by this Agreement on the Refinancing Date are subject to the fulfillment, prior to or on the Refinancing Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder, and paragraph (r) shall not be a condition precedent to the obligations of the Pass Through Trustee hereunder): (a) The Owner Trustee shall have tendered the Refinancing Secured Certificates to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Refinancing Secured Certificates and shall have tendered the Refinancing Secured Certificates to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts or conformed copies of the following documents: (1) this Agreement; (2) the Lease Amendment No. 1; (3) the Indenture; (4) the PA Amendment No. L; (5) the Trust Agreement Amendment No. 1; (6) each of the Pass Through Trust Agreements; (7) the Intercreditor Agreement; and (8) the Liquidity Facility for each of the Class A, Class B and Class C Trusts. -7- 7 (c) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Lessee and the Guarantor (as the case may be) as to the person or persons authorized to execute and deliver this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the TIA Amendment No. 1 and any other documents to be executed on behalf of the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Lessee and the Guarantor or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the 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 the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby; and (3) a copy of the certificate of incorporation of the Lessee and the Guarantor, certified by the Secretary of State of the State of Minnesota in the case of the 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 the Lessee and the Guarantor, certified by the Secretary or Assistant Secretary of the 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 the 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 Refinancing Date, as to the due incorporation and good standing of the Lessee or the Guarantor (as the case may be) in such state. (d) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received a certificate signed by an authorized officer of the Lessee (and, with respect to the matters set forth in clauses (4) and (5) below, of the Guarantor), dated the Refinancing Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Original Lease and has a current, valid certificate of airworthiness; (2) the FAA Bill of Sale, the Original Lease and the Original Indenture have been duly recorded, and the Original Trust Agreement -8- 8 has been duly filed, with the FAA pursuant to the sections of Title 49, United States Code, relating to aviation (the "FEDERAL AVIATION ACT"); (3) the Aircraft has been registered with the FAA in the name of the Owner Trustee and the Lessee has authority to operate the Aircraft; (4) the representations and warranties contained herein of the Lessee and the Guarantor are correct as though made on and as of the Refinancing Date, except to the extent that such representations and warranties (other than those contained in clause (v) of Section 8(d)) relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (5) there has been no material adverse change in the financial condition of the Guarantor and its subsidiaries, taken as a whole, since December 31, 1995. (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement, the Indenture, the PA Amendment No. 1, 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 and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary or an Assistant Secretary of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Refinancing 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). -9- 9 (f) The Pass Through Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and any other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the 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; (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 Refinancing Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Refinancing 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). (g) The Pass Through Trustee and the Owner Trustee each shall have received a certificate signed by an authorized officer of the Owner Participant, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Refinancing 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). (h) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an independent insurance broker's report as to the due compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (i) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for the Lessee and the Guarantor, and an -10- 10 opinion addressed to it from the Lessee's legal department, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee and the Owner Participant each shall have received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form and substance satisfactory to each of them. (l) The Pass Through Trustee and the Owner Trustee each shall have received an opinion addressed to it from Dewey Ballantine, special counsel for the Owner Participant, and an opinion addressed to it from corporate counsel to the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee shall have received an opinion of White & Case, special counsel for the Liquidity Provider, and in-house German counsel for the Liquidity Provider, each in form and substance satisfactory to the Pass Through Trustee. (n) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The 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 Refinancing Secured Certificates to be purchased from the Owner Trustee. (p) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustees to make the payments described in Section l(a)(ii) or for the Owner Trustee or the Owner Participant to participate in the transactions contemplated by this Agreement on the Refinancing Date. (q) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee or the Guarantor which are required in connection with the Pass Through Trustee's making of the payments described in Section l(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Refinancing Date shall have been duly obtained. -11- 11 (r) The Lessee and the Owner Participant shall each have executed and delivered to the other the TIA Amendment No. 1. Promptly following the recording of the Lease Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of the Lease Amendment No. 1 and the Indenture. SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in the transactions contemplated by this Agreement and to execute and deliver each of the Pass Through Trust Agreements and the PA Amendment No. 1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion referred to in subsections (j) through (n) of Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter from counsel rendering such opinion authorizing the Lessee and the Guarantor to rely on such opinion as if it were addressed to the Lessee and the Guarantor, (ii) each certificate referred to in subsections (e) through (g) of Section 3, (iii) executed counterparts or conformed copies of the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1 and (iv) such other documents and evidence with respect to each other party hereto as the Lessee, the Guarantor or their counsel 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) The respective obligation of each of the Lessee, the Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Pass Through Trustee are correct as though made on and as of the Refinancing 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), (ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) 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. SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Indenture. The -12- 12 Lessee and the Guarantor, by execution and delivery hereof, consent to such execution and delivery of the Indenture. The Indenture shall be effective as of the Refinancing Date. SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, by execution and delivery hereof, consent to the amendment to the Original Lease effected by, and request and instruct the Owner Trustee to execute and deliver the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1 shall be effective as provided therein. SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the execution and delivery of the PA Amendment No. 1 by each of the parties thereto, the Original Participation Agreement shall be amended as set forth in the PA Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall be a party thereto from and after the Refinancing Date to the extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing Date. SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) each of the 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 on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under (i) in the case of the Lessee, this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 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; -13- 13 (b) the 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; (c) the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, and the performance of the obligations of the Lessee or the Guarantor (as the case may be) under this Agreement, the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, have been duly authorized by all necessary corporate action on the part of the 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 the 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 the Lessee or the Guarantor (as the case may be) or the certificate of incorporation or by-laws of the 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 the Lessee or the Guarantor (as the case may be) under, any indenture, mortgage, contract or other agreement to which the 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; (d) neither the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 or any other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, nor the performance of the obligations of the Lessee or the Guarantor (as the case may be) hereunder or under the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement or the other Operative Documents to which the Lessee or the Guarantor (as the case may be) is a party, nor the consummation by the Lessee or the Guarantor (as the case may be) 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 in respect of, the Department of Transportation, the FAA, or any other federal, state or foreign -14- 14 governmental authority having jurisdiction, other than (i) 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, (ii) 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, (iii) the consents, approvals, notices, registrations and other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement, (iv) the registrations and filings referred to in Section 8(f), and (v) 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; (e) this Agreement constitutes, and each of the Participation Agreement, the Pass Through Trust Agreements, the Tax Indemnity Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment No. 1 and the Lease Amendment No. 1 shall have been executed and delivered by each of the parties thereto, will constitute, the legal, valid and binding obligations of the Lessee or the Guarantor (as the case may be) enforceable against the 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, 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; (f) except for the filings and registrations referred to in Section 7(a)(vi) of the Participation Agreement, such filings and registrations as shall have been made or effected subsequent thereto and the filing for recording pursuant to the Federal Aviation Act of the Indenture and the Lease Amendment No. 1, 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 the 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 other than the taking of possession by the Indenture Trustee of the original counterparts of -15- 15 the Original Lease and the Lease Amendment No. 1 (to the extent the Lease constitutes chattel paper) and the filing of continuation statements at periodic intervals with respect to the Uniform Commercial Code financing statements in effect on the Refinancing Date covering the security interests created by the Original Indenture or describing the Lease as a lease; (g) neither the 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; (h) neither the Lessee nor the Guarantor is an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (i) 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; and (j) 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. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the parties below represents, warrants and covenants to each of the other parties to this Agreement and to the Liquidity Provider as follows: (a) The Indenture Trustee in its individual capacity represents, warrants and covenants that: (1) 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 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 PA Amendment No. 1, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party; -16- 16 (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, the PA Amendment No. 1 and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party 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; (3) this Agreement constitutes, and the Participation Agreement, when the PA Amendment No. 1 has been executed and delivered by the Indenture Trustee, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) 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 (5) there are no Indenture Trustee Liens on the Aircraft or any portion of the Trust Estate. (b) The Owner Trustee, in its individual capacity (except as provided in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7) and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and (11) below) as Owner Trustee, represents and warrants that: (1) 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, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver the Original Trust Agreement, has the corporate power and authority to carry out the terms of the Trust Agreement, and has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of the Trust Agreement by the Owner Participant), as Owner Trustee, and to the extent expressly provided herein or therein, in its individual capacity, the corporate -17- 17 power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Refinancing Secured Certificates, the Lease, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) 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 and (assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant) this Agreement constitutes, and each of the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Indenture, when entered into, the Lease, when the Lease Amendment No. 1 shall have been entered into, and the Trust Agreement, when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, enforceable against it in its individual capacity or as Owner Trustee, as the case may be, in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, the Owner Trustee has duly authorized, and on the Refinancing Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Refinancing Secured Certificates pursuant to the terms and provisions hereof and of the Indenture, and each Refinancing Secured Certificate on the Refinancing Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Refinancing Secured Certificate and the Indenture; (4) neither the execution and delivery by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, the Original Participation Agreement, the PA Amendment No. 1, the Original Trust Agreement, the Trust Agreement Amendment No. 1, the Original Indenture, the Indenture, the Original Lease, the Lease Amendment No. 1, the Refinancing Secured Certificates or any other Operative Document to which it is a party, 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 hereby or 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 hereof and 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 -18- 18 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; (5) 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 Indenture, the Lease, the Refinancing 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 8(d); (6) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (7) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 -19- 19 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (8) 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 redemption of the Original Secured Certificates or the issuance of the Refinancing 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 (1), (2), (3) and (4) 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 of Utah, 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; (9) 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 (1), (2), (3) and (4) above; (10) 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; (11) the Owner Trustee has not, in its individual capacity or as Owner Trustee, directly or indirectly offered any Refinancing 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, the Original Loan Participants 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 Refinancing Secured Certificate, any Certificate or any interest in and to the Trust Estate, the Trust Agreement or any similar interest -20- 20 for sale to, or to solicit any offer to acquire any of the same from, any person; and (12) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) The Owner Participant is a corporation 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, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Original Participation Agreement, the Original Trust Agreement, the Tax Indemnity Agreement, the Trust Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; this Agreement has been duly authorized, executed and delivered by the Owner Participant; and this Agreement constitutes, and the Participation Agreement when the PA Amendment No. 1 shall have been entered into, the Tax Indemnity Agreement when the TIA Amendment No. 1 shall have been entered into, and the Trust Agreement when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their 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; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1, the Trust Agreement Amendment No. 1 or any other Operative Document to which it is a party nor (B) compliance by the Owner Participant with all of the provisions hereof or 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, 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; -21- 21 (3) 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 or was required, as the case may be, for the due execution, delivery or performance by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; (4) there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or arbitrator which would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Participation Agreement, the Tax Indemnity Agreement and the Trust Agreement; (5) 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 refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Refinancing 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 was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Refinancing 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 that 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 Indenture, (D) which the Owner Participant 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Massachusetts, -22- 22 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements, the Intercreditor Agreement and the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1, and (upon execution and delivery of the PA Amendment No. 1), the Participation Agreement, will 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; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the performance by the Pass Through Trustee of the Participation Agreement, the purchase by the Pass Through Trustee of the Refinancing 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; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby or by the Participation Agreement, 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 -23- 23 governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement or the Participation 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 Refinancing 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 as a grantor trust under subpart E, Part I of Subchapter J of the Code, such trusts will not be subject to any Taxes imposed by the Commonwealth of Massachusetts or any political subdivision thereof; (6) 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 Participation Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) 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, the Lessee or the Guarantor. -24- 24 (e) The Subordination Agent represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement and, when the PA Amendment No. 1 has been executed and delivered by each of the parties thereto, the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent each of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery by the Subordination Agent of the PA Amendment No. 1), the Participation Agreement will 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; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the Participation Agreement, or the performance by the Subordination Agent of the Participation 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; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby or by the Participation Agreement requires the consent or approval of, the giving of notice to, the -25- 25 registration with, or the taking of any other action with respect to, any Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement, the PA Amendment No. 1 or the Participation 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 Refinancing 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); (6) 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 PA Amendment No. 1, the Participation Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter, the Lessee or the Guarantor. SECTION 10. NOTICES. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and any such notice shall become effective upon being deposited in the United States -26- 26 mail, with proper postage for first-class registered or certified mail prepaid, or when delivered personally or, if promptly confirmed by mail as provided above, when dispatched by facsimile or other written telecommunication, addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement. SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Indenture Trustee and the Original Loan Participants in connection with the transactions contemplated by this 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) shall be paid promptly by the Owner Participant, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Refinancing Secured Certificates issued under the Indenture of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for the Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special counsel for the Original Loan Participants; (2) the fees, expenses and disbursements of Dewey Ballantine, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 11 and the agreements referred to herein are not consummated, the Lessee shall bear and pay all costs, expenses and fees referred to in this Section 11 at no after-tax cost to the Owner Trustee, Trust Estate or the Owner Participant; provided that if the transactions fail to be consummated -27- 27 as a result of the failure of the Owner Participant to act in good faith in consummating the transactions, or to otherwise comply with the terms hereof, the Owner Participant shall bear and pay its own fees, costs and expenses (including, without limitation, the fees and expenses of its special counsel) and the Lessee shall pay all other reasonable fees, costs and expenses as aforesaid. SECTION 12. 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. SECTION 13. MISCELLANEOUS. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations, warranties and agreements herein of the Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee, and the Lessee's, the Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the Subordination Agent's and the Pass Through Trustee's obligations under any and all thereof, shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. (b) This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only 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 each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and, subject to the terms of the Participation 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 Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject to the provisions of the Participation Agreement, its successors and permitted assigns. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. No purchaser or holder of any Refinancing Secured Certificates shall be deemed to be a successor or assign of any holder of the Original Secured Certificates. -28- 28 SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -29- 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. NORTHWEST AIRLINES, INC., Lessee By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -30- 30 NORTHWEST AIRLINES CORPORATION, Guarantor By: _____________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -31- 31 [_______________] Owner Participant By: _______________________________________ Title: Address: Attn: Telecopy No.: -32- 32 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: ___________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -33- 33 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent, Subordination Agent By: ___________________________________ Title: Address: c/o State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -34- 34 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee Indenture Trustee By: ____________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -35- 35 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: ___________________________________ Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Facsimile: (801) 246-5053 -36- 36 SCHEDULE I TO REFUNDING AGREEMENT PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1A dated as of the Closing Date. 2. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1B dated as of the Closing Date. 3. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1C dated as of the Closing Date. 37 SCHEDULE II TO REFUNDING AGREEMENT REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
Interest Rate Purchaser and Maturity --------- ------------- Northwest Airlines Principal Purchase Pass Through Trust Amount Price --------- -------- 1996-1A [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1B [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1C [ _ ]% Refinancing Secured Certificates due [ ] $[ ]
EX-4.I1 69 TRUST AGREEMENT-1996 E 1 TRUST AGREEMENT [NW 1996 E] This TRUST AGREEMENT [NW 1996 E] dated as of April 29, 1996 between [ ], a [ ] corporation (the "ORIGINAL OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); W I T N E S S E T H : DEFINITIONS AND TERMS CERTAIN DEFINITIONS. Unless the context shall otherwise require and except as contained in this Section 1.01, the capitalized terms used herein shall have the respective meanings assigned thereto in the Lease (as hereinafter defined) for all purposes hereof. All definitions contained in this Section 1.01 shall be equally applicable to both the singular and plural forms of the terms defined. For all purposes of this Trust Agreement the following terms shall have the following meanings: "Excluded Payments" has the meaning ascribed to such term in the Trust Indenture. "Indenture Event of Default" has the meaning which the term "Event of Default" has in the Trust Indenture. "Lease" means that certain Lease Agreement [NW 1996 E], to be dated as of the date hereof, and to be entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of this Trust Agreement, as said Lease Agreement may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Trust Agreement. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Event of Default" has the meaning which the term "Event of Default" has in the Lease. "Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns. "Owner Participant" means the Original Owner Participant and each 1 2 Subsequent Owner Participant to the extent that the same shall, at the relevant time, have an Ownership Interest. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by this Trust Agreement. "Participation Agreement" has the meaning ascribed to such term in the Lease. "Replacement Airframe" has the meaning ascribed to such term in the Trust Indenture. "Replacement Engine" has the meaning ascribed to such term in the Trust Indenture. "Subsequent Owner Participant" means any Person to which the Original Owner Participant or any transferee from the Original Owner Participant or any Subsequent Owner Participant shall have transferred at any time after the Delivery Date its undivided right, title and interest originally held by the Original Owner Participant in this Trust Agreement, the Trust Estate and the Participation Agreement, to the extent permitted by Section 8.1 of this Trust Agreement and Section 8 of the Participation Agreement; provided that in the event of any such transfer so long as the Lease shall be in effect or any Secured Certificates remain unpaid, such transferee and its transferor shall have complied with all of the terms of Section 8(n) of the Participation Agreement. "Trust Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant, the Loan Participants or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its individual capacity, or to the Loan Participants or any other holder of a Secured Certificate, or to any of their respective directors, officers, employees, servants and agents, pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. "Trust Indenture Estate" has the meaning ascribed to such term in the Trust Indenture. "Trust Office" shall mean the principal corporate trust office of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or the principal corporate trust office of any successor Owner Trustee. "Trust Supplement" means a supplement to the Trust Indenture and to this Trust Agreement in substantially the form of Exhibit A to the Trust Indenture which shall particularly describe the Aircraft, and any Replacement Airframe and Replacement 2 3 Engine included in the property of the Owner Trustee covered by this Trust Agreement. AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS; DECLARATION OF TRUST AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant hereby authorizes and directs the Owner Trustee to execute and the Owner Trustee agrees for the benefit of the Owner Participant that it will on or before the Delivery Date, execute and deliver the Operative Documents and any other agreements, instruments or documents to which the Owner Trustee is a party in the respective forms thereof in which delivered from time to time by the Owner Participant to the Owner Trustee for execution and delivery and, subject to the terms hereof, to perform its duties and, upon instructions from the Owner Participant, exercise its rights under said Operative Documents in accordance with the terms thereof. DECLARATION OF TRUST. The Owner Trustee hereby declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the Owner Participant, subject, however, to the provisions of and the Lien created by the Trust Indenture and to the provisions of the Lease and the Participation Agreement. ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF SECURED CERTIFICATES ACCEPTANCE OF AIRCRAFT. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, on the Delivery Date, subject to due compliance with the terms of Section 3.02 hereof: (a) purchase the Aircraft pursuant to the Participation Agreement and the Bill of Sale; (b) accept from Lessee the delivery of the Bill of Sale and the FAA Bill of Sale; (c) cause the Aircraft to be leased to Lessee under the Lease, and in furtherance thereof execute and deliver a Lease Supplement covering the Aircraft; (d) execute and deliver the Trust Supplement covering the Aircraft; (e) issue to the Loan Participants Secured Certificates in the amounts and otherwise as provided in Section 1(a) of the Participation Agreement; 3 4 (f) execute and deliver the financing statements referred to in Section 4(a)(vi) of the Participation Agreement, together with all other agreements, documents and instruments referred to in Section 4 of the Participation Agreement to which the Owner Trustee is a party; (g) effect the registration of the Aircraft in the name of the Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of Sale; (ii) an application for registration of the Aircraft in the name of the Owner Trustee (including without limitation an affidavit from the Owner Trustee in compliance with the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) this Trust Agreement; and (h) execute and deliver all such other instruments, documents or certificates and take all such other actions in accordance with the directions of the Owner Participant, as the Owner Participant may deem necessary or advisable in connection with the transactions contemplated hereby. CONDITIONS PRECEDENT. The right and obligation of the Owner Trustee to take the action required by Section 3.01 hereof with respect to the Aircraft shall be subject to the following conditions precedent: (a) the Original Owner Participant shall have made the full amount of its Commitment set forth in Schedule II of the Participation Agreement available to the Owner Trustee, in immediately available funds, in accordance with Section 1 of the Participation Agreement; and (b) the Owner Participant shall have notified the Owner Trustee that the terms and conditions of Section 4 of the Participation Agreement, insofar as they relate to the Aircraft, shall have been complied with in a manner satisfactory to the Original Owner Participant. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, take the actions specified to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in accordance with the provisions of such Section 8(x) provided Lessee shall have paid all amounts required by such Section 19(d) and 8(x). AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR REPLACEMENT 4 5 ENGINES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of a Replacement Airframe and Replacement Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a Replacement Engine being substituted pursuant to Section 10(b) of the Lease, subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease, as the case may be: (a) to the extent not previously accomplished by a prior authorization, authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees of Lessee) to accept delivery of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engines; (b) accept from Lessee or other vendor of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine a bill of sale or bills of sale (if tendered), and the invoice, if any, with respect to the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine being furnished pursuant to Section 10(a) or (b) of the Lease; (c) in the case of a Replacement Airframe, make application to the Federal Aviation Administration for the registration in the name of the Owner Trustee of the Aircraft of which such Replacement Airframe is a part; (d) execute and deliver a Lease Supplement and a Trust Supplement covering (i) the Aircraft of which such Replacement Airframe is part or (ii) such Replacement Engine, as the case may be; (e) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) the Airframe and Engines (if any) or the Engine being replaced to Lessee; (f) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Airframe and Engines or engines (if any) or the Engine or engine being replaced from the lien created under the Trust Indenture and release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such replaced Airframe and Engines, if any, or Engine) from the assignment and pledge under the Trust Indenture; and (g) upon instructions from the Owner Participant, take such further action as may be contemplated by clauses (A) and (B) of the third 5 6 paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of Section 10(b) of the Lease, as the case may be. TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In the event of the substitution of a Replacement Airframe for the Airframe or the substitution of a Replacement Engine for any Engine or engine, all provisions of this Trust Agreement relating to such replaced Airframe or Engine or engine shall be applicable to such Replacement Airframe or Replacement Engine with the same force and effect as if such Replacement Airframe or Replacement Engine were the same airframe or engine as the Airframe or Engine being replaced but for the Event of Loss with respect to such Airframe or Engine. AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of an engine being transferred to the Owner Trustee pursuant to Section 5(b) of the Lease, subject to due compliance with the terms of such Section 5(b): (a) accept from Lessee the bill of sale with respect to such engine contemplated by such Section 5(b) (if tendered); (b) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) and to an Engine to Lessee as contemplated by such Section 5(b); and (c) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Engine being transferred to Lessee pursuant to such Section 5(b) from the lien of the Trust Indenture and to release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such Engine) from the assignment and pledge under the Trust Indenture. RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture Trustee. Until the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with 6 7 the provisions of Article III of the Trust Indenture. (a) Payments to Owner Trustee; Other Parties. After the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, any payment of the type referred to in Section 4.01(a) hereof (other than Excluded Payments) received by the Owner Trustee, any payments received from the Indenture Trustee other than as specified in Section 4.01(d) hereof and any other amount received as part of the Trust Estate and for the application or distribution of which no provision is made herein, shall be distributed forthwith upon receipt by the Owner Trustee in the following order of priority: first, so much of such payment as shall be required to reimburse the Owner Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof shall be retained by the Owner Trustee; second, so much of the remainder for which provision as to the application thereof is contained in the Lease or any of the other Operative Documents shall be applied and distributed in accordance with the terms of the Lease or such other Operative Document; and third, the balance, if any, shall be paid to the Owner Participant. (b) Certain Distributions to Owner Participant. All amounts from time to time distributable by the Indenture Trustee to the Owner Participant pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be distributed by the Owner Trustee to the Owner Participant in accordance with the provisions of Article III of the Trust Indenture. (c) Excluded Payments. Any Excluded Payments received by the Owner Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded Payments are payable under the provisions of the Participation Agreement, the Tax Indemnity Agreement, the Lease and the Operative Documents on the day received (or on the next succeeding Business Day if the funds to be so distributed shall not have been received by the Owner Trustee by 12:00 noon, New York City time). (e) Multiple Owner Participants. If as a result of a transfer by an Owner Participant under Section 8.01 of this Trust Agreement, there is more than one Owner Participant hereunder, each such Owner Participant shall hold in proportion to its respective beneficial interest in the Trust Estate, an undivided beneficial interest in the entire Trust Estate and is entitled to receive ratably with any other Owner Participant payments distributable by the Owner Trustee hereunder. No Owner Participant shall have legal title to the Aircraft or any other portion of the Trust Estate. METHOD OF PAYMENTS. The Owner Trustee shall make distributions or cause distributions to be made to the Owner Participant pursuant to this Article IV by transferring by wire transfer in immediately available funds on the day received (or the next succeeding Business Day if the funds to be so distributed shall not have been received by the Owner Trustee by 12:00 noon, New York time, the amount to be distributed to such account or accounts of the Owner Participant as the Owner Participant 7 8 may designate from time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner Trustee will, if so requested by the Owner Participant in writing, pay any or all amounts payable to the Owner Participant pursuant to this Article IV either (i) by crediting such amount or amounts to an account or accounts maintained by the Owner Participant with the Owner Trustee in its individual capacity in immediately available funds, (ii) by payment at the Trust Office of the Owner Trustee, in immediately available funds, or (iii) by mailing an official bank check or checks in such amount or amounts payable to the Owner Participant at such address as the Owner Participant shall have designated in writing to the Owner Trustee. DUTIES OF THE OWNER TRUSTEE NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall have knowledge of a Lease Event of Default or Indenture Event of Default (or an event which with the passage of time or the giving of notice or both would constitute a Lease Event of Default or an Indenture Event of Default) the Owner Trustee shall give to the Owner Participant prompt telephonic or telecopy notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event. The notice shall set forth in reasonable detail the facts and circumstances known to it with respect to such Lease Event of Default or Indenture Event of Default. Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such action or shall refrain from taking such action, not inconsistent with the provisions of the Trust Indenture, with respect to such Lease Event of Default, Indenture Event of Default or other event as the Owner Trustee shall be directed in writing by the Owner Participant. If the Owner Trustee shall not have received instructions as above provided within thirty (30) days after the mailing of such notice to the Owner Participant, the Owner Trustee until instructed otherwise in accordance with the preceding sentence may, but shall be under no duty to, take or refrain from taking such action with respect to such Lease Event of Default, Indenture Event of Default or other event, not inconsistent with the provisions of the Trust Indenture, as it shall deem advisable in the best interests of the Owner Participant. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by an officer of FSBU in the Corporate Trust Department, the Owner Trustee shall not be deemed to have knowledge of a Lease Event of Default, Indenture Event of Default or other event referred to in this Section 5.01 unless notified in writing by the Indenture Trustee, the Owner Participant or Lessee. V.11. ACTION UPON INSTRUCTIONS. Subject to the terms of Sections 5.01 and 8 9 5.03 hereof, upon the written instructions at any time and from time to time of the Owner Participant, the Owner Trustee will take such of the following actions, not inconsistent with the provisions of the Trust Indenture, as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder or under any of the Operative Documents to which the Owner Trustee is a party or in respect of all or any part of the Trust Estate as shall be specified in such instructions; (ii) take such action to preserve or protect the Trust Estate (including the discharge of Liens) as may be specified in such instructions; (iii) approve as satisfactory to it all matters required by the terms of the Lease or the other Operative Documents to be satisfactory to the Owner Trustee, it being understood that without written instructions of the Owner Participant, the Owner Trustee shall not approve any such matter as satisfactory to it (it being understood that the provisions of Sections 3.03, 3.04 and 3.06 hereof do not constitute instructions by the Owner Participant for the Owner Trustee to approve of or consent to the matters to be approved of or consented to by the Owner Trustee in the sections of the Lease referred to in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of Lessee under the Operative Documents, after the expiration or earlier termination of the Lease, deliver the Aircraft to the Owner Participant in accordance with such instructions, convey all of the Owner Trustee's right, title and interest in and to the Aircraft for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or net lease the Aircraft on such terms and to such lessee or lessees as shall be designated in such instructions. INDEMNIFICATION. The Owner Trustee shall not be required to take any action under Section 5.01 (other than the giving of the notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have been indemnified by the Owner Participant, in manner and form satisfactory to the Owner Trustee, against any liability, cost or expense (including reasonable counsel fees and disbursements) which may be incurred in connection therewith; and, if the Owner Participant shall have directed the Owner Trustee to take any such action or refrain from taking any action, the Owner Participant agrees to furnish such indemnity as shall be required and, in addition, to the extent not otherwise paid pursuant to the provisions of the Lease or of the Participation Agreement, to pay the reasonable compensation of the Owner Trustee for the services performed or to be performed by it pursuant to such direction and any reasonable fees and disbursements of counsel or agents employed by the Owner Trustee in connection 9 10 therewith. The Owner Trustee shall not be required to take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably determine, or shall have been advised by counsel, that such action is contrary to the terms of any of the Operative Documents to which the Owner Trustee is a party, or is otherwise contrary to law. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with any of the Operative Documents to which the Owner Trustee is a party, except as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, or (to the extent not inconsistent with the provisions of the Trust Indenture) as expressly provided by the terms hereof or in written instructions from the Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or obligations shall be read into this Trust Agreement against the Owner Trustee. FSBU agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof) promptly take such action as may be necessary to duly discharge and satisfy in full all Lessor Liens attributable to it in its individual capacity which it is required to discharge pursuant to Section 8(h) of the Participation Agreement and otherwise comply with the terms of said Section binding on it. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to the contrary notwithstanding, the Owner Trustee shall comply with the provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of special counsel for the Owner Trustee, of all the applicable conditions precedent specified in Section 3.02 hereof and in Section 4 of the Participation Agreement. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to, and the Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate except (i) as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, (ii) as expressly provided by the terms hereof, or (iii) as expressly provided in written instructions from the Owner Participant pursuant to Section 5.01 or 5.02 hereof. THE OWNER TRUSTEE ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts hereby created and agrees to perform the same but only upon the terms hereof applicable to it. The Owner Trustee also agrees to receive and disburse all monies received by it constituting part of the Trust Estate upon the terms hereof. FSBU shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence, (b) for performance of the terms of the last sentence of 10 11 Section 5.04 hereof and the first sentence of Section 5.01 hereof, (c) for its or the Owner Trustee's failure to use ordinary care to disburse funds, (d) for liabilities that may result from the inaccuracy of any representation or warranty of it (or from the failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation Agreement and (e) for any Tax based on or measured by any fees, commissions or compensation received by it for acting as trustee in connection with any of the transactions contemplated by the Operative Documents. ABSENCE OF CERTAIN DUTIES. Except in accordance with written instructions furnished pursuant to Section 5.02 hereof and except as provided in, and without limiting the generality of, Sections 3.01 and 5.04 hereof and the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU shall have any duty (i) to see to any recording or filing of any Operative Document or of any supplement to any thereof or to see to the maintenance of any such recording or filing or any other filing of reports with the Federal Aviation Administration or other governmental agencies, except that FSBU, in its individual capacity, shall comply with the reporting requirements set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall, to the extent that information for that purpose is supplied by Lessee pursuant to any of the Operative Documents, complete and timely submit (and furnish the Owner Participant with a copy of) any and all reports relating to the Aircraft which may from time to time be required by the Federal Aviation Administration or any government or governmental authority having jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, other than to forward to the Owner Participant copies of all reports and other written information which the Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against any part of the Trust Indenture Estate or the Trust Estate, except as provided in Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and records with respect to the Aircraft at any time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease or any other Operative Document. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity warrants that on the Delivery Date the Owner Trustee shall have 11 12 received whatever title was conveyed to it by Lessee and that the Aircraft shall during the Term be free of Lessor Liens attributable to it, or (b) any representation or warranty as to the validity, legality or enforceability of this Trust Agreement or any Operative Document to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof except to the extent that any such statement is expressly made herein or therein as a representation by FSBU in its individual capacity or by the Owner Trustee and except that FSBU in its individual capacity hereby represents and warrants that this Trust Agreement has been, and (assuming due authorization, execution and delivery by the Original Owner Participant of this Trust Agreement) the Operative Documents to which it or the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by it or the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of itself or the Owner Trustee, as the case may be and that this Trust Agreement constitutes the legal, valid and binding obligation of FSBU or the Owner Trustee, as the case may be, enforceable against FSBU or the Owner Trustee, as the case may be, in accordance with its terms. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as provided in Section 22 of the Lease, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law, and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The Owner Trustee shall incur no liability to anyone in acting in reliance upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Unless other evidence in respect thereof is specifically prescribed herein, any request, direction, order or demand of the Owner Participant or Lessee mentioned herein or in any of the Operative Documents to which the Owner Trustee is a party shall be sufficiently evidenced by written instruments signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director and in the name of the Owner Participant or Lessee, as the case may be. The Owner Trustee may accept a copy of a resolution of the Board of Directors or Executive Committee of Lessee, certified by the secretary or any assistant secretary of Lessee as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or Committee and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Owner Trustee may for all purposes hereof rely on a certificate signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner 12 13 Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. In the administration of trusts hereunder, the Owner Trustee may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may, at the expense of the Trust Estate, consult with counsel, accountants and other skilled persons to be selected and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such agent, attorney, counsel, accountant or other skilled person appointed by it with due care hereunder. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder, the Owner Trustee acts solely as trustee and not in its individual capacity except as otherwise expressly provided herein; and, subject to the terms of the Participation Agreement and the Trust Indenture, all persons, other than the Owner Participant, as provided herein, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Trust Estate for payment or satisfaction thereof. FEES; COMPENSATION. Except as provided in Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the Owner Participant or (subject to the provisions of the Trust Indenture) the Trust Estate for any fee as compensation for its services hereunder; provided, however, that the Owner Trustee shall have a lien upon the Trust Estate (subject, however, to the lien of the Trust Indenture) for any such fee not paid by Lessee as contemplated by the last paragraph of Section 7(c) of the Participation Agreement. Pursuant to Section 7(c) of the Participation Agreement and subject to Section 16 thereof, Lessee shall be required to pay the reasonable fees and expenses of the Owner Trustee comprising the compensation and reimbursement of expenses to which the Owner Trustee is entitled under this Section 6.07. TAX RETURNS. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all monies under this Trust Agreement or any agreement contemplated hereby. The Owner Participant shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Owner Participant. The Owner Trustee shall be responsible for causing to be prepared, at the request and expense of the Owner Participant, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. The Owner Participant or the Owner Trustee, as the case may be, upon request, will furnish the Owner Trustee or the Owner Participant, as the case may be, with all such information as may be reasonably required from the Owner Participant or the Owner Trustee, as the case may be, in connection with the preparation of such income tax returns. The Owner Trustee will give to the Owner Participant, upon request, such periodic information concerning receipts and disbursements by it with respect to the Trust Estate as would be helpful to the Owner Participant in preparing its tax returns. 13 14 FIXED INVESTMENT TRUSTS. Notwithstanding anything herein to the contrary, the Owner Trustee shall not be authorized and shall have no power to "vary the investment" of the Owner Participant within the meaning of Treasury Regulations Section 301.7701-4(c)(1). INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner Participant hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and hereby indemnify, protect, save and keep harmless FSBU in its individual capacity and its successors, assigns, legal representatives, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its individual capacity on or measured by any compensation received by FSBU in its individual capacity for its services hereunder or in connection with the transactions contemplated by the Operative Documents or otherwise excluded in subclause (e) below), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and including, without limitation, any liability of an owner, any strict liability and any liability without fault) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against FSBU in its individual capacity (whether or not also indemnified against by Lessee under the Lease or under the Participation Agreement or also indemnified against by any other person but only to the extent not otherwise paid or reimbursed by Lessee or such other person) in any way relating to or arising out of this Trust Agreement or any of the Operative Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of the Owner Trustee or FSBU in its individual capacity hereunder, except (a) in the case of willful misconduct or gross negligence on the part of the Owner Trustee or FSBU in its individual capacity in the performance or non-performance of its duties hereunder or under any of the other Operative Documents to which the Owner Trustee is a party or (b) those resulting from the inaccuracy of any representation or warranty of FSBU in its individual capacity (or from the failure of FSBU in its individual capacity to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture or, with respect to representations or warranties of FSBU in its individual capacity only, in Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the Participation Agreement or in any of the other Operative Documents or (c) as may result from a breach by FSBU in its individual capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in the case of the failure to use ordinary care on the part of the Owner Trustee or FSBU in its individual capacity in the disbursement of funds or (e) those claims arising under any 14 15 circumstances or upon any terms where Lessee would not have been required to indemnify the Owner Trustee in its individual capacity pursuant to Section 7(b) or 7(c) of the Participation Agreement (disregarding, for this purpose, Sections 7(b)(ii)(3) (to the extent that such disposition referred to therein results from the Owner Trustee acting in accordance with written instructions of the Owner Participant), 7(b)(ii)(5)(i) (to the extent that it results from the willful misconduct or gross negligence of the Owner Participant to the extent imposed on the Owner Trustee), 7(b)(ii)(8), 7(c)(B) (to the extent that such failure referred to therein results from the Owner Trustee's acting in accordance with written instructions of the Owner Participant), 7 (c)(D) (to the extent such disposition therein results from the Owner Trustee's acting in accordance with written instructions of the Owner Participant), 7(c)(F),7(c)(H), 7(c)(I) and 7(c)(J) of the Participation Agreement and disregarding, for this purpose, those claims arising or resulting from any action taken by or inaction of the Owner Trustee in accordance with written instructions of the Owner Participant). The indemnities contained in this Section 7.01 extend to FSBU only in its individual capacity and shall not be construed as indemnities of the Trust Indenture Estate or the Trust Estate (except to the extent, if any, that FSBU in its individual capacity has been reimbursed by the Trust Indenture Estate or the Trust Estate for amounts covered by the indemnities contained in this Section 7.01). The indemnities contained in this Section 7.01 shall survive the termination of this Trust Agreement. In addition, if necessary, FSBU in its individual capacity shall be entitled to indemnification from the Trust Estate, subject to the Lien of the Trust Indenture, for any liability, obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee, the Owner Participant or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same FSBU in its individual capacity shall have a Lien on the Trust Estate, subject to the Lien of the Trust Indenture, which shall be prior to any interest therein of the Owner Participant. The payor of any indemnity under this Article VII shall be subrogated to any right of the person indemnified in respect of the matter as to which such indemnity was paid. TRANSFER OF THE OWNER PARTICIPANT'S INTEREST TRANSFER OF INTERESTS. All provisions of Section 8(n) of the Participation Agreement shall (with the same force and effect as if set forth in full, mutatis mutandis, in this Section 8.01) be applicable to any assignment, conveyance or other transfer by any Owner Participant of its right, title or interest in and to the Participation Agreement, the Trust Estate or this Trust Agreement. If there is more than one Owner Participant, no assignment, conveyance or other transfer by an Owner Participant of any of its right, title or interest in and to this Trust Agreement or the Trust Estate shall be valid unless each other Owner Participant's prior written consent (which consent may be withheld in the sole discretion of such other Owner Participants) is given to such assignment, conveyance or other transfer. ACTIONS OF THE OWNER PARTICIPANTS. If at any time prior to the 15 16 termination of this Trust Agreement there is more than one Owner Participant, then during such time, if any action is required to be taken by all Owner Participants and whenever any direction, authorization, approval, consent, instruction, or other action is permitted to be given or taken by the Owner Participant it shall be given or taken only upon unanimous agreement of all Owner Participants; provided, however, that the termination of this Trust Agreement pursuant to Section 11.01 hereof may be effected upon the election of any Owner Participant. SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the Participation Agreement and (ii) may resign at any time without cause by giving at least sixty (60) days' prior written notice to the Owner Participant, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such resignation to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In addition, the Owner Participant may at any time remove the Owner Trustee without cause by a notice in writing delivered to the Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such removal to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or removal of the Owner Trustee, the Owner Participant may appoint a successor Owner Trustee by an instrument signed by the Owner Participant. If a successor Owner Trustee shall not have been appointed within thirty (30) days after such notice of resignation or removal, the Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor shall have been appointed as above provided. Any successor Owner Trustee so appointed by such court shall immediately and without further act be superseded by any successor Owner Trustee appointed as above provided. (b) Execution and Delivery of Documents, etc. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee and the Owner Participant an instrument accepting such appointment, and thereupon such successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts hereunder with like effect as if originally named the Owner Trustee herein; but nevertheless, upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to such successor Owner Trustee 16 17 all monies or other property then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will execute such documents as are provided to it by such successor Owner Trustee and will take such further actions as are requested of it by such successor Owner Trustee as are reasonably required to cause registration of the Aircraft included in the Trust Estate to be transferred upon the records of the Federal Aviation Administration, or other governmental authority having jurisdiction, into the name of the successor Owner Trustee. (c) Qualification. Any successor Owner Trustee, however appointed, shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement and shall also be a bank or trust company organized under the laws of the United States or any state thereof having a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. (d) Merger, etc. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee may be transferred, shall, subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without further act. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee shall have been directed to do so by the Owner Participant, the Owner Trustee and the Owner Participant shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement) approved by the Owner Trustee and the Owner Participant, either to act as co-trustee, jointly with the Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as an "ADDITIONAL TRUSTEE"). In the event an Indenture Event of Default not arising from a Lease Event of Default shall occur and be continuing, the Owner Trustee may act under the foregoing provisions of this Section 9.02 without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 9.02 in such contingency. Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the 17 18 following provisions and conditions: (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; (E) the Owner Participant, at any time, by an instrument in writing may remove any such additional trustee unless such additional trustee was appointed by the Owner Trustee without the concurrence of the Owner Participant during the occurrence of an Indenture Event of Default not arising from a Lease Event of Default, in which case the Owner Trustee shall have the power to remove any such additional trustee without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact for it in such connection in such contingency; and (F) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, the Trust Indenture or affect the interests of the Indenture Trustee or the holders of the Secured Certificates in the Trust Indenture Estate. 18 19 SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS SUPPLEMENTS AND AMENDMENTS. (a) Supplements and Amendments. This Trust Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Owner Trustee and the Owner Participant. Subject to Section 10.02 hereof and the first sentence of Section 10 of the Participation Agreement, the Owner Trustee will execute any amendment, supplement or other modification of this Trust Agreement or of any other Operative Document to which the Owner Trustee is a party which it is requested to execute by the Owner Participant, except that the Owner Trustee shall not execute any such amendment, supplement or other modification which, by the express provisions of any of the above documents, requires the consent of any other party unless such consent shall have been obtained. (b) Delivery of Amendments and Supplements to Certain Parties. A signed copy of each amendment or supplement referred to in Section 10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each holder of a Secured Certificate. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to executing any document required to be executed by it pursuant to the terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its counsel to the effect that the execution of such document is authorized hereunder. If in the opinion of the Owner Trustee any such document adversely affects any right, duty, immunity or indemnity in favor of the Owner Trustee hereunder or under any other Operative Document to which the Owner Trustee is a party, the Owner Trustee may in its discretion decline to execute such document. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be necessary for any written request furnished pursuant to Section 10.01 hereof to specify the particular form of the proposed documents to be executed pursuant to such Section, but it shall be sufficient if such request shall indicate the substance thereof. DISTRIBUTION OF DOCUMENTS. Promptly after the execution by the Owner Trustee of any document entered into pursuant to Section 10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof to the Owner Participant, but the failure of the Owner Trustee to mail such conformed copy shall not impair or affect the validity of such document. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be required to enable the Owner Trustee to enter into the Lease Supplement covering the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01 hereof and the Trust Supplement 19 20 pursuant to the terms of the Trust Indenture and Section 3.01 hereof. MISCELLANEOUS TERMINATION OF TRUST AGREEMENT. This Trust Agreement and the trusts created hereby shall be of no further force or effect upon the earlier of (a) both the final discharge of the Trust Indenture pursuant to Section 10.01 thereof and the sale or other final disposition by the Owner Trustee of all property constituting part of the Trust Estate and the final distribution by the Owner Trustee of all monies or other property or proceeds constituting part of the Trust Estate in accordance with Article IV hereof, provided that at such time Lessee shall have fully complied with all of the terms of the Lease and the Participation Agreement or (b) twenty-one years less one day after the death of the last survivor of all of the descendants of the grandparents of David Rockefeller living on the date of the earliest execution of this Trust Agreement by any party hereto, but if this Trust Agreement and the trusts created hereby shall be or become authorized under applicable law to be valid for a period commencing on the 21st anniversary of the death of such last survivor (or, without limiting the generality of the foregoing, if legislation shall become effective providing for the validity of this Trust Agreement and the trusts created hereby for a period in gross exceeding the period for which this Trust Agreement and the trusts created hereby are hereinabove stated to extend and be valid), then this Trust Agreement and the trust created hereby shall not terminate under this subsection (b) but shall extend to and continue in effect, but only if such nontermination and extension shall then be valid under applicable law, until the day preceding such date as the same shall, under applicable law, cease to be valid; otherwise this Trust Agreement and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof, subject to the Owner Participant's right to revoke such trusts and cause the Trust Estate (subject to the Lien of the Trust Indenture) to be distributed. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE. The Owner Participant shall not have legal title to any part of the Trust Estate. [No transfer, by operation of law or otherwise, of any right, title and interest of the Owner Participant in and to the Trust Estate hereunder shall operate to terminate] this Trust Agreement or the trusts hereunder or entitle any successors or transferees of the Owner Participant to an accounting or to the transfer of legal title to any part of the Trust Estate. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment, sale, transfer or other conveyance of its interest in the Aircraft by the Owner Trustee made pursuant to the terms hereof or of the Lease or the Participation Agreement shall bind the Owner Participant and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Owner Participant in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. 20 21 TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY. Except for the terms of Section 8(n) of the Participation Agreement incorporated in Article VIII hereof and except as otherwise provided in Articles IX and X hereof, nothing herein, whether expressed or implied, shall be construed to give any Person other than the Owner Trustee and the Owner Participant any legal or equitable right, remedy or claim under or in respect of this Trust Agreement; but this Trust Agreement shall be held to be for the sole and exclusive benefit of the Owner Trustee and the Owner Participant. NOTICES; CONSENT TO JURISDICTION. (a) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 11.05(a). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.05(a), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the Owner Participant, to the respective addresses set forth below the signatures of such parties on the signature page of the Participation Agreement, or (B) if to a Subsequent 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. (a) Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Trust Agreement, the Participation Agreement, 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 the Participation 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. SEVERABILITY. Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and 21 22 any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. WAIVERS, ETC. No term or provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing entered into in compliance with the terms of Article X hereof; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. COUNTERPARTS. This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. BINDING EFFECT, ETC. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII hereof, its assigns. Any request, notice, direction, consent, waiver or other instrument or action by the Owner Participant shall bind its successors and assigns. Any Owner Participant which shall cease to have any Ownership Interest shall thereupon cease to be a party hereto or an Owner Participant for any reason and shall have no further obligations hereunder. o HEADINGS; REFERENCES. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. o GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. o PERFORMANCE BY THE OWNER PARTICIPANT. Any obligation of the Owner Trustee in its individual capacity or as Owner Trustee hereunder or under any other Operative Document or other document contemplated herein, may be performed by the Owner Participant and any such performance shall not be construed as a revocation of the trust created hereby. 22 23 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [ ] Owner Participant By___________________________________ Title:_______________________________ FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By__________________________________ Title:______________________________ 23 EX-4.I2 70 FIRST AMENDMENT TO TRUST AGREEMENT - 1996 E 1 FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 E] This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 E], dated as of June 12, 1996, between [___________], a [__________] corporation (the "OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Trust Agreement (as defined below); W I T N E S S E T H: WHEREAS, Northwest Airlines, Inc. (the "LESSEE"), the Owner Participant, the Owner Trustee, [_______________________], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and State Street Bank and Trust Company, as Indenture Trustee (the "INDENTURE TRUSTEE") entered into the Participation Agreement [NW 1996 E], dated as of April 29, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 E], dated as of April 29, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 E] relating to the Aircraft, dated as of April 29, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 E] dated April 30, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to 2 Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 E], dated as of April 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 E], dated April 30, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, Lessee, Northwest Airlines Corporation, as Guarantor, the Owner Trustee, State Street Bank and Trust Company, as Pass Through Trustee, the Owner Participant, the Indenture Trustee and State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent, have entered into the Refunding Agreement [NW 1996 E], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"), providing for a refinancing operation as contemplated by Section 17 of the Original Participation Agreement; WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 E], dated as of the date hereof (the " INDENTURE"), under which Indenture the Owner Trustee shall issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1996 E], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); and WHEREAS, the Owner Participant and the Owner Trustee wish to amend the Original Trust Agreement as set forth herein to give effect to the transactions contemplated by the Refunding Agreement; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Trust Agreement is amended as follows: SECTION 1. AMENDMENT OF SECTION 11.01 OF THE ORIGINAL TRUST AGREEMENT . Section 11.01 of the Original Trust Agreement is hereby amended by adding the following clause to the end thereof after the word "distributed": "provided, however, such right is subject to the provisions of Section 10 of the Participation Agreement." SECTION 2. AMENDMENT OF SECTION 11.05(a) OF THE ORIGINAL TRUST AGREEMENT. Section 11.05(a) of the Original Trust Agreement is hereby amended by deleting -2- 3 the word "Participation" in clause (A) of the second sentence thereof and substituting therefor the word "Refunding". SECTION 3. DIRECTION. Pursuant to and in conformity with Section 10.01(a) of the Trust Agreement, the Owner Participant hereby requests the Owner Trustee to execute this Amendment. SECTION 4. RATIFICATION. Except as hereby modified, the Original Trust Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Trust Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Trust Agreement or any word or phrase referring to a section or provision of the Trust Agreement is deemed for all purposes to be a reference to the Trust Agreement or such section or provision as amended pursuant to this Amendment. SECTION 5. MISCELLANEOUS. This Amendment 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. The terms of this Amendment shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII of the Original Trust Agreement as amended hereby, its assigns. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. -3- 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [Owner Participant] By: ________________________ Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, By: ________________________ Name: Title: -4- EX-4.I3 71 TRUST INDENTURE-1996 E 1 AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 E] AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 E], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Owner Trustee under the Trust Agreement referred to below (together with its successors under the Trust Agreement, the "OWNER Trustee"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity, except as expressly stated herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE"). W I T N E S S E T H WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and the Owner Trustee have entered into the Trust Agreement whereby, among other things, (i) the Owner Trustee has established a certain trust for the use and benefit of the Owner Participant subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of, and with the priority of payment to, the holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has been authorized and directed to execute and deliver this Trust Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 E] dated as of April 29, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the Trust Agreement and Indenture Supplement [NW 1996 E] (the "SUPPLEMENT") dated April 30, 1996 to the Original Indenture, (iii) the Original Indenture and the Supplement were recorded by the Federal Aviation Administration on May 3, 1996 and were assigned Conveyance No. E21280 and (iv) the Lease Agreement [NW 1996 E] dated as of even date with the Original Indenture between the Owner Trustee and Lessee and the Lease Supplement No. 1 [NW 1996 E] were recorded by the Federal Aviation Administration on May 3, 1996 and were assigned Conveyance No. E21279 and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Loan Participants Secured Certificates (as defined in the Original Indenture); WHEREAS, the parties have agreed that subject to certain conditions, Lessee shall have the right to cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Secured Certificates issued to the Loan Participants pursuant to the Original Indenture shall be redeemed and new Secured Certificates (the "REFINANCING SECURED CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Trust Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Refinancing Secured Certificates and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of all of the Owner Trustee's right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Certificate Holders, subject to Section 2.15 and Article III hereof; 2 WHEREAS, all things have been done to make the Secured Certificates, when executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid, binding and enforceable obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Trust Indenture the valid, binding and legal obligation of the Owner Trustee for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened: -2- 3 GRANTING CLAUSE NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Secured Certificates from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions herein and in the Participation Agreement and the Secured Certificates contained, for the benefit of the Certificate Holders and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Certificate Holders by the Owner Trustee and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Secured Certificates by the holders thereof, and for other good and valuable consideration the receipt and adequacy whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors in trust and assigns, for the security and benefit of the Certificate Holders, a first priority security interest in and mortgage lien on all right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges, other than Excluded Payments (which collectively, excluding Excluded Payments but including all property hereafter specifically subjected to the Lien of this Trust Indenture by the Trust Agreement and Indenture Supplement or any mortgage supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire title as provided herein and in the Lease), all as more particularly described in the Trust Agreement and Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture; (2) the Lease and any Lease Supplement and all Rent thereunder (including, without limitation, all amounts of Interim Rent, Basic Rent, Supplemental Rent and payments of any kind thereunder (excluding any Excluded Payments)), and the Guarantee; (3) the Purchase Agreement (to the extent specified in the Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent and Agreement and the Bill of Sale; (4) all rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the lien of this Indenture; (5) all insurance and requisition proceeds with respect to the Aircraft, including but not limited to the insurance required under Section 11 of the Lease, but excluding insurance proceeds described in clauses (ii) and (iii) of the definition of Excluded Payments; -3- 4 (6) all rights of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under the Participation Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder, but excluding all Excluded Payments; (7) all monies and securities from time to time deposited or required to be deposited with the Indenture Trustee pursuant to any terms of this Indenture or the Lease or required hereby or by the Lease to be held by the Indenture Trustee hereunder (other than Excluded Payments); and (8) all proceeds of the foregoing. Concurrently with the delivery of the Original Indenture, the Owner Trustee has delivered to the Indenture Trustee the original executed counterpart of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt is attached), and executed copies of the Participation Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and its successors and assigns, in trust for the benefit and security of the Loan Participants and the Certificate Holders, except as provided in Section 2.15 and Article III hereof without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (8) inclusive above, subject to the terms and provisions set forth in this Trust Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Owner Trustee shall remain liable under the Indenture Agreements to perform all of the obligations assumed by it thereunder, except to the extent prohibited or excluded from doing so pursuant to the terms and provisions thereof, and the Indenture Trustee and the Certificate Holders shall have no obligation or liability under the Indenture Agreements, by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to the Indenture Agreements, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. Subject to the terms hereof, the Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, and with full power (in the name of the Owner Trustee or otherwise) to ask for, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds but in all cases excluding Excluded Payments) due and to become due under or arising out of the Indenture Agreements, and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Without limiting the generality of the foregoing, but subject to the rights of the Owner Trustee and the Owner Participant hereunder, during the continuance of any Event of Default under this Trust Indenture, the Indenture Trustee shall have the right under such power of attorney to accept any offer in connection with the exercise of remedies as set forth herein of any purchaser to purchase the Airframe and Engines and upon such purchase to execute and deliver in the name of and on behalf of the Owner Trustee an appropriate bill of sale and other instruments of transfer relating to the Airframe and Engines, when purchased by such purchaser, and to perform all other necessary or appropriate acts with respect to any such purchase, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or -4- 5 appropriate to protect and preserve the right, title and interest of the Indenture Trustee in and to such Rents (other than Excluded Payments) and other sums and the security intended to be afforded hereby; provided, however, that no action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or liabilities of the Owner Trustee to any Person beyond those obligations and liabilities specifically set forth in this Trust Indenture and in the other Operative Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture shall not have been fully discharged, to make all payments of Rent (other than Excluded Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to, or as directed by, the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Trust Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Trust Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem necessary or desirable to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be created hereby or to obtain for the Indenture Trustee the full benefits of the assignment hereunder and of the rights and powers herein granted. The parties hereto acknowledge that neither the Owner Trustee nor the Owner Participant shall have any obligation as to any recording, filing, refiling or re-recording of any documents or instruments in regard to maintaining the perfection of the security interests created hereunder, in the Trust Indenture Estate or any security interest that may be claimed to have been created by the Lease or the ownership interest of the Owner Trustee in the Aircraft. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants and agrees that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that it will not, except as otherwise provided in this Trust Indenture and except with respect to Excluded Payments, (i) accept any payment from Lessee under any Indenture Agreement, (ii) enter into any agreement amending or supplementing any Indenture Agreement, (iii) execute any waiver or modification of, or consent under, the terms of, or exercise any rights, powers or privileges under, any Indenture Agreement, (iv) settle or compromise any claim (other than those relating to an Excluded Payment) arising under any Indenture Agreement or (v) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any Indenture Agreement to arbitration thereunder. The Owner Trustee does hereby further agree that it will not without the written consent of the Indenture Trustee: (a) except as set forth in Section 8(bb) of the Participation Agreement, collect or agree to the receipt or collection of any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease but excluding any Excluded Payment prior to the due date for the payment thereof provided for by the Lease or assign, transfer or hypothecate (other than to the Indenture Trustee hereunder) any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease but excluding any Excluded Payment, then due or to accrue in the future under the Lease in respect of the Airframe and Engines; or (b) except as contemplated by the Trust Agreement in connection with the appointment of a successor owner trustee, sell, mortgage, transfer, assign or hypothecate (other than to the Indenture Trustee hereunder) its interest in the Airframe and Engines or any part -5- 6 thereof or in any amount to be received by it from the use or disposition of the Airframe and Engines, other than amounts distributed to it pursuant to Article III hereof. It is hereby further agreed that any and all property described or referred to in the granting clauses hereof which is hereafter acquired by the Owner Trustee shall ipso facto, and without any further conveyance, assignment or act on the part of the Owner Trustee or the Indenture Trustee, become and be subject to the Lien herein granted as fully and completely as though specifically described herein, but nothing contained in this paragraph shall be deemed to modify or change the obligations of the Owner Trustee contained in the foregoing paragraphs. Notwithstanding the Granting Clause or any of the foregoing paragraphs, there is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excluded Payments. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. Definitions. For all purposes of this Indenture the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "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. "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 hereof. "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 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. "Cash Equivalents" shall mean the investments specified in Section 22(a) of the Lease. "Certificate Holder" shall mean any holder from time to time of one or more Secured Certificates. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Continuous Stay Period" shall have the meaning specified in Section 4.04(a) hereof. -6- 7 "Corporate Trust Department" or "Trust Office" means the principal corporate trust office of the Owner Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, 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 and each Certificate Holder. "Corporate Trust Office" shall mean the principal office of the Indenture Trustee located at Two International Place, 4th Floor, Boston, Massachusetts 02110, 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 and each Certificate Holder. "Debt" shall mean any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments or for the deferred purchase price of property, goods or services. "Debt 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" means any event or condition that with the giving of notice or the lapse of time or both would become an Event of Default. "Dollars" and "$" shall mean the lawful currency of the United States of America. "Enforcement Date" shall have meaning specified in Section 4.03 hereof. "Event of Default" shall have the meaning specified in Section 4.02 hereof. "Excess Amount" shall have the meaning specified in Section 2.03(b) hereof. "Excluded Payments" shall mean (i)(A) 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) and 7(c) of the Participation Agreement and (B) any other payment to the Owner Participant pursuant to any provision of any Operative Document, (ii) proceeds of public liability insurance (or proceeds of governmental indemnities in lieu thereof) 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) 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) all Indemnity Adjusted Payments, (vi) fees payable to the Owner Trustee or the Indenture Trustee pursuant to the last sentence of Section 7(c) of the Participation Agreement, (vii) provided that the Secured Certificates shall have been duly assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the Owner Trustee pursuant to the third sentence of Section 19(d) of the Lease, (viii) any payment of the foregoing under the Guarantee, (ix) interest accrued on any of the above, and (x) any right to enforce the payment of any amount described in clauses (i) through (ix) above. "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 Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Guarantor" shall have the meaning specified in the Lease. -7- 8 "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 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. "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" shall mean that certain Lease Agreement [NW 1996 E], dated as of April 29, 1996, entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of the Original Trust Indenture, as said Lease Agreement has been, or may from time to time be, supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Indenture. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Default" shall mean any event or condition that with the giving of notice or the lapse of time or both would become a Lease Event of Default. "Lease Event of Default" shall mean an "Event of Default" as defined in the Lease. "Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Lessee Operative Documents" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. "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 hereof (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 (plus, in the case of Series C Secured Certificates, 75 basis points) 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, -8- 9 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. "Mortgaged Property" shall have the meaning specified in Section 3.03 hereof. "Owner Indemnitee" shall have the meaning specified in the definition of Excluded Payments herein. "Owner Participant" shall mean [ ], so long as such party shall have any interest in the Trust Estate, and transferees thereof as permitted by Section 8 of the Participation Agreement. "Participants" shall mean and include the Loan Participants and the Owner Participant. "Participation Agreement" shall mean that certain Participation Agreement [NW 1996 E], dated as of April 29, 1996, among the Owner Trustee, the Indenture Trustee, Lessee and the Participants, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Past Due Rate" shall mean, with respect to the Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in effect from time to time. "Payment Date" shall mean each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Secured Certificates have been paid in full. "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. "QIB" shall have the meaning specified in Section 2.08 hereof. "Replacement Airframe" shall mean any airframe substituted for the Airframe pursuant to Section 5.06 hereof. "Replacement Engine" shall mean any engine substituted for an Engine pursuant to Section 5.06 hereof. "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. "Section 1110 Period" shall have the meaning specified in Section 4.04(a) hereof. -9- 10 "Secured Certificates" shall mean and include any Secured Certificates issued hereunder, and issued in exchange therefor or replacement thereof. "Secured Obligations" shall have the meaning specified in Section 2.06 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Holder" shall have the meaning specified in Section 2.15(c) hereof. "Series A" or "Series A Secured Certificates" means Secured Certificates issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A." "Series B" or "Series B Secured Certificates" means Secured Certificates issued and designated as "Series B" hereunder, 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" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series C." "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. "Transactions" means the transactions contemplated by the Participation Agreement and the other Operative Documents. "Trust Agreement and Indenture Supplement" shall mean a supplement to the Trust Agreement and to this Indenture, in substantially the form of Exhibit A hereto, 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. "Trust Indenture", "this Trust Indenture", "the Trust Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this Amended and Restated Trust Indenture and Security Agreement [NW 1996 E] as it may from time to time be supplemented or amended as herein provided, including supplementing by the Trust Agreement and Indenture Supplement pursuant hereto. "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 this Trust Indenture, excluding Excluded Payments. SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this Trust Indenture the terms used but not defined herein are used as defined in the Lease. ARTICLE II THE SECURED CERTIFICATE SECTION 2.01. FORM OF SECURED CERTIFICATES. The Secured Certificates shall be substantially in the form set forth below: -10- 11 THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [NW 1996 E] DATED AS OF APRIL 29, 1996. SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N541US. No.____ Date: [______,__] $_________________ INTEREST RATE MATURITY DATE [________] [________,_______] FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 E], dated as of April 29, 1996, between the Owner Participant named therein and the Owner Trustee (herein as such Trust Agreement may be supplemented or amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Interest Rate indicated above. The Principal Amount of this Secured Certificate shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Secured Certificate set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including _______, _____. Notwithstanding the foregoing, the final payment made on this Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Secured Certificate. Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "TRUST INDENTURE" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 E], dated as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Secured Certificate and not defined herein shall have the respective meanings assigned in the Trust Indenture. This Secured Certificate shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Trust Indenture or the Participation Agreement -11- 12 shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Trust Indenture and each holder hereof, by its acceptance of this Secured Certificate, agrees that (A) it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the holder hereof as above provided, (B) neither the Owner Trustee nor the Indenture Trustee is personally liable or liable in any manner to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Trust Indenture or in the Participation Agreement, for any liability under the Trust Indenture or the Participation Agreement, and (C) the Owner Participant is not personally liable or liable in any manner to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Participation Agreement, for any liability under the Participation Agreement; provided, however, that nothing herein contained shall limit, restrict or impair the right of the Indenture Trustee, subject always to the terms and provisions of the Trust Indenture, to accelerate the maturity of this Secured Certificate upon occurrence of an Event of Default under the Trust Indenture in accordance with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment against the Owner Trustee on this Secured Certificate for purposes of realizing upon the Trust Indenture Estate and to exercise all rights and remedies provided under the Trust Indenture or otherwise realize upon the Trust Indenture Estate. There shall be maintained a Secured Certificate Register for the purpose of registering transfers and exchanges of Secured Certificates at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Trust Indenture. The Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Trust Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Secured Certificate, except that in the case of any final payment with respect to this Secured Certificate, the Secured Certificate shall be surrendered promptly thereafter by the Indenture Trustee to the Owner Trustee for cancellation. The holder hereof, by its acceptance of this Secured Certificate, agrees that, except as provided in the Trust Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts hereunder) to the date of such payment, second, to the payment of the Principal Amount of this Secured Certificate then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of Principal Amount of this Secured Certificate remaining unpaid in the inverse order of their normal maturity. This Secured Certificate is one of the Secured Certificates referred to in the Trust Indenture which have been or are to be issued by the Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Secured Certificates. The provisions of this Secured Certificate are subject to the Trust Indenture. Reference is hereby made to the Trust Indenture and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Secured Certificate and the rights and obligations of the holders of, and the nature and extent of the security for, any other Secured Certificates executed and delivered under the Trust Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust Indenture, to all of which terms and conditions in the Trust Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Secured Certificate. As provided in the Trust Indenture and subject to certain limitations therein set forth, this Secured Certificate is exchangeable for a like aggregate Principal Amount of Secured Certificates of different authorized denominations, as requested by the holder surrendering the same. -12- 13 Prior to due presentment for registration of transfer of this Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Secured Certificate is registered as the owner hereof for all purposes whether or not this Secured Certificate be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Secured Certificate is subject to redemption as provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This Secured Certificate is also subject to assumption by Lessee as provided in Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.14 of the Trust Indenture but not otherwise. [The indebtedness evidenced by this Secured Certificate is, to the extent and in the manner provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Trust Indenture) in respect of [Series A Secured Certificates](1)[Series A and Series B Secured Certificates](2), and this Secured Certificate is issued subject to such provisions. The Certificate Holder of this Secured Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]** Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Secured Certificate shall not be entitled to any benefit under the Trust Indenture or be valid or obligatory for any purpose. THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. * * * - ----------------------------- (1) To be inserted in the case of a Series B Secured Certificate. (2) To be inserted in the case of a Series C Secured Certificate. ** To be inserted for each Secured Certificate other than any Series A Secured Certificate. -13- 14 IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Certificate to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By _____________________________________ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Secured Certificates referred to in the within-mentioned Trust Indenture. STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By _____________________________________ Name: Title: -14- 15 SCHEDULE I SECURED CERTIFICATE AMORTIZATION
Percentage of Principal Amount Payment Date to be Paid ------------ ----------------
[SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES. The Secured Certificates shall be dated the date of issuance thereof, shall be issued in three separate series consisting of Series A, Series B and Series C and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Agreements as set forth in Schedule II hereto in connection therewith and (ii) the Secured Certificates issued under the Original Indenture shall be concurrently redeemed. The Secured Certificates shall be issued in registered form only. The Secured Certificates shall be issued in denominations of $1,000 and integral multiples thereof, except that one Secured Certificate of each Series may be in an amount that is not an integral multiple of $1,000. Each Secured Certificate shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Secured Certificate shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Secured Certificates. Notwithstanding the foregoing, the final payment made under each Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Secured Certificate. Each Secured Certificate shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Certificate Holders, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case pursuant to Section 7 of the Participation Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Advances (as -15- 16 defined in the Liquidity Facilities) under any Liquidity Facility except to the extent included in Net Interest and Related Charges, and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used in this Section, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes, plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Secured Certificate a fraction, the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes issued under Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any Series D Secured Certificates or Series D Equipment Notes. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to the Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount which would be payable if such drawings bore interest at the Designated Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding Liquidity Facility) which result from any Interest Drawing, Final Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities). As used in this Section "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) except with respect to that portion of any Final Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section, a Payment Default when used in connection with a Secured Certificate or Equipment Note means a default in the payment of principal thereof or interest thereon other than a default in the payment of principal or interest on a Series D Equipment Note which has not been cured other than solely because of acceleration. The following terms are used in this Section as defined in the Intercreditor Agreement without regard to any amendment, modification or supplement thereto after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and Series D Equipment Notes. The Secured Certificates shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Secured Certificates bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Secured Certificates or did not hold such offices at the respective dates of such Secured Certificates. The Owner Trustee may from time to time execute and deliver Secured Certificates with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Secured Certificates shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Secured Certificates to be authenticated hereunder on original issue with respect to the Aircraft. No Secured Certificate shall be secured by or entitled to any benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears on such Secured Certificate a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Secured Certificates shall be conclusive evidence, and the only evidence, that such Secured Certificate has been duly authenticated and delivered hereunder. -16- 17 SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY. (a) Without impairing any of the other rights, powers, remedies, privileges, liens or security interests of the Certificate Holders under this Trust Indenture, each Certificate Holder, by its acceptance of a Secured Certificate, agrees that as between it and the Owner Trustee, except as expressly provided in this Trust Indenture, the Participation Agreement or any other Operative Document, (i) the obligation to make all payments of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Secured Certificates, and the performance by the Owner Trustee of every obligation or covenant contained in this Trust Indenture and in the Participation Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Trust Indenture and any agreement referred to herein other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Trust Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Owner Trustee is responsible for, or is making, in its individual capacity, for which there would be personal liability of the Owner Trustee), no recourse shall be had with respect to this Trust Indenture 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, and (ii) none of the Owner Trustee, in its individual capacity, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable hereunder, under the Participation Agreement or any of the other Operative Documents or under the Secured Certificates except as expressly provided herein or in the Participation Agreement; provided, however, that nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Trust Indenture or such other agreements of rights and remedies against the Trust Estate. These provisions are not intended as any release or discharge of the indebtedness represented by the Secured Certificates and the Trust Indenture, but are intended only as a covenant not to sue the Owner Trustee or the Indenture Trustee in their individual capacities, except as expressly provided herein or in the Participation Agreement, or the Owner Participant, except as expressly provided in the Participation Agreement, for a deficiency with respect to such indebtedness, the indebtedness represented by this Trust Indenture and the Secured Certificates to remain in full force and effect as fully as though these provisions were not contained in this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders have expressly reserved all their rights and remedies against the Trust Indenture Estate, including the right, in the event of a default in the payment of all or part of the Principal Amount of, interest on, Make-Whole Amount, if any, or any other amount due with respect to any Secured Certificate within the periods provided for in Section 4.02(b) hereof, or upon the occurrence and continuation of any other Event of Default under this Trust Indenture, to foreclose upon this Trust Indenture, and/or to receive the proceeds from the Trust Indenture Estate and otherwise to enforce any other right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner Participant from personal liability, or constitute a covenant not to sue the Owner Participant, for any breach by it of any of its covenants, representations or warranties contained in the Participation Agreement for the benefit of the Indenture Trustee or the Certificate Holders or for any of the payments it has agreed to make to the Indemnitee Trustee or the Certificate Holders pursuant to the Participation Agreement or (y) release the Owner Trustee or constitute a covenant not to sue the Owner Trustee for any breach by it of any representations, warranties or covenants of the Owner Trustee contained in the Operative Documents for the benefit of the Indenture Trustee or the Certificate Holders or (z) release the Owner Trustee in its individual capacity from personal liability, or constitute a covenant not to sue the Owner Trustee in its individual capacity for any breach by it of any representations, warranties or covenants of the Owner Trustee made in its individual capacity in the Operative Documents for the benefit of the Indenture Trustee or the Certificate Holders. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant -17- 18 to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, 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 any Certificate Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of (x) the Owner Trustee (in its individual capacity) under the Participation Agreement or this Trust Indenture or by separate agreement or (y) the recourse liability of the Owner Participant under the Participation Agreement), to make payment on account of any amount payable as principal, Make-Whole Amount, if any, interest or other amounts on the Secured Certificates, (iii) the Certificate Holders shall have or shall have been permitted to foreclose the Lien of this Trust Indenture, and (iv) any Certificate Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Owner Trustee (in its individual capacity) or the Owner Participant on account of clause (ii) above, then such Certificate Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Trustee (in its individual capacity) or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a Certificate Holder 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 clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Certificate Holder 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 the Participation Agreement or this Trust Indenture (and any exhibits or annexes hereto or thereto) or by separate agreement or from retaining any amount paid by Owner Participant under Section 2.14 or 4.03 hereof. SECTION 2.04. METHOD OF PAYMENT. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Secured Certificate or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Certificate Holders in the manner provided herein. The Owner Trustee shall not have any responsibility for the distribution of such payment to any Certificate Holder. Notwithstanding the foregoing or any provision in any Secured Certificate to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such holder's Secured Certificate or Secured Certificates to such holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such holder with a bank located in the continental United States the amount to be distributed to such holder, for credit to the account of such holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate such holders for loss of use of funds at the Debt Rate until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Secured Certificate, except that, in the case of the final payment in respect of any Secured Certificate, such Secured Certificate shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Secured Certificate is registered on the Secured Certificate Register as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable with respect to such Secured Certificate and for all other purposes, and none of the Owner Trustee or the Indenture Trustee shall be affected by any notice to the contrary. So long as any signatory to the Participation Agreement or nominee thereof shall be a -18- 19 registered Certificate Holder, all payments to it shall be made to the account of such Certificate Holder specified in Schedule I thereto and otherwise in the manner provided in or pursuant to the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Secured Certificate (and such exclusion and withholding shall constitute payment in respect of such Secured Certificate) any and all United States withholding taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Secured Certificates, to withhold such amounts and timely pay the same to the appropriate authority in the name of and on behalf of the Certificate Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Certificate Holder (with a copy to the Owner Trustee and Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Certificate Holder may reasonably request from time to time. The Indenture Trustee and each Certificate Holder agree that (i) no such withholding or action with respect thereto shall constitute or give rise to any Event of Default and (ii) in the event of the failure of the Indenture Trustee to withhold and pay over any such taxes to the appropriate taxing authority, no indemnity will be sought from the Owner Trustee, the Owner Participant or the Trust Estate. If a Certificate Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Secured Certificate(s) held by such holder is made (but prior to the making of such payment), or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by Law (after taking into account any applicable exemptions claimed by the Certificate Holder) to be withheld from payments hereunder or under the Secured Certificates held by such holder in respect of United States federal income tax. If a Certificate Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Secured Certificates held by such holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Certificate Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Secured Certificates held by such holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Certificate Holder withholding taxes at the appropriate rate under Law and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. The Indenture Trustee and each Certificate Holder agree that (i) no such withholding or action with respect thereto shall constitute or give rise to any Event of Default and (ii) in the event of the failure of the Indenture Trustee to withhold and pay over any such taxes to the appropriate taxing authority, no indemnity will be sought from the Owner Trustee, the Owner Participant or the Trust Estate. -19- 20 SECTION 2.05. APPLICATION OF PAYMENTS. In the case of each Secured Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Secured Certificate (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Secured Certificate; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Secured Certificate remaining unpaid (provided that such Secured Certificate shall not be subject to redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Secured Certificate in the inverse order of their normal maturity. SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE. A Certificate Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Secured Certificates held by such Certificate Holder and all other sums then payable to such Certificate Holder hereunder and under the other Operative Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall have been paid in full. SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED CERTIFICATES. The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the registration of Secured Certificates and the registration of transfers of Secured Certificates. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Secured Certificate Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the purpose of registering Secured Certificates and transfers of Secured Certificates as herein provided. A holder of any Secured Certificate intending to exchange such Secured Certificate shall surrender such Secured Certificate to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Secured Certificate, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Secured Certificate, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Secured Certificates of a like aggregate Principal Amount and of the same series. At the option of the Certificate Holder, Secured Certificates may be exchanged for other Secured Certificates of any authorized denominations of a like aggregate Principal Amount, upon surrender of the Secured Certificates to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Secured Certificates are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Secured Certificates which the Certificate Holder making the exchange is entitled to receive. All Secured Certificates issued upon any registration of transfer or exchange of Secured Certificates (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Trust Indenture, -20- 21 as the Secured Certificates surrendered upon such registration of transfer or exchange. Every Secured Certificate presented or surrendered for registration of transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Certificate Holder or such holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of any applicable state. The Indenture Trustee shall make a notation on each new Secured Certificate of the amount of all payments of Principal Amount previously made on the old Secured Certificate or Secured Certificates with respect to which such new Secured Certificate is issued and the date to which interest on such old Secured Certificate or Secured Certificates has been paid. Interest shall be deemed to have been paid on such new Secured Certificate to the date on which interest shall have been paid on such old Secured Certificate, and all payments of the Principal Amount marked on such new Secured Certificate, as provided above, shall be deemed to have been made thereon. The Owner Trustee shall not be required to exchange any surrendered Secured Certificates as provided above during the ten-day period preceding the due date of any payment on such Secured Certificate. The Owner Trustee shall in all cases deem the Person in whose name any Secured Certificate shall have been issued and registered as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable by the Owner Trustee with respect to such Secured Certificate and for all purposes until a notice stating otherwise is received from the Indenture Trustee and such change is reflected on the Secured Certificate Register. The Indenture Trustee will promptly notify the Owner Trustee and Lessee of each registration of a transfer of a Secured Certificate. Any such transferee of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to the provisions of the Participation Agreement applicable to Certificate Holders, including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(ff), 13(b), 13(c), 15(b), 15(c) and 16, and shall be deemed to have represented and warranted (except as provided above), and covenanted, to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by the original Loan Participants in the Participation Agreement. Subject to compliance by the Certificate Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates upon transfer or exchange within 10 Business Days of the date a Secured Certificate is surrendered for transfer or exchange. SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED CERTIFICATES. If any Secured Certificate shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the holder of such Secured Certificate, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Secured Certificate, payable in the same Principal Amount dated the same date and captioned as issued in connection with the Aircraft. The Indenture Trustee shall authenticate each replacement Secured Certificate on request by the Owner Trustee and shall make a notation on each replacement Secured Certificate of the aggregate amount of all payments of Principal Amount previously made on the mutilated, destroyed, lost or stolen Secured Certificate with respect to which the replacement Secured Certificate is issued and the date to which interest on such mutilated, destroyed, lost or stolen Secured Certificate has been paid. If the Secured Certificate being replaced has become mutilated, such Secured Certificate shall be surrendered to the Indenture Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the Secured Certificate being replaced has been destroyed, lost or stolen, the holder of such Secured Certificate shall furnish to the Owner Trustee and the Indenture Trustee such security or indemnity as may be required by them to save the Owner Trustee and the Indenture Trustee harmless and evidence satisfactory to the Owner Trustee and the Indenture Trustee of the destruction, loss or theft of such Secured Certificate and of the ownership thereof. If a "qualified institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen Secured Certificate, then the written indemnity of such QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Lessee, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Secured Certificate. Subject to compliance by the Certificate Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates within 10 Business Days of the date of the written request therefor from the Certificate Holder. -21- 22 SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION. (a) No service charge shall be made to a Certificate Holder for any registration of transfer or exchange of Secured Certificates, but the Indenture Trustee, as Secured Certificate Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Secured Certificates; provided, however, that neither the Owner Trustee nor the Owner Participant shall bear any such costs of registration, transfer or exchange including, without limitation, in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Secured Certificates surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Secured Certificates. SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES. (a) On the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders but without Make-Whole Amount. (b) If the Lease is terminated with respect to the Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13 hereof and to Section 8(x) of the Participation Agreement, on the date the Lease is so terminated all the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES. All of the Secured Certificates may be redeemed by the Owner Trustee in connection with a transaction described in, and subject to the terms and conditions of, Section 17 of the Participation Agreement upon at least 30 days' revocable prior written notice to the Indenture Trustee and the Certificate Holders, and the Secured Certificates shall, as provided in Section 17 of the Participation Agreement, be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION. (a) Neither any redemption of any Secured Certificate nor any purchase by the Owner Trustee of any Secured Certificate may be made except to the extent and in the manner expressly permitted by this Trust Indenture. No purchase of any Secured Certificate may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Secured Certificates shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Certificate Holder of such Secured Certificates to be redeemed or purchased, at such Certificate Holder's address appearing in the Secured Certificate Register; provided that, in the case of a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be deemed revoked in the event that the Lease does not in fact terminate on the specified termination date or if notice of such redemption shall have been given in connection with a refinancing of Secured Certificates and the Indenture Trustee receives written notice of such revocation from Lessee or the Owner Trustee not later than three days prior to the redemption date. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and -22- 23 payable upon each such Secured Certificate, and that, if any such Secured Certificates are then outstanding, interest on such Secured Certificates shall cease to accrue on and after such redemption date, and (4) the place or places where such Secured Certificates are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Secured Certificates to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption date in immediately available funds the redemption price of the Secured Certificates to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid (and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee or at any office or agency maintained for such purposes pursuant to Section 2.07, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Secured Certificates then outstanding shall cease to bear interest. Upon surrender of any such Secured Certificate for redemption or purchase in accordance with said notice, such Secured Certificate shall be redeemed at the redemption price. If any Secured Certificate called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Secured Certificate as of such redemption date. SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE. If, in accordance with Section 8(x) of the Participation Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a full recourse basis) all of the obligations of the Owner Trustee hereunder, under the Secured Certificates and all other Operative Documents by supplemental indenture satisfactory to the Indenture Trustee (which shall contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease and (ii) other provisions necessary or advisable to effectuate such assumption), then upon delivery of such supplemental indenture, payment by Lessee of all expenses (including reasonable fees and expenses of counsel) for the Owner Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of the Secured Certificates and other amounts owing to the Certificate Holders substantially in the form of the Guarantee, and delivery of an opinion of counsel for Lessee that such assumption has been duly and validly effected, the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Secured Certificates and all other Operative Documents and the Owner Participant shall be released and discharged from any further obligations under the Participation Agreement and any other Operative Document to which it is a party, except with respect to any such obligations that accrued prior thereto. SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES. The Owner Trustee and the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.14, purchase all but not less than all of the Secured Certificates outstanding hereunder, and each Certificate Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind other than (i) of title to the Secured Certificates so conveyed and (ii) against Liens on such Secured Certificates arising by, through or under such holder), all of the right, title and interest of such Certificate Holder in and to the Secured Certificates held by it, and such purchaser or its nominee shall assume all of such holder's obligations under the Participation Agreement and hereunder. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Participation Agreement to the holder thereof. Such option to purchase the Secured Certificates may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there -23- 24 shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default, the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Trustee or the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Secured Certificates shall become irrevocable upon the sixteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Certificate Holders will comply with all the provisions of Section 2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes, charges and expenses required pursuant to Section 2.09 in connection with the issuance of such new Secured Certificate shall be borne by the Owner Participant. SECTION 2.15. SUBORDINATION. (a) The Owner Trustee and, by acceptance of its Secured Certificates of any Series, each Certificate Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g) hereof, except as expressly provided in Article III hereof. (b) By the acceptance of its Secured Certificates of any Series (other than Series A), each Certificate Holder of such Series agrees that in the event that such Certificate Holder, in its capacity as a Certificate Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.15 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article III hereof. (c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured Obligations in respect of Series A Secured Certificates have been paid in full and (ii) after the Secured Obligations in respect of Series A Secured Certificates have been paid in full, the Certificate Holders of Series B until the Secured Obligations in respect of Series B Secured Certificates have been paid in full. SECTION 2.16. DEFEASANCE. (a) The Owner Trustee will be deemed to have paid and will be discharged from any and all obligations in respect of the Secured Certificates on the 90th day (or such other period as may be specified in the relevant provision of the United States Bankruptcy Code) (such period being the "Preference Period") after the date of the deposit referred to in clause (i) of this Section 2.16(a) if: (i) with reference to this Section 2.16(a), the Owner Trustee has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee (or another trustee satisfying the requirements of Section 8.02) and conveyed all right, title and interest for the benefit of the Certificate Holders, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Indenture Trustee, which provides irrevocable instructions therein to apply such money or the proceeds of -24- 25 such U.S. Government Obligations to the payment of such principal and interest with respect to the Secured Certificates, as trust funds in trust, specifically entrusted to the Indenture Trustee for the benefit of the Certificate Holders for payment of the principal of and interest, if any, on the Secured Certificates, and dedicated solely to, the benefit of the Certificate Holders, in and to (A) money in an amount, (B) U.S. Government Obligations that, through the payment of interest, and principal in respect thereof in accordance with their terms, will provide, not later than one day before the due date of any payment referred to in this clause (i), money in an amount or (C) a combination thereof in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Indenture Trustee, to pay and discharge, without consideration of the reinvestment of such interest and after payment of all federal, state and local withholding taxes or other similar charges and assessments in respect thereof payable by the Indenture Trustee with respect to the amounts deposited pursuant to clause (A), (B) or (C), the principal of and accrued interest on the outstanding Secured Certificates at the maturity of such principal or interest; (ii) the Owner Trustee shall have delivered to the Indenture Trustee (A) either (1) a ruling directed to the Indenture Trustee received from the Internal Revenue Service to the effect that the Certificate Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Owner Trustee's exercise of its option under this Section 2.16(a) and will be subject to federal income tax on that same amount and in the same manner and at the same times as would have been the case if such option had not been exercised or (2) an Opinion of Counsel to the same effect as the ruling described in clause (1) above accompanied by a ruling to that effect published by the Internal Revenue Service, unless there has been a change in the applicable federal income tax law since the date of this Indenture such that a ruling from the Internal Revenue Service is no longer required and (B) an Opinion of Counsel to the effect that (1) the creation of the defeasance trust does not violate the Investment Company Act of 1940 and (2) after the passage of the Preference Period, the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code (or any successor or replacement provision) in a case commenced by or against the Owner Trustee or Lessee under either such statute, and either (I) the trust funds will no longer remain the property of the Owner Trustee or Lessee (and therefore will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally) or (II) if a court were to rule under any such law in any case or proceeding that the trust funds remained the property of the Owner Trustee or Lessee (y) assuming such funds remained in the possession of the Indenture Trustee prior to such court ruling to the extent not paid to the Certificate Holders, the Indenture Trustee will hold, for the benefit of the Certificate Holders, a valid and perfected security interest in such trust funds that is not avoidable in bankruptcy or otherwise except for the effect of Section 552(b) of the United States Bankruptcy Code (or any successor or replacement provision) on interest on the trust funds accruing after the commencement of a case under such statute and (z) the Certificate Holders will be entitled to receive adequate protection of their interests in such trust funds if such trust funds are used in such case or proceeding; and (iii) the Owner Trustee shall have made arrangements reasonably satisfactory to the Indenture Trustee for payment or satisfaction of all amounts due under the third paragraph of Section 2.02. After any such irrevocable deposit and satisfaction of the condition precedent provided in clause (ii) of this Section 2.16(a), the Indenture Trustee upon request shall execute and deliver appropriate instruments to release the Lien of this Trust Indenture in accordance with Section 10.01 and shall acknowledge in writing the discharge of the Owner Trustee's obligations under the Secured Certificates and this Trust Indenture except for those surviving obligations in the immediately succeeding paragraph. Notwithstanding the foregoing, prior to the end of the Preference Period, none of the Owner Trustee's obligations under this Trust Indenture shall be discharged. Subsequent to the end of the Preference Period, the Owner Trustee's obligations in Sections 2.07 and 2.08 shall survive until the Secured Certificates are no longer outstanding. -25- 26 (b) In lieu of satisfying its obligations set forth in Section 2.16(a), the Owner Trustee may elect, in its sole discretion, to satisfy the conditions specified in clauses (i) and (ii) of Section 2.16(a) without regard to the requirement described in Section 2.16(a)(ii)(A) and may, in lieu of satisfying the requirements set forth in Section 2.16(a)(ii)(A), provide only an Opinion of Counsel to the effect that the Certificate Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Owner Trustee's providing of the deposit referred to in Section 2.16(a)(i) and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit had not been made. If the Owner Trustee elects such option, then the Indenture Trustee upon request shall execute and deliver appropriate instruments to release the Lien of this Trust Indenture in accordance with Section 10.01 and the Owner Trustee shall be released from its obligations set forth in Section 4.01 (other than Section 4.01(a)). All other obligations of the Owner Trustee hereunder shall remain in full force and effect. For the avoidance of doubt, the effect of the Owner Trustee's exercise of its option set forth in this subsection (b) shall be to create an economic defeasance rather than the legal defeasance that would result if the option set forth in subsection (a) above were to be exercised. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. BASIC RENT DISTRIBUTION. Except as otherwise provided in Section 3.03 hereof, each installment of Basic Rent or Interim Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly distributed in the following order of priority: FIRST, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Secured Certificates shall be distributed to the Certificate Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Secured Certificate bears to the aggregate amount of the payments then due under all Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Secured Certificates shall be distributed to the Certificate Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Secured Certificate bears to the aggregate amount of the payments then due under all Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series C Secured Certificates shall be distributed to the Certificate Holders of Series C ratably, -26- 27 without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Secured Certificate bears to the aggregate amount of the payments then due under all Series C Secured Certificates; and SECOND, the balance, if any, of such installment remaining thereafter shall be distributed to the Owner Trustee; provided, however, that if an Event of Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "Second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 5.09 hereof until whichever of the following shall first occur: (i) all Events of Default shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "Second", (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of such Section 3.03, or (iii) the 120th day after the receipt of such payment in which case such payment shall be distributed as provided in this clause "Second". SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION; REFINANCING. Except as otherwise provided in Section 3.03 hereof, any payments received by the Indenture Trustee (i) with respect to the Aircraft as the result of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a refinancing of the Secured Certificates pursuant to Section 17 of the Participation Agreement shall be applied to redemption of the Secured Certificates and to all other amounts payable hereunder or to the Indenture Trustee or any Certificate Holder under the Participation Agreement by applying such funds in the following order of priority: FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for any reasonable costs or expenses incurred in connection with such redemption for which they are entitled to reimbursement, or indemnity by Lessee, under the Operative Documents and then (b) to pay any other amounts then due to the Indenture Trustee and the Certificate Holders under this Trust Indenture, the Participation Agreement or the Secured Certificates; SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, to pay the amounts specified in paragraph (ii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, to pay the amounts specified in paragraph (iii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series C Secured Certificates; and THIRD, as provided in clause "Fourth" of Section 3.03 hereof; provided, however, that if a Replacement Airframe or Replacement Engine shall be substituted for the Airframe or Engine subject to such Event of Loss as provided in Section 10 of the Lease and in accordance with Section 5.06 hereof, any insurance, condemnation or similar proceeds which result from such Event of Loss and are paid over to the Indenture Trustee shall be held by the Indenture Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be invested as provided in Section 5.09 hereof) as additional security for the obligations of Lessee under the Lessee Operative Documents and, unless otherwise applied pursuant to the Lease, such proceeds (and -27- 28 such investment earnings) shall be released to Lessee at Lessee's written request upon the release of such damaged Airframe or Engine and the replacement thereof as provided in the Lease. SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT. Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Section 15 of the Lease or Article IV hereof) after an Event of Default shall have occurred and be continuing and after the occurrence of an Indenture Trustee Event, as well as all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly distributed by the Indenture Trustee in the following order of priority: FIRST, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate (all such property being herein called the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) , but other than income tax on, or measured by, fees payable to the Indenture Trustee in its individual capacity pursuant to the Operative Documents to which it is a party incurred by the Indenture Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Certificate Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or any Certificate Holder, liquidated or otherwise, upon such Event of Default shall be applied by the Indenture Trustee as between itself and the Certificate Holders in reimbursement of such expenses and any other expenses for which the Indenture Trustee or the Certificate Holders are entitled to reimbursement under any Operative Document and in the case the aggregate amount to be so distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as shall be required to reimburse the then existing or prior Certificate Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to such then existing or prior Certificate Holders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Certificate Holder pursuant to said Section 5.03 hereof; THIRD, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series A Secured Certificates (other than Make-Whole Amount) to the date of distribution, shall be distributed to the Certificate Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount) to the date of distribution; -28- 29 (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series B Secured Certificates [(other than Make-Whole Amount)] to the date of distribution, shall be distributed to the Certificate Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than the Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than the Make-Whole Amount) to the date of distribution; and (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series C Secured Certificates (other than Make-Whole Amount) to the date of distribution, shall be distributed to the Certificate Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than the Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than the Make-Whole Amount) to the date of distribution; and FOURTH, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee. No Make-Whole Amount shall be due and payable on the Secured Certificates as a consequence of the acceleration of the Secured Certificates. SECTION 3.04. CERTAIN PAYMENTS. (a) Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in this Trust Indenture and for which such provision is made in the Lease, the Participation Agreement or any other Operative Document shall be applied forthwith to the purpose for which such payment was made in accordance with the terms of the Lease, the Participation Agreement or such other Operative Document, as the case may be. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of the Participation Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the third paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the -29- 30 Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the third paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) [Intentionally Omitted] (d) Notwithstanding anything to the contrary contained in this Trust Indenture, any amounts received by the Indenture Trustee which constitute Excluded Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. (e) Notwithstanding any provision of this Trust Indenture to the contrary, any amounts held by the Indenture Trustee that would, but for the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall, notwithstanding the provisions of said Section, be distributed to Lessee unless and until a Lease Event of Default shall have occurred and be continuing. SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any other Operative Document shall be distributed by the Indenture Trustee to the extent received or realized at any time (i) prior to the payment in full of all Secured Obligations due the Certificate Holders, in the order of priority specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in full of all Secured Obligations due the Certificate Holders, in the following order of priority: FIRST, to the extent payments or amounts described in clause "First" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "First" of Section 3.03 hereof, and SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof. Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04 hereof, all payments received and amounts realized by the Indenture Trustee under the Lease or otherwise with respect to the Aircraft (including, without limitation, all amounts realized upon the sale or release of the Aircraft after the termination of the Lease with respect thereto), to the extent received or realized at any time after payment in full of all Secured Obligations due the Certificate Holders, shall be distributed by the Indenture Trustee in the order of priority specified in clause (ii) of the immediately preceding sentence of this Section 3.05. SECTION 3.06. PAYMENTS TO OWNER TRUSTEE. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account (within the time limits contemplated by Section 2.04(a)) specified in Schedule I to the Participation Agreement. SECTION 3.07. APPLICATION OF PAYMENTS UNDER GUARANTEE. -30- 31 All payments received by the Indenture Trustee pursuant to the Guarantee shall be distributed forthwith by the Indenture Trustee in the same order of priority, and in the same manner, as it would have distributed the payment in respect of which such payment under the Guarantee was received. ARTICLE IV COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT, REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. COVENANTS OF OWNER TRUSTEE. The Owner Trustee hereby covenants and agrees (the covenants and agreements only in clause (b) below being made by the Owner Trustee in its individual capacity) as follows: (a) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Secured Certificates and hereunder in accordance with the terms of the Secured Certificates and this Trust Indenture and all amounts, if any, payable by it to the Certificate Holders under the Participation Agreement; (b) the Owner Trustee in its individual capacity covenants and agrees that it shall not, directly or indirectly, cause or permit to exist a Lessor Lien attributable to it in its individual capacity with respect to the Aircraft or any other portion of the Trust Estate; that it will promptly, at its own expense, take such action as may be necessary to duly discharge such Lessor Lien attributable to it in its individual capacity; and that it will make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Lessor Liens attributable to it in its individual capacity; (c) in the event the Owner Trustee shall have Actual Knowledge of an Event of Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Event of Default or Event of Loss to the Indenture Trustee, each Certificate Holder, Lessee and the Owner Participant; (d) the Owner Trustee will furnish to the Certificate Holders and the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of any Termination Notice and a copy of each report or notice received pursuant to Section 9(a) and 11(c) of the Lease to the extent that the same shall not have been furnished to the Certificate Holders or the Indenture Trustee pursuant to the Lease; (e) except with the consent of the Indenture Trustee (acting pursuant to instructions given in accordance with Section 9.01 hereof), the Owner Trustee will not contract for, create, incur, assume or suffer to exist any Debt (other than the Secured Certificates), and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the Debt of any other person; and (f) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. EVENT OF DEFAULT. "EVENT OF DEFAULT" means any of the following events (whatever the reason for such Event of Default and whether such event shall be voluntary or involuntary or come about or be effected by operation of Law -31- 32 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): (a) any Lease Event of Default (provided that any such Lease Event of Default caused solely by a failure of Lessee to pay to the Owner Trustee or the Owner Participant when due any amount that is included in the definition of Excluded Payments shall not constitute an Event of Default unless notice is given by the Owner Trustee to the Indenture Trustee that such failure shall constitute an Event of Default); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due and payable under any Secured Certificate or hereunder (other than any such failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof or as a result of a Lease Event of Default or a Lease Default) and such failure shall have continued unremedied for ten Business Days in the case of any payment of Principal Amount or interest or Make-Whole Amount, if any, thereon and, in the case of any other amount, for ten Business Days after the Owner Trustee or the Owner Participant receives written demand from the Indenture Trustee or any Certificate Holder; or (c) any Lien required to be discharged by the Owner Trustee, in its individual capacity pursuant to Section 4.01(b) hereof or in its individual or trust capacity pursuant to Section 8(h) of the Participation Agreement, or by the Owner Participant pursuant to Section 8(h) of the Participation Agreement shall remain undischarged for a period of 30 days after the Owner Trustee or the Owner Participant, as the case may be, shall have received written notice from the Indenture Trustee or any Certificate Holder of such Lien; or (d) any representation or warranty made by the Owner Participant or the Owner Trustee herein, in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in any certificate furnished by the Owner Participant or the Owner Trustee to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents shall prove to have been false or incorrect when made in any material respect and continues to be material; and if such misrepresentation is capable of being corrected and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 60 days (or, without affecting Section 4.02(f) hereof, in the case of the representations made in Section 8(c) of the Participation Agreement as to the citizenship of the Owner Trustee in its individual capacity or of the Owner Participant, respectively, as soon as is reasonably practicable but in any event within 60 days) following notice thereof from the Indenture Trustee or any Certificate Holder to the Owner Trustee or the Owner Participant, as the case may be; or (e) other than as provided in (c) above or (f) below, any failure by the Owner Trustee or Owner Participant to observe or perform in any material respect any other covenant or obligation of the Owner Trustee or Owner Participant, as the case may be, for the benefit of the Indenture Trustee or the Certificate Holders contained in the Participation Agreement, Section 4.01(a) of the Trust Agreement, the Secured Certificates or this Trust Indenture which is not remedied within a period of 60 days after notice thereof has been given to the Owner Trustee and the Owner Participant (or, if such failure cannot be remedied during such 60-day period and the Owner Trustee and/or the Owner Participant have been and are diligently proceeding to remedy such failure, such additional period not in excess of 120 days, if such failure is capable of being remedied during such additional period, as may be necessary to remedy such failure); or (f) if at any time when the Aircraft is registered under the laws of the United States, the Owner Participant shall not be a Citizen of the United States, and as the result thereof the registration of the Aircraft under the Federal Aviation Act, and regulations then applicable thereunder, shall cease to be effective; provided that no Event of Default shall be deemed to have occurred under this paragraph (f) -32- 33 unless such circumstances continue unremedied for more than 60 days after the Owner Participant has Actual Knowledge of the state of facts that resulted in such ineffectiveness and of such loss of citizenship; or (g) at any time either (i) the commencement of an involuntary case or other proceeding in respect of the Owner Participant, the Owner Trustee or the Trust Estate 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 seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii) the commencement by the Owner Participant, the Owner Trustee or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee or the Trust Estate to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or the making by the Owner Participant, the Owner Trustee or the Trust Estate of any assignment for the benefit of creditors or the Owner Participant or the Owner Trustee shall take any action to authorize any of the foregoing; provided, however, that an event referred to in this Section 4.02(g) with respect to the Owner Participant shall not constitute an Event of Default if within 30 days of the commencement of the case or proceeding (A) a final non-appealable order, judgment or decree shall be entered in such case or proceeding by a court or a trustee, custodian, receiver or liquidator, or (B) an opinion of counsel, reasonably satisfactory to the Indenture Trustee, shall be provided by the Owner Participant, in each case to the effect that, no part of the Trust Estate (except for the Owner Participant's beneficial interest therein) and no right, title or interest under the Trust Indenture Estate shall be included in, or be subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 4.02(g); provided further that an event referred to in this Section 4.02(f) with respect to the Owner Participant shall not constitute an Event of Default if, not later than 90 days following such event, the Owner Participant has been replaced with an entity eligible to act as Owner Participant in accordance with Section 8(n) of the Participation Agreement. SECTION 4.03. CERTAIN RIGHTS. The Indenture Trustee shall give the Certificate Holders, the Owner Trustee and the Owner Participant prompt written notice of any Event of Default of which the Indenture Trustee has Actual Knowledge and, if any such Event of Default results from a Lease Event of Default that can be cured by the payment of money (it being understood that defaults requiring action such as the obtaining of insurance and the procuring of maintenance services can be so remedied), shall give the Certificate Holders, the Owner Trustee and the Owner Participant not less than ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence and consummate the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the provisions of Section 15 of the Lease. If an Event of Default shall have occurred and be continuing, the Owner Trustee shall have the following rights hereunder, any of which may be exercised directly by the Owner Participant. If as a result of the occurrence of an Event of Default in respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease, the Indenture Trustee shall have insufficient funds to make any payment of Principal Amount and interest on any Secured Certificate on the day it becomes due and payable, the Owner Trustee may, without the consent or concurrence of any Certificate Holder, but shall not be obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the manner provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an amount equal to the portion of the Principal Amount and interest (including interest, if any, on any overdue payments of such portion of Principal Amount and interest) then due and payable on the Secured Certificates, and, unless the Owner Trustee has cured Events of Default in respect of -33- 34 payments of Basic Rent on each of the three immediately preceding Basic Rent payment dates, or the Owner Trustee has cured six previous Events of Default in respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any Event of Default which would otherwise have arisen on account of the nonpayment by Lessee of such installment of Interim Rent or Basic Rent (but not any other Default or Event of Default which shall have occurred and be continuing). If any Event of Default (other than in respect of the nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured by the payment of money (it being understood that defaults requiring action such as the obtaining of insurance and the procuring of maintenance services can be so remedied) has occurred, the Owner Trustee may, without the consent or concurrence of any Certificate Holder, but shall not be obligated to, cure such Event of Default by making such payment prior to the Enforcement Date as is necessary to accomplish the observance or performance of the defaulted covenant, condition or agreement to the party entitled to the same. Except as hereinafter in this Section 4.03 provided, the Owner Trustee shall not, as a result of exercising the right to cure any such Event of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable under the Lease for or on account of costs or expenses incurred in connection with the exercise of such right, nor shall any claim of the Owner Trustee against Lessee or any other party for the repayment of such costs or expenses impair the prior right and security interest of the Indenture Trustee in and to the Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the first or second preceding paragraphs of this Section 4.03, the Owner Trustee shall be subrogated to the rights of the Indenture Trustee and the Certificate Holders in respect of the Interim Rent or Basic Rent which was overdue at the time of such payment and interest payable by Lessee on account of its being overdue and any Supplemental Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant to the immediately preceding paragraph (but in either case shall have no rights as a secured party hereunder), and thereafter, the Owner Trustee shall be entitled to receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt thereof by the Indenture Trustee; provided, however, that (i) if the Principal Amount and interest on the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to all Secured Certificates shall have been paid in full, be subordinate to the rights of the Indenture Trustee and the Certificate Holders in respect of such payment of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and (ii) the Owner Trustee shall not be entitled to seek to recover any such payment (or any payment in lieu thereof) except pursuant to the foregoing right of subrogation until payment of the Principal Amount and interest that has become due in accordance with Section 4.04(b) hereof. SECTION 4.04. REMEDIES. (a) If an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, then and in every such case the Indenture Trustee may, subject to the second paragraph of this Section 4.04(a), exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article IV and shall have and may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and, in the event such Event of Default is also a Lease Event of Default, any and all of the remedies pursuant to Section 15 of the Lease and may take possession of all or any part of the properties covered or intended to be covered by the Lien created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee and Lessee and all persons claiming under any of them wholly or partly therefrom, provided, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft or foreclose the Lien of this Trust Indenture. Unless an Event of Default not resulting from or relating to a Lease Event of Default has occurred and is continuing, the Owner Participant may bid at any public sale and become the purchaser. Without limiting any of the foregoing but subject to the immediately succeeding paragraph, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Trust Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder as a result of an Event of Default which arises solely by reason of one -34- 35 or more events or circumstances which constitute a Lease Event of Default unless the Indenture Trustee as security assignee of the Owner Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 15 of the Lease to terminate the Lease (so long as the Aircraft is not subsequently re-leased to Lessee or an Affiliate thereof) or take possession and/or sell the Aircraft with respect to the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any person. In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any rights or remedy of the Indenture Trustee hereunder) to participate in such proceedings. It is expressly understood and agreed that, subject only to the immediately preceding paragraph, the inability, described in such paragraphs, of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising any or all of its rights, powers and remedies under this Trust Indenture, including, without limitation, this Article IV. (b) If an Event of Default shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery of written notice or notices to the Owner Trustee and the Owner Participant, declare all the Secured Certificates to be due and payable, whereupon the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued but unpaid interest thereon (without Make-Whole Amount) and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. This Section 4.04(b), however, is subject to the condition that, if at any time after the Principal Amount of the Secured Certificates shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Secured Certificates and all other amounts payable under the Secured Certificates (except the Principal Amount of the Secured Certificates which by such declaration shall have become payable) shall have been duly paid, and every other Default and Event of Default with respect to any covenant or provision of this Trust Indenture shall have been cured, then and in every such case a Majority in Interest of Certificate Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. (c) The Certificate Holders shall be entitled, at any sale pursuant to Section 15 of the Lease or this Section 4.04, to credit against any purchase price bid at such sale by such holder all or any part of the unpaid obligations owing to such Certificate Holder and secured by the Lien of this Trust Indenture (but only to the extent that such purchase price would have been paid to such Certificate Holder pursuant to Article III hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c) were not given effect). -35- 36 (d) In the event of any sale of the Trust Indenture Estate, or any part thereof, pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Trust Indenture, the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued interest thereon (without Make-Whole Amount), and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement (or its designee) is a Certificate Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any Mortgaged Property or take any action with respect to any Mortgaged Property so acquired by it if such acquisition or action would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. RETURN OF AIRCRAFT, ETC. (a) If an Event of Default shall have occurred and be continuing and the Indenture Trustee shall have foreclosed, or shall concurrently be foreclosing, the Lien of this Trust Indenture and shall be taking steps for the sale or repossession of the Aircraft, subject to Section 4.03 hereof, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Mortgaged Property included in the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents to the fullest extent permitted by applicable law, and (ii) pursue all or part of such Mortgaged Property wherever it may be found and, in the event that a Lease Event of Default has occurred and is continuing, may enter any of the premises of Lessee wherever such Mortgaged Property may be or be supposed to be and search for such Mortgaged Property and take possession of and remove such Mortgaged Property. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Trust Indenture. (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Mortgaged Property, make all such expenditures for maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modifications or alterations to and of the Mortgaged Property, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the Mortgaged Property and to carry on the business and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Mortgaged Property, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modification or alteration of the Mortgaged Property or any part thereof as the Indenture Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Mortgaged Property and every part thereof, except Excluded Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Trust Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, improvement, modification or alteration of the Mortgaged Property and of conducting the business thereof, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Mortgaged Property or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Trust Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee with respect hereto. -36- 37 SECTION 4.06. REMEDIES CUMULATIVE. Subject to the other provisions of Article IV hereof, each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or Lessee or to be an acquiescence therein. SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS. In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Trust Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Owner Trustee, the Owner Participant, the Indenture Trustee and Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Mortgaged Property, and all rights, remedies and powers of the Owner Trustee, the Owner Participant, the Indenture Trustee or Lessee shall continue as if no such proceedings had been instituted. SECTION 4.08. WAIVER OF PAST DEFAULTS. Upon written instruction from a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Default or Event of Default hereunder and its consequences and upon any such waiver such Default or Event of Default shall cease to exist and any Event of Default arising from any such Default shall be deemed to have been cured for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon; provided, that in the absence of written instructions from all the Certificate Holders, the Indenture Trustee shall not waive any Default or Event of Default (i) in the payment of the Principal Amount, Make-Whole Amount, if any, and interest and other amounts due under any Secured Certificate then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Certificate Holder. SECTION 4.09. APPOINTMENT OF RECEIVER. The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee thereof) for all or any part of the Mortgaged Property, whether such receivership be incidental to a proposed sale of the Mortgaged Property or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Mortgaged Property shall be entitled to exercise all the rights and powers of the Indenture Trustee with respect to the Mortgaged Property. SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC. The Owner Trustee irrevocably appoints the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture, whether pursuant to foreclosure or power of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Owner Trustee hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing -37- 38 and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Trust Indenture, the right of any Certificate Holder to receive payment of principal of, and premium, if any, and interest on a Secured Certificate on or after the respective due dates expressed in such Secured Certificate, or to bring suit for the enforcement of any such payment on or after such respective dates in accordance with the terms hereof, shall not be impaired or affected without the consent of such Certificate Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default arising from a failure to pay Rent, the Indenture Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms of Sections 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default or Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture Trustee shall not have received instructions as above provided within 20 days after mailing notice of such Event of Default to the Certificate Holders, the Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default or Default as it shall determine advisable in the best interests of the Certificate Holders. If the Indenture Trustee shall at any time declare the Lease to be in default pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall forthwith notify the Owner Participant, the Certificate Holders, the Owner Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall not be deemed to have knowledge of a Default or an Event of Default (except, in the case of the Indenture Trustee, the failure of Lessee to pay any installment of Interim Rent or Basic Rent within one Business Day after the same shall become due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee, the Owner Participant or one or more Certificate Holders. SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, subject to the terms of this Section 5.02, take such of the following actions as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder as shall be specified in such instructions; (ii) give such notice or direction or exercise such right, remedy or power under the Lease, the Participation Agreement, the Purchase Agreement, or any other part of the Trust Indenture Estate as shall be specified in such instructions; and (iii) after the occurrence and during the continuance of an Event of Default, approve as satisfactory to the Indenture Trustee all matters required by the terms of the Lease to be satisfactory to the Owner Trustee, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall not approve any such matter as satisfactory to the Indenture Trustee; provided, -38- 39 that anything contained in this Trust Indenture, the Lease or the other Operative Documents to the contrary notwithstanding: (1) the Owner Trustee or the Owner Participant may, at all times without the consent of the Indenture Trustee, (A) to the exclusion of the Indenture Trustee demand, collect, sue for or otherwise obtain all amounts included in Excluded Payments from Lessee, (B) unless the Lien of this Trust Indenture shall have been foreclosed upon, grant or withhold its consent to amendments or supplements to Indenture Agreements required in accordance with Article IX hereof and (C) seek legal or equitable remedies to require Lessee to maintain the insurance coverage referred to in Section 11 of the Lease; provided, that the rights referred to in this clause (1) shall not be deemed to include the exercise of any remedies provided for in Section 15 of the Lease other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by Lessee of such amounts included in Excluded Payments or performance by Lessee of such insurance covenant or to recover damages for the breach thereof; (2) at all times prior to the foreclosure of the Lien of this Trust Indenture, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be unreasonably withheld if no right or interest of the Owner Trustee or the Owner Participant shall be diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; (3) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, each of the Owner Trustee, the Owner Participant and, except with respect to clauses (iii) and (iv), the Indenture Trustee shall have the right (i) to receive from Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which any thereof is permitted or required to give or furnish to the Owner Trustee or Lessor pursuant to any Operative Document (including pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 11(e) of the Lease specifically confers on Lessor, and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of Lessor under Section 21 of the Lease; (4) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee shall at all times, to the exclusion of the Indenture Trustee, have the right to adjust Rent, Stipulated Loss Values and Termination Values as provided in Section 3(d) of the Lease; (5) unless an Indenture Trustee Event shall have occurred, to exercise all of the rights of Lessor under Section 7(b) of the Lease; (6) whether or not a Default or Event of Default shall have occurred and is continuing, the Owner Trustee may, without the consent of the Indenture Trustee, (i) solicit and make bids with respect to the Aircraft under Section 9 of the Lease in respect of a termination of the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales value" and "fair market rental value" under Section 19 of the Lease for all purposes except following an Event of Default pursuant to Section 15 of the Lease, and (iii) make an election pursuant to and in accordance with the provisions of Section 9(c) of the Lease; and (7) so long as no Event of Default shall have occurred and be continuing, all other rights of the "Lessor" under the Lease shall be exercised by the Owner Trustee to the exclusion of the Indenture Trustee including, without limitation, the right to (i) exercise all rights with respect to Lessee's use and -39- 40 operation, modification or maintenance of the Aircraft and any Engine which the Lease specifically confers on Lessor, (ii) consent to and approve any assignment pursuant to Section 13 of the Lease and (iii) request further assurances pursuant to Section 16 of the Lease; provided that the foregoing shall not limit (A) any rights separately granted to the Indenture Trustee under the Operative Agreements or (B) the right of the Indenture Trustee to receive any funds to be delivered to the "Lessor" under the Lease (except with respect to Excluded Payments) and under the Purchase Agreement. Notwithstanding anything to the contrary contained herein (including this Section 5.02), the Indenture Trustee shall have the right, to the exclusion of the Owner Trustee and the Owner Participant (other than with respect to Excluded Payments), to (A) declare the Lease to be in default under Section 15 thereof and (B) subject only to the provisions of Sections 4.03, 4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15 (other than in connection with Excluded Payments) at any time that a Lease Event of Default shall have occurred and be continuing. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as specified by Lessee pursuant to Section 8(e) of the Participation Agreement or as may be specified from time to time in written instructions of a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee will furnish to each Certificate Holder (and, during the continuation of an Indenture Trustee Event, to the Owner Trustee and Owner Participant), promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder, including, without limitation, a copy of any Termination Notice (as defined in the Lease) and a copy of each report or notice received pursuant to Sections 9(a) and 11(c) of the Lease, respectively, to the extent that the same shall not have been furnished to such Certificate Holder pursuant hereto or to the Lease. (b) If any Lease Event of Default shall have occurred and be continuing and the Owner Trustee shall not have cured fully such Lease Event of Default under and in accordance with Section 4.03 hereof, on request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall declare the Lease to be in default pursuant to Section 15 thereof and exercise those remedies specified by such Certificate Holders. The Indenture Trustee agrees to provide to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with such declaration by the Indenture Trustee, notice of such declaration by the Indenture Trustee. SECTION 5.03. INDEMNIFICATION. The Indenture Trustee shall not be under any obligation to take any action under this Trust Indenture or any other Operative Document and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds or otherwise incur the risk of any financial liability in the performance of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (the written indemnity of any Certificate Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Indenture Trustee shall be accepted as reasonable assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture or any other Operative Document be deemed to impose a duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or of the Lease or is otherwise contrary to Law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR INSTRUCTIONS. The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Trust Indenture or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Trust Indenture or as expressly provided in -40- 41 written instructions from Certificate Holders as provided in this Trust Indenture; and no implied duties or obligations shall be read into this Trust Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof), promptly take such action as may be necessary duly to discharge all liens and encumbrances on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the ownership of the Aircraft or the administration of the Trust Indenture Estate or any other transaction pursuant to this Trust Indenture or any document included in the Trust Indenture Estate. SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR INSTRUCTIONS. The Owner Trustee and the Indenture Trustee agree that they will not use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate except (i) as required by the terms of the Lease or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Trust Indenture and in accordance with the express terms hereof. SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES. At any time an Airframe or Engine is to be replaced under or pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of Default is continuing, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid, but only upon compliance by Lessee with the applicable provisions of Section 10 of the Lease and upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee, requesting such release specifically describing the Airframe and/or Engine(s) so to be released. (2) A certificate signed by a duly authorized officer of Lessee stating the following: A. With respect to any Replacement Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe to be received (including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number) as consideration for the Airframe to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of such Replacement Airframe free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Airframe will on such date be in good working order and condition, and that such Replacement -41- 42 Airframe has been or, substantially concurrently with such withdrawal, will be duly registered in the name of the Owner Trustee under the Federal Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and that Lessee will have the full right and authority to use such Replacement Airframe; (iv) the existence of the insurance required by Section 11 of the Lease with respect to such Replacement Airframe and the payment of all premiums then due thereon; (v) that the Replacement Airframe is of the same or an improved model as the Airframe requested to be released from this Indenture; (vi) the fair market value of the Replacement Airframe as of the date of such certificate (which in the judgment of Lessee shall be not less than the then fair market value of the Airframe requested to be released (assuming such Airframe was in the condition and repair required to be maintained under the Lease)); (vii) the fair market value of the Airframe immediately prior to the date the Airframe suffered an Event of Loss (assuming that such Airframe was in the condition and repair required under the Lease); (viii) that no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default, has occurred which has not been remedied or waived, and that Lessee will not be in default, by the making and granting of the request for release and the addition of a Replacement Airframe, in the performance of any of the terms and covenants of the Lease; and (ix) that the release of the Airframe so to be released will not be in contravention of any of the provisions of this Indenture; or B. with respect to the replacement of any Engine: (i) a description of the Engine which shall be identified by manufacturer's serial number; -42- 43 (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) as consideration for the Engine to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Engine will on such date be in good working order and condition and that such Replacement Engine is substantially the same as the Engine to be released (or as improved model); (iv) the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then fair market value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease)); (v) the fair market value of the Engine to be released (immediately prior to any Event of Loss suffered by such Engine and assuming that such Engine was in the condition and repair required under the Lease); (vi) that each of the conditions specified in Section 10(b) of the Lease with respect to such Replacement Engine have been satisfied and that Lessee will not be in default, by the making and granting of the request for release and the addition of the Replacement Engine, in the performance of any of the terms and covenants of the Lease; (vii) that, with respect to the replacement of an Engine pursuant to Section 9(d) of the Lease, no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default has occurred which has not been remedied or waived; and (viii) that the release of the Engine so to be released will not be in contravention of any of the provisions of this Indenture. (3) (a) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting -43- 44 such Replacement Airframe or Replacement Engine and any related warranty rights to the lien of this Indenture. (b) With respect to the replacement of any Engine, such Uniform Commercial Code financing statements covering the lien created by this Indenture as deemed necessary or desirable by counsel for the Indenture Trustee to protect the lien under the Indenture in the Replacement Engine. (4) A certificate from either an aircraft engineer (who may be an employee of Lessee) or a firm of independent aircraft appraisers selected by Lessee confirming the accuracy of the information set forth in clause (2)A(vi) of this Section 5.06. (5) The opinion of in-house counsel to Lessee, or other counsel satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Trust Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be lawfully released from the lien of this Trust Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Trust Indenture, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate and interest of the Owner Trustee to and the lien of this Trust Indenture on such Replacement Aircraft or Replacement Engine. SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS. If a Replacement Airframe or Replacement Engine is being substituted as contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Certificate Holders and Lessee, subject to fulfillment of the conditions precedent and compliance by Lessee with its obligations set forth in Section 10 of the Lease and the requirements of Section 5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to execute and deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease. -44- 45 SECTION 5.08. EFFECT OF REPLACEMENT. In the event of the substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced and (b) the provisions of this Trust Indenture shall no longer be applicable to the Airframe or Engine or Engines being replaced, which shall be released from the Lien of this Indenture. SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of the Lease shall be held in accordance with the terms of such Section and the Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of the Owner Trustee under such Section. Any amounts held by the Indenture Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee may acquire the same using its best efforts. Unless otherwise expressly provided in this Trust Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Trust Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever such sale is necessary to make a distribution required by this Trust Indenture. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse all monies constituting part of the Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its individual capacity, and the Indenture Trustee, in its individual capacity, shall not be answerable or accountable under any circumstances, except (i) for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be willful misconduct or negligence), (ii) in the case of the Indenture Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii) for liabilities that may result, in the case of the Owner Trustee, from the inaccuracy of any representation or warranty of the Owner Trustee expressly made in its individual capacity in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents) or, in the case of the Indenture Trustee (in its individual capacity), from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable for any action or -45- 46 inaction of the other or of the Owner Participant. The Owner Trustee shall not be deemed to be a trustee for the Certificate Holders for any purpose. SECTION 6.02. ABSENCE OF DUTIES. In the case of the Indenture Trustee, except in accordance with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the Lease or of this Trust Indenture or any other document, or to see to the maintenance of any such registration, recording or filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Lessee's covenants under the Lease with respect to the Aircraft. The Owner Participant shall not have any duty or responsibility hereunder, including, without limitation, any of the duties mentioned in clauses (i) through (v) above; provided, that nothing contained in this sentence shall limit any obligations of the Owner Participant under the Participation Agreement or relieve the Owner Participant from any restriction under Section 4.03 hereof. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR DOCUMENTS. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its individual capacity warrants that (i) the Owner Trustee has received on the Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Trustee in its individual capacity. Neither the Owner Trustee, in its individual capacity or as Owner Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual or trust capacities, makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Trust Indenture, the Trust Agreement, the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Owner Trustee made in its individual capacity and the representations and warranties of the Indenture Trustee in its individual capacity, in each case expressly made in this Trust Indenture or in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement). The Loan Participants, the Certificate Holders and the Owner Participant make no representation or warranty hereunder whatsoever. SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the Certificate Holders, Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by Law or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under such general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for any interest thereon (except that the Indenture Trustee shall invest -46- 47 all monies held as directed by Lessee so long as no Lease Event of Default or Lease Default has occurred and is continuing (or in the absence of such direction, by the Majority In Interest of Certificate Holders) in Cash Equivalents; provided, however, that any payments received, or applied hereunder, by the Indenture Trustee shall be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL. Neither the Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors (or Executive Committee thereof) of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Secured Certificates outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to Lessee the manner of ascertainment of which is not specifically described herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee and the Indenture Trustee for any action taken or omitted to be taken by them in good faith in reliance thereon. The Indenture Trustee shall assume, and shall be fully protected in assuming, that the Owner Trustee is authorized by the Trust Agreement to enter into this Trust Indenture and to take all action to be taken by it pursuant to the provisions hereof, and shall not inquire into the authorization of the Owner Trustee with respect thereto. In the administration of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled persons. SECTION 6.06. CAPACITY IN WHICH ACTING. The Owner Trustee acts hereunder solely as trustee as herein and in the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein, in the Trust Agreement and in the Participation Agreement. SECTION 6.07. COMPENSATION. The Indenture Trustee shall be entitled to reasonable compensation, including expenses and disbursements (including the reasonable fees and expenses of counsel), for all services rendered hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by Lessee, and shall have the right, on and subsequent to an Event of Default hereunder, to use or apply any monies held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against the Loan Participants, the Certificate Holders, the Owner Trustee or the Owner Participant for any fee as compensation for its services as trustee under this Trust Indenture. SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS. In the administration of the trusts created hereunder, the Indenture Trustee shall have the right to seek instructions from a Majority in Interest of Certificate Holders should any provision of this Trust Indenture appear to conflict with any other provision herein or should the Indenture Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no liability in refraining from acting until it receives such -47- 48 instructions. The Indenture Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.08. ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. SCOPE OF INDEMNIFICATION. The Owner Trustee, not in its individual capacity, but solely as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its individual and trust capacities), and its successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Trust Indenture), claims, actions, suits, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever, which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also indemnified against by any other Person under any other document) in any way relating to or arising out of this Trust Indenture or any other Operative Document to which it is a party or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder except only in the case of willful misconduct or gross negligence (or negligence in the case of handling funds) of the Indenture Trustee in the performance of its duties hereunder or resulting from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in Section 8 of the Participation Agreement or Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities under such Sections; provided that, so long as the Lease is in effect, the Indenture Trustee, unless otherwise prohibited by law, shall not make any claim under this Section 7.01 for any claim or expense without first making demand on Lessee for the payment on behalf of Lessor of such claim or expense pursuant to the Lease or the Participation Agreement, including, without limitation, Section 7(b) or 7(c) of the Participation Agreement. In addition, if necessary, the Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement including upon any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee, Lessee and the Certificate Holders. SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In -48- 49 addition, a Majority in Interest of Certificate Holders may at any time (but only with the consent of Lessee, which consent shall not be unreasonably withheld, except that such consent shall not be necessary if a Lease Event of Default is continuing) remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Certificate Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so long as no Lease Event of Default shall have occurred and be continuing, shall be subject to Lessee's reasonable approval. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as above provided. (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee an instrument accepting such appointment and assuming the obligations of the Indenture Trustee under the Participation Agreement arising from and after the time of such appointment, and thereupon such successor Indenture Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee herein; but nevertheless upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all monies or other property then held by such predecessor Indenture Trustee hereunder. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having its principal place of business in the Borough of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations under the Operative Documents are guaranteed by an affiliated entity having) a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. (d) Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Indenture Trustee may be transferred, shall, subject to the terms of paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the Indenture Trustee under this Trust Indenture without further act, except that such Person shall give prompt subsequent notice of such transaction to the Owner Trustee and the Owner Participant. SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Trust Indenture Estate shall be situated or to make any claim or bring any suit with respect to or in connection with the Trust Indenture Estate, this Trust Indenture, any other Indenture Agreement, the Secured Certificates or any of the transactions contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interests of the Certificate Holders (and the Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture Trustee shall have been requested to do so by a Majority in Interest of Certificate Holders, then in any such case, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and such other instruments as may from time to time be necessary or advisable either (1) to constitute one or more bank or trust companies or -49- 50 one or more persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as additional trustee or trustees of all or any part of the Trust Indenture Estate, or to act as separate trustee or trustees of all or any part of the Trust Indenture Estate, in each case with such rights, powers, duties and obligations consistent with this Trust Indenture as may be provided in such supplemental indenture or other instruments as the Indenture Trustee or a Majority in Interest of Certificate Holders may deem necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional and separate trustee, subject in each case to the remaining provisions of this Section 8.03. If the Owner Trustee shall not have taken any action requested of it under this Section 8.03(a) that is permitted or required by its terms within 15 days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing provisions of this Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and perform any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee. In case any additional or separate trustee appointed under this Section 8.03(a) shall die, become incapable of acting, resign or be removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to the Indenture Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.03(a). (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Trust Indenture Estate or otherwise payable under any Operative Document to the Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights, powers, duties and obligations conferred or imposed upon any additional or separate trustee shall be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly except to the extent that applicable Law of any jurisdiction in which any particular act is to be performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of the Indenture Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Indenture Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.03 shall be subject to, and shall have the benefit of Articles IV through VIII and Article X hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. (c) If at any time the Indenture Trustee shall deem it no longer necessary or desirable in order to conform to any such law or take any such action or shall be advised by such counsel that it is no longer so necessary or desirable in the interest of the Certificate Holders, or in the event that the Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Certificate Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when and to the extent it could so act under Section 8.03(a) hereof. -50- 51 ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS. (a) Except as provided in Section 5.02 hereof, the Owner Trustee agrees it shall not enter into any amendment of or supplement to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee and a Majority in Interest of Certificate Holders. Anything to the contrary contained herein notwithstanding, without the necessity of the consent of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter into amendments of or additions to the Lease to modify Section 5 (except to the extent that such amendment would affect the rights or exercise of remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such amendments, modifications and changes do not and would not affect the time of, or reduce the amount of, Rent payments (other than Excluded Payments) until after the payment in full of all Secured Obligations or otherwise adversely affect the Certificate Holders. (b) Without limiting the provisions of Section 9.01(a) hereof, the Indenture Trustee agrees with the Certificate Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Certificate Holders, or does not adversely effect the Certificate Holders, but upon the written request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each holder of an affected Secured Certificate then outstanding, no such amendment of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11 or 2.15 or Article III or Section 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an Event of Default) of the Lease, the definitions of "Event of Default", "Default", "Lease Event of Default", "Lease Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Secured Certificate, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in favor of the Owner Trustee, the Indenture Trustee or the Certificate Holders (except that the Owner Trustee (in its individual capacity) or the Indenture Trustee, as the case may be, may consent to any waiver or reduction of an indemnity payable to it), (iv) consent to any change in the Trust Indenture or the Lease which would permit redemption of Secured Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as permitted by Section 2.14 hereof, (v) except as contemplated by the Lease or the Participation Agreement, reduce the amount or extend the time of payment of Interim Rent, Basic Rent, Stipulated Loss Value, or Termination Value for the Aircraft in each case as set forth in the Lease, or modify, amend or supplement the Lease or consent to any assignment of the Lease, in either case releasing Lessee from its obligations in respect of the payment of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections -51- 52 3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. So long as no Lease Event of Default has occurred and is continuing, without the consent of Lessee no amendment or supplement to this Trust Indenture or waiver or modification of the terms hereof shall adversely affect Lessee. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Certificate Holder for any of the following purposes: (i) (a) to cure any defect or inconsistency herein or in the Secured Certificates, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Certificate Holders in its capacity solely as Certificate Holder; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Trust Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Certificate Holders, or to surrender any rights or power herein conferred upon the Owner Trustee, the Owner Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and (vii) to include on the Secured Certificates any legend as may be required by law. SECTION 9.02. TRUSTEES PROTECTED. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of Section 9.01 hereof adversely affects any right, duty, immunity or indemnity with respect to such institution under this Trust Indenture or the Lease, such institution may in its discretion decline to execute such document. SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to Section 9.01 hereof, the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each Certificate Holder at its address last set forth in the Secured Certificate Register, but the failure of the Indenture Trustee to mail such copies shall not impair or affect the validity of such document. SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST AGREEMENT AND INDENTURE SUPPLEMENT. No written request or consent of the Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof shall be required to enable the Owner Trustee to enter into any Lease Supplement specifically required by the terms of the Lease or to execute and deliver a Trust Agreement and Indenture Supplement specifically required by the terms hereof. -52- 53 ARTICLE X MISCELLANEOUS SECTION 10.01. TERMINATION OF TRUST INDENTURE. Upon (or at any time after) payment in full of the Principal Amount of, Make-Whole Amount, if any, and interest on and all other amounts due under all Secured Certificates and provided that there shall then be no other Secured Obligations due to the Certificate Holders and the Indenture Trustee hereunder or under the Participation Agreement, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft and the Engines from the Lien of this Trust Indenture and releasing the Lease, the Bill of Sale, the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto from the assignment and pledge thereof hereunder and the Indenture Trustee shall execute and deliver such instrument as aforesaid and give written notice thereof to Lessee; provided, however, that this Trust Indenture and the trusts created hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property constituting part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all monies or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE HOLDERS. No holder of a Secured Certificate shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Secured Certificate or other right, title and interest of any Certificate Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Trust Indenture or entitle such holder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Trust Indenture Estate. SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING. Any sale or other conveyance of the Trust Indenture Estate, or any part thereof (including any part thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind the Certificate Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders in and to such Trust Indenture Estate or part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS. Nothing in this Trust Indenture, whether express or implied, shall be construed to give any person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or equitable right, remedy or claim under or in respect of this Trust Indenture. SECTION 10.05. NOTICES. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), with a copy to the Owner Participant addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee, -53- 54 addressed to it at its office at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to any Participant, Lessee or any Certificate Holder, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party (if any) set forth on the signature pages to the Refunding Agreement or in the Secured Certificate Register. Whenever any notice in writing is required to be given by the Owner Trustee, any Participant or the Indenture Trustee or any Certificate Holder or Lessee to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after being mailed, addressed as provided above. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Trust Indenture. SECTION 10.06. SEVERABILITY. Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS. No term or provision of this Trust Indenture or the Secured Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Owner Trustee and the Indenture Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any Secured Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 10.08. SUCCESSORS AND ASSIGNS. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the permitted successors and assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificate Holder shall bind the successors and assigns of such holder. This Trust Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby, thereby and by the Participation Agreement. Each Certificate Holder by its acceptance of a Secured Certificate agrees to be bound by this Trust Indenture and all provisions of the Participation Agreement applicable to a Loan Participant or a Certificate Holder. SECTION 10.09. HEADINGS. The headings of the various Articles and sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.10. NORMAL COMMERCIAL RELATIONS. Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or any bank or other Affiliate of such Participant may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Lessee, fully to the same extent as if this Trust Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. -54- 55 SECTION 10.11. GOVERNING LAW; COUNTERPART FORM. THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the parties hereto in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.12. VOTING BY CERTIFICATE HOLDERS. All votes of the Certificate Holders shall be governed by a vote of a Majority in Interest of Certificate Holders, except as otherwise provided herein. SECTION 10.13. BANKRUPTCY. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee hereunder), shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any of the provisions of this Trust Indenture or the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner Trustee will take any action contrary to Lessee's rights under the Lease, including the right to possession and use of, and the quiet enjoyment of, the Aircraft, except in accordance with provisions of the Lease. -55- 56 IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to be duly executed by their respective officers thereof duly authorized as of the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, as Owner Trustee By: _____________________________________ Name: _____________________________________ Title: STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By: _____________________________________ Name: _____________________________________ Title: -56- 57 ----------------------------- EXHIBIT A TO TRUST INDENTURE AND MORTGAGE ----------------------------- TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 E] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 E], dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 E] dated as of April 29, 1996 (the "TRUST AGREEMENT"), between the Owner Trustee and the Owner Participant named therein. W I T N E S S E T H: WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 E], dated as of June 12, 1996 (as amended and supplemented to the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft (such term and other terms used but not defined herein having the respective meanings ascribed thereto in the Trust Indenture), and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for recordation on the date hereof with the FAA as one document; NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust Indenture Estate covers all of Owner Trustee's right, title and interest in and to the following described property: 58 AIRFRAME One airframe identified as follows:
FAA Registration Manufacturer's Manufacturer Model Number Serial Number ------------ ----- ------------ --------------
together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Two aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number ------------ -------------------- -------------
together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to any of such engines. Together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts). As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Loan Participants and of the Certificate Holders, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under the Lease Supplement [of even date herewith] covering the property described above subject, however, to all of the terms of the Trust Indenture including, without limitation, the rights of the Owner Trustee and the Owner Participant under Section 5.02 of the Trust Indenture. Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Certificate Holders, except EXHIBIT A-2 59 as provided in Section 2.15 and Article III of the Trust Indenture without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Trust Indenture Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. EXHIBIT A-3 60 IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, Owner Trustee By: _________________________________ Name: Title: EXHIBIT A-4 61 SCHEDULE I
PRINCIPAL AMOUNT INTEREST RATE ---------------- ------------- Series A $25,255,419 7.67% Series B $ 8,282,397 8.07% Series C $ 6,462,184 8.97%
62 SECURED CERTIFICATES AMORTIZATION SERIES A AIRCRAFT: N541US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 1.61637786% Jul 2, 1998 0.00000000% Jan 2, 1999 2.04965912% Jul 2, 1999 0.00000000% Jan 2, 2000 2.04965912% Jul 2, 2000 0.00000000% Jan 2, 2001 2.04965912% Jul 2, 2001 0.00000000% Jan 2, 2002 2.04965912% Jul 2, 2002 0.00000000% Jan 2, 2003 2.04965912% Jul 2, 2003 0.00000000% Jan 2, 2004 2.04965912% Jul 2, 2004 0.00000000% Jan 2, 2005 2.04965912% Jul 2, 2005 0.00000000% Jan 2, 2006 2.04965912% Jul 2, 2006 0.00000000% Jan 2, 2007 2.04965912% Jul 2, 2007 0.00000000% Jan 2, 2008 2.04965912% Jul 2, 2008 0.00000000% Jan 2, 2009 2.04965912% Jul 2, 2009 0.00000000% Jan 2, 2010 11.69834482% Jul 2, 2010 0.00000000% Jan 2, 2011 12.72737942% Jul 2, 2011 0.00000000% Jan 2, 2012 13.70356992% Jul 2, 2012 17.07826744% Jan 2, 2013 15.79303040% Jul 2, 2013 0.87716620% Jan 2, 2014 3.95961358%
63 SERIES B AIRCRAFT: N541US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.08333409% Jul 2, 1999 0.00000000% Jan 2, 2000 2.08333409% Jul 2, 2000 0.00000000% Jan 2, 2001 2.08333409% Jul 2, 2001 0.00000000% Jan 2, 2002 2.08333409% Jul 2, 2002 0.00000000% Jan 2, 2003 2.08333409% Jul 2, 2003 0.00000000% Jan 2, 2004 2.08333409% Jul 2, 2004 0.00000000% Jan 2, 2005 2.08333409% Jul 2, 2005 0.00000000% Jan 2, 2006 2.08333409% Jul 2, 2006 0.00000000% Jan 2, 2007 2.08333409% Jul 2, 2007 0.00000000% Jan 2, 2008 11.46938501% Jul 2, 2008 0.00000000% Jan 2, 2009 26.33173706% Jul 2, 2009 0.00000000% Jan 2, 2010 0.37180058% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 38.03291487% Jul 2, 2014 4.77498241% Jan 2, 2015 0.26917328%
64 SERIES C AIRCRAFT: N541US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.55481738% Jul 2, 1999 0.00000000% Jan 2, 2000 3.61387110% Jul 2, 2000 0.00000000% Jan 2, 2001 4.76790819% Jul 2, 2001 0.00000000% Jan 2, 2002 6.02548612% Jul 2, 2002 0.00000000% Jan 2, 2003 7.39584326% Jul 2, 2003 0.00000000% Jan 2, 2004 8.88914646% Jul 2, 2004 0.00000000% Jan 2, 2005 10.51638270% Jul 2, 2005 0.00000000% Jan 2, 2006 5.39156731% Jul 2, 2006 0.00000000% Jan 2, 2007 11.71413565% Jul 2, 2007 0.00000000% Jan 2, 2008 12.33483912% Jul 2, 2008 0.00000000% Jan 2, 2009 0.00000000% Jul 2, 2009 0.00000000% Jan 2, 2010 0.00000000% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 0.00000000% Jul 2, 2014 0.00000000% Jan 2, 2015 26.79600271%
65 SCHEDULE II 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. EX-4.I4 72 LEASE AGREEMENT - 1996 E 1 LEASE AGREEMENT [NW 1996 E] This LEASE AGREEMENT [NW 1996 E], dated as of April 29, 1996, between FIRST SECURITY BANK OF UTAH, 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. The following terms shall have the following meanings for all purposes of this Lease Agreement [NW 1996 E] and shall be equally applicable to both the singular and the plural forms of the terms herein defined: "Administrative Agent" means [________________], a [______] banking corporation, as administrative agent pursuant to the Participation Agreement, and any successor acting as administrative agent. "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. "After-Tax Basis" means an additional amount which when added to the amount of payment otherwise required to be made on an After-Tax Basis, after deduction of all Federal, state, local and foreign taxes required to be paid by or on behalf of a Person in respect of the receipt or realization of any such amounts, results in a sum equal to the payment required under the provisions of the Operative Documents to be made on an After-Tax Basis. Any payment under the Operative Documents which does not actually result in an increase (or a decrease in a refund) of the Owner Participant's Federal, state, local or foreign income tax liability for the year of the accrual or receipt of such payment but which reduces any net operating loss or business credit or foreign tax credit carryover of the recipient shall be treated as giving rise to an actual increase in (or a decrease in a refund of) tax liability for the year in which such tax attribute if not reduced thereby would have given rise to a reduction in such recipient's tax liability (or such recipient's allowable refund in respect of any 2 such taxes). With respect to the Owner Participant, for purposes of this definition, it shall be assumed that United States federal, state, local and foreign income taxes are payable at the Highest Marginal Rate (as defined in the Tax Indemnity Agreement) then applicable to the Owner Participant. "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 two 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 Boeing 757-251 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. "Assumed Interest Rate" has the meaning set forth in Section 3(c) hereof. "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 - 2 - 3 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 Commencement Date and ending on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. "Bill of Sale" means a full warranty bill 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 Bill of Sale shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good title to the Airframe and each Engine described in such Bill 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 New York, New York; Boston, Massachusetts; Salt Lake City, Utah; or Minneapolis, Minnesota and, in connection with any payment of Rent and so long as any Secured Certificate is a Eurodollar Loan (as defined in the Trust Indenture), such day is also a day for trading by and between banks in the interbank Eurodollar market. "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. "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. - 3 - 4 "Commencement Date" means January 2, 1997. "Commitment" means the commitment of a Loan Participant 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 1996 E], 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. "Credit Agreement" means the Credit Agreement, dated as of November 2, 1995, among Lessee, the banks, financial institutions and other institutional lenders listed on the signature pages thereof, [_____________], as documentation agent, [________________], as administrative agent, and [___________________], as syndication agent, as the same may be amended, supplemented or otherwise modified from time to time. "Debt Rate" has the meaning set forth in the Trust Indenture. "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, 2003, provided, however, that if the chief legal officer or chief tax officer of Lessee has actual knowledge that the Depreciation Period is other than the period specified in the Tax Assumptions as a result of an "Operative Event" (as defined in the Tax Indemnity Agreement), then ending on the last day of the Owner Participant's taxable year in which a depreciation or cost recovery deduction is allowed or allowable with respect to the Aircraft. "Documentation Agent" means [________________], a bank organized under the laws of [_________________], as documentation agent pursuant to the Participation Agreement, and any successor acting as documentation agent. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of the two Pratt & Whitney Model PW2037 engines listed by manufacturer's serial number in the initial Lease Supplement, - 4 - 5 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 two 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 hereunder. The term "Engines" means, as of any date of determination, all Engines then leased hereunder. "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 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government) 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 for a period in excess of 180 consecutive days or, if earlier, until the end of the Term or, in the case of a requisition of title by the United States Government or any other government of registry of the Aircraft which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government, as the case may be, the requisition of title shall not have been reversed within 90 days from the date of such requisition of title or, if earlier, at the end of the Term (it being understood that a requisition of title by any government other than as expressly provided above shall constitute an immediate Event of Loss); (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, prior to the - 5 - 6 expiration of such 180 day period, shall have undertaken and shall be diligently carrying forward in a manner that does not discriminate against the Aircraft all steps which are necessary or desirable to permit the normal use of such property by Lessee, and, within one year of such prohibition, Lessee 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, provided, notwithstanding any of the foregoing, such prohibition shall constitute an Event of Loss if such use shall have been prohibited for a period of two 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any instrumentality or agency of any thereof whose obligations are backed by the full faith and credit of such government, which shall have occurred during the Basic Term (or the Interim 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; (vi) any divestiture of title to or interest in an Engine treated as an Event of Loss pursuant to Section 7(b) hereof; and (vii) the operation of or location of the Aircraft, while under requisition for use by any government, in an area excluded from coverage by any insurance policy in effect with respect to the Aircraft required by this Agreement, unless in the case of a requisition by the United States Government or any other government of registry of the Aircraft which is listed on Exhibit C to the Participation Agreement and is designated a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government, Lessee shall have obtained an indemnity in lieu thereof from such government or such agency or instrumentality. 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 the Transition 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 the Transition Date; provided, however, that, to the extent that the aggregate amount of interest due and payable on the Transition Date on the Secured Certificates for the period from and including the Delivery Date to but excluding the Transition Date is less than the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Transition Date if such Secured Certificates had borne interest at the Assumed Interest Rate for such period, the - 6 - 7 corresponding percentage set forth in Exhibit B shall be decreased by the amount which when multiplied by Lessor's Cost will equal such differential. "Expenses" has the meaning specified in Section 7(c) of the Participation Agreement. "FAA Bill of Sale" means a bill 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. "Funding Loss Amount" has the meaning assigned to that term in the Trust Indenture. "Guarantee" means the Guarantee [NW 1996 E], dated as of the date hereof, made by the Guarantor in favor of the Parties, 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 the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Administrative Agent, the Documentation Agent, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents. "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. - 7 - 8 "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. "Interest Period" means Interest Period as defined in the Trust Indenture. "Interim Rent" means the rent payable for the Aircraft for the Interim Term pursuant to Section 3(b) hereof. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions hereof. "Lease Agreement", "this Lease Agreement", "this Lease", "this Agreement", "herein", "hereof", "hereunder", "hereby" or other like words mean this Lease Agreement [NW 1996 E] 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 semi-annual periods throughout the Basic Term and any Renewal Term ending on a Lease Period Date, the first such period commencing on and including the Commencement Date and each succeeding period commencing on the date immediately following the preceding Lease Period Date. "Lease Period Date" means July 2, 1997 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 - 8 - 9 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 Bill of Sale, the Bill 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 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 of Utah, 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 of Utah, 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 risk of interference with the payment of Rent (other than Excluded Payments in favor of First Security Bank of Utah, 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. - 9 - 10 "Lien" means any mortgage, pledge, lien, charge, claim, encumbrance, lease, sublease, sub-sublease or security interest. "Loan Participant" means each institution executing the Participation Agreement as a Loan Participant, and its respective successors and assigns, and any Certificate Holder; at any time when there is only one Certificate Holder, "each Loan Participant" shall mean such 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 assigned to that term in the Trust Indenture. "Manufacturer" means The Boeing Company, a Delaware corporation. "Manufacturer Documents" means the Purchase Agreement and the Consent and Agreement. "Moody's" means Moody's Investors Service, Inc. "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 after-tax present value, as of the Delivery Date, of Basic Rent set forth in Exhibit B hereto through and including the date on which the Special Purchase Price is payable pursuant to Section 19(d) hereof, and the Special Purchase Price payable as of such date, computed on the basis of the same methodology, constraints and assumptions as were utilized in determining Basic Rent, the Special Purchase Price, Stipulated Loss Value and Termination Value percentages as of the Delivery Date. "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 Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Guarantee, the Owner Participant Guaranty, the Purchase Agreement Assignment and the Consent and Agreement. - 10 - 11 "Overall Transaction" means all the transactions contemplated by the Operative Documents. "Owner Participant" means the corporation executing the Participation Agreement as the Owner Participant and 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 Participant Guarantor" means the entity executing the Owner Participant Guaranty as guarantor thereunder. "Owner Participant Guaranty" means the Owner Participant Guaranty [NW 1996 E], dated as of the date hereof, made by the Owner Participant Guarantor in favor of Lessee, Lessor, the Loan Participants and the Indenture Trustee, as such Owner Participant Guaranty may be amended or supplemented from time to time pursuant to the applicable provisions thereof. "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 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 1996 E], dated as of the date hereof, among Lessee, the Loan Participants, the Indenture Trustee, the 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. - 11 - 12 "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. "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 (calculated based on the actual number of days elapsed in a year consisting of 365 days or 366 days, as the case may be) equal to (x) 1% over the Base Rate for the first 5 Business Days from the date such payment became due, and (y) 3% over the Base Rate thereafter. "Permitted Carrier" means an air carrier domiciled and principally based in a country set forth on Exhibit C to the Participation Agreement and designated therein as a "Specified Country". "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 C to the Participation Agreement. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Prepaid Rent" has the meaning assigned in Section 3(g) hereof. "Purchase Agreement" means the Purchase Agreement No. 1631, dated December 1, 1989, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1996 E], 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. - 12 - 13 "Reimbursement Amount" has the meaning set forth in Section 3(g) hereof. "Renewal Term" means any Fixed Renewal Term or Fair Market Renewal Term as those terms are defined in Section 19 hereof. "Rent" means Interim Rent, Basic Rent and Supplemental Rent, collectively. "Rent Differential Amount" has the meaning set forth in Section 3(c) hereof. "Restricted Country" has the meaning set forth on Exhibit C to the Participation Agreement. "Return Site" means a major airport on Lessee's route system located within the forty-eight contiguous states of the United States. "S&P" means Standard & Poor's Corporation. "Secured Certificates" has the meaning assigned to that term in the Trust Indenture. "Special Purchase Price" shall mean the amount denominated as such in Exhibit B hereto. "Specified Country" has the meaning set forth on Exhibit C to the Participation Agreement. "Stipulated Loss Value" with respect to the Aircraft as of any date through and including January 2, 2019, 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). To the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Interim Term or the Lease Period in which such Stipulated Loss Value Date occurs up to and including such Stipulated Loss Value Date is greater or less than the amount included in calculating the percentage set forth in Exhibit C with respect to such Stipulated Loss Value Date on account of such interest, the corresponding percentage set forth in Exhibit C shall be adjusted appropriately to compensate for such differential. "Stipulated Loss Value" as of any date after January 2, 2019 shall be the amount determined as provided in Section 19(a) hereof. - 13 - 14 "Stipulated Loss Value Date" means the 2nd calendar day of each calendar month during the Interim Term, 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. "Supplemental Rent" means all amounts, liabilities and obligations (other than Interim Rent and Basic Rent) which Lessee assumes or agrees to pay to Lessor or others hereunder, under the Participation Agreement, under the Tax Indemnity Agreement or under any of the other Operative Documents. The parties acknowledge that Supplemental Rent is a general category and, accordingly, agree that any provision of any Operative Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment. "Tax Indemnitee" means the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors and permitted assigns. "Tax Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1996 E], dated as of the date hereof, 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, 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 Interim Term, 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 January 2, 2019, means, but subject always to the provisions of - 14 - 15 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). In the event that the Termination Date with respect to which Termination Value is determined is a date on which Basic Rent is payable in advance as indicated on Exhibit B, to the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Lease Period ending on such Termination Date is greater or less than the amount included in calculating the corresponding percentage set forth in Exhibit D with respect to such Termination Date on account of such interest, the corresponding percentage set forth in Exhibit D shall be adjusted appropriately to compensate for such differential. "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker, special counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Vedder, Price, Kaufman & Kammholz, special counsel to the Loan Participants, such information to be furnished by the Documentation Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee and Guarantor, such information to be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements (but excluding any sales, use and other transfer taxes which apply to the Aircraft), such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, and the reasonable out-of-pocket expenses of the Owner Participant, such information to be furnished by the Owner Participant, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust Indenture, such information to be furnished by the Indenture Trustee, (v) the fees of Aeroeconomics, Inc. and BK Associates, Inc. with respect to the appraisals of the Aircraft pursuant to Sections 4(a)(xx) and 4(a)(xxix), respectively, of the Participation Agreement, such information to be furnished by the Owner Participant in the case of Aeroeconomics, Inc. and by the Documentation Agent in the case of BK Associates, Inc., (vi) the reasonable and actual fees, expenses and disbursements of Dewey Ballantine, special counsel to the Owner Participant, such information to be furnished by the Owner Participant, (vii) the fee and reasonable disbursements of Babcock and Brown Financial Corporation, such information to be furnished by Lessee, and (viii) the fee payable to the Loan Participants on the Delivery Date. - 15 - 16 "Transition Date" means the date designated as such in Exhibit B hereto. "Trust Agreement" means that certain Trust Agreement [NW 1996 E], dated as of the date hereof, between the Owner Participant and First Security Bank of Utah, 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 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 1996 E], dated as of the date hereof, between Lessor and the Indenture Trustee, as originally executed or as modified, amended or supplemented in accordance with the provisions thereof. "Trust Supplement" means a supplement to the Trust Agreement and the Trust Indenture, substantially in the form of Exhibit A to the Trust Indenture. "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 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. SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to satisfaction of the conditions set forth in Section 4(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 Section 4(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 - 16 - 17 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) Interim Term and Basic Term. The Interim Term shall commence on the Delivery Date and end on and include the day immediately preceding the Commencement Date unless earlier terminated pursuant to the provisions hereof. The Basic Term shall commence on the Commencement Date and end on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. (b) Interim Rent. Lessee shall pay Interim Rent on the Commencement Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for Interim Rent on the Commencement Date. Although the Interim Rent percentage set forth in Exhibit B hereto has been computed on the assumption that the rate of interest on the Secured Certificates will be the Assumed Interest Rate, Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, the Interim Rent payable on the Commencement Date shall be increased or decreased (but not below zero) by the difference between (i) the aggregate amount of interest due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to but excluding the Commencement Date and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to the Commencement Date if such Secured Certificates had borne interest at the Assumed Interest Rate. If the amount determined in accordance with clause (i) of the preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be increased by such difference. If the amount determined in accordance with clause (i) of the preceding sentence shall be less than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be decreased (but not below zero) by such difference. (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 applicable Lease Period Date specified in Exhibit B hereto. Although the Basic Rent percentages set forth in Exhibit B hereto have been computed on the assumption that the rate of interest on the Secured Certificates throughout the Term will be 6.5% per annum, computed on the basis of a 360-day year of twelve 30-day - 17 - 18 months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, each installment of Basic Rent shall be increased or decreased (but not below zero), as the case may be, by the Rent Differential Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with respect to the Basic Term, the difference between (i) the aggregate amount of interest due and payable on such Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on such Lease Period Date if such Secured Certificates had borne interest at the Assumed Interest Rate, in each case for the period from and including the Lease Period Date (or the Commencement Date in the case of the first Lease Period) next preceding such Lease Period Date to but excluding such Lease Period Date. If, as of any Lease Period Date, the amount determined in accordance with clause (i) of the immediately preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Basic Rent payable on such Lease Period Date shall be increased by the Rent Differential Amount. If, as of any Lease Period Date, the amount determined in accordance with such clause (ii) shall exceed the amount determined in accordance with such clause (i), the amount of Basic Rent due on such Lease Period Date shall be decreased (but not below zero) by the Rent Differential Amount. (d) Adjustments to Basic Rent. (i) In the event that (A) the Delivery Date occurs other than on April 30, 1996, or (B) Transaction Expenses paid by Lessor pursuant to Section 16 of the Participation Agreement are determined to be other than 1.0% 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, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated on or prior to November 15, 1996 using the same methods and assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and Special Purchase Price, 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. (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, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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, subject to the Owner Participant's consent, which the Owner - 18 - 19 Participant may withhold in its sole discretion, 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, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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 and the Special Purchase Price 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 Amount set forth in Exhibit B in a manner consistent with such recalculation. In addition, (X) any recalculation of Basic Rent, Stipulated Loss Value or Termination Value percentages made pursuant to this Section 3(d) shall take into account any decrease in the Excess Amount with respect to the Transition Date required by the proviso to the definition of "Excess Amount", (Y) after January 31, 1997 but prior to July 2, 1997, the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C and the Termination Value percentages set forth in Exhibit D shall be recalculated to take into account any decrease in Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) of this sentence, and (Z) at the time of any payment of Stipulated Loss Value or Termination Value, the Stipulated Loss Value percentage set forth in Exhibit C or the Termination Value percentage set forth in Exhibit D, by reference to which the amount of such payment is determined shall be recalculated to take into account any decrease in the Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) or clause (Y) of this sentence. (iv) Any recalculation of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price 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. In addition, notwithstanding any other provisions herein, in no event shall the Special Purchase Price be adjusted to an amount that is less than the greater of (A) the Termination Value as of July 2, 2012, (B) the estimated fair market value of the Aircraft on July 2, 2012, determined as of the Delivery Date and set forth in the opinion received from Aeroeconomics, Inc. pursuant to Section - 19 - 20 4(a)(xx) of the Participation Agreement (the "APPRAISAL"), and (C) 101% multiplied by the present value as of July 2, 2012 of (x) the remaining scheduled Basic Rent through the end of the Basic Term plus (y) 42.2% of Lessor's Cost (i.e., the fair market value of the Aircraft as of the end of the Basic Term as set forth in the Appraisal) (the present value calculation described in this clause (C) shall utilize a semi-annual compounded discount rate no lower than that utilized by the Owner Participant in determining the Special Purchase Price as of the Delivery Date, but in no event shall such discount rate be less than 11.8% per annum). Such recalculated Basic Rent, Excess Amount and Stipulated Loss Value and Termination Value percentages and the Special Purchase Price 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 Interim Rent and 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 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), 4.07 and 4.08(1) of Rev. Proc. 75-28 and with Section 467 of the Internal Revenue Code of 1986, as amended, as each is then in effect as long as the Schedule of Basic Rent was in compliance with Section 467 of the Code as in effect on the Closing Date, it being understood that, to the extent that any grandfather, effective date, or similar provisions in any regulations under Section 467 or other administrative pronouncement interpreting Section 467 promulgated or issued after the Closing - 20 - 21 Date causes such regulations or pronouncement not to be applicable to the Schedule of Basic Rent in effect on the Closing Date, such Schedule shall be deemed to be in compliance with Section 467 as in effect on the Closing Date (provided that the test of Rev. Proc. 75-28 Section 4.08(1) and Section 467 shall be applied on a prospective basis from the date of such adjustment if and to the extent permitted by applicable law, as then in effect) 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, on behalf of Lessor, as Supplemental Rent when due any amount of premium payable when due under the Trust Indenture and shall pay on behalf of Lessor amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when the same shall become due and payable. 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 Interim Rent and 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 of Utah, National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW 1996 E (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, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1996 E (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 10 Business Days prior to the date such payment of Rent is due). 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 - 21 - 22 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 the Transition Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall on the Transition Date, prepay on the Transition 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 shall, under all circumstances and whether or not an Event of Default shall be continuing on the Transition Date, pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount equal to the excess, if any, of the interest on the Secured Certificates relating to the period from and including the Delivery Date to but excluding the Transition Date over the Excess Amount payable on the Transition Date; provided, further, 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 equal to the Base Rate as in effect from time to time plus 5% per annum 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 - 22 - 23 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 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 Interim Rent or 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 of Utah, 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 that 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 - 23 - 24 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, 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 Return Site then being serviced by Lessee's 757-200 aircraft, which Return Site shall be chosen by Lessor and reasonably acceptable to Lessee (provided, that at Lessor's request, Lessee will consider in good faith a Return Site not then being serviced by Lessee's 757-200 aircraft, provided, further, that, in the case of a return to a Return Site not then being serviced by Lessee's 757-200 aircraft, Lessee is able to return the Airframe immediately following a revenue passenger flight with the Airframe to such Return Site), and Lessor will give Lessee at least ten (10) days' prior written notice of the Return Site; 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 and not due to any act or failure to act on the part of Lessee; the Airframe will be fully equipped with the Engines (or other Pratt & Whitney Model PW2037 engines or two engines of the same or another manufacturer of not less than equivalent utility, fair market sales 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 both 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 without the necessity of any further expense being incurred by Lessor, (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 - 24 - 25 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 Exhibit F. Lessor agrees to pay Lessee those amounts specified in Exhibit F to be for the cost, expense or account of Lessor. 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 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) bill 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 bill 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 bill 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 that 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) Lessee shall invoice Lessor, and 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 thirty (30) 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 - 25 - 26 facilities for the Aircraft (maintenance costs and other out-of-pocket costs other than parking fees incurred by Lessee in connection with such storage 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 that 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 Sublessee) either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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, the 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 forty-five (45) days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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 - 26 - 27 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 Boeing 757-200 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 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 or such manner as shall have been approved by the Owner Participant pursuant to Section 7(b)(x) and without in any way discriminating against the Aircraft, by reason of its leased status, including, without limitation, the termination of airworthiness directives; 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 (which records, logs and other materials, as between Lessor and Lessee and all parties claiming through Lessee, shall be the property of Lessor but shall be maintained by Lessee during the Term and shall become the property of Lessee upon Lessee's purchase of the Aircraft pursuant to the terms of this Lease or upon the occurrence of an Event of Loss and Lessee's compliance with Section 10 hereof); 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, - 27 - 28 rule, regulation or order in any reasonable manner which does not materially adversely affect Lessor or the Owner Participant 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 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 Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee 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 any 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 Permitted 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 - 28 - 29 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; (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; - 29 - 30 (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 (which, if entered into with tax-exempt entities during the Depreciation Period, may not exceed three years) 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 (the term of which, during the Depreciation Period, may not exceed three years), 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 the Owner Participant and the Indenture Trustee in their sole discretion, 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 the Sublessee under such sublease is a foreign air carrier (other than a foreign air carrier principally based and domiciled in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Sublessee is principally based and domiciled 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 domiciled and principally based in a country listed on Exhibit C to the Participation Agreement and designated therein as a "Restricted Country", Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee to the effect that (I) the terms of the proposed - 30 - 31 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 and domiciled, (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, (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 Lessor (or Lessee, as "lessee", or the proposed Sublessee, as "sublessee", as appropriate) and to the Lien of the Trustee Indenture, (V) such Sublease will not result in a risk of unindemnified Taxes to Lessor or the Owner Participant (it being agreed that in the event such opinion cannot be given in a form reasonably satisfactory to the Owner Participant, such opinion will be waived if (A) the Owner Participant has received assurances satisfactory to it to the effect that such Sublease will not result in any such risk, or (B) Lessee shall have entered into a binding agreement to indemnify in a manner satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant for such unindemnified Taxes; provided, however, that if (a) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (b) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such subleasing or (c) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee), (VI) none of the Owner Trustee, the Owner Participant or the Indenture Trustee will be required to register to do business in such country as a result of such sublease, after (A) taking into account any other contacts of the Owner Trustee and the Owner Participant with such jurisdiction (provided, that upon request by Lessee (such request having been acknowledged by the Owner Participant's general counsel), the Owner Trustee and the Owner Participant must respond - 31 - 32 within fourteen (14) Business Days after receipt of such request describing its contacts in such jurisdiction, or else such party shall be deemed for purposes of this clause (VI) to have no such contacts) and (B) assuming that the Indenture Trustee has no other contacts with such jurisdiction, and (VII) there is no tort liability for owners not in possession of aircraft in such country more onerous than under the laws of the United States or any state thereof (it being agreed that in the event such opinion cannot be given in a form reasonably satisfactory to the Owner Participant, such opinion will be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover the risk of such tort liability), 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; provided, further, that in the event the Sublessee's maintenance program for the Airframe will be a block overhaul program, a sublease entered into pursuant to this clause (x) to such Sublessee shall not extend beyond the date which is six months prior to the expiration of the Basic Term or any Renewal Term then in effect (and Lessee, if the last Sublessee was not a U.S. Air Carrier, shall upon expiration of the sublease to such Sublessee (1) incorporate the Aircraft into Lessee's approved maintenance program for aircraft of the same make and model and in active commercial service and (2) place the Aircraft into active passenger service or, in lieu thereof, upon the return of the Aircraft to Lessor pursuant to Section 5, Lessee shall comply with those return conditions that would have been applicable had Lessee adopted a block overhaul program) unless either the Owner Participant shall have previously approved in writing the maintenance procedures of the Sublessee or Lessee shall have irrevocably committed to purchase the Aircraft at, or extend the Term of this Lease by a period of at least six months from, the end of the Basic Term or such Renewal Term, as the case may be. 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 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 - 32 - 33 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 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 (A) fifteen (15) days prior to entering into any Sublease with a term of more than one (1) year, (B) five (5) Business Days prior to entering into any Sublease with a term equal to or less than one (1) year with a Permitted Sublessee and (C) five (5) days prior to entering into any Sublease with a term equal to or less than one (1) year with any proposed Sublessee other than a Permitted Sublessee, 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 of Utah, 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 - 33 - 34 (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 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 - 34 - 35 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) 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, the Owner Participant, 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 diminish the value, utility or remaining useful life of the Airframe or such Engine, or materially impair the condition or airworthiness thereof, below the value, utility, remaining useful life, condition or airworthiness 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 original cost of all Obsolete Parts which shall have been removed and not replaced shall not exceed $500,000. 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 - 35 - 36 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, remaining useful life, condition or airworthiness 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]. (2) Lessee shall have the right to elect to terminate this Lease on any Lease Period Date occurring on or after January 2, 2003 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 its best efforts to obtain bids in Dollars 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, lease or ownership 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 - 36 - 37 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 cash bid therefor (net of any brokerage commissions) 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 that 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 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 sale price of the Aircraft sold by Lessor after deducting the reasonable expenses incurred by Lessor, the Owner Participant or the Indenture Trustee 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) on behalf of Lessor, the premium and Funding Loss 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 that 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. 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 premium and Funding Loss Amount, if any, due on the Secured Certificates and, so long as - 37 - 38 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 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, if Lessee revokes its Termination Notice or, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that payment by Lessee of the amount specified in clause (3)(A) above in connection with a termination where Lessor has not elected to retain title will not constitute a preference under applicable U.S. bankruptcy laws, a Default or an Event of Default of the type referred to in Section 14(e) hereof shall exist on such Termination Date (unless, in the case of any such Default or Event of Default, Lessee has obtained an order from the applicable bankruptcy court approving the payment of any such amount), 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, the Indenture Trustee 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, in which case Lessee shall pay only the reasonable costs and expenses of the Indenture Trustee), 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, Basic Rent or any other amounts hereunder arising subsequent to such date of sale or retention shall cease to accrue, Lessee shall have no further obligation in this respect 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 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 and a Termination Notice may be given not more than once during any 365-day period. If (x) there is a sale of the Aircraft pursuant to this Section 9(c), (y) an Event of Default of the type described in Section 14(c) relating to Section 7(a) or Section 8 shall have occurred and be continuing on the date of such sale and (z) the fair market sales value of the Aircraft on the date of such sale is lower than it would have been had no such Event of Default occurred, Lessee shall pay to Lessor, in addition to any other amounts due hereunder, the amount in excess of Termination Value that Lessor would have received had no such Event of Default occurred. Lessor and Lessee shall confer in good faith with a view to reaching agreement on what the fair market sales value of the Aircraft would have been in the absence of such Event of Default. If Lessor and Lessee have not so agreed within 10 days after notice by Lessor or the Owner Participant of the occurrence of such Event of Default, the question - 38 - 39 shall be determined by an appraisal in accordance with the procedures described in Section 19(c). (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 Interim Rent or 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) the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence) (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 the Commencement Date or 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 Interim Rent or Basic Rent that would have been due on the Commencement Date or such Lease Period Date as if such Event of Loss had not occurred, or (ii) 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, 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 - 39 - 40 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. 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, if Basic Rent is payable in arrears on the date of such payment as indicated on Exhibit B hereto, Basic Rent due on such payment date, and all Supplemental Rent), under the Participation Agreement and under the Tax Indemnity Agreement, (1) Basic Rent, Supplemental Rent, Stipulated Loss Value, Termination Value or any other amount due hereunder shall cease to accrue, and Lessee shall have no further obligation in any such respect, provided, that the obligations of Lessee under the other Operative Documents which, by their express terms, are stated to survive shall not be terminated, (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 that 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 bill 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. Notwithstanding anything to the contrary contained in the foregoing, in the event that any payment of Stipulated Loss Value is to be made pursuant to this Section 10(a) on a date that is subsequent to the scheduled expiration of the Term, then Lessee shall, in addition to any other amounts payable pursuant to this Section 10(a), pay on the relevant Loss Payment Date such additional amount as is necessary to preserve the Owner Participant's Net Economic Return. Any calculation of any such additional amount shall be made by the Owner Participant and shall be subject to the verification procedures set forth in Exhibit E hereto. 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 (Lessee shall in connection therewith provide the certificate or the appraisal described in Section 5.06(4) of the Trust Indenture) 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 any airframe so substituted hereunder shall have a year of manufacture after December 31, 1994 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 bill of sale and a - 40 - 41 Federal Aviation Administration bill 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 that 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 bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft 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, (7)(x) furnish Lessor with an opinion of tax counsel chosen by the Owner Participant and reasonably acceptable to Lessee to the effect that such substitution will not result in any adverse tax consequences to the Owner Participant or (y) indemnify the Owner Participant as to such tax consequences in a manner reasonably satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (a) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB+/Baa1" or better from either S&P or Moody's so long as the rating by the other agency is not less than "BBB" or "Baa2", as the case may be, or (b) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such substitution or (c) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the - 41 - 42 Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee, and (8) 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 Interim Rent or 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 Pratt & Whitney Model PW2037 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, and Lessee shall in connection therewith provide the certificate or appraisal described in Section 5.06(2)(B)(iv) of the Trust Indenture; provided that both 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) bill 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 that 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 bill 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 - 42 - 43 "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 Interim Rent or 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) and the Owner Participant 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 to Lessor and Lessee, as their interests may appear; 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) and the Owner Participant 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 which is a Specified Country. 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any instrumentality or agency of any thereof whose obligations are backed by the full faith and credit of such government, 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, instrumentality or agency, as the case may be, prior to the end of the Term, Lessee shall be obligated to return the Airframe and such Engines or engines to Lessor - 43 - 44 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, instrumentality or agency. 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 Exhibit F) 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) bill 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 bill 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens), against receipt from Lessor of a bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 which is a Specified Country. 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government (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. (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 - 44 - 45 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 or a Default of the type referred to in Section 14(a) or 14(e) 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 or 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 any 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 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 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 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 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 - 45 - 46 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 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 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, any 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 by Lessee 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 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 - 46 - 47 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 or a Default of the type referred to in Section 14(a) or 14(e) 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 - 47 - 48 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 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) and the Owner Participant 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) and the Owner Participant 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 - 48 - 49 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). (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 by Lessee 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, 1996, a report, signed by Marsh & McLennan, Incorporated 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 - 49 - 50 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. (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. (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 or a Default of the type referred to in Section 14(a) or 14(e) 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 - 50 - 51 any such Event of Default or 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 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 unless an Event of Default shall have occurred and be continuing) 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; 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: - 51 - 52 (a) Lessee shall not have made a payment of Interim Rent, Basic Rent or Stipulated Loss Value within ten (10) 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 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 and in clauses (i)(B) and (ii) of the first sentence of second paragraph of Exhibit F) 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 one hundred eighty (180) 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 the representations and warranties in, or in connection with, the Credit Agreement) 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 - 52 - 53 (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 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 Section 14(c) or (d) hereof, 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 - 53 - 54 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, if any, 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 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 Stipulated Loss Value Date not earlier than ten days from the date of such notice, may demand that the 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 Interim Rent or Basic Rent for the Aircraft due on or after the payment date specified in such notice), any unpaid Interim Rent or Basic Rent due on the payment date so specified (unless Basic Rent is payable in advance on such date but 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 Stipulated Loss Value Date specified as the payment date in - 54 - 55 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 Stipulated Loss Value Date specified as the payment date in such notice at an annual rate equal to the Base Rate plus 3%; or (ii) an amount equal to the excess, if any, of the Stipulated Loss Value for such Aircraft, computed as of the Stipulated Loss Value Date specified as the payment date in such notice over the fair market sales value of such Aircraft (computed as hereafter in this Section provided) as of the Stipulated Loss Value 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 Interim Rent or Basic Rent for the Aircraft due on or after such date), any unpaid Interim Rent or 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 and an all cash, contemporaneous sale, 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 - 55 - 56 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 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 will endeavor 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 and any such public sale shall be conducted in general so as to afford Lessee (and any Sublessee) a commercially reasonable opportunity to bid (it being understood that Lessor shall - 56 - 57 incur no liability for its failure to provide any such notice). 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 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 at its expense 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 1997, 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 - 57 - 58 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 telecopy 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President-Finance and Treasurer (Telecopy No. (612) 726-0665), 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 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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. This Lease is a net lease. 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, - 58 - 59 (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, upon compliance with the notice provisions set forth in Section 19(e) hereof, to renew this Lease for up to three 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"). 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. At the expiration of the third Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have the option, upon compliance with the notice provisions set forth in Section 19(e) hereof, to renew this Lease for a renewal term of not less than one year and not more than three 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"). The aggregate length of all Fair Market Renewal Terms pursuant to this Section 19(a)(2) may not exceed five years. (3) If no written notice is delivered by Lessee to Lessor pursuant to Section 19(e) 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), 14(e) or 14(f) 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 - 59 - 60 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 any portion of Basic Rent during the Basic Term was payable in advance, in which case the same proportion of Basic Rent (i.e., the total Basic Rent payable during the Basic Term divided into the total Basic Rent payable in advance during the Basic Term) shall be payable in advance during such Renewal Term, 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 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 compliance with the notice provisions set forth in Section 19(e) hereof, to purchase the Aircraft on the last Business Day of the Basic Term or any Renewal Term for a purchase price equal to the fair market sales value of the Aircraft; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the purchase price by Lessee will not constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled to purchase the Aircraft if there shall exist on such last Business Day of the Basic Term or any Renewal Term, as the case may be, a Default of the type referred to in Section 14(e) hereof. 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 that 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. 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 - 60 - 61 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 this Lease, including the purchase and renewal options of 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 a notice from Lessee pursuant to Section 19(e) hereof, 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, 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 July 2 , 2012 (or, if July 2, 2012 is not a Business Day, the Business Day immediately succeeding July 2, 2012), Lessee shall have the - 61 - 62 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; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the Special Purchase Price by Lessee will not constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled to purchase the Aircraft if there shall exist on July 2, 2012 (or, if July 2, 2012 is not a Business Day, on the Business Day immediately succeeding July 2, 2012) a Default of the type referred to in Section 14(e) hereof. 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 2.15 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 that 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. (e) In order to exercise any right pursuant to Sections 19(a) or 19(b) hereof, Lessee shall, no earlier than 540 days and no later than 270 days prior to the expiration of the Basic Term or any Renewal Term, as the case may be, deliver to Lessor a notice in writing stating that it intends to exercise one of the options set forth in Sections 19(a) or 19(b) hereof. Any such notice shall be revocable until the date that is 270 days prior to the expiration of the Basic Term or such Renewal Term, as the case may be. Failure to revoke any such notice prior to such 270th day prior to the end of the Basic Term or such Renewal Term, as the case may be, shall constitute a binding and irrevocable election by Lessee to exercise one of the options set forth in Sections 19(a) or 19(b) hereof. In the event that any such notice has so been provided to Lessor, Lessee shall, no earlier than the 270th day and no later than the 90th day prior to the expiration of the Basic Term or such Renewal Term, as the case may be, specify which of the options in Sections 19(a) or 19(b) Lessee intends to elect. For the avoidance of doubt, the parties agree and acknowledge that Lessee may not specify which of the options in Sections 19(a) or 19(b) it intends to elect prior to the date that is 270 days earlier than the expiration of the Basic Term or such Renewal Term, as the case may be. 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 - 62 - 63 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 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 Moody's or AA or better by S&P and having a final maturity of ninety (90) days or less from date of purchase thereof; and (iii) commercial paper - 63 - 64 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 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 a Default of the type referred to in Section 14(a) or 14(e) or an Event of Default shall have occurred and be continuing. If a Default of the type referred to in Section 14(a) or 14(e) or an Event of Default shall have occurred and be continuing, Lessor, or if the Trust Indenture shall not have been discharged, the Indenture Trustee as assignee of Lessor, shall hold any such gain as security for the obligations of Lessee under this Lease and apply it against such obligations as and when due, and once all such Defaults and Events of Default have been remedied, any gain not so applied shall be remitted to Lessee. 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 - 64 - 65 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. 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 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. SECTION 27. HOLDOVER RENT. In the event that Lessee shall fail to return the Aircraft in accordance with Section 5 hereof at the scheduled expiration of the Term, then, unless such failure shall occur as a result of (x) the Aircraft having suffered an Event of Loss or (y) Lessee having purchased the Aircraft pursuant to Section 19 hereof and, in the case of either clauses (x) or (y) above, Lessee shall have made all payments required to be made pursuant to such Sections, Lessee shall pay to Lessor, for each such day beyond the scheduled expiration of the Term during which the Aircraft is not returned to Lessor in accordance with Section 5 hereof, an amount equal to the higher of (A) the daily fair market rental value of the Aircraft during such period, computed in accordance with Section 19(c) hereof, and (B) the average daily Basic Rent payable by Lessee during the Term. - 65 - 66 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 OF UTAH, 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: Senior Vice President- Finance and Treasurer 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 - 67 EXHIBIT A TO LEASE AGREEMENT [NW 1996 E] LEASE SUPPLEMENT NO. [NW 1996 E] LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement [NW 1996 E], dated as of April 29, 1996, 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 1996 E], dated as of April 29, 1996, relating to one Boeing 757-251 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 Boeing 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the date hereof consists of the following components: - -------------------- (1) This language for Lease Supplement No. 1. (2) This language for other Lease Supplements. 68 (i) Airframe: FAA Registration No. ______; manufacturer's serial no. _____; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P______ and P______ (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 January 2, 2019. 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 The Boeing Company, or any subcontractor or supplier of The Boeing Company, 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 69 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 OF UTAH, 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 70 EXHIBIT B TO LEASE AGREEMENT [NW 1996 E] INTERIM RENT, 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. Interim Rent, Basic Rent and Excess Amount: Excess Amount Transition (Percentage of Date Lessor's Cost) ---------------------- ------------------ Interim Rent Commencement (Percentage of Date Lessor's Cost) ---------------------- ------------------ * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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. 71 INTERIM RENT, 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 (Percentage of Lease Period Date Lessor's Cost) --------------------- ---------------------- * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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 5 of 5 72 Lessor's Cost for the Aircraft: Special Purchase Price: Transition Date: EXHIBIT B - Page 5 of 5 73 EXHIBIT C TO LEASE AGREEMENT [NW 1996 E] 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 ------------------ ------------------ 74 EXHIBIT D TO [NW 1996 E] 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 ------------- ------------ EX-4.I5 73 FIRST AMENDMENT TO LEASE AGREEMENT-1996 E 1 FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 E] This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 E], dated as of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee under the Trust Agreement [NW 1996 E], dated as of April 29, 1996 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a certain Lease Agreement [NW 1996 E], dated as of April 29, 1996 (the "ORIGINAL Lease"), between Lessee and Lessor (the Original Lease, as supplemented by Lease Supplement No. 1 [NW 1996 E] ("LEASE SUPPLEMENT NO. 1") between Lessor and Lessee, dated April 30, 1996, herein called the "LEASE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; WITNESSETH: WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the Aircraft, which consists of the following components: (i) Airframe: FAA Registration No. N541US; manufacturer's serial No. 26488; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P727172 and P727173; WHEREAS, Section 17 of the Participation Agreement [NW 1996 E], dated as of April 29, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee, [ ] (the "OWNER PARTICIPANT"), the loan participants named therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured Certificates issued by the Owner Trustee under the Trust Indenture and Security Agreement [NW 1996 E], dated as of April 29, 1996, between Lessor (not in its individual capacity except as expressly provided therein but as trustee) and the Indenture Trustee may be refinanced under certain circumstances; WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW 1996 E], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State Street Bank and Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines Corporation (the "GUARANTOR"); WHEREAS, Lessor and Lessee desire to recalculate the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price in order to reflect, among other things, the interest rate of the refinanced Secured Certificates; 2 WHEREAS, in connection with the recalculation of the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, Lessor and Lessee desire to amend the Lease; WHEREAS, a counterpart of the Original Lease, to which were attached and made a part thereof counterparts of Lease Supplement No. 1, the Trust Indenture and Security Agreement [NW 1996 E], dated as of April 29, 1996, and the Trust Agreement and Indenture Supplement [NW 1996 E], dated April 30, 1996, was recorded by the Federal Aviation Administration (the "FAA") on May 3, 1996, and assigned Conveyance No. E21279; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE. (a) The definitions of "Business Day", "Excess Amount", "Indemnitee", "Loan Participant", "Operative Documents", "Stipulated Loss Value", "Supplemental Rent", "Tax Indemnitee", and "Termination Value" in Section 1 of the Lease are hereby amended applicable on and after the Closing Date to read as follows: "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. "EXCESS AMOUNT" for the Closing Date or the Commencement 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 the Closing Date or the Commencement Date. "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) 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). "LOAN PARTICIPANT" means for any period prior to the Closing, the Original Loan Participants and their successors and assigns, and from and after the Closing, the Purchasers and their successors and registered assigns, including any Certificate Holder. -2- 3 "OPERATIVE DOCUMENTS" means each of the Participation Agreement, the documents referred to in Section 4(a)(v) of the Participation Agreement (including any amendments, modifications or supplements thereto), the Refunding Agreement, the Trust Indenture Amendment and the Refinancing Secured Certificates, collectively, and "Operative Document" shall mean each of the Operative Documents, individually. "STIPULATED LOSS VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v) hereof, the amount determined by multiplying Lessor's Cost 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 January 2, 2019 shall be the amount determined as provided in Section 19(a) hereof. "SUPPLEMENTAL RENT" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Interim Rent or 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 the Other Pass Through Trust Agreement, 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 and 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. "TERMINATION VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v), the amount determined by multiplying Lessor's Cost by the percentage specified in Exhibit D hereto opposite the Termination Date with -3- 4 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). (b) The following definitions are hereby inserted in Section 1 of the Lease in alphabetical order to be applicable on and after the Closing Date: "CLOSING" means the consummation of the refinancing operation contemplated by Section 1 of the Refunding Agreement. "CLOSING DATE" means the date on which the Closing shall occur. "INDEMNITY ADJUSTED PAYMENT" means any indemnity payment made pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Provider and the Subordination Agent. "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 Westdeutsche Landesbank Girozentrale, acting through its New York branch, as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider under the Liquidity Facilities, or any successor thereto. "MAKE-WHOLE AMOUNT" has the meaning assigned to that term in the Trust Indenture. "ORIGINAL LOAN PARTICIPANTS" means each institution executing the Participation Agreement as a Loan Participant. "ORIGINAL TRUST INDENTURE" means the Trust Indenture and Security Agreement [NW 1996 E], dated as of April 29, 1996, between the Owner Trustee and State Street Bank and Trust Company, as amended, modified and supplemented prior to the Closing Date. "OTHER PASS THROUGH TRUST AGREEMENT" means the pass through trust agreement and supplement pursuant to which the Class D pass through trust certificates are issued. -4- 5 "PASS THROUGH CERTIFICATES" means the pass through certificates to be issued by the Pass Through Trustee in connection with the Refinancing 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 Refunding Agreement to be entered into by and between Lessee and the Pass Through Trustee in connection with the Refinancing Transaction. "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. "PURCHASERS" means the Pass Through Trustees under each Pass Through Trust Agreement. "REFINANCING CERTIFICATE" means a certificate of an authorized representative of the Owner Participant delivered pursuant to Section 17(a)(1) of the Participation Agreement, setting forth, among other things, the Refinancing Date, the principal amount of debt to be issued by the Owner Trustee on the Refinancing Date, and the proposed revised schedules of Excess Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages, and the proposed Amortization Schedules. "REFINANCING DATE" means the proposed date on which the outstanding Secured Certificates will be redeemed and refinanced pursuant to Section 17 of the Participation Agreement. "REFINANCING EXPENSES" means the costs, fees, commissions and other expenses payable by the Owner Participant pursuant to Section 11(a) of the Refunding Agreement. "REFINANCING SECURED CERTIFICATES" means the Secured Certificates to be issued by Lessor to the Purchasers pursuant to the Trust Indenture Amendment and the Refunding Agreement on the Closing Date. "REFINANCING TRANSACTION" means a refinancing transaction pursuant to Section 17 of the Participation Agreement involving, among other things, (i) the redemption of the Secured Certificates issued on the Refinancing Date and the concurrent issuance and sale of the Refinancing Secured Certificates to the Pass Through Trustees (or their designee) and (ii) the issuance and sale of the Pass Through Certificates by the Pass Through Trustees. -5- 6 "REFUNDING AGREEMENT" means that certain Refunding Agreement [NW 1996 E], dated as of June 3, 1996, among Lessor, Lessee, the Owner Participant, the Purchasers, the Indenture Trustee, the Subordination Agent, and the Guarantor, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "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. "TRUST INDENTURE AMENDMENT" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 E], dated as of the Closing Date, 1996, between Lessor and State Street Bank and Trust Company, as Indenture Trustee. "TRUST INDENTURE ESTATE" has the meaning assigned to that term in the Trust Indenture. (c) The definitions of "Administrative Agent", "Assumed Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in Section 1 of the Lease are hereby deleted on and after the Closing Date. SECTION 2. AMENDMENT OF SECTION 3 OF THE LEASE. (a) Section 3(b) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (b) Section 3(c) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (c) Section 3(d)(i) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (i) In the event that (A) the Closing Date occurs other than on June 12, 1996, (B) Transaction Expenses paid by Lessor pursuant to Section 16 of the Participation Agreement are determined to be other than 1.0% of Lessor's Cost, or (C) Refinancing Expenses paid by Lessor or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement are determined to be other than 1.3281% of Lessor's Cost, then in each case, the Basic Rent percentages set forth in Exhibit B and the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated by the Owner Participant, on or prior to November 15, 1996 using the same methods and assumptions used to -6- 7 calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, 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. (d) Section 3(d)(ii) of the Lease is hereby amended by (i) deleting on and after the Closing Date "(A)" at the beginning thereof, (ii) deleting on and after the Closing Date the word "and" at the end of clause (A) thereof and substituting a period therefor, and (iii) deleting on and after the Closing Date clause (B) thereof in its entirety. (e) Section 3(d)(iii) of the Lease is hereby amended by deleting on and after the Closing Date the second sentence thereof. (f) The second sentence of Section 3(e) of the Lease is hereby amended to read in its entirety as follows on and after the Closing Date: "Lessee shall pay, on behalf of Lessor, 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 such Section 2.10(b) or Section 2.11." (g) Section 3(f) of the Lease is hereby amended by deleting on and after the Closing Date the numbers and punctuation "124-000-12" in the first sentence thereof and substituting therefor the numbers and punctuation "124-0000-12". (h) Section 3(g) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (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 the Commencement Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall, on the Commencement Date, prepay on the Commencement 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 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 -7- 8 rate per annum equal to the Base Rate as in effect from time to time plus 5% per annum 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 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 to 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 Interim Rent or 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 Make-Whole Amount, if any, due with respect to) the Secured Certificates then outstanding. (i) The following new Section 3(h) shall be added to the end of Section 3 of the Lease to be applicable on and after the Closing Date: (h) In the event that Lessee exercises its option to satisfy any indemnity obligation under the Tax Indemnity Agreement pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement, Lessee shall pay, in addition to any other payments due hereunder, (i) on each Lease Period Date, the portion of the Indemnity Adjusted Payments then due and payable on such date as set forth in an appropriate schedule to the Tax Indemnity Agreement and (ii) on the date that Stipulated Loss Value, Termination Value or the Special Purchase Price becomes due and payable, as the case may be, the Indemnity Adjusted Payment then due and payable by reference to the date as of which such Stipulated Loss Value, Termination Value or Special Purchase Price is payable as set forth in an appropriate schedule to the Tax Indemnity Agreement. -8- 9 SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE. Section 7(b)(x)(2) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the Owner Participant and the Indenture Trustee" and substituting therefor the word "Lessor", and (ii) deleting on and after the Closing Date the word "their" and substituting therefor the word "its". SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE. Section 9(c) of the Lease is hereby amended by deleting on and after the Closing Date the word "premium" each time it appears therein and substituting therefor the words "Make-Whole Amount" and by deleting on and after the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount" each time such words and such words and punctuation appear. SECTION 5. AMENDMENT OF SECTION 10(A) OF THE LEASE. Section 10(a) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier that thirty (30) days after such occurrence)" in clause (i)(y) thereof and substituting therefor the words "an earlier Business Day irrevocably specified fifteen days in advance by notice from Lessee to Lessor and the Indenture Trustee" and (ii) inserting on and after the Closing Date the words and punctuation ", which appraisal shall be from a firm of independent aircraft appraisers satisfactory to the Owner Participant," after the words "the certificate or the appraisal" in the third parenthetical phrase of clause (A) of the third paragraph thereof. SECTION 6. AMENDMENT OF SECTION 14(D) OF THE LEASE. Section 14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date the words and punctuation ", the Refunding Agreement" after the words "Participation Agreement" and (ii) adding on and after the Closing Date the words "and except for representations or warranties contained in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in the Refunding Agreement) or any document or instrument furnished pursuant to either thereof" after the word "Agreement" at the end of the first parenthetical phrase therein. SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "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: -9- 10 (i) if to Lessee, for U.S. Mail at 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President - Finance and Treasurer, (Telecopy No. (612) 726-0665), or to such other address, telex number or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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 on the signature pages of the Refunding Agreement." SECTION 8. AMENDMENT OF SECTION 19(D) OF THE LEASE. The second sentence of Section 19(d) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: 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. SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the Lease is hereby amended by (i) deleting on and after the Closing Date the word "or" between the words "Trust Agreement" and the words "the Trust Indenture" and substituting a comma therefor and (ii) inserting on and after the Closing Date the words "or the Refunding Agreement" after the words "Trust Indenture". SECTION 10. AMENDMENT OF EXHIBITS. (a) Exhibits B, C and D to the Lease attached hereto are applicable on and after the Closing Date. Exhibits B, C and D to the Lease are applicable until the Closing Date (b) The parties hereto agree that Exhibits B, C and D attached hereto reflect the recalculation of Basic Rent, Excess Amounts, Stipulated Loss Value and Termination -10- 11 Value percentages and the Special Purchase Price to take into account the interest rates borne by the Secured Certificates as of the Closing Date. SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease set forth in Sections 1 through 10 hereof shall be effective as of the date hereof. SECTION 12. RATIFICATION. Except as amended hereby, the Lease as heretofore supplemented continues and shall remain in full force and effect in all respects. SECTION 13. MISCELLANEOUS. Any provision of this Amendment 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 Amendment 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. Nothing contained herein shall be construed as conveying to Lessee any right, title or interest in the Aircraft except as a lessee. The section and paragraph headings in this Amendment 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 Amendment. THIS AMENDMENT 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 Amendment 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. To the extent, if any, that this Amendment 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 Amendment 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 as mortgagee under the Trust Indenture on the signature page thereof. -11- 12 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment to be duly executed on the day and year first above written. FIRST SECURITY BANK OF UTAH, 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: (1)Receipt of this original counterpart of the foregoing Amendment is hereby acknowledged this _____ day of ______________, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: ____________________________________________ Title: - -------------------- (1) This language contained in the original counterpart only. EX-4.I6 74 GUARANTEE - 1996 E 1 GUARANTEE [NW 1996 E] This GUARANTEE [NW 1996 E], dated as of April 29, 1996 (as amended, modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I hereto (collectively, together with their successors and permitted assigns, the "PARTIES", and, individually, a "PARTY"). WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to enter into a Lease Agreement [NW 1996 E], dated as of the date hereof (as amended, modified or supplemented from time to time, the "LEASE"), between the Lessee and First Security Bank of Utah, National Association, not in its individual capacity but solely as Owner Trustee (as defined therein), except as expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing 757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines (such aircraft and engines, and any substitute Airframe and Engines under the Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation Agreement [NW 1996 E], dated as of the date hereof (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), among the Lessee and the Parties; and WHEREAS, it is a condition precedent to the obligations of the Parties to consummate the transactions contemplated by the Participation Agreement that the Guarantor execute and deliver this Guarantee; and WHEREAS, the Lessor will assign by way of collateral security certain of its right, title and interest in and to this Guarantee to the Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and Security Agreement [NW 1996 E], dated as of the date hereof, between the Lessor and the Indenture Trustee (as amended, modified or supplemented from time to time, the "TRUST INDENTURE"), as security for the obligations of the Lessor referred to therein; and WHEREAS, the capitalized terms used herein that are not defined herein are used herein as defined in the Lease; NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and to induce the other Parties referred to above to enter into the Participation Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. GUARANTEE. (a) The Guarantor does hereby acknowledge that it is fully aware of the terms and conditions of the Lease, the Participation Agreement and the other Operative 2 Documents and the transactions and the other documents contemplated thereby, and does hereby irrevocably and fully and unconditionally guarantee, as primary obligor and not as surety merely, to the Parties, as their respective interests may appear, the payment by the Lessee of all payment obligations when due under the Lease (including, without limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement and the other Operative Documents to which the Lessee is a party (such obligations of the Lessee guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative Documents, and the timely performance of all other obligations of the Lessee thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby agree that in the event that the Lessee fails to pay any Financial Obligation when due for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within five days after the date on which such Financial Obligation became due and payable and the applicable grace period has expired, the Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Financial Obligation was not paid when due and for five days after the applicable grace period has expired, the amount of such Financial Obligation. The Guarantor hereby agrees that in the event the Lessee fails to perform any Nonfinancial Obligation for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within 10 Business Days after the date on which such Nonfinancial Obligation is required to be performed (for avoidance of doubt, to include any applicable grace period), the Guarantor shall cause such Nonfinancial Obligation to be performed within 10 Business Days following the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Nonfinancial Obligation was not performed when so required and that any applicable grace period has expired. (b) The obligations of the Guarantor hereunder shall not be, to the fullest extent permitted by law, affected by: the genuineness, validity, regularity or enforceability (or lack thereof) of any of the Lessee's obligations under the Lease or any other Operative Document to which the Lessee is a party, any amendment, waiver or other modification of the Lease or such other Operative Document (except that any such amendment or other modification in writing shall be given effect in determining the obligations of the Guarantor hereunder), or by any substitution, release or exchange of collateral for or other guaranty of any of the Obligations (except to the extent that such substitution, release or exchange is -2- 3 undertaken in accordance with the terms of the Operative Documents) without the consent of the Guarantor, or by any priority or preference to which any other obligations of the Lessee may be entitled over the Lessee's obligations under the Lease and the other Operative Documents to which the Lessee is a party, or by any other circumstance that might otherwise constitute a legal or equitable defense to or discharge of the obligations of a surety or guarantor including, without limitation, any defense arising out of any laws of the United States of America or any State thereof which would excuse, discharge, exempt, modify or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not, to the fullest extent permitted by law, affect the liability of the Guarantor hereunder: (a) the extension of the time for or waiver of, at any time or from time to time, without notice to the Guarantor, the Lessee's performance of or compliance with any of its obligations under the Operative Documents (except that such extension or waiver in writing shall be given effect in determining the obligations of the Guarantor hereunder)), (b) any assignment, transfer, sublease or other arrangement by which the Lessee transfers possession or loses control of the use of the Aircraft, (c) any defect in the title, condition, design, operation or fitness for use of, or damage to or loss or destruction of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or with any other Person, or any sale, transfer, lease or disposal of any of its assets or (e) any change in the ownership of any shares of capital stock of the Lessee. (c) This Guarantee is an absolute, present and continuing guaranty of payment and performance and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Lessee any unpaid amounts due or otherwise to enforce performance by the Lessee. The Guarantor specifically agrees, to the fullest extent permitted by law, that it shall not be necessary or required, and that the Guarantor shall not be entitled to require, that any Party (i) file suit or proceed to obtain or assert a claim for personal judgment against the Lessee for the Obligations, or (ii) make any effort at collection of the Obligations from the Lessee, or (iii) foreclose against or seek to realize upon any security now or hereafter existing for the Obligations, including the Trust Estate or the Trust Indenture Estate (as such term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations, or make any effort at collection of the Obligations from any such other Person, or exercise or assert any other right or remedy to which any Party is or may be entitled in connection with the Obligations or any security or other guaranty therefor, or (v) assert or file any claim against the assets of the Lessee or any other guarantor or other Person liable for the Obligations, or any part thereof, before or as a condition of enforcing the liability of the Guarantor under this Guarantee or requiring payment of said Obligations by the Guarantor hereunder, or at any time thereafter. (d) The Guarantor agrees, to the fullest extent permitted by law, that, without limiting the generality of this Guarantee, if an Event of Default shall have occurred and be continuing and the Lessor (or any assignee thereof including, without limitation, the Indenture Trustee) shall be prevented by applicable law from exercising its remedies (or any of -3- 4 them) under Section 15 of the Lease, the Lessor (or any assignee thereof, including, without limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive hereunder from the Guarantor, upon demand therefor the sums that would otherwise have been due from the Lessee under the Lease had such remedies been able to be exercised. The Guarantor hereby unconditionally waives, to the fullest extent permitted by law, any requirement that, as a condition precedent to the enforcement of the obligations of the Guarantor hereunder, the Lessee or all or any one or more of any other guarantors of any of the Obligations be joined as parties to any proceedings for the enforcement of any provision of this Guarantee. 2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be deemed to create any right in any Person except a Party and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person. 3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives notice of the acceptance of this Guarantee and of the performance or nonperformance by the Lessee, demand for payment from the Lessee or any other Person, notice of nonpayment or failure to perform on the part of the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent permitted by law, all other demands or notices whatsoever, other than the request for payment hereunder and notice provided for in Section 1 hereof. The obligations of the Guarantor shall be absolute and unconditional and shall remain in full force and effect until satisfaction of all Obligations hereunder and, without limiting the generality of the foregoing, to the extent not prohibited by applicable law, shall not be released, discharged or otherwise affected by the existence of any claims, set-off, defense or other rights that the Guarantor may have at any time and from time to time against any Party, whether in connection herewith or any unrelated transactions. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Financial Obligation is rescinded or must otherwise be returned by any Party upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding with respect to the Lessee or otherwise, all as though such payment had not been made. The Guarantor, by virtue of any payment or performance hereunder to a Party, shall be subrogated to such Party's claim against the Lessee or any other Person relating thereto; provided, however, that the Guarantor shall not be entitled to receive payment from the Lessee in respect of any claim against the Lessee arising from a payment by the Guarantor: (a) while an Event of Default shall have occurred and be continuing, in which case no such payment in respect of such a claim by the Guarantor may be made by the Lessee; or (b) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings relating to the Lessee, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Lessee, whether or not involving insolvency or bankruptcy proceedings, in which case the Obligations shall be paid and performed in full before any payment in respect of a claim by the Guarantor shall be made by or on behalf of the Lessee. -4- 5 4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or waiver or modification of, or consent under, the terms hereof, shall be effective unless evidenced by an instrument in writing signed by the Guarantor and each Party against whom such amendment, supplement, waiver, modification or consent is to be enforced. 5. PAYMENTS. All payments by the Guarantor hereunder in respect of any Obligation shall be made in Dollars and otherwise as provided in the Lease, the Participation Agreement or any other Operative Document in which such Obligation is contained; provided that the Guarantor consents to all the terms of the Trust Indenture and agrees to make all payments hereunder directly to the Indenture Trustee until such time as the Indenture Trustee shall give notice to the Guarantor that the Lien of the Trust Indenture has been fully discharged and thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay directly to the Lessor, in its individual capacity, or to the Owner Participant or another Party, as the case may be, any amount owing to such Person as Supplemental Rent for indemnities provided in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or otherwise not constituting part of the Trust Indenture Estate (as such term is defined in the Trust Indenture). 6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust Indenture, the Lessor will assign, and create a security interest in, certain of its rights hereunder to and for the benefit of the Indenture Trustee. From and after the execution and delivery of the Trust Indenture, and until receipt by the Guarantor of a written notice from the Indenture Trustee to the effect that the Trust Indenture has been fully satisfied and discharged, no remedy or election hereunder may be exercised by the Lessor or consent given by the Lessor, except by or with the prior written consent of the Indenture Trustee, and the Guarantor will make payment of all amounts hereunder that are assigned to the Indenture Trustee directly to the Indenture Trustee, and such payments shall discharge the obligations of the Guarantor to the Lessor to the extent of such payments. 7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Parties as follows: (a) It is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware. It has all requisite corporate power and authority to own and operate its properties, to carry on its business as presently conducted and to enter into and perform its obligations under this Guarantee. (b) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with or the taking of any other action in respect of, any Federal, state, municipal or other governmental department, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, is now, or under existing law in the future will be, required or necessary on its behalf to authorize the execution, delivery and performance (other than as contemplated by the Operative Documents in the case of the -5- 6 performance of the Non-Financial Obligations) by it of this Guarantee, or for the legality, validity, binding effect or enforceability hereof. (c) Neither the execution and delivery of this Guarantee, the performance of its obligations hereunder, nor its consummation of the transactions contemplated hereby, will conflict with or result in any breach of, or constitute a default under, or result in any creation or imposition of any Lien upon any of its property or assets under, any applicable laws or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject, or its Articles of Incorporation or by-laws. (d) The execution, delivery and performance by it of this Guarantee have been duly authorized by all necessary corporate action. This Guarantee has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 8. JURISDICTIONAL MATTERS. The Guarantor (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 Guarantee brought by any party, 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 Guarantee may not be enforced in or by such courts. The Guarantor hereby generally consents to service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of the Guarantor in New York City as from time to time may be designated by the Guarantor in writing to the Parties. 9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Parties, with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and (c) shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of, and shall be enforceable by, each of the Parties to the fullest extent permitted by applicable laws. The headings in this Guarantee are for purposes of reference only, and shall not limit or otherwise affect the meanings hereof. -6- 7 10. NOTICES. All requests, notices or other communications hereunder shall be in writing, addressed as follows: If to the Guarantor: Northwest Airlines Corporation for U.S. Mail: 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 for Overnight courier: 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President -- Finance and Treasurer Telecopy No.: (612) 726-0665 If to a Party: to the address or telecopy number set forth in the Participation Agreement All requests, notices or other communications shall be given in the manner, and shall be effective at the times and under the terms, set forth in Section 13(b) of the Participation Agreement. 11. NO WAIVERS. No failure on the part of any Party to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder or under the Lease, the Participation Agreement or the other Operative Documents, and any other agreement or instrument relating thereto will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise of such right or remedy or the exercise of any other right or remedy or under the Lease, the Participation Agreement or the other Operative Documents, and any other agreement or instrument relating thereto. 12. SURVIVAL. All representations and warranties contained herein or made in writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee regardless of any investigation made by any Party or any other Person. 13. SEVERABILITY. To the fullest extent permitted by applicable law, any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or any provision in any other Operative Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. -7- 8 14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES 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 GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK. 15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by such Party in enforcing, or collecting under, this Guarantee. 16. TERMINATION. Subject to the provisions of Section 3 hereof, this Guarantee shall terminate upon the indefeasible payment and performance in full of all of the Obligations. 17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to the Obligations described in Section 1 and nothing in this Guarantee shall be deemed to constitute a guarantee of payment of any of the Secured Certificates or shall give rise to any inference that the Lessee or the Guarantor has so guaranteed such payment. -8- 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed as of the date first hereinabove set forth. NORTHWEST AIRLINES CORPORATION By: ----------------------------------------- Name: Joseph E. Francht, Jr. Title: Senior Vice President-Finance and Treasurer Accepted as of the above date: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION in its individual capacity and as Owner Trustee By: --------------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY in its individual capacity and as Indenture Trustee By: --------------------------------------- Name: Title: -9- 10 SCHEDULE I TO GUARANTEE [NW 1996 E] PARTIES First Security Bank of Utah, National Association, in its individual capacity and as Owner Trustee State Street Bank and Trust Company, as Indenture Trustee [Owner Participant] [Bridge Lenders] EX-4.I7 75 PARTICIPATION AGREEMENT - 1996 E 1 PARTICIPATION AGREEMENT [NW 1996 E] THIS PARTICIPATION AGREEMENT [NW 1996 E] dated as of April 29, 1996, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of the State of Minnesota (herein called "LESSEE"), (ii) the institution listed on Schedule I hereto and identified therein as the "OWNER PARTICIPANT" which executes and delivers a counterpart of this Agreement and of the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date referred to below, (iii) the institutions listed on Schedule I and identified therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, 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"), and (v) State Street Bank and Trust Company, a Massachusetts trust company, in its individual capacity and as Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein, in such latter capacity together with any successor indenture trustee, called the "INDENTURE TRUSTEE"); W I T N E S S E T H: WHEREAS, pursuant to the Purchase Agreement (as such term is defined in the Lease hereinafter referred to) between Lessee and the Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things, certain Boeing 757-251 aircraft, including the Aircraft which has been delivered by the Manufacturer to Lessee and is the subject of this Agreement; WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Lessee and the Owner Trustee are entering into a Purchase Agreement Assignment [NW 1996 E], dated as of the date hereof (herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to the Owner Trustee certain rights and interests of Lessee under the Purchase Agreement with respect to the Aircraft; and (ii) the Manufacturer has executed the Consent and Agreement [NW 1996 E] (herein called the "CONSENT AND AGREEMENT"), substantially in the form attached to the Purchase Agreement Assignment (herein called the "CONSENT AND AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996 E], 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 - 1 - 2 in Section 1.01 thereof (herein called the "TRUST ESTATE") for the use and benefit of the Owner Participant; WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with the execution and delivery of this Agreement are entering into the Trust Indenture and Security Agreement [NW 1996 E], 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 issues to each of the Loan Participants one or more secured certificates (herein called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan Participants arising from the Loan Participants' making secured loans to the Owner Trustee to finance a portion of the Owner Trustee's purchase of the Aircraft, which Secured Certificates are to be secured by the mortgage and security interests created by the Owner Trustee in favor of the Indenture Trustee, and 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; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1996 E], dated as of the date hereof (such Lease Agreement, as the same may be amended or supplemented from time to time to the extent permitted by the terms thereof and this Agreement, herein called the "LEASE", such term to include, unless the context otherwise requires, the Lease Supplement referred to below), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft is sold and delivered by Lessee to the Owner Trustee under the Bill 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; WHEREAS, certain terms are used herein as defined in Section 13(a) hereof; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and conditions of this Agreement, each Loan Participant agrees to finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule II opposite the name of such Loan Participant. Each Loan Participant shall make such Loan to the Owner Trustee on a date to be designated pursuant to - 2 - 3 Section 2 hereof, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite such Loan Participant's name in Schedule II hereto. Upon the occurrence of the above transfers by the Loan Participants to the Owner Trustee, to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon, the Owner Trustee shall issue and the Indenture Trustee shall authenticate Secured Certificates which shall be delivered simultaneously to the Loan Participants under the Trust Indenture to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon. The Owner Trustee agrees to pay the Secured Certificates in installments in the amounts and on the dates provided in the Trust Indenture together with interest thereon and all other amounts payable with respect thereto, all as more fully provided in the Trust Indenture. (b) Participation by Owner Participant. Subject to the terms and conditions of this Agreement, the Owner Participant hereby agrees to participate in the payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft on a date to be designated pursuant to Section 2 hereof, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite the Owner Participant's name in Schedule II hereto. (c) General Provisions. The amount of the participation of each of the Loan Participants and the Owner Participant to be made as provided above in the payment of Lessor's Cost for the Aircraft is hereinafter called such party's "COMMITMENT" for the Aircraft. In case any of the Loan Participants or the Owner Participant shall default in its obligation under the provisions of this Section 1, no other such party shall have any obligation to make any portion of such defaulted amount available or to increase the amount of its Commitment and the obligation of such nondefaulting party shall remain subject to the terms and conditions set forth in this Agreement. Upon receipt by the Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant to this Section 1 and the satisfaction of the conditions set forth in Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take title to and accept delivery of the Aircraft. In consideration of the transfer of title to and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall, simultaneously with such transfer of title and delivery, pay to Lessee from the amounts so furnished it by the Participants, the Lessor's Cost. (d) Determination of Interest Period. The length of each Interest Period shall be determined by Lessee on behalf of the Owner Trustee in accordance with Section 2.02 of the Trust Indenture. - 3 - 4 SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each Participant, the Owner 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 and the amount of each Participant's Commitment for the Aircraft. As to each Participant, the making of its Commitment for the Aircraft available in the manner required by Section 1 shall constitute a waiver of such notice. SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant agrees that its releasing the amount of its Commitment for the Aircraft to the account of the Owner Trustee in accordance with the terms of Section 1 shall constitute, subject to satisfaction or waiver of the conditions set forth in Section 4(a), without further act, authorization and direction by the Owner Participant to the Owner Trustee: (i) to pay to Lessee the Lessor's Cost for the Aircraft; (ii) to the extent not previously accomplished by a prior authorization, to authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees, or an agent or agents, of Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant to the Acceptance Certificate; (iii) to accept from Lessee the Bill of Sale and the FAA Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9); (iv) to execute an Aircraft Registration Application, the Lease Supplement and the Trust Supplement, in each case covering the Aircraft; (v) to borrow from the Loan Participants to finance a portion of the Lessor's Cost for the Aircraft and to issue to the Loan Participants Secured Certificates in aggregate principal amount equal to the amount borrowed, pursuant hereto and to the Trust Indenture; and (vi) to take such other action as may be required to be taken by the Owner Trustee on the Delivery Date by the terms of any Operative Document. SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations in the Aircraft. It is agreed that the obligations of each of the Loan Participants and the Owner Participant to participate in the payment of Lessor's Cost and to make available the amount of its respective Commitment are subject to the satisfaction prior to or on the Delivery Date of the following conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it relates to representations and warranties only contained in the Tax Indemnity Agreement), (xx), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and (xxvii) shall not be a condition precedent to the obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it - 4 - 5 relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a condition precedent to the obligations of the Owner Participant: (i) The Loan Participants 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 applicable law or regulations or guidelines or interpretations thereof by appropriate regulatory authorities shall be in effect which, in the opinion of such Loan Participant or the Owner Participant, as the case may be, or their respective counsel, would make it a violation of law or regulations or guidelines for such Loan Participant or the Owner Participant to make its Commitment available in accordance with Section 1 hereof or, in the case of such Loan Participant, to acquire a Secured Certificate or to realize the benefits of the security afforded by the Trust Indenture. (iii) In the case of the Owner Participant, the Loan Participants shall have made available the amount of their Commitments for the Aircraft in accordance with Section 1 hereof. (iv) In the case of the Loan Participants, 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 Documentation Agent and the Owner Participant and shall be in full force and effect and executed counterparts shall have been delivered to the Loan Participants and the Owner Participant, or their respective counsel, provided that only each Loan Participant shall receive an executed original of its respective Secured Certificate and provided, further, that an excerpted copy of the Purchase Agreement shall only be delivered to and retained by the Owner Trustee and the Owner Participant (but the Indenture Trustee shall also retain an excerpted copy of the Purchase Agreement which may be inspected by the Documentation Agent and its counsel before the Delivery Date and subsequent to the Delivery Date may be inspected and reviewed by the Indenture Trustee, any Loan Participant and their respective counsel if and only if there shall occur and be continuing an Event of Default), 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 shall only be delivered to Lessee and the Owner Participant and their respective counsel: (1) an excerpted copy of the Purchase Agreement (insofar as it relates to the Aircraft); - 5 - 6 (2) the Purchase Agreement Assignment; (3) the Lease; (4) a Lease Supplement covering the Aircraft dated the Delivery Date; (5) the Tax Indemnity Agreement; (6) the Trust Agreement; (7) a Trust Supplement covering the Aircraft dated the Delivery Date; (8) the Bill of Sale; (9) the FAA Bill of Sale; (10) an acceptance certificate covering the Aircraft in the form agreed to by the Documentation Agent, 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; (12) the Secured Certificates; (13) the Consent and Agreement; (14) the Guarantee; and (15) the Owner Participant Guaranty. All of the foregoing documents, together with this Agreement, are sometimes referred to herein, collectively, as the "OPERATIVE DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT". (vi) A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the Granting Clause of the Trust Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Owner 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 Owner Participant or the Documentation Agent shall have been executed and delivered by Lessee or the Owner Trustee and duly filed. - 6 - 7 (vii) The Loan Participants and the Owner Participant shall have received the following, in each case in form and substance satisfactory to the Documentation Agent and the Owner Participant: (1) a certified copy of the Certificate of Incorporation and By-Laws of Lessee and a copy of resolutions of the board of directors of Lessee, certified by a Vice President, the Secretary or an Assistant Secretary of Lessee, duly authorizing the sale of the Aircraft and the lease by Lessee of the Aircraft under the Lease and the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the Purchase Agreement Assignment, the Tax Indemnity Agreement and each other document required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof, and a certified copy of the Certificate of Incorporation and By-Laws of the Guarantor and a copy of resolutions of the Board of Directors of the Guarantor, certified by a Vice President, the Secretary or an Assistant Secretary of the Guarantor, duly authorizing the execution, delivery and performance by the Guarantor of the Guarantee; (2) such other documents and evidence with respect to Lessee, the Guarantor, the Manufacturer, the Owner Trustee, the Owner Participant, the Owner Participant Guarantor, the Indenture Trustee, and the Loan Participants as the Loan Participants or the Owner Participant, or the respective counsel for the Loan Participants or the Owner Participant, may reasonably request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; and (3) a certificate of Lessee as to the person or persons authorized to execute and deliver this Agreement, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft and any other documents to be executed on behalf of Lessee in connection with the transactions contemplated hereby and as to the signatures of such person or persons, and a certificate of the Guarantor as to the person or persons authorized to execute and deliver the Guarantee and as to the signatures of such person or persons. (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 - 7 - 8 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 following statements shall be true, and the Documentation Agent and the Owner Participant shall have received evidence satisfactory to it to the effect that: (1) the Owner Trustee has good title (subject to filing and recording the FAA Bill of Sale with the Federal Aviation Administration) to the Aircraft on such Delivery Date, free and clear of Liens other than the rights of Lessee under the Lease and Lease Supplement covering the Aircraft, the mortgage and security interests created by the Trust Indenture, the rights of the Owner Participant under the Trust Agreement and the Trust Supplement, and Liens permitted by clause (v) of Section 6 of the Lease; (2) the Aircraft has been duly certified by the Federal Aviation Administration (or there shall have been received adequate assurances from the Federal Aviation Administration that the certification will be issued as soon as the registration of the Aircraft is complete) as to type and airworthiness in accordance with the terms of the Lease; (3) the FAA Bill of Sale, the Lease, the Lease Supplement, the Trust Indenture and the Trust Supplement covering the Aircraft shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the Federal Aviation Administration, and the Trust Agreement shall have been filed (or shall be in the process of being so filed) with the Federal Aviation Administration; and (4) application for registration of the Aircraft in the name of the Owner Trustee has been duly made with the Federal Aviation Administration. (x) On the Delivery Date, (A) the representations and warranties of Lessee, the Owner Participant and the Owner Trustee contained in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing, or would result from the purchase, sale, lease or mortgage of the Aircraft, which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default. (xi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner - 8 - 9 Participant and the Owner Trustee, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for Lessee and the Guarantor, as to New York and certain federal law matters, and Lessee's and the Guarantor's in-house or other counsel, as to Minnesota and certain federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota and has the corporate power and authority to carry on its business as now conducted and to enter into and perform its obligations under the Lessee Documents. Lessee is a Certificated Air Carrier. The Guarantor is a corporation duly organized and validly existing pursuant to the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under the Guarantee; (2) the execution, delivery and performance of the Lessee Documents by Lessee and of the Guarantee by the Guarantor have been duly authorized by all necessary corporate action on the part of Lessee and the Guarantor, as the case may be, do not require any approval of stockholders of Lessee or the Guarantor, as the case may be, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of Lessee or the Guarantor, as the case may be (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of any thereof by Lessee or the Guarantor, as the case may be, nor the performance by Lessee or the Guarantor, as the case may be, of its respective obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on Lessee or the Guarantor, as the case may be, or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Permitted Liens) upon any property of Lessee or the Guarantor, as the case may be, under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter, by-law or permit issued by any Minnesota or United States governmental authority to which Lessee or the Guarantor, as the case may be, is a party or by which Lessee or the Guarantor, as the case may be, or its properties may be bound or affected; (3) neither the execution and delivery by Lessee of the Lessee Documents or by the Guarantor of the Guarantee nor the performance by Lessee or the Guarantor of their respective 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 - 9 - 10 United States, except for (A) the registration of the Aircraft (including the placement on board of the owner's copy of the application for registration of the Aircraft and, if necessary, a flying time wire), recordations and other actions referred to in paragraph 5 below and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents or the Guarantee after the Delivery Date; (4) the Guarantee has been duly entered into and delivered by the Guarantor, the Purchase Agreement (insofar as it relates to the Aircraft) has been duly entered into and delivered by Lessee, and each of the other Lessee Documents has been duly entered into and delivered by Lessee and each of such other Lessee Documents and the Guarantee constitutes 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 its respective terms, except as limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally, (C) applicable laws which may affect the remedies provided in the Lease, which laws, however, do not in the opinion of such counsel make the remedies provided in the Lease inadequate for the practical realization of the benefits provided thereby, but no opinion is expressed as to the amount or priority of any recovery under any particular circumstances and, in particular, no opinion is expressed as to the effect on such remedies of Section 1-201(37) of the Uniform Commercial Code, as in effect in any jurisdiction, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations; (5) subject to the registration of the Aircraft with the Federal Aviation Administration in the name of the Owner Trustee, and assuming the due and timely filing for recordation in accordance with the provisions of the Federal Aviation Act of (A) the FAA Bill of Sale, (B) the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and made a part thereof and (C) the Trust Indenture with the Trust Supplement attached thereto and made a part thereof, with respect to such portion of the Aircraft as is covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code by virtue of the same constituting an "aircraft" or an "aircraft engine" as defined in the Federal Aviation Act, no further filing or recording of any document (including any financing statement with respect to the Lease under Article 9 of the Uniform Commercial Code of Minnesota or Utah), is necessary in any applicable jurisdiction within the United States in order (x) to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee or any third parties or (y) to create and perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee or any third parties. With - 10 - 11 respect to such portion of the Aircraft, if any, as may not be deemed to constitute an "aircraft" or "aircraft engine" as defined in the Federal Aviation Act, except for the filing of financing statements in appropriate filing offices in the States of Minnesota and Utah and such other states as may be specified in such counsel's opinion, and for the filings of periodic continuation statements with respect to such filings as and when required, (x) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary under Article 9 of the Uniform Commercial Code in order to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee and any third parties in any applicable jurisdiction within the United States, and (y) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary or advisable under Article 9 of the Uniform Commercial Code in order to create or perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee and any third parties in any applicable jurisdiction within the United States; and (6) there are no legal or governmental proceedings pending or, to the best knowledge of such in-house counsel, threatened to which Lessee or Guarantor or any of their respective subsidiaries is a party or to which any of the properties of Lessee or Guarantor or any of their respective subsidiaries is subject other than those proceedings summarized in the Guarantor's publicly filed annual, quarterly and other reports filed with the Securities and Exchange Commission, and proceedings which such in-house counsel believes would not reasonably be expected to have a material adverse effect on Lessee and its subsidiaries, taken as a whole, or on the power or ability of Lessee to perform its obligations under the Lessee Documents. The opinion contemplated by this paragraph (xi) shall be to such further effect with respect to such other matters as the Documentation Agent or the Owner Participant may reasonably request. Such opinion with respect to the matters specified in this paragraph (xi) may rely exclusively (A) upon the opinion of special counsel in Oklahoma City, Oklahoma, referred to in paragraph (xv) of this Section 4(a) with respect to the matters stated therein, and (B) upon the opinion of Ray, Quinney & Nebeker with respect to the opinion in paragraph (5) above insofar as it relates to the laws of the State of Utah and (C) upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, with respect to matters of fact, and may state that no opinion is expressed as to laws other than laws of the State of New York (in the case of such special counsel's opinion), the State of Minnesota and the Delaware General Corporation Law (in the case of Lessee's in-house or other counsel's opinion) and the Federal laws of the United States. Such counsel may assume that, except for the filings and recordations contemplated herein, there are no filings or recordations with respect to - 11 - 12 the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement or the Trust Indenture with the Federal Aviation Administration, or of Uniform Commercial Code financing statements naming the Owner Trustee as a debtor in the filing offices of the Secretary of State of Minnesota, the Secretary of State of Utah or in any other filing office in the States of Minnesota or Utah, or in such other filing offices in such other jurisdictions as shall be identified in such counsel's opinion. (xii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from a counsel to the Manufacturer, with respect to the Manufacturer Documents and such other matters as such parties may reasonably request. (xiii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, to the effect that: (1) First Security Bank of Utah, National Association is a national banking association duly organized, validly existing and in good standing under the laws of the United States, is a Citizen of the United States and has under the laws of the State of Utah and federal banking law the power, authority and legal right to execute, deliver and carry out in its capacity as Owner Trustee or in its individual capacity, as the case may be, the terms of the Owner Trustee Documents, including the Secured Certificates; (2) each of the Owner Trustee Documents has been duly authorized, executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, and each of the Owner Trustee Documents constitutes the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, in the case of indemnity provisions contained herein and therein, as limited by public policy - 12 - 13 considerations, and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (3) the execution, delivery and performance by the Owner Trustee and by First Security Bank of Utah, National Association, in its individual capacity, or both, as the case may be, of the Owner Trustee Documents and the consummation of the transactions by the Owner Trustee and by First Security Bank of Utah, National Association in its individual capacity contemplated thereby are not and will not be in violation of the articles of association or By-Laws of First Security Bank of Utah, National Association or of any indenture, mortgage, credit agreement, license or other agreement or instrument known to such counsel after due inquiry to which First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee is a party or by which it is bound, or of any Federal or Utah law, governmental rule or regulation applicable to First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee or any judgment or order applicable to it and known to such counsel after due inquiry; (4) neither the execution and delivery by the Owner Trustee and, where appropriate, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, of the Owner Trustee's Documents nor the consummation of any of the transactions by the Owner Trustee, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing Federal law governing the banking and trust powers of First Security Bank of Utah, National Association or Utah law (except for filings pursuant to the Uniform Commercial Code, and except for compliance with requirements of the Federal Aviation Act as to which such counsel may express no opinion); (5) the Trust Agreement, as supplemented by the Trust Supplement, duly creates for the benefit of the Owner Participant the trust interest in the Trust Estate which the Trust Agreement by its terms purports to create; (6) assuming that Utah law were to govern the perfection of the security interests in the Trust Indenture Estate under the Trust Indenture, except for (i) the Indenture Trustee's taking of possession of the original counterparts of the Lease and the Lease Supplement covering the Aircraft (insofar as the Lease and the Lease Supplement covering the Aircraft may constitute chattel paper (as - 13 - 14 such term is defined in the Uniform Commercial Code as in effect in Utah)) and all monies and securities (including instruments) required to be deposited with the Indenture Trustee, and (ii) the filing of Uniform Commercial Code financing statements with the office of the Division of Corporations and Commercial Code of the State of Utah with respect to the security interests created in the Trust Indenture Estate under the Trust Indenture, naming the Owner Trustee as debtor and the Indenture Trustee as secured party, which filing has been duly effected, no other filing or recording or refiling or rerecording is necessary in the State of Utah to create, perfect or maintain the perfected status of such security interest (except for the timely filing of continuation statements in respect of such financing statements); (7) assuming that the Operative Documents were negotiated to a substantial degree in the State of New York and that the closing of a substantial portion of the transactions contemplated by the Operative Documents occurred in the State of New York, the choice of New York law to govern the Participation Agreement, the Lease, and each other Operative Document (other than the Trust Agreement) to which the Owner Trustee or First Security Bank of Utah, National Association in its individual capacity, or both, is a party is, under the laws of the State of Utah, a valid choice of law and should, in a properly presented case, be honored by the courts of the State of Utah; (8) the Owner Trustee has received from Lessee such title to the Aircraft as Lessee had immediately prior to the conveyance to the Owner Trustee, subject to the rights of the Owner Trustee and Lessee under the Lease and the security interest created pursuant to the Trust Indenture and the Trust Supplement; (9) no taxes, fees or other charges, except taxes imposed on fees payable to the Owner Trustee, will be imposed by Salt Lake City or the State of Utah or any political subdivision or taxing authority thereof on or with respect to the execution, delivery or performance of any of the Operative Documents and the trust created pursuant to the Trust Agreement will not be subject to any such taxes, fees or other charges on, based on or measured by the net income of the Trust Estate (as distinguished from the net income of the Owner Participant) solely by reason of the Owner Trustee's location in Salt Lake City or the State of Utah (assuming for purposes of this opinion that the Owner Participant, the Owner Trustee and the Trust Estate would not be subject to any such tax, fee or other charge if the Owner Trustee performed its duties under the Trust Agreement and the Trust Indenture from an office located outside Utah); and (10) there are no pending or, to the knowledge of such counsel after due inquiry, threatened proceedings against or affecting the Owner Trustee before any court or administrative agency, individually or in the aggregate, which, if - 14 - 15 determined adversely to it, would materially adversely affect the power or ability of the Owner Trustee to perform its obligations under the Owner Trustee Documents. Such opinion shall be to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Indenture Trustee or Lessee may reasonably request. Such opinion may state that (A) no opinion is expressed as to laws other than the laws of the State of Utah, the Federal laws of the United States governing the banking and trust powers of First Security Bank of Utah, National Association, and the Federal Aviation Act as it relates to paragraph (1) and (B) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. Such opinion may assume (M) the due authentication of the Secured Certificates by the Indenture Trustee, (N) that the Operative Documents (other than the Trust Agreement) are legal, valid and binding under the laws of the State of New York and (O) the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and of the other Operative Documents by each of the parties thereto other than First Security Bank of Utah, National Association in its individual capacity and as the Owner Trustee. (xiv) The Loan Participants shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Trustee and Lessee, from Dewey Ballantine, special counsel for the Owner Participant and the Owner Participant Guarantor, and the Owner Participant's in-house counsel, to the collective effect that: (1) the Owner Participant is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Documents; the Owner Participant Guarantor is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Guaranty; (2) the Owner Participant Documents have been duly authorized, executed and delivered by the Owner Participant and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitute legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and, in the - 15 - 16 case of indemnity provisions contained herein and therein, as limited by public policy considerations; the Owner Participant Guaranty has been duly authorized, executed and delivered by the Owner Participant Guarantor and constitutes the legal, valid and binding obligation of the Owner Participant Guarantor, enforceable against the Owner Participant Guarantor in accordance with its terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; (3) neither the execution and delivery by the Owner Participant of the Owner Participant Documents or by the Owner Participant Guarantor of the Owner Participant Guaranty nor the consummation of any of the transactions by the Owner Participant or the Owner Participant Guarantor contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency of the United States, the State of Delaware or the State in which the principal office of the Owner Participant or the Owner Participant Guarantor is located (or any governmental subdivision of any thereof) (except as shall have been duly obtained or given, specifying the same); (4) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the other parties, if any, thereto (other than the Owner Participant in the case of this Agreement), and the due authentication of the Secured Certificates by the Indenture Trustee, the Owner Trustee Documents (other than the Trust Agreement) constitute legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (5) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the Indenture Trustee as aforesaid, the Trust Indenture duly creates for the benefit of the Indenture Trustee the security interests which the Trust Indenture purports to create and the Indenture Trustee is entitled to the benefits and security afforded by the Trust Indenture; - 16 - 17 (6) the execution, delivery and performance of the Owner Participant Documents by the Owner Participant does not require any approval of stockholders of the Owner Participant, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Documents by the Owner Participant nor the performance by the Owner Participant of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on the Owner Participant or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any New York, Delaware or United States governmental authority to which the Owner Participant is a party or by which it or its properties may be bound or affected; the execution, delivery and performance of the Owner Participant Guaranty by the Owner Participant Guarantor does not require any approval of stockholders of the Owner Participant Guarantor, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant Guarantor (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Guaranty by the Owner Participant Guarantor, nor the performance by the Owner Participant Guarantor of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on the Owner Participant Guarantor or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant Guarantor under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any New York, Delaware or United States governmental authority to which the Owner Participant Guarantor is a party or by which it or its properties may be bound or affected; and (7) there are no pending or, to the best knowledge of such counsel, threatened actions or proceedings against or affecting the Owner Participant before any court or administrative agency individually or in the aggregate which, - 17 - 18 if determined adversely to the Owner Participant, would have a material adverse effect on the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; there are no pending or, to the best knowledge of such counsel, threatened actions or proceedings against or affecting the Owner Participant Guarantor before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant Guarantor, would have a material adverse effect on the Owner Participant Guarantor or the ability of the Owner Participant Guarantor to perform its obligations under the Owner Participant Guaranty; and to such further effect with respect to such other matters or documents relating to the Owner Participant's or the Owner Participant Guarantor's obligations in connection with this Agreement as the Documentation Agent, the Indenture Trustee, the Owner Trustee or Lessee may reasonably request. Such opinion may rely upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, as to matters of fact. Such opinion may state that (M) no opinion is expressed as to laws other than the General Corporation Law of the State of Delaware, the laws of the State of New York and the Federal laws of the United States, and (N) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. (xv) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to the effect that: (1) the FAA Bill of Sale, the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and the Trust Indenture with the Trust Supplement attached thereto are in due form for recording by and have been duly filed for recordation with the Federal Aviation Administration in accordance with the provisions of Section 44107 of Title 49 of the United States Code; (2) proper application for registration of the Aircraft in the name of the Owner Trustee together with the affidavits of the Owner Trustee and the Owner Participant required by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations and the Trust Agreement have been duly filed with the Federal Aviation Administration in accordance with the Federal Aviation Act, and such counsel is of the opinion that the Federal Aviation Administration will issue a Certificate of Aircraft Registration (AC Form 8050-3) in response to said application; - 18 - 19 (3) the Owner Trustee is the owner of the legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interests created by the Trust Indenture and such other Liens as are permitted by the Lease or this Agreement; (4) the Aircraft is eligible for registration in the name of the Owner Trustee and will be duly registered in due course in the name of the Owner Trustee pursuant to and in accordance with the provisions of Sections 44102 and 44103 of Title 49 of the United States Code; (5) the Trust Indenture as supplemented by the Trust Supplement creates a duly and validly perfected first priority security interest in the Aircraft and a duly perfected assignment of all the right, title and interest of the Owner Trustee in, to and under the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), subject only to the Lease and to Liens permitted by the Lease and the Trust Indenture, it being understood that no opinion need be expressed as to the validity or enforceability of such security interest under local law or as against third parties in respect of the Aircraft when the same is outside the United States; (6) none of the Trust Indenture, the Trust Agreement, the Trust Supplement, the Lease or the Lease Supplement is required to be filed or recorded in any other place within the United States in order to perfect the security interest in the Aircraft and the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), under the applicable laws of any jurisdiction within the United States; (7) no authorization, approval, consent, license or order of, or registration with, or giving of notice to, the FAA Aircraft Registry is required for the valid authorization, delivery or performance of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture and the Trust Supplement except for such authorizations, approvals, consents, licenses, orders, registrations, and notices as have been effected; and (8) no other registration of the Aircraft and no filings or recordings (other than the filings and recordings with the FAA referred to above) are necessary to provide constructive notice to third parties in any jurisdiction within the United States of the Owner Trustee's title to the Aircraft or the beneficial interest of the Owner Participant in the Aircraft. - 19 - 20 Such opinion may state that no opinion is expressed as to laws other than the Federal laws of the United States. Said opinion may also contain a statement to the effect that such opinion is limited to the records maintained by the Federal Aviation Administration Aircraft Registry and does not cover liens that are perfected without the filing of notice thereof with the Federal Aviation Administration, such as Federal tax liens, liens arising under Section 1368(a) of Title 29 of the United States Code and possessory artisans' liens, and is subject to the accuracy of FAA personnel in the filing, indexing and recording of instruments filed with the FAA and in the search for encumbrance cross-reference index cards for the Engines. Said opinion may also rely on the opinion obtained by such counsel from counsel for the Aeronautical Center of the FAA, satisfactory in form and scope to such counsel, and on past practice of the FAA which is consistent with such Aeronautical Center counsel's opinion. (xvi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, to the effect that: (1) State Street Bank and Trust Company is a Massachusetts trust company, duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the full corporate power, authority and legal right to enter into and perform its obligations under the Indenture Trustee Documents and, in its capacity as Indenture Trustee, to authenticate the Secured Certificates to be delivered on the Delivery Date; (2) the execution, delivery and performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the Indenture Trustee Documents and the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby and compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with the terms thereof including, without limitation, the authentication of the Secured Certificates to be delivered on the Delivery Date, have been duly authorized by all necessary corporate action on the part of State Street Bank and Trust Company, and neither the execution and delivery thereof nor the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby nor compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with any of the terms and provisions thereof (i) does or will contravene any law or governmental rule or regulation of the United States governing the banking or trust powers of - 20 - 21 State Street Bank and Trust Company or the Commonwealth of Massachusetts or any order or judgment known to such counsel and applicable to or binding on State Street Bank and Trust Company, or (ii) does or will contravene or result in any breach of, or constitute any default under, the charter documents or By-Laws of State Street Bank and Trust Company or the provisions of any indenture, mortgage, contract or other agreement, in each case known to such counsel, to which State Street Bank and Trust Company is a party or by which it or any of its properties is or may be bound or affected; (3) neither the execution and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, of the Indenture Trustee Documents or the certificates of authentication on the Secured Certificates to be delivered on the Delivery Date, nor the performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the transactions contemplated thereby requires or required the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or Massachusetts governmental authority or agency governing the banking or trust powers of State Street Bank and Trust Company or under any Massachusetts law; (4) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; (5) the Secured Certificates to be issued and dated the Delivery Date have been duly authenticated and delivered by the Indenture Trustee pursuant to the terms of the Indenture Trustee Documents; (6) to the best knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting State Street Bank and Trust Company before any court or administrative agency or arbitration board or tribunal which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of State Street Bank and Trust Company to perform its obligations under the Indenture Trustee Documents; and - 21 - 22 (7) there are no taxes, fees or other governmental charges ("TAXES") payable under the laws of the Commonwealth of Massachusetts with respect to the execution of and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the Indenture Trustee Documents (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts. Neither State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, the Owner Participant, the Owner Trustee, nor the trust created by the Trust Agreement will, as a result of the transactions contemplated thereby, be subject to any taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would have not been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts, and there are no taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) upon or with respect to the Aircraft or any Engine or any part of any interest therein, or the purchase, ownership, delivery, lease, sublease, possession, presence, use, operation, condition, storage, maintenance, modification, alteration, repair, sale, return, transfer or other disposition of the Aircraft or any Engine which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts; and to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee may reasonably request. Such opinion may state that no opinion is expressed as to laws other than the internal substantive laws of the Commonwealth of Massachusetts and the Federal laws of the United States. Such opinion may further state that with respect to paragraph (4) in connection with the opinion relating to legality, validity and binding effect of the documents there referred to, such counsel has assumed that the laws of the jurisdictions whose laws govern such documents are not materially different from the internal substantive laws of the Commonwealth of Massachusetts. (xvii) The Loan Participants shall have received from Vedder, Price, Kaufman & Kammholz, special counsel for the Loan Participants, a favorable opinion satisfactory - 22 - 23 in substance and form to the Documentation Agent, as to such matters incident to the transactions contemplated hereby as the Documentation Agent may reasonably request. (xviii) The Loan Participants and the Owner Participant shall have received a certificate signed by the President, any Executive Vice President, any Senior Vice President or any Vice President of Lessee, dated the Delivery Date, addressed to the Loan Participants and the Owner Participant and certifying as to the matters stated in paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this Section 4(a). Copies of the orders, permits, waivers, authorizations, exemptions and approvals referred to in Section 4(a)(viii) shall have been furnished to the Loan Participants and the Owner Participant. (xix) The Owner Participant and the Loan Participants shall, by making their Commitments available as provided in Section 1(b) of this Agreement, be deemed to have reaffirmed the representations and warranties made by them in Section 8 of this Agreement. (xx) The Owner Participant shall have received an opinion, in form and substance satisfactory to the Owner Participant, from Aeroeconomics, Inc., independent aircraft appraisers, or such other recognized aircraft appraiser, to the effect, among other relevant matters, that (A) the Aircraft will have, at the end of the third Fixed Renewal Term, (i) at least 20% of its original economic life remaining and (ii) a fair market value of at least 20% of Lessor's Cost (without taking into account any increase or decrease for inflation or deflation during the Interim Term, the Basic Term and the Fixed Renewal Terms or the terms of any purchase option provided in the Lease) and taking into account any costs to the Owner Trustee or the Owner Participant of removal and delivery of the Aircraft to the Owner Trustee at the end of the third Fixed Renewal Term; (B) the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost; and (C) it will be commercially feasible for a third party to utilize the Aircraft at the end of the third Fixed Renewal Term. (xxi) The Loan Participants and Owner Participant shall have received an independent insurance broker's report, in form and substance satisfactory to the Documentation Agent 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. (xxii) On the Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to the Airframe or any Engine has occurred. (xxiii) Lessor's Cost for the Aircraft shall be $50,000,000. - 23 - 24 (xxiv) 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. (xxv) The representations and warranties of the Indenture Trustee and the Loan Participants contained in Section 8 shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and each Participant shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President of the Indenture Trustee addressed to such Participant and certifying as to the foregoing matters with respect to the Indenture Trustee. (xxvi) The Owner Participant shall have received from Dewey Ballantine, special counsel to the Owner Participant, 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. (xxvii) In the opinion of the Owner Participant and its special counsel, there shall have been, since the date hereof, 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 hereof, 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. (xxviii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants and the Owner Participant, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for 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. - 24 - 25 (xxix) The Loan Participants shall have received an opinion, in form and substance reasonably satisfactory to the Documentation Agent, from BK Associates, Inc., independent aircraft appraisers, to the effect that the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost. (xxx) Lessee shall have executed and delivered to the Owner Participant a letter from the Owner Participant to Lessee relating to Lessee's weighted average cost of capital. 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 Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to the due and valid registration of the Aircraft in the name of the Owner Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement, such Trust Supplement, the Lease and 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. It is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are all subject to the fulfillment to the satisfaction of Lessee 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 4(a)(ii), 4(a)(iii) and 4(a)(iv) hereof shall have been satisfied. (iii) Those documents described in Section 4(a)(v) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Lessee and the Guarantor) in the manner specified in Section 4(a)(v), shall each be satisfactory in form and substance to Lessee, shall be in full force and effect on the Delivery Date, and an executed counterpart of each thereof (other than the Secured Certificates) shall have been delivered to Lessee or its special counsel. - 25 - 26 (iv) Lessee shall have received a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant, or other evidence of authority satisfactory to Lessee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing or evidencing authority for the execution, delivery and performance by the Owner Participant of all of the Owner Participant Documents, a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant Guarantor, certified as of the Delivery Date by the Secretary or Assistant Secretary of the Owner Participant Guarantor, duly authorizing the execution, delivery and performance by the Owner Participant Guarantor of the Owner Participant Guaranty, and a copy of the general authorizing resolutions of the boards of directors of the Indenture Trustee and the Owner Trustee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Indenture Trustee and the Owner Trustee, respectively, which authorize the execution, delivery and performance by the Indenture Trustee of the Indenture Trustee Documents and the Secured Certificates and by the Owner Trustee of the Owner Trustee Documents, together with such other documents and evidence with respect to the Indenture Trustee, the Owner Participant, the Owner Participant Guarantor and the Owner Trustee as Lessee or its special counsel may reasonably request in order to establish the 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) The representations and warranties of the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, contained in Section 8 hereof shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and Lessee shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President or other authorized representative of the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively, addressed to Lessee and certifying as to the foregoing matters with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively. (vi) Lessee shall have received the opinions set forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case addressed to Lessee and dated the Delivery Date and in each case in scope and substance reasonably satisfactory to Lessee and Lessee's special counsel. (vii) 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 - 26 - 27 prevent the completion and consummation of this Agreement or the transactions contemplated hereby. (viii) No applicable law or regulations or guidelines or interpretations by appropriate regulatory authorities shall be in effect which, in the opinion of Lessee or its special counsel, would make it a violation of law or regulations or guidelines for Lessee to enter into any transaction contemplated by the Operative Documents. (ix) 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. (x) Lessee shall have been paid Lessor's Cost for the Aircraft. SECTION 5. PUBLICITY. Each party hereto agrees that it will use its best efforts not to disclose, or permit any of its employees or agents to disclose, the identity of the Owner Participant or the terms of the Operative Documents in connection with the issuance or release for external publication of any article or advertising or publicity matter relating to the terms and conditions of any of the Operative Documents or the transactions contemplated thereby without the prior written consent of the Owner Participant and Lessee, provided that nothing in this Section 5 shall prevent the Loan Participants from publishing a tombstone which may include the initial principal amount of the Secured Certificates, provided, further, that no such tombstone shall disclose the identity of the Owner Participant without the prior written consent of the Owner Participant. SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate Holder (as defined in the Trust Indenture) shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Trust Indenture when and if the principal of and interest on all Secured Certificates held by such holder and all other sums payable to such holder hereunder, under the Trust Indenture and under such Secured Certificates shall have been paid in full. Each of the Loan Participants 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 Loan Participants 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. - 27 - 28 SECTION 7. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and the Owner Participant that as of the Delivery Date: (i) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires, other than failures to qualify which would not have a material adverse effect on the consolidated business, assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents; is a Certificated Air Carrier; has its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) located at Eagan, Minnesota; holds all licenses, certificates, permits and franchises from the appropriate agencies of the United States and/or all other governmental authorities having jurisdiction necessary to authorize Lessee to engage in air transport and to carry on scheduled passenger service as presently conducted (other than those licenses, certificates, permits and franchises which, if not obtained, would not have a material adverse effect on the consolidated business assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents); and has the corporate power and authority to own or hold under lease its properties wherever located or used and to enter into and perform its obligations under the Lessee Documents; (ii) the execution, delivery and performance by Lessee of the Lessee Documents will, on the Delivery Date, have been duly authorized by all necessary corporate action on the part of Lessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Lessee except such as have been duly obtained or by the Delivery Date will have been duly obtained, and none of such agreements contravenes any law, judgment, government rule, regulation or order binding on Lessee or the certificate of incorporation or By-Laws of Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its properties may be bound or affected; (iii) neither the execution and delivery by Lessee of the Lessee Documents nor the performance by Lessee of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, any Federal, State or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee 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 will on the Delivery - 28 - 29 Date 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), (B) the registration of the Aircraft referred to in Section 4(a)(ix)(4) and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Delivery Date; (iv) on the Delivery Date the Lessee Documents will each constitute legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof (subject to the qualifications set forth in clause (4) of the form of opinion of counsel to Lessee in Section 4(a)(xi)); (v) there are no pending or, to the best of Lessee's knowledge, threatened actions, suits or proceedings before any court or administrative agency which might materially adversely affect the business, condition (financial or otherwise), operations or properties of Lessee and its subsidiaries taken as a whole or Lessee's ability to perform its obligations under the Operative Documents; (vi) except for (A) the registration of the Aircraft pursuant to the Federal Aviation Act, (B) the filing for recording pursuant to said 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 Bill of Sale, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such documents under the Uniform Commercial Code of Minnesota and Utah and such other states as may be specified in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the taking of possession by the Indenture Trustee of the original counterpart of each of the Lease and the Lease Supplement covering the Aircraft, no further action, including any 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 in order to establish and perfect the Owner Trustee's title to and the Indenture Trustee's security interest in the Aircraft as against Lessee and any third parties in any applicable jurisdictions in the United States; (vii) there has not occurred any event which constitutes an Event of Default under the Lease (or any event which with the giving of notice or the passage of time or both would constitute an Event of Default under the Lease) which is presently continuing; (viii) 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 - 29 - 30 mature; and Lessee's sale of the Aircraft is made without any intent to hinder, delay or defraud either present or future creditors; (ix)(a) The consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of December 31, 1995 and the related consolidated statements of operations, cash flows and common stockholders' equity of the Guarantor and its consolidated subsidiaries for the year then ended, which have been audited by independent certified public accountants, copies of which have been furnished to the Owner Participant and each Loan Participant, fairly present the consolidated financial condition of the Guarantor and its consolidated subsidiaries as at such date and the results of operations and cash flow of the Guarantor and its consolidated subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied and since December 31, 1995 there has been no material adverse change in the consolidated financial condition, cash flow or results of operations of the Guarantor and its consolidated subsidiaries; (x) on the Delivery Date, the Owner Trustee will receive good title to the Aircraft free and clear of all Liens, except Liens permitted by clause (v) of Section 6 of the Lease, the rights of Lessee under the Lease and the Lease Supplement covering the Aircraft, the Lien of the Trust Indenture and the beneficial interest of the Owner Participant in the Aircraft; (xi) 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 or U of the Board of Governors of the Federal Reserve System; (xii) Lessee is not in default in the performance of any term or condition of the Purchase Agreement which materially adversely impairs the transactions contemplated hereby; (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 or any interest therein; (xiv) On the Delivery Date, the Aircraft will be duly certified by the FAA as to type and airworthiness, will be insured by Lessee in accordance with the terms of the Lease and will be in the condition and state of repair required under the terms of the Lease; and - 30 - 31 (xv) neither Lessee nor any subsidiary of Lessee is an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended. (b) General Tax Indemnity. [Reserved] - 31 - 32 (c) General Indemnity. [Reserved] -32- 33 (d) Income Tax. For purposes of this Section 7, the term "INCOME TAX" means any Tax based on or measured by gross or net income or receipts (other than taxes in the nature of sales, use, license, property or value added Taxes (except value added taxes in the nature of any income, franchise, capital, doing business, excess profits or net worth tax) (including, without limitation, capital gains taxes, minimum taxes, income taxes collected by withholding and taxes on tax preference items), and Taxes which are capital, doing business, excess profits or net worth taxes and interest, additions to tax, penalties, or other charges in respect thereof. SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner Participant represents that it is acquiring its interest in the Trust Estate for investment and not with a present intent as to any resale or distribution thereof (subject nonetheless to any requirement of law that the disposition of its properties shall at all times be and remain within its control) and that neither it nor anyone acting on its behalf has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a -33- 34 violation of the Securities Act of 1933, as amended, or the securities laws, rules and regulations of any state. (b) Lessee represents and warrants that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended, or the securities laws, rules and regulations of any state. (c) Each of the Owner Participant and First Security Bank of Utah, National Association, in its individual capacity, represents and warrants to the other parties to this Agreement that it is, and on the Delivery Date will be, a Citizen of the United States without making use of any voting trust, voting powers agreement or similar arrangement. The Owner Participant agrees, solely for the benefit of Lessee and the Loan Participants, that if (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 hereto 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 in the first sentence of this Section 8(c) 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 Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). First Security Bank of Utah, 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 of Utah, National Association, shall obtain actual knowledge that First Security Bank of Utah, National Association, has ceased to be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under the Federal Aviation Act as in effect at such time or, if it is not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Loan Participants, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or First Security Bank of Utah, National Association, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an -34- 35 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, National Association, in its individual capacity, represents that it has not offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire the same from, anyone, and that no officer or responsible employee of the Corporate Trust Department of First Security Bank of Utah, 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 or any similar securities related to the Aircraft 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 or the securities laws, rules and regulations of any state. (f) The Owner Participant and each of the Loan Participants agree that, at any time after the Depreciation Period, as long as no Event of Default or a Default of the type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and be continuing, Lessee may elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit A hereto (or such other country as the Owner Participant 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 qualified in the laws of the relevant jurisdiction and reasonably satisfactory to the Owner Participant, to the effect that: -35- 36 (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) none of the Owner Trustee, the Owner Participant or the Indenture Trustee will be required to register to do business in the country in which the Aircraft is to be registered as a result of such reregistration, after (1) taking into account any other contacts of the Owner Trustee and the Owner Participant with such jurisdiction (provided, that upon request by Lessee (such request having been acknowledged by the Owner Participant's general counsel), the Owner Trustee and the Owner Participant must respond within fourteen (14) Business Days after receipt of such request describing its contacts in the jurisdiction of reregistration, or else such party shall be deemed for purposes of this clause (D) to have no such contacts) and (2) assuming that the Indenture Trustee has no other contacts with such jurisdiction, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), and (F) (unless Lessee shall have agreed to provide insurance covering the risk of requisition of use of such Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use. In addition, as a condition precedent to any such change in registration, (a) Lessee shall furnish to the Owner Trustee and the Indenture Trustee an Officer's Certificate to the effect that the insurance required by Section 11 of the Lease shall be in full force and effect at the time of such -36- 37 change in registration after giving effect to such change in registration and that the new country of registry imposes aircraft maintenance standards not materially different from those of the United States, France, Germany, Japan, the Netherlands or the United Kingdom and (b) the Owner Participant shall have received assurances satisfactory to it that (i) the original indemnities in favor of it under this Agreement afford it substantially the same protection as provided prior to such change in registry, and (ii) such change will not result in the risk of, or the imposition of, or increase the amount of, any Tax for which Lessee is not required to indemnify under the Operative Documents, or is not then willing to enter into a binding agreement to indemnify in a manner satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (A) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (B) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such reregistration or (C) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee. Lessee shall pay all costs, expenses, fees, recording and registration taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. (g) The Owner Participant represents and warrants to Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in its capacity as such and in its individual capacity, as follows: (i) the Owner Participant is a corporation duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under the Owner Participant Documents; (ii) the Owner Participant Documents have been duly authorized by all necessary corporate action on the part of the Owner Participant, do not require any approval not already obtained of stockholders of the Owner Participant or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of the Owner Participant, and have been duly executed and delivered by the Owner Participant, and, subject to and in reliance upon the representations made by the Loan Participants and Lessee in Section 8(q) hereof, neither the execution and delivery -37- 38 thereof, nor the consummation of the transactions contemplated thereby, nor compliance by the Owner Participant with any of the terms and provisions thereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order 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 financing or the citizenship requirements of the Owner Participant under applicable aviation law) or contravene or result in any breach of or constitute any 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, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Owner Participant is a party or by which it or its properties may be bound or affected provided, that no representation or warranty as to ERISA (as hereinafter defined) is made by the Owner Participant except as set forth in Section 8(q)(A); (iii) each of the Owner Participant Documents constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant in accordance with the terms thereof (subject to the qualifications set forth in clause (2) of the opinion of counsel to the Owner Participant in Section 4(a)(xiv)); (iv) there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which, if determined adversely to the Owner Participant, would materially adversely affect the financial condition of the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; (v) upon the execution and delivery of the Trust Indenture, the Trust Indenture Estate will be free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Participant; (vi) neither the execution and delivery of the Owner Participant Documents nor the performance by the Owner Participant of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, state or foreign government authority or agency except for those exceptions referred to in Section 7(a)(iii) which may be applicable to the Owner Participant and the Owner Participant Documents (it being understood that no representation or warranty is made with respect to the laws, rules or regulations relating to aviation or to the nature of the equipment owned by the Owner -38- 39 Trustee, other than such laws, rules or regulations relating to the citizenship requirements of the Owner Participant under applicable aviation law); and (vii) the Owner Participant is not an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended. (h) Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to it. The Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from any Taxes or Expenses imposed on the Trust Estate against which Lessee is not required to indemnify the Trust Estate pursuant to Section 7 hereof. (i) State Street Bank and Trust Company, in its individual capacity, covenants and agrees that it shall not cause or permit to exist any Lien, arising as a result of (A) claims against the Indenture Trustee not related to its interest in the Aircraft or the administration of the Trust Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not permitted by, or failure of the Indenture Trustee to take any action required by, the Operative Documents to the extent such acts arise or such failure arises from or constitutes gross negligence or willful misconduct, (C) claims against the Indenture Trustee relating to Taxes or Expenses which are excluded from the indemnification provided by Section 7 pursuant to said Section 7, or (D) claims against the Indenture Trustee arising out of the transfer by the Indenture Trustee of all or any portion of its interest in the Aircraft, the Trust Estate, the Trust Indenture Estate or the Operative Documents other than a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9 hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of Default is continuing and prior to the time that the Indenture Trustee has received all amounts due pursuant to the Trust Indenture. (j) Each Loan Participant represents, warrants, covenants and agrees as to itself: (i) that this Agreement has been duly authorized, executed and delivered by such Loan Participant and this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of -39- 40 equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of its jurisdiction of organization; and (iii) that such Loan Participant has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. (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, and which is consistent with the applicable provisions of the Credit Agreement and subject to the provisions hereof. (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 - 40 - 41 enforcing any personal recourse obligation (and retaining the proceeds thereof) of the Owner Trustee (in its individual capacity) under this Agreement or the Trust Indenture (and any exhibits or annexes thereto) or the Owner Participant under this Agreement. (m) State Street Bank and Trust Company represents and warrants, in its individual capacity, to Lessee, the Owner Trustee and each Participant as follows: (i) it is a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other 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 trust agreement or other similar arrangement, is likely to change and that it will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other similar arrangement; (ii) it is a Massachusetts trust company duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the requisite corporate power and authority to enter into and perform its obligations under the Trust Indenture and this Agreement and to authenticate the Secured Certificates to be delivered on the Delivery Date; (iii) the Indenture Trustee Documents and the authentication of the Secured Certificates to be delivered on the Delivery Date have been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or state law or governmental rule or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its charter or By-Laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (iv) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. - 41 - 42 (n) So long as the Aircraft shall be subject to the Lease and at all times prior to the release of the Lien of the Trust Indenture, the Owner Participant will not, directly or indirectly, sell, assign, convey or otherwise transfer any of its right, title or interest in and to the Aircraft, this Agreement, the Trust Estate, the Tax Indemnity Agreement, or the Trust Agreement or any proceeds therefrom to any person or entity, unless the proposed transferee is a "Transferee" (as defined below), and such sale, assignment, conveyance or transfer is with respect to all, but not less than all, of such Transferee's right, title and interest to a single entity (except that the Owner Participant may transfer to one or more Transferees all or any portion of its interest, if any, in the residual value of the Aircraft (which interest shall not include any of the Owner Participant's right, title or interest in any of the Operative Documents); provided that such transfer of residual value shall result in no increase, decrease or change in any of Lessee's, any Loan Participant's, or the Indenture Trustee's obligations, rights or responsibilities under the Operative Documents and that such Transferee or Transferees of residual value shall have no right to consent or object to any matter or decision under, or relating to, the Aircraft or any of the Operative Documents and provided, further, that no Lien shall result from such transfer). A "TRANSFEREE" shall mean either (A) a bank or other financial institution or insurance company with a combined capital, surplus and undivided profits of at least $50,000,000 or a corporation whose tangible net worth is at least $50,000,000, 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, insurance company, or corporation, provided that such bank, financial institution, insurance company, or corporation furnishes to the Owner Trustee, the Loan Participants, 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 Loan Participants, 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 the form attached as Exhibit D hereto; provided, however, that any Transferee shall not be (i) an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or (ii) 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 (unless such entity is General Electric Company, International Lease Finance Corporation, any similar entity or any of their respective Affiliates, provided, that (I) such entity is not included within the immediately preceding clause (i) of this subsection (n) and (II) no such entity has, through ownership of common or preferred stock, effective voting control of an entity described in such immediately preceding clause (I)). 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 (or has effected a voting trust agreement, voting powers agreement or other similar arrangement so as not to affect the then continued (if applicable) United States registration of the Aircraft), and has full power and authority to enter into the transactions contemplated hereby, (N) the Transferee has the requisite power and authority to enter into and carry out the transactions contemplated hereby and such Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture Trustee and the - 42 - 43 Loan Participants an opinion of counsel in the form attached as Exhibit E hereto, (O) the Transferee enters into (i) an agreement in the form attached as Exhibit B hereto or (ii) such other form approved by 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 each other Operative Document to which the Owner Participant is a party 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 and makes the representations and warranties comparable to those made by the Owner Participant thereunder provided that with respect to ERISA, the Transferee makes the representations and warranties contained in Section 7(h) of the agreement in the form attached as Exhibit B hereto, (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 (provided that the term "applicable Federal law" shall not include ERISA), (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 unless such transfer is effected in connection with the exercise of remedies as a result of and during the continuance of an Event of Default in which case any expenses incurred by Lessee in connection with such transfer shall not be reimbursed, 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 20 days' prior written notice thereof to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, specifying the name and address of the proposed Transferee. Upon any such transfer, Lessee shall, at the Transferee's expense, use its reasonable efforts promptly to cause to be obtained new insurance certificates (consistent with the provisions of Section 11 of the Lease) that reflect the interest of the Transferee in the Aircraft. (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 - 43 - 44 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 of Utah, 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)(A) Each Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Secured Certificate or any interests represented thereby with the assets of any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1) of the Code or of any entity the assets of which constitute "plan" assets under ERISA. 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 as set forth in the preceding sentence and a covenant as set forth in this sentence. (B) Lessee represents and warrants that: none of (i) the execution and delivery of this Agreement and the other Operative Documents, (ii) the initial purchase by the Loan Participants of the Secured Certificates, and (iii) the initial acquisition by the Owner Participant of its beneficial interest in the Trust Estate will involve any non-exempt prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation being made in reliance upon and subject to the accuracy of the representations contained in subparagraph (A) of this Section 8(q)). (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 and not specifically reserved to Lessee under Section 1 thereof, to bona fide potential purchasers of the Aircraft. - 44 - 45 (s) The Owner Trustee and the Owner Participant severally, not jointly, represent and warrant that none of the funds made available by the Loan Participants 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. (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. Each Loan Participant agrees that Lessee may, on behalf of the Owner Trustee and upon notice to the affected Certificate Holder, arrange for another institution (which may be a Certificate Holder) to purchase the Secured Certificates of the affected Certificate Holder by paying the affected Certificate Holder an amount equal to the unpaid principal amount of the Secured Certificates held by the affected Certificate Holder plus accrued but unpaid interest thereon to the date of payment of such principal amount plus all other amounts owed to such affected Certificate Holder under the Operative Documents (including any Funding Loss Amount payable as a result of the applicable purchase occurring on a day other than the last day of an Interest Period). For purposes of this Section 8(t), "AFFECTED CERTIFICATE HOLDER" shall mean a Certificate Holder which has asserted claims against the Owner Trustee or Lessee under or sought rights or remedies provided by Section 7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture. (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) First Security Bank of Utah, National Association, in its individual capacity, represents and warrants that: (i) the Trust Agreement and, assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, each of the other Owner - 45 - 46 Trustee Documents has been duly executed and delivered by one of its officers who is duly authorized to execute and deliver such instruments on behalf of First Security Bank of Utah, National Association or the Owner Trustee, as the case may be; (ii) the Trust Estate is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to First Security Bank of Utah, National Association, in its individual capacity, and there are no Liens affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Trust Indenture Estate resulting from any act or claim against First Security Bank of Utah, National Association, in its individual capacity, arising out of any event or condition not related to the ownership, leasing, use or operation of the Aircraft or to any other transaction contemplated by this Agreement or any of the Operative Documents, including any such Lien resulting from the nonpayment by First Security Bank of Utah, National Association, in its individual capacity, of any Taxes imposed or measured by its net income; (iii) there has not occurred any event which constitutes (or to the best of its knowledge would, with the passage 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 First Security Bank of Utah, National Association, in its individual capacity, and which is presently continuing; (iv) it is a national banking association duly organized, validly existing and in good standing under the laws of the United States and has the full corporate power, authority and legal right to enter into and perform its obligations under each of the Owner Trustee Documents; (v) each of the Owner Trustee Documents has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal law governing the banking and trust powers of First Security Bank of Utah, National Association, or Utah law or regulation or contravene or result in any breach of the provisions of its articles of association or By-Laws or any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (vi) each of the Owner Trustee Documents has been duly executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, each thereof is the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the - 46 - 47 case may be, in accordance with its respective terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (vii) there are no Taxes payable by it (either in its individual capacity or as Owner Trustee), the Trust Estate, the Owner Participant, Lessee, the Indenture Trustee or the Loan Participants to the State of Utah in connection with the execution, delivery and performance of the Operative Documents solely because First Security Bank of Utah, National Association is a national banking association with its principal office in the State of Utah and will perform its obligations under the Operative Documents in the State of Utah, other than franchise or other taxes based on or measured by any fees or compensation received or accrued by First Security Bank of Utah, National Association for services rendered in connection with the transactions contemplated by the Operative Documents. (w) The Owner Participant covenants and agrees that if (i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to Lessee written notice of Lessor's election to retain title to the Aircraft and (iii) the Owner Trustee has failed to make, on or before the Termination Date, any payment required to be made by the Owner Trustee pursuant to Section 9(c) in connection with its retention of title to the Aircraft, the Owner Participant will indemnify Lessee for any losses, damages, costs or expenses of any kind (including any additional rents paid by Lessee and any fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a consequence of such failure by the Owner Trustee. The Owner Participant further covenants and agrees to pay those costs and expenses specified to be paid by the Owner Participant pursuant to Exhibit E to the Lease. (x) Each of the Owner Participant, the Owner Trustee, the Indenture Trustee, each Loan Participant 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. - 47 - 48 (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 each Participant an agreement in form and substance reasonably satisfactory to such 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; (iv) Lessee shall have delivered to the Owner Trustee, the Indenture Trustee and each 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 Participants, 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; and (v) 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, shall make such filings and recordings with the FAA pursuant to the Federal Aviation Act, as shall be necessary or desirable to evidence such consolidation, merger, conveyance, transfer or lease with or to such entity. 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 - 48 - 49 theretofore have become such in the manner prescribed in this subparagraph (A) of Section 8(y) from its liability in respect of any Operative Document to which it is a party. (B) Lessee shall at all times maintain its corporate existence except as permitted by subparagraph (A) of this Section 8(y). (z) Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust Supplement and any financing statements or other instruments as are necessary to maintain, so long as the Trust Indenture or the Lease is in effect, the perfection of the security interests created by the Trust Indenture and any security interest that may be claimed to have been created by the Lease and the interest of the Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the Indenture Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable them to take such action. Lessee will notify the Owner Trustee, the Owner Participant and the Indenture Trustee of any change in the location of its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) promptly after making such change or in any event within the period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. (aa) Section 3 of the Lease contemplates that, under certain circumstances, the Owner Participant will make certain recalculations of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the Owner Participant hereby agrees to make such recalculations as and when contemplated by the Lease and subject to all the terms and conditions of the Lease and promptly to take such further actions as may be necessary or desirable to give effect to and to cause the Owner Trustee to give effect to the provisions of Section 3 of the Lease. (bb) To the extent that any Excess Amount is due on the Commencement Date, the Owner Participant shall have the right to prepay to the Indenture Trustee all or a portion of such Excess Amount on the last Business Day occurring in 1996, and the Indenture Trustee agrees that it shall invest such amount in accordance with the terms set forth in the Trust Indenture. The Owner Participant hereby agrees with Lessee, and only with Lessee, and not for the benefit of any other party to this Participation Agreement, that it will pay in full to Lessee upon termination of the Lease the Reimbursement Amount for which Lessee has not previously received an offset pursuant to Section 3(g) of the Lease. (cc) The Owner Participant hereby agrees to notify Lessee or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York time on the third Business Day prior to the day for which an Excess Amount is indicated stating whether or not the Owner Participant intends to pay such Excess Amount in full by 10:30 A.M. (New York time) on the due date. - 49 - 50 (dd) [_________________] agrees to act as Administrative Agent hereunder. The Administrative Agent agrees to notify each of the Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual interest expected to accrue on the Secured Certificates during each Interest Period promptly after the commencement of such Interest Period and after the occurrence of any event that would cause such actual interest expected to accrue during such Interest Period to change from the amount previously notified. The Administrative Agent further agrees to perform all of the functions that are required to be performed by the Administrative Agent pursuant to the terms of the Trust Indenture. (ee) The Owner Participant hereby agrees with Lessee that it will pay, or cause to be paid, all costs and expenses that are for the account of the Owner Trustee pursuant to Sections 5(a) and 5(d) of the Lease. The Owner Participant further agrees with Lessee that it will provide the information contemplated to be provided by it pursuant to clause (VI) of Section 7(b)(x) of the Lease within the time period contemplated therein. (ff) 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(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture). (gg) [__________________] agrees to act as Documentation Agent hereunder and to perform all of the functions that are required to be performed by the Documentation Agent hereunder. (hh) [__________________], [_________________] and [_____________] each agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate (as defined in the Trust Indenture). (ii) Lessee agrees and covenants that it shall not purchase or guarantee or acquire any interest in any Secured Certificate or any other certificate for which a Secured Certificate is security except as provided in Section 8(x). SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall, pursuant to this Section 9 and in accordance with the requirements of Section 3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt payment structures. Within forty-five Business Days after the need for an adjustment to Rent has been established pursuant to Section 3 of the Lease, the Owner Participant shall deliver to Lessee a certificate of an authorized representative of the - 50 - 51 Owner Participant (the "REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of debt amortization and Basic Rent, Excess Amounts, Special Purchase Price, Stipulated Loss Value and Termination Value percentages. Within forty-five days of its receipt of the Reoptimization Certificate, Lessee may demand a verification, pursuant to Exhibit E of the Lease, of the information set forth in the Reoptimization Certificate. Upon the acceptance by Lessee of the accuracy of the information set forth in the Reoptimization Certificate or the determination pursuant to such verification procedures of such information, the Owner Participant will cause the Owner Trustee (M) to execute a Lease Supplement setting forth the reoptimized Basic Rent, Excess Amounts, Special Purchase Price, Stipulated Loss Value and Termination Value percentages, and (N) to exchange new Secured Certificates containing reoptimized amortization schedules for the Secured Certificates outstanding immediately prior to such reoptimization. (b) In connection with reoptimization adjustments of Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree to changes in the amortization schedule of the Secured Certificates, and (N) each Loan Participant will exchange the Secured Certificates held by it immediately prior to such reoptimization for new Secured Certificates containing reoptimized amortization schedules; provided that such changes do not (X) change the final maturity of any Secured Certificates to beyond twenty years from the Delivery Date or (Y) increase the weighted average lives of the Secured Certificates as of the Delivery Date to more than 15 years. SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the Owner Trustee hereby (A) agrees with Lessee, the Loan Participants 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 (B) agrees with Lessee and the Loan Participants not to revoke the Trust Agreement without the prior written consent of Lessee and the Loan Participants so long as the Lease or the Lien of the Trust Indenture remain in effect. 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 10.05 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. - 51 - 52 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 Bill 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 Bill of Sale, second, the Lease, with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the Trust Indenture, with the Trust Supplement attached. (c) Lessee agrees that it will consummate, with Owner Participant, on terms substantially identical to those set forth in the Operative Documents, leveraged lease transactions in respect of the first two Boeing 757-251 aircraft delivered by the Manufacturer to Lessee subsequent to the date of this Agreement. 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 attributed thereto in the Lease. The term "TRUST OFFICE" shall have the meaning - 52 - 53 set forth in the Trust Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set forth in the Trust Indenture. Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it may be amended from time to time. (b) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto or to the Guarantor shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier (only if such communication is also given or made by an additional method herein permitted), 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 Owner Trustee, the Loan Participants, the Administrative Agent, the Documentation 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, or (D) if to the Guarantor, addressed to the Guarantor at such address as the Guarantor shall have furnished by notice to the parties hereto. (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, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, 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. - 53 - 54 SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant agrees that if, at any time, the Trust Estate becomes subject to any Taxes for which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States from the state in which it is then located, the situs of the trust may be moved with the written consent of the Owner Participant (which consent shall not be unreasonably withheld) and the Owner Participant will take 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 Loan Participants may reasonably request in form and substance satisfactory to such parties, (B) the rights and obligations under the Operative Documents of the Owner Participant and the Loan Participants 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 Loan Participants shall have received an opinion or opinions of counsel (satisfactory to the Owner Participant and the Loan Participants), in scope, form and substance satisfactory to the Owner Participant and the Loan Participants 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 Loan Participants, 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 Loan Participants and to the Owner Participant covering the matters described in Section 4(a)(xiii) hereof and such other matters as the Loan Participants and the Owner Participant may reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner Participant, the Indenture Trustee and the Loan Participants on an 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, the Indenture Trustee and the Loan Participants in connection with such change of situs. SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, or the Indenture Trustee under the terms of - 54 - 55 the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture Trustee. (b) The representations, warranties, indemnities and agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee, the Administrative Agent, the Documentation Agent and the Owner Participant provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan Participants', the Indenture Trustee's, the Administrative Agent's, the Documentation Agent's and the Owner Participant's obligations under any and all thereof, shall survive the making available of the respective Commitments by the Loan Participants and 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, and shall be enforceable by, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and assigns, each Certificate Holder and its successors and registered assigns, the Indenture Trustee and its successors as Indenture Trustee under the Trust Indenture, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, the Administrative Agent and the Documentation Agent. 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 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, - 55 - 56 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 Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan Participants shall promptly submit to the Owner Trustee and Lessee for their review 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 July 15, 1996). The Owner Participant agrees to transfer to the Owner Trustee promptly but in any event no later than August 15, 1996 such amount as shall be necessary in order to enable the Owner Trustee to pay Transaction Expenses. To the extent of funds received by it, the Owner Trustee agrees to pay all invoices of Transaction Expenses that have been approved by it and Lessee promptly upon receipt thereof. Notwithstanding the foregoing, to the extent that Transaction Expenses exceed 1% of Lessor's Cost, Lessee at its sole option shall have the right to pay directly its special counsel fees and the fee and reasonable disbursements of Babcock and Brown Financial Corporation. - 56 - 57 SECTION 17. REFINANCINGS. (a) So long as no Event of Default or a Default of the type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and be continuing, Lessee shall have the right to refinance all (but not less than all) of the Secured Certificates with Dollar denominated debt 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 (including the terms of any debt to be issued in connection with such refinancing); provided that no such refinancing shall subject the Owner Participant to any adverse, or the risk of any adverse, tax consequence unless Lessee agrees to indemnify the Owner Participant for such unindemnified adverse tax consequence (any such indemnity to be satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (1) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (2) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such refinancing or (3) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee); provided further that (x) the Owner Participant agrees that it will not be entitled to any indemnity from Lessee for any failure of the debt in such refinancing to constitute "qualified nonrecourse indebtedness" within the meaning of Treasury Regulation Section 1.861-10T(b) with respect to the first refinancing described in the next paragraph, provided it is satisfactory to, or has no adverse tax consequences for, the Owner Participant and (y) no offering material related to any public refinancing shall disclose the identity of the Owner Participant. The Owner Participant has been informed by Lessee that the debt to be issued in connection with such refinancing may be issued in several classes, each of which may have a different interest rate, final maturity date and priority of payment. The Owner Participant acknowledges that it has been informed that one or more of such classes may be entitled to the benefit of a liquidity facility which shall not be provided by Lessee or a Person who is an Affiliate of Lessee, and which will entitle the Indenture Trustee (or a collateral agent therefor) to make drawings thereunder to pay interest on a current basis on the enhanced classes of debt for up to three semi-annual interest payments following a payment default with respect to such enhanced classes. The Owner Participant acknowledges being informed that under such a - 57 - 58 structure drawings of the entire amount available under the liquidity facility for any class (and the deposit of the proceeds thereof into a cash collateral account) will be required in the event of a ratings decline with respect to the related liquidity provider or in the event that the liquidity facility is not extended or replaced prior to its scheduled expiration and that amounts owed to the liquidity facility provider for both drawings and interest thereon will generally be senior to all Loan Participant claims. The Owner Participant agrees that in any refinancing operation it will consider in good faith these and any other conditions which do not impair the customary rights of an owner participant in a leveraged lease transaction. In the event that any such agreement is concluded: (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 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 proposed date on which the outstanding Secured Certificates will be redeemed (such date, 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 increased or 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 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 (such debt securities, the "NEW DEBT") except that the principal amount of New Debt may exceed by no more than 105% 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; - 58 - 59 (3) Lessee shall give the notice to the Indenture Trustee pursuant to Section 2.11 of the Trust Indenture, and Lessee and the Owner Trustee will amend the Lease to provide that (i) Basic Rent payable in respect of the period from and after the Refinancing Date shall be as provided in the Refinancing Information and (ii) amounts payable in respect of Stipulated Loss Value and Termination Value from and after the Refinancing Date shall be as provided in the Refinancing Information; (4) the Owner Trustee will enter into an agreement to provide for the securing thereunder of the New Debt in like manner as the Secured Certificates and will enter into such amendments and supplements to the Trust Indenture (or such new indenture or other security agreement) as may be necessary to effect such refinancing; (5) the Owner Participant shall pay all of the expenses of the first refinancing (including, but not limited to, the fees, expenses and disbursements of counsel and any placement or underwriting fees) and such expenses shall be treated as Transaction Expenses; 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 and constraints 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 and constraints 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 Section Section 4.02(5), 4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc. 75-28 Section 4.08(1) shall be applied on a prospective basis from the date of such adjustment) and Section 467 of the Code as then in effect as long as the Schedule of Basic Rent was in compliance with Section 467 of the Code as in effect on the Closing Date, it being understood that, to the extent that any grandfather, effective date, or similar provisions in any regulations under Section 467 or other administrative pronouncement interpreting Section 467 promulgated or issued after the Closing Date causes such regulations or pronouncement not to be applicable to the Schedule of Basic Rent in effect on the Closing Date, such Schedule shall be deemed to be in compliance with Section 467 as in effect on the Closing Date. (b) The final maturity and weighted average life of the New Debt on an aggregate basis shall not exceed by more than six months those of the Secured Certificates. (c) 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. (d) The Owner Participant, at the time of the closing of the second or third refinancing pursuant to this Section 17, if any, shall be paid a fee of $25,000 in respect of each - 59 - 60 such refinancing provided, that in the event that a similar refinancing is concurrently being effected on identical terms under any of the other transactions entered into in 1996 by the Owner Participant and Lessee for the lease of Boeing 757-251 aircraft pursuant to which a fee is payable pursuant to the corresponding provisions of the applicable participation agreement, Lessee shall not be required to pay a separate fee of $25,000 for each such refinancing, it being the intent of the parties that a total fee of $50,000 shall be paid by Lessee for all such concurrent refinancings on identical terms for which a fee is otherwise payable pursuant to the corresponding provisions of the applicable participation agreement. SECTION 18. AGENTS. (a) Each Loan Participant hereby appoints and authorizes each of the Administrative Agent and the Documentation Agent (each, an "AGENT") to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Operative Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. Each Agent shall have no duties or responsibilities except those expressly set forth in the Operative Documents. As to any matters not expressly provided for hereby or by the Trust Indenture, each Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority in Interest of Certificate Holders (as defined in the Trust Indenture), and such instructions shall be binding upon all Loan Participants and all Certificate Holders; provided, however, that such Agent shall not be required to take any action that exposes such Agent to personal liability or that is contrary to the Operative Documents or applicable law. Each Agent agrees to give to each Loan Participant prompt notice of each notice given to it by the Owner Trustee pursuant to the terms of the Operative Documents with respect to which such Loan Participant has not otherwise received such notice. (b) No Agent nor such Agent's directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the Trust Indenture, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Loan Participant and shall not be responsible to any Loan Participant for any statements, warranties or representations (whether written or oral) made in or in connection with the Operative Documents; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Operative Documents on the part of any party thereto or to inspect the property (including the books and records) of any such party; (iv) shall not be responsible to any Loan Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or - 60 - 61 in connection with, the Operative Documents or any other instrument or document furnished pursuant thereto; and (v) shall incur no liability under or in respect of the Operative Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. (c) With respect to their Loans and any Secured Certificates issued to them, [________________________] and [____________________________] shall have the same rights and powers under the Operative Documents as any other Loan Participant and may exercise the same as though they were not Agents and the term "Loan Participant" or "Certificate Holder" shall, unless otherwise expressly indicated, include[___] and [___] in their individual capacity. [___] and its Affiliates and [____] and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Owner Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any Person who may do business with or own securities of any of such Persons, all as if [___] and [____] were not Agents and without any duty to account therefor to the Loan Participants. (d) Each Loan Participant acknowledges that it has, independently and without reliance upon the Agents or any other Loan Participant and based on the financial statements referred to in Section 7(a)(ix) of this Agreement and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Loan Participant also acknowledges that it will, independently and without reliance upon the Agents or any other Loan Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. (e) Subject to the appointment and acceptance of a successor agent as provided below, any Agent may resign at any time by giving written notice thereof to the Loan Participants, the Owner Trustee and Lessee and may be removed at any time with or without cause by the Majority in Interest of Certificate Holders (as defined in the Trust Indenture). Upon any such resignation or removal, the Majority in Interest of Certificate Holders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority in Interest of Certificate Holders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or removal of the retiring Agent by the Majority in Interest of Certificate Holders, then the retiring Agent may, on behalf of the Loan Participants, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the Trust Indenture. After any retiring Agent's resignation or removal hereunder as Agent, the - 61 - 62 provisions of this Section 18 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the Trust Indenture. Notwithstanding anything contrary herein, the Administrative Agent and the Documentation Agent hereunder and under the Trust Indenture shall be the same institution, respectively, as the Administrative Agent and the Documentation Agent under (and as defined in) the Credit Agreement. - 62 - 63 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: ----------------------------------------- Title: Sr. Vice President-Finance and Treasurer Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 [______________] Owner Participant By: -------------------------------------- Title: Address: Attn: Telecopy No.: - Signature Page - 64 [Insert bridge lenders] - Signature Page - 65 SCHEDULE I NAMES AND ADDRESSES Lessee: Northwest Airlines, Inc. U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 Wire Transfer First Bank, N.A., Minneapolis ABA No. 091000022 Acct. No. 150250099440 Owner Participant: 66 Indenture Trustee: State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 Wire Transfer State Street Bank and Trust Company ABA No. 011-00-0028 for credit to State Street Bank and Trust Company Acct. No. 9903-943-0 Attn: Corporate Trust Department Reference: Northwest/NW 1996 E Owner Trustee: First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 Payments made to the Owner Trustee as provided in Section 3(f) of the Lease shall be made to: First Security Bank of Utah, National Association ABA No. 124-0000-12 Acct. No. 051-0922115 Attn: Corporate Trust Department Credit: Northwest/NW 1996 E SCHEDULE I- PAGE 2 67 SCHEDULE II COMMITMENTS
Percentage of Loan Participants: Lessor's Cost - ----------------- -------------
68
Owner Participant: - ----------------- ------------- Total Commitments: 100%
SCHEDULE II - PAGE 2 69 EXHIBIT A TO PARTICIPATION AGREEMENT [NW 1996 E] SCHEDULE OF COUNTRIES FOR REREGISTRATION Argentina Japan Australia Luxembourg Austria Malaysia Belgium Mexico Brazil Netherlands Canada New Zealand Chile Norway Denmark People's Republic of China Finland Portugal France Republic of China (Taiwan) Germany Singapore Greece South Africa Hungary South Korea Iceland Spain India Sweden Indonesia Switzerland Ireland Thailand Italy United Kingdom
70 EXHIBIT B - PAGE 1 EXHIBIT B TO PARTICIPATION AGREEMENT [NW 1996 E] ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 E] ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 E], dated as of __________, ____, between ____________________________________, a _____________ corporation (the "ASSIGNOR"), and __________________________, a __________ corporation (the "ASSIGNEE"). W I T N E S S E T H: WHEREAS, the parties hereto desire to effect (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Participation Agreement [NW 1996 E], dated as of April 29, 1996, among Northwest Airlines, Inc., the Assignor, each Loan Participant named therein, First Security Bank of Utah, National Association, and State Street Bank and Trust Company (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), including, without limitation, any indemnity payments payable to the Assignee directly or indirectly thereunder, (ii) the Trust Agreement identified in the Participation Agreement (the "TRUST AGREEMENT"), (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Tax Indemnity Agreement identified in the Participation Agreement, and (v) the proceeds therefrom and (b) the assumption by the Assignee of the obligations of the Assignor accruing from and after the Effective Time; and WHEREAS, such documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Participation Agreement): 71 1. ASSIGNMENT. The Assignor has sold, assigned, conveyed, transferred and set over, and does hereby sell, assign, convey, transfer and set over, unto the Assignee as of the date hereof all of its present and future right, title and interest in, under and with respect to the Trust Estate, the Aircraft, the Participation Agreement, the Trust Agreement, the Tax Indemnity Agreement and all other Operative Documents to which the Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which the Assignor is bound, and any proceeds therefrom, together with all other documents and instruments evidencing any of such right, title and interest, except such rights of the Assignor as have accrued to the Assignor prior to the Effective Time (as subsequently defined) (including specifically, but without limitation, the right to receive any amounts due or accrued to the Assignor under the Trust Agreement prior to the Effective Time and the right to receive any indemnity payment pursuant to the Participation Agreement or the Tax Indemnity Agreement with respect to events ccurring prior to the Effective Time). 2. ASSUMPTION. The Assignee hereby undertakes all of the duties and obligations of the "Owner Participant" accruing on or subsequent for the Effective Time (for the avoidance of doubt, excluding any duties, obligations and liabilities of the Assignor required to be performed by it on or prior to the date hereof under the Participation Agreement, the Trust Agreement, any of the other Operative Documents to which the Assignor is a party or by which it is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which the Assignor is a party or by which the Assignor is bound), pursuant to the Participation Agreement, the Trust Agreement, and each other Operative Document to which the Assignor is a party, each contract, agreement, document or instrument hereby assigned and each other contract, agreement, document or instrument relating to the Trust Estate by which the Assignor is bound, and hereby confirms that it shall be deemed a party to the Participation Agreement, the Trust Agreement and each other Operative Document to which the Assignor is a party or by which it is bound and each such other contract, agreement, document and instrument, and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Owner Participant. The assignment and assumption contemplated hereby shall not release the Assignor from its obligations under the Participation Agreement or the Trust Agreement except to the extent expressly assumed by the Assignee pursuant to this Section 2, provided, that Assignor's rights under Section 7 of the Participation Agreement and under the Tax Indemnity Agreement to the extent relating to acts, conditions or events occurring or existing prior to the date hereof shall be retained in full by Assignor. 3. APPOINTMENT AS ATTORNEY-IN-FACT. In furtherance of the within assignment, the Assignor hereby constitutes and appoints the Assignee, and its successors and assigns, the true and lawful attorneys of the Assignor, with full power of substitution, in the name of the Assignee or in the name of the Assignor but on behalf of and for the benefit of and at the expense of the Assignee, to collect for the account of the Assignee all items sold, transferred or assigned to the Assignee pursuant hereto; to institute and prosecute, in the name of the Assignor or otherwise, but at the expense of the Assignee, all proceedings that the Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, EXHIBIT B - PAGE 2 72 transferred or assigned; to defend and compromise at the expense of the Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by the Assignee; and to do all such acts and things in relation thereto at the expense of the Assignee as the Assignee shall reasonably deem advisable. The Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by the Assignor in any manner or for any reason or by virtue of any dissolution of the Assignor. 4. PAYMENTS. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee, and the Assignee hereby covenants and agrees to pay over to the Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignee that, under Section 1 hereof, belong to the Assignor. 5. FURTHER ASSURANCES. Each party hereto shall, at any time and from time to time, upon the request of any other party hereto, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the other party may reasonably request to obtain the full benefits of this Assignment and of the right and powers herein granted. 6. INVESTMENT PURPOSE. The Assignee hereby represents that it is acquiring the trust and other interests hereby assigned to it for its own account for the purpose of investment and not with a view to the distribution or resale of either thereof. 7. REPRESENTATIONS AND WARRANTIES. The Assignee represents and warrants that: (a) it is duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations and the obligations of the Owner Participant under the Operative Documents to which it is or will be a party; (b) this Assignment and Assumption Agreement has been duly authorized by all necessary action on its part, does not require any approval not already obtained of its stockholders or any approval or consent not already obtained of any trustee or holders of any of its indebtedness or obligations, and has been duly executed and delivered by the Assignee, and neither the execution and delivery thereof, nor the consummation of the transactions contemplated hereby, nor compliance by the Assignee with any of the terms and provisions hereof or of any of the Operative Documents to which it will become a party or by which it will be bound, will contravene any United States Federal or state law, judgment, EXHIBIT B - PAGE 3 73 governmental rule, regulation or order applicable to or binding on the Assignee (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA (except as set forth in subsection 7(h) below) or aviation or to the nature of the equipment to be owned by the Owner Trustee, other than such laws, rules, or regulations relating to lease transactions generally or to the citizenship requirements of the Assignee under the Federal Aviation Act) or contravene or result in any breach of or constitute any default under, or result in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Assignee or, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Assignee is a party or by which it or its properties may be bound or affected; (c) each of the Operative Documents to which it will become a party, assuming such document is the legal, valid and binding obligation of each other party thereto, will constitute the legal, valid and binding obligation of the Assignee, enforceable in accordance with its terms; (d) there are no pending or, to the knowledge of the Assignee, threatened actions or proceedings against the Assignee before any court or administrative agency which, if determined adversely to the Assignee, would materially adversely affect the ability of the Assignee to perform its obligations under any Operative Document to which it will become a party; (e) upon the execution and delivery of this Assignment and Assumption Agreement, the Trust Estate and the Trust Indenture Estate will be free and clear of Lessor Liens (including for the this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Assignee; (f) neither the execution and delivery by the Assignee of this Assignment and Assumption Agreement, nor the consummation by it of any of the transactions contemplated hereby, requires the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or other governmental authority or agency (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 lease transactions generally or to the citizenship requirements of the Assignee under applicable aviation law); (g) the Assignee is not an "investment company" or a company controlled by an "investment company" required to register as such under the Investment Company Act of 1940, as amended; EXHIBIT B - PAGE 4 74 (h) either (x) no part of the funds to be used by it to acquire any right, title or interest in the Trust Estate, or in this Agreement, the Trust Agreement, the Tax Indemnity Agreement or any other of the Operative Documents to which the Assignee is a party or by which the Owner Participant is bound, directly or indirectly constitutes, or may be deemed under the Code, ERISA or any applicable state law or any rulings or regulations thereunder to be, 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 or of any entity the assets of which constitute "plan" assets under ERISA, or (y) the transfer to and ownership of such right, title and interest by the Assignee is and will continue to be covered by Prohibited Transaction Class Exemption 91-38 or 95-60. (i) on the date hereof [it is a Citizen of the United States (without use of a voting trust agreement or voting powers agreement)] [it has entered into a voting powers or voting trust agreement which has been approved by the FAA (to the extent required by the Federal Aviation Act or the FAA)]; (j) the transfer to it of all of the Assignor's right, title and interest as Owner Participant will not adversely affect the continued registration of the Aircraft in the name of the Owner Trustee or violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or violate any provisions of the Securities Act of 1933, as amended, or any other applicable Federal or state law (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA (except as set forth in subsection 7(h) above)); and (k) [it is a "Transferee" satisfying the conditions set forth in Section 8(n) of the Participation Agreement] [alternatively, guaranty meeting the requirements of Section 8(n) of the Participation Agreement to be provided]; and (1) such Transferee is not (i) an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or (ii) 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 (unless such entity is General Electric Company, International Lease Finance Corporation, any similar entity or any of their respective Affiliates, provided, that (I) such entity is not included within the immediately preceding clause (i) of this subsection (l) and (II) no such entity has, EXHIBIT B - PAGE 5 75 through ownership of common or preferred stock, effective voting control of an entity described in such immediately preceding clause (i). 8. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor represents and warrants that: (a) it is a corporation duly organized and validly existing in good standing under the laws of the State of ____________ and has the requisite power, authority and legal right to enter into and carry out the transactions contemplated hereby; (b) this Agreement has been duly authorized, executed and delivered by it and constitutes the legal, valid and binding obligation of Assignor, enforceable against it in accordance with its terms; (c) no action or proceeding is pending, has been instituted or, to the knowledge of Assignor, is threatened, before any court or governmental agency, nor has any order, judgment or decree been issued or, to the knowledge of Assignor, is threatened, by any court or governmental agency which would materially adversely affect the ability of Assignor to complete and consummate its obligations contemplated hereby; (d) the Trust Estate is free of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to it; (e) it has fully performed all of its obligations under the Participation Agreement and under each other Operative Document to which it is a party or by which it is bound, which obligations by their terms are required to be satisfied or performed prior to the Effective Time or prior to the consummation of the transactions contemplated hereby; (f) neither the execution, delivery and performance by it of this Agreement, nor compliance by it with any of the provisions thereof requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness obligations of it or contravenes or will contravene any law or any order of any court or governmental authority of agency applicable to or binding on it (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA) or contravenes or will contravene the provisions of, or constitute a default under, its [Certificate of Incorporation] or [By-Laws] or any indenture, mortgage, contract or any agreement or instrument to which it is a party or by which it or any of its property may be bound or affected; EXHIBIT B - PAGE 6 76 (g) the transfer to Assignee of all of the Assignor's right, title and interest as Owner Participant will not violate, or affect registration of the Aircraft under, any provision of the Federal Aviation Act (or any rules or regulations promulgated thereunder), violate the Securities Act of 1933, as amended (and no registration pursuant to such Act or the rules and regulations thereunder shall be required in connection with such transfer), or violate any other applicable Federal or state law (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA); and (h) Assignor has assumed 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 the transfer to Assignee pursuant to the Assignment. 9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE. 10. COUNTERPARTS. This Assignment may be executed in any number of counterparts, all of which together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 11. THIRD PARTY BENEFICIARIES. Each party hereto agrees, for the benefit of the Owner Trustee, each Loan Participant, each Certificate Holder, the Indenture Trustee and Lessee (collectively, the "BENEFICIARIES"), that the representations, warranties and covenants of such party contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. 12. EFFECTIVENESS. This Agreement shall be effective upon its execution and delivery by each of Assignor and Assignee, the exact time of occurrence of which (the "EFFECTIVE TIME") shall be agreed in a writing signed by Assignor and Assignee addressed to Lessee, the Owner Trustee and the Indenture Trustee. EXHIBIT B - PAGE 7 77 IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. [ASSIGNOR] By -------------------------------------- Title [ASSIGNEE] By -------------------------------------- Title EXHIBIT B - PAGE 8 78 EXHIBIT C TO PARTICIPATION AGREEMENT [NW 1996 E] SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES 79 ** Argentina * Australia * Austria * Belgium ** Brazil * Canada ** Chile * Denmark * Finland * France * Germany ** Greece ** Hungary * Iceland ** India ** Indonesia * Ireland * Italy * Japan * Luxembourg ** Malaysia ** Mexico * Netherlands * New Zealand * Norway ** People's Republic of China Portugal ** Republic of China (Taiwan)*** Singapore ** South Africa South Korea Spain * Sweden * Switzerland ** Thailand * United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . * Designates "Specified Country" ** Designates "Restricted Country" EXHIBIT C - PAGE 1 80 *** 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. 81 EXHIBIT D TO PARTICIPATION AGREEMENT FORM OF GUARANTY [LETTERHEAD OF GUARANTOR] PARENT GUARANTY Dated as of ____________ ____, ______ [Lessee] [Trust Company] [Indenture Trustee] [Loan Participants] One Boeing Model 757-251 Aircraft Manufacturer's Serial Number [ ] Ladies and Gentlemen: Reference is hereby made to the Participation Agreement [NW 1996 E] (as from time to time amended or supplemented, the "Participation Agreement"), dated as of April 29, 1996, among Northwest Airlines, Inc. ("Lessee"), [ ] (the "Owner Participant"), First Security Bank of Utah, National Association, not in its individual capacity, except as expressly provided therein, but solely as trustee (the "Owner Trustee" and "Lessor") under the Trust Agreement, dated as of April 29, 1996, between the Trustee and the Owner Participant (the "Trust Agreement"), State Street Bank and Trust Company (the "Indenture Trustee") and the Loan Participants listed on Schedule I thereto. Capitalized terms used herein without definition have the respective meanings ascribed thereto in the Participation Agreement. Pursuant to Section 8 of the Participation Agreement and in connection with the transfer of the Interest (as defined in the Assignment and Assumption Agreement dated as of the date hereof between [Transferor], a ____________ corporation ("Transferor") and [Transferee], a ____________ corporation ("Transferee") (the "Assumption Agreement'')) to be consummated as of the date hereof from Transferor to Transferee, the wholly-owned subsidiary of _________________________ ("Guarantor"), and the execution by Guarantor of the guaranty of Transferee's obligations as contemplated by the Assumption Agreement (this "Guaranty"), Guarantor represents and warrants to, and covenants with, Lessee, First Security Bank of Utah, National Association, in its individual capacity ("Trust Company"), Indenture Trustee and Loan Participants, as follows: EXHIBIT D - PAGE 1 82 1. Ownership of Transferee. Guarantor directly or indirectly owns and holds all of the issued and outstanding shares of capital stock of Transferee. 2. Additional Representations and Warranties. (i) Guarantor is a corporation duly organized and validly existing pursuant to the laws of ___________________, and has the corporate power and authority to enter into and perform this Guaranty. (ii) The execution, delivery and performance by Guarantor of this Guaranty has been duly authorized by all necessary corporate action on the part of Guarantor, does not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Guarantor except such as have been duly obtained, and this Guaranty will not contravene any applicable law or corporate charter or by-law, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien upon the property of Guarantor under, any indenture, mortgage, contract or other agreement to which Guarantor is a party or by which it may be bound or affected. (iii) Neither the execution and delivery by Guarantor of this Guaranty, nor the consummation of the transactions by Guarantor contemplated hereby, nor the performance of the obligations hereunder or under any other documents contemplated hereby or thereby by Guarantor requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, United States Federal, state, or foreign governmental authority or agency. (iv) This Guaranty has been duly executed and validly delivered by Guarantor and constitutes the legal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its terms except as the enforcement of this Guaranty may be affected by applicable bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally. (v) There are no pending or, to Guarantor's knowledge, threatened actions or proceedings before any court or administrative agency which might materially adversely affect the consolidated financial condition, business or operations of Guarantor, or the ability of Guarantor to perform its obligations under this Guaranty. (vi) No broker's or finder's fees or commissions or advisory fees are or may become payable in connection with this Guaranty or the Assumption Agreement or, if any such fee is payable, such fee will be the responsibility of Guarantor. (vii) On the date hereof the Trust Estate will be free of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to Guarantor. EXHIBIT D - PAGE 2 83 (viii) Guarantor is (A) a Citizen of the United States (or has effected a voting trust agreement, voting powers agreement or other similar arrangement) and (B) a bank, insurance company, financial institution or domestic corporation the net worth of which is at least $50,000,000. 3. Guaranty. (a) Guarantor hereby unconditionally and irrevocably guarantees, not merely as surety but as obligor: (i) the due and punctual payment of any and all sums which are payable by Transferee pursuant to any provision of the Assumption Agreement (and in particular, Section 4 thereof) and the Participation Agreement, the Tax Indemnity Agreement and any other Operative Document assumed by Transferee pursuant to the Assumption Agreement (collectively, the "Guaranteed Agreements"), and (ii) the due and punctual performance of and compliance with and observance of all other obligations, covenants, warranties and undertakings of or conditions contained in or arising under the Guaranteed Agreements binding upon or made by Transferor and assumed by Transferee under the Assumption Agreement, in each case, whether or not Guarantor shall have contributed funds to Lessor or Transferee, as the case may be, for such payment or performance by Lessor or Transferee (such payments and other obligations guaranteed hereunder hereinafter referred to as the "Obligations"). (b) Guarantor agrees that this Guaranty is an unconditional and absolute guaranty of payment and performance (not merely enforceability) and that its undertakings hereunder are not contingent upon your bringing any action against Transferee or resorting to any security and hereby expressly waives any claim that its undertakings hereunder are so contingent. (c) Guarantor hereby waives promptness, diligence, demand and all notices whatsoever as to the obligations and covenants guaranteed hereby and acceptance of this Guaranty, and waives any other circumstance which might otherwise constitute a defense available to, or a discharge of, the undersigned, and agrees that it shall not be required to consent to, or receive any notice of, any amendment or modification of, or waiver, consent or extension with respect to, the Guaranteed Agreements that may be made or given as provided therein. (d) Guarantor agrees to pay any costs and expenses (including reasonable fees and disbursements of counsel) that may be paid or incurred by the beneficiaries hereof in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty. EXHIBIT D - PAGE 3 84 (e) Guarantor understands and agrees that its obligations hereunder shall be construed as continuing, absolute and unconditional without regard to (i) the validity, regularity or enforceability of any Operative Document, any of the Obligations or any collateral security therefor or guaranty or right of offset with respect thereto at any time or from time to time held by any beneficiary hereof, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by Transferee against any beneficiary hereof or (iii) any other circumstances whatsoever (with or without notice to or knowledge of Transferee or Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of Transferee for the Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any other instance. 4. Quiet Enjoyment. So long as no Event of Default shall have occurred and be continuing, Guarantor will not permit Transferee or Lessor to take or cause to be taken any action contrary to Lessee's rights under the Lease, including, without limitation, Lessee's rights to possession and use of the Aircraft. 5. No Discharge. The obligations of Guarantor hereunder are absolute, unconditional and irrevocable and will not be discharged by, and this Guaranty shall remain in full force and effect notwithstanding: (a) the assignment, conveyance or other transfer by Guarantor of any or all of its interest in or capital stock of Transferee, unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer); (b) the assignment, conveyance or other transfer by Transferee of any or all of its interest in the Trust Estate (as defined in the Trust Agreement), unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer) unless Guarantor guarantees the obligations of the transferee under Section 8(n) of the Participation Agreement; (c) the assignment, conveyance or other transfer by Lessor of any or all of its interest in the Aircraft; (d) any extension or renewal with respect to any obligation of Transferee or Lessor under the Guaranteed Agreements; (e) any modification of, or amendment or supplement to, any of the Guaranteed Agreements; (f) any furnishing or acceptance of additional security or any release of any security; (g) any waiver, consent or other action or inaction or any exercise or non-exercise of any right, remedy or power with respect to Transferee or Lessor, or any change in the structure of Transferee or Lessor; or (h) any insolvency, bankruptcy, reorganization, arrangement, composition, liquidation, dissolution, or similar proceedings with respect to the Trustee or Transferee; or any other occurrence whatsoever, except payment in full of all amounts payable by Transferee under the Guaranteed Agreements and performance in full of all Obligations of Transferee in accordance with the terms and conditions of the Guaranteed Agreements. EXHIBIT D - PAGE 4 85 6. Reinstatement. Guarantor agrees that this Guaranty shall be automatically reinstated with respect to any payment made prior to any termination of the Guaranty by or on behalf of Transferee pursuant to the Participation Agreement or the other Operative Documents to which Transferee is a party if and to the extent that such payment is rescinded or must be otherwise restored, whether as a result of any proceedings in bankruptcy or reorganization or otherwise. 7. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any set-off or application of funds of Guarantor by any beneficiary hereof, Guarantor shall not be entitled to be subrogated to any of the rights of any beneficiary hereof against Transferee or any collateral, security or guarantee or right of set-off held by any beneficiary hereof for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payment made by Guarantor hereunder, until all amounts and performance owing to the beneficiaries hereof by Transferee on account of the Obligations are paid and performed in full. 8. Severability. Any provision of this Guaranty Agreement that 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. 9. Miscellaneous. This Guaranty shall: (a) be binding upon Guarantor, its successors and assigns; (b) inure to the benefit of, and be enforceable by, Lessee, Trust Company, Indenture Trustee, and Loan Participants, and their respective successors and assigns and each other holder from time to time of any interest in the Aircraft or the Operative Documents, but shall not, and is not intended to, create rights in any other third parties; (c) not be waived, amended or modified without the written consent of Lessee, Trust Company, Indenture Trustee, and Loan Participants; (d) BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; and (e) subject to Section 6 hereof, remain in full force and effect until, and shall be terminated upon (1) the payment in full of all sums payable by Transferee, as the case may be, under the Guaranteed Agreements, and by Guarantor hereunder, and performance in full of Transferee, in accordance with the terms and provisions of the Guaranteed Agreements and Guarantor in accordance with the terms of this Guaranty or (2) the date on which Transferee shall meet the requirements set forth in Section 8 of the Participation Agreement without benefit of this Guaranty; provided that Guarantor hereby covenants and agrees that if Transferee shall at any time thereafter (while Transferee shall be Owner Participant under the Participation Agreement) fail to meet such requirements, Guarantor shall immediately reinstate this Guaranty or execute and deliver to the addressees of this Guaranty a guaranty substantially identical hereto. All notices to, or requests of, demands on and other communications with Guarantor shall be made as set forth in the Participation Agreement. EXHIBIT D - PAGE 5 86 [rest of page intentionally left blank] EXHIBIT D - PAGE 6 87 Very truly yours, [GUARANTOR] By: ______________________________ Name: Title: [SIGNATURE PAGE] EXHIBIT D - PAGE 7 88 EXHIBIT E TO PARTICIPATION AGREEMENT FORM OF OPINION OF TRANSFEREE COUNSEL _____________ ___, _______ To Each of the Persons Named on Schedule A Attached Hereto Re: Transfer of Interest in one Boeing Model 757-251 Aircraft, and Operative Documents related to Acquisition Thereof on __________ ____, ______ Ladies and Gentlemen: We have acted as [special][internal] counsel to [Transferee], a _____________ corporation (the "Transferee"), in connection with the transfer by [Transferor], a __________________ corporation (the "Transferor") to Transferee, of all of its right, title and interest in and to the Aircraft and the Operative Documents to which the Transferor is a party or by which it is bound (collectively, the "Transferee Documents") and the assumption by the Transferee of the Transferor's obligations thereunder. The transfer is being accomplished by an Assignment and Assumption Agreement, dated as of ____________ ____, _____ made by the Transferee and agreed to and acknowledged by the Transferor (the "Assumption Agreement"). Capitalized terms used but not otherwise defined herein are defined as set forth in or by reference in the Participation Agreement referred to in the Assumption Agreement. In connection with the opinions expressed herein, we have examined executed counterparts of the Transferee Documents. We have also examined and relied upon the accuracy of the originals or certified, conformed, photocopied or telecopied copies of such corporate records, certificates, instruments and other documents as we have deemed necessary or appropriate to enable us to render the opinions expressed herein. In all such examinations, we have assumed the genuineness of signatures (other than those of the Transferee) on original documents and the conformity to such original documents of all copies submitted to us as certified, conformed, photocopied or telecopied copies, and as to certificates and telegraphic and telephonic confirmations given by public officials, we have assumed the same to have been properly given and to be accurate. As to all matters of fact material to our opinions, we have, when relevant facts were not independently established, relied upon representations and warranties contained in the Operative Documents and upon the statements and certificates furnished to us. EXHIBIT E - PAGE 1 89 Based upon and subject to the foregoing and the matters hereinafter set forth, we are of the opinion that: 1. The Transferee is a corporation duly organized, validly existing and in good standing under the laws of the State of ______________. 2. The Transferee has full corporate power, authority and legal right to carry on its business as now conducted and is duly authorized and empowered to [execute and deliver] the Transferee Documents and to perform its obligations thereunder in accordance with the conditions and provisions thereof. 3. The execution, delivery and performance by the Transferee of the Transferee Documents have been duly authorized by the Transferee[, and each of the Transferee Documents has been duly executed and delivered by it]. 4. No filing with, notice to or authorization or approval from any governmental or public body or authority of the United States of America or the State of ____________ is required in connection with the execution, delivery and performance by the Transferee of the Transferee Documents. 5. There are no actions, suits or proceedings (whether or not purportedly on behalf of the Transferee) pending or, to our knowledge, threatened against or affecting the Transferee or any property rights of the Transferee at law or in equity or before any court, commission or other administrative agency or instrumentality, which, either individually or in the aggregate, if determined adversely would materially affect the condition, financial or otherwise, of the Transferee or its ability to perform its obligations under the Transferee Documents; and, to our knowledge, the Transferee is not in default with respect to any order or decree of any court or governmental commission, agency or instrumentality which would materially affect the condition, financial or otherwise, of the Transferee or its ability to perform its obligations under the Transferee Documents. 6. Neither the execution and delivery by the Transferee of the Transferee Documents nor the consummation of the transactions therein contemplated or the fulfillment of or compliance with, the terms and provisions thereof will conflict with or result in a breach of, any of the terms, conditions or provisions of (i) any law or regulation of the United States of America or the State of ____________, or (ii) to the best of our knowledge, any order, injunction or decree of any court or governmental instrumentality binding upon the Transferee, or (iii) the Certificate of Incorporation or the By-Laws of the Transferee or (iv) to the best of our knowledge, any bond, debenture, note, mortgage, indenture, agreement or other instrument to which the Transferee is now a party or by which it or its property may be bound, or would constitute (with the giving of notice or the passage of time or both) a default thereunder or result in the creation or imposition of any lien, charge, security interest or other encumbrance (except EXHIBIT E - PAGE 2 90 as expressly contemplated by the Operative Documents) or any nature whatsoever upon the Aircraft pursuant to the terms of any such agreement or instrument. 7. Each of the Transferee Documents constitutes a legal, valid and binding obligation of the Transferee, enforceable against the Transferee in accordance with the terms thereof, except as the enforceability thereof may be limited by (a) general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), (b) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (c) public policy considerations (in the case of the indemnity provisions contained therein). 8. Neither the execution and delivery by the Transferee of the Transferee Documents, nor the consummation by the Transferee of any of the transactions contemplated thereby requires the consent or approval of, the giving of notice to, or the registration or filing with, or the taking of any other action with respect to, any governmental authority or agency of the United States of the State of _______________. We express no opinion as to the laws of any jurisdiction other than the laws of the State of ______________ and the federal laws of the United States of America. We note that the Trust Agreement is governed by the laws of the State of Utah. Insofar as the foregoing opinions relate to the legality, validity, binding effect and enforceability of the Trust Agreement, we have assumed for purposes of such opinions (notwithstanding the express provisions of such agreements to the contrary) that such agreement is governed by the laws of the State of ______________ and we express no opinion as to the enforceability of the choice of law provisions in such agreement. In addition, we express no opinion herein as to (i) any federal or state securities laws, (ii) any tax laws, (iii) any aviation laws, (iv) any laws, statutes, rules or regulations applicable to the particular nature of the equipment acquired by the Owner Trustee pursuant to the Participation Agreement or the Purchase Agreement Assignment and (v) ERISA or any other pension and employee benefit laws, rules or regulations. In addition, we express no opinion as to title in or to the Trust Estate on the part of any Person. Insofar as our opinions expressed herein relate to the Tax Indemnity Agreement, such opinions are addressed and are being rendered solely to Lessee. In rendering the opinions expressed herein, we have assumed that (a) each of the Transferee Documents has been duly authorized, executed and delivered by the respective parties thereto (other than the Transferee) and constitutes a legal, valid and binding obligation of each of such parties (other than the Transferee) enforceable against each of such parties in accordance with the terms thereof, (b) each of such parties (other than the Transferee) has the requisite power, authority and legal right to enter into and perform its respective obligations under the Transferee Documents and (c) the transactions provided for in the Transferee Documents are not within the prohibitions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended. EXHIBIT E - PAGE 3 91 This opinion is furnished by us at the request of the Transferee, with their consent for the sole benefit of the addressees hereof, each of whom we understand and agree may rely upon the opinions set forth herein. No other person or entity is entitled to rely on this opinion without our express written consent. This opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated herein. Very truly yours, EXHIBIT E - PAGE 4 92 SCHEDULE A [Lessee] [Trust Company] [Indenture Trustee] [Loan Participants] SCHEDULE A - PAGE - 1 - EX-4.I8 76 FIRST AMENDMENT TO PARTICIPATION AGREEMENT-1996 E 1 FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 E] This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 E], dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) [_____________], a [______] corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (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 (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; W I T N E S S E T H: WHEREAS, Lessee, the Owner Participant, the Owner Trustee, [___________________________], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 E], dated as of April 29, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 E], dated as of April 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 E], dated April 30, 1996 2 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 E] relating to the Aircraft, dated as of April 29, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 E] dated April 30, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 E], dated as of April 29, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 E] relating to the Aircraft, dated as of April 29, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 E] dated as of April 29, 1996 (the "GUARANTEE"), pursuant to which the Guarantor guaranteed certain obligations of Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant Guarantor entered into the Owner Participant Guaranty [NW 1996 E] dated as of April 29, 1996 (the "OWNER PARTICIPANT GUARANTY"), pursuant to which the Owner Participant Guarantor guaranteed certain obligations of the Owner Participant under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent have entered into the Refunding Agreement [NW 1996 E], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"); -2- 3 WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 E], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1996 E], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 E] dated as of June 3, 1996 (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Participant and the Owner Trustee have entered into the First Amendment to Trust Agreement [NW 1996 E] dated as of the date hereof (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in Section 1 of the Refunding 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing 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 Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (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 -3- 4 Subordination Agent entered into the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Participation Agreement is amended as follows: SECTION 1. AMENDMENT OF SECTION 1(d) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 2. AMENDMENT OF SECTION 7(b)(i) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(i) of the Original Participation Agreement is hereby amended by (i) adding the words "or the Pass Through Certificates" (1) before and after the clause "or transfer of the Secured Certificates" in clause (E) thereof and (2) after the clause "the Secured Certificates" in clause (F) thereof and (ii) adding the words and punctuation "(including any Make-Whole Amount)" after the word "premium" in clause (F) thereof. SECTION 3. AMENDMENT OF SECTION 7(b)(ii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation Agreement is hereby amended by (i) deleting the words "other than a Loan Participant" from clauses (1) and (3) thereof; (ii) deleting clauses (2) and (4) thereof in their entirety and substituting therefor "Intentionally Omitted", (iii) deleting the words "a Loan Participant" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (iv) deleting the words "any Loan Participant or any Certificate Holder" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (B) in clause (10) thereof and substituting therefor "or", (vi) deleting "(C)" in clause (10) thereof and substituting therefor "(B)", and (vii) deleting the parenthetical clause and the proviso from clause (12) thereof. SECTION 4. AMENDMENT OF SECTION 7(b)(iii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation Agreement is hereby amended by (i) deleting the words "U.S. Withholding Taxes" where such words first appear in the second sentence of the first paragraph thereof and substituting therefor "any Income Tax imposed by the Unites States Federal government required to be withheld from payments on the Secured Certificates or the Pass Through Certificates (a "U.S. WITHHOLDING TAX")" and (ii) deleting the second sentence in the last paragraph thereof. SECTION 5. AMENDMENT OF SECTION 7(b)(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement is hereby amended by (i) deleting the third and fourth sentences thereof and (ii) deleting the words "other than a Loan Participant" in the first sentence thereof. -4- 5 SECTION 6. AMENDMENT OF SECTION 7(c) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(c) of the Original Participation Agreement is hereby amended by (i) deleting the word "and" between the words "expenses" and "Transaction Expenses" in the second parenthetical phrase of the first paragraph thereof and substituting a comma therefor, (ii) inserting after the phrase "to Section 16 hereof" in such second parenthetical phrase the words "and Refinancing Expenses to the extent not required to be paid by the Owner Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement", (iii) adding the words and punctuation "and, only in the case of an Indemnitee who is the Owner Participant and its Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents, the Intercreditor Agreement, the Liquidity Facilities and the Pass Through Trust Agreements and, only in the case of an Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words "respect thereof" in the first clause (A) thereof, and (iv) adding the words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after the words "Operative Documents" in the second clause (A) thereof and in the second clause (B) thereof. SECTION 7. [Reserved] SECTION 8. AMENDMENT OF SECTION 8(f) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby amended by deleting the words "each of the Loan Participants" and substituting therefor the words "the Indenture Trustee" in the first line thereof. SECTION 9. AMENDMENT OF SECTION 8(n) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", any Loan Participant's," from the first sentence thereof, (ii) deleting the words and punctuation "the Loan Participants," each time they appear in the second sentence thereof, (iii) deleting the "," between the words "Owner Trustee" and "the Indenture Trustee" in clause (N) of the third sentence thereof and substituting therefor "and", (iv) deleting the words "and the Loan Participants" from clause (N) of the third sentence thereof, and (v) deleting the words and punctuation "the Loan Participants," from the fifth sentence thereof. -5- 6 SECTION 10. AMENDMENT OF SECTION 8(q)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement is hereby amended by (i) deleting the word "Each" in the first sentence thereof and substituting therefor the words "The Owner" and (ii) adding a new sentence to the end thereof to read as follows: "The Pass Through Trustee agrees that it will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of the initial supplement (other than the initial supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust Agreement without the prior written consent of the Owner Participant.". SECTION 11. AMENDMENT OF SECTION 8(t) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is hereby amended by deleting the fourth and fifth sentences thereof. SECTION 12. AMENDMENT OF SECTION 8(x) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", each Loan Participant" therefrom and (ii) adding a new second paragraph thereto at the end thereof: 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. SECTION 13. AMENDMENT OF SECTION 8(y)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement is hereby amended by (i) deleting the words "each" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii) deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Indenture Trustee and the Owner", (iii) inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement Assignment", the words and punctuation ", the Refunding Agreement", (iv) deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and substituting therefor the words "the Owner", and (v) deleting the word "Participants" from Section 8(y)(A)(iv) and substituting therefor the words "the Indenture Trustee and the Owner Participant". SECTION 14. AMENDMENT OF SECTION 8(dd) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. -6- 7 SECTION 15. AMENDMENT OF SECTION 8(gg) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 16. AMENDMENT OF SECTION 8(hh) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 17. AMENDMENT OF SECTION 8(ii) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(ii) of the Original Participation Agreement is hereby amended to read in its entirety as follows: (ii) Lessee agrees and covenants that it shall not purchase, guarantee or acquire any interest in (i) any Secured Certificate (except as provided in Section 8(x)) or Pass Through Certificate or (ii) any Advance by the Liquidity Provider. SECTION 18. AMENDMENT OF SECTION 9 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 19. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", the Loan Participants" from clause (A) thereof, (ii) deleting the words "Loan Participants" the second time they appear in clause (B) thereof and substituting therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05" from clause (iii) of the second sentence thereof. SECTION 20. AMENDMENT OF SECTION 13(b) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby amended by deleting the words "at the foot of this Agreement" in clause (A) of the second sentence thereof and substituting therefor the words "on the signature pages to the Refunding Agreement". SECTION 21. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is hereby amended by (i) deleting the words "Loan Participants" each time they appear in clauses (A), (B), and (D) thereof and substituting therefor the words "Indenture Trustee", (ii) deleting the "," both times it appears between the words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and substituting therefor "and", and (iii) deleting the words "and the Loan Participants" both times they appear in clause (E) thereof. SECTION 22. AMENDMENT OF SECTION 15(a) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Section 15. Miscellaneous. (a) The Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent -7- 8 requested of the Owner Trustee, as Lessor, under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor. SECTION 23. AMENDMENT OF SECTION 17 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is hereby amended by adding the following new subclause (7) to clause (a) thereof: (7) in connection with any proposed refinancing, if, on the date which is two Business Days prior to the last date on which notice of revocation of redemption may be given pursuant to Section 2.12(b) of the Trust Indenture, the Owner Participant is not satisfied in its sole discretion that such refinancing will occur on the date specified for such refinancing in the notice provided pursuant to Section 2.11 of the Trust Indenture, then Lessee shall not effect such proposed refinancing and shall provide notice to such effect to the Indenture Trustee pursuant to Section 2.12(b) of the Trust Indenture. SECTION 24. AMENDMENT OF SECTION 18 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 25. RATIFICATION. Except as hereby modified, the Original Participation Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Participation Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Participation Agreement or any word or phrase referring to a section or provision of the Participation Agreement is deemed for all purposes to be a reference to the Participation Agreement or such section or provision as amended pursuant to this Amendment. SECTION 26. MISCELLANEOUS. (a) Without in any way affecting the provisions of the letter agreement dated April 30, 1996 between the Owner Participant and Lessee (which letter agreement shall remain in full force and effect) relating to future financings, each of the parties hereto agrees that the transactions contemplated hereby shall constitute one of the three refinancing operations permitted in Section 17 of the Participation Agreement. (b) Each party hereto acknowledges and agrees that the Purchaser is a Loan Participant under the Participation Agreement, the Lease and the other Operative Documents, and is entitled to the benefits of the covenants and other provisions therein running in favor of the Loan Participants, and to the security purported to be afforded by the Trust Indenture, but that (i) the Purchaser has no liability arising out of any actions or inactions of the Original Loan Participants or any prior Certificate Holder or any event or condition which occurred or existed prior to the Closing, (ii) the Purchaser is making no representations or warranties other than those set forth in the Refunding Agreement, and (iii) the Purchaser has no liability or obligation under any covenant in any of such agreements for any period prior to the Closing. -8- 9 (c) This Amendment 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 Amendment 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 Amendment shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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. THIS AMENDMENT 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 AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -9- 10 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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: ----------------------------------- Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: ----------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ----------------------------------- Name: Title: [_______________], as Owner Participant By: ----------------------------------- Name: Title: -10- 11 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Subordination Agent By: ----------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee By: ----------------------------------- Name: Title -11- 12 SCHEDULE I TO PARTICIPATION AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. -12- EX-4.I9 77 REFUNDING AGREEMENT-1996 E 1 REFUNDING AGREEMENT [NW 1996 E] This REFUNDING AGREEMENT [NW 1996 E], dated as of June 3, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii) [____________________] (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Participation Agreement (as defined below) as if the Closing Date had occurred. W I T N E S S E T H: WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, [INSERT BRIDGE LENDERS] as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 E], dated as of April 29, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust 2 Indenture and Security Agreement [NW 1996 E], dated as of April 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 E], dated April 30, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Lessee entered into the Lease Agreement [NW 1996 E] relating to the Aircraft, dated as of April 29, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 E] dated April 30, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 E], dated as of April 29, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 E] relating to the Aircraft, dated as of April 29, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 E] dated as of April 29, 1996 (the "GUARANTEE") pursuant to which the Guarantor guaranteed certain obligations of the Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and the Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 E], dated as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; -3- 3 WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Trustee and the Lessee entered into the First Amendment to Lease Agreement [NW 1996 E], dated as of the date hereof (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"), containing amendments, modifications and additions necessary to give effect to the transactions described herein; WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into the First Amendment to Trust Agreement [NW 1996 E], dated as of the Refinancing Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT"); WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent will enter into the First Amendment to Participation Agreement [NW 1996 E], dated as of the Refinancing Date (the "PA AMENDMENT NO. 1"; the Original Participation Agreement, as amended by the PA Amendment No. 1, the "PARTICIPATION AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 E] dated as of the date hereof (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing Secured Certificates bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will enter 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 Refinancing Date (the "INTERCREDITOR AGREEMENT"); and -4- 4 WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on June 12, 1996 or on such other date agreed to by the parties hereto (the "REFINANCING DATE"): (i) immediately prior to the Closing, the Owner Participant shall pay to the Owner Trustee an amount equal to the unpaid interest on the Original Secured Certificates accrued up to but not including the Refinancing Date; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Refinancing Secured Certificates being issued to such Pass Through Trustee as set forth in clause (vii) below; (iii) the Owner Trustee shall pay to the Indenture Trustee for the benefit of the holders of the Original Secured Certificates an amount equal to the aggregate principal amount of Original Secured Certificates outstanding on the Refinancing Date, together with accrued and unpaid interest on the Original Secured Certificates up to but not including the Refinancing Date, and all other amounts payable to such holders by the Owner Trustee under the Original Indenture and the Original Participation Agreement; (iv) pursuant to the Indenture, the Indenture Trustee shall disburse to the holders of the Original Secured Certificates the amounts of principal and interest, and other amounts, if any, described in clause (iii) above, owing to them on the Refinancing Date with respect to the Original Secured Certificates as a prepayment of the Original Secured Certificates; (v) simultaneously with the disbursement by the Indenture Trustee of amounts described in clause (iv) above to the holders of the Original Secured Certificates, the Indenture Trustee shall receive the Original Secured Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture; (vii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Refinancing Secured Certificates of the -5- 5 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; and (viii) the Owner Trustee shall disburse to the Owner Participant the excess of the amounts received by it pursuant to clauses (i) and (ii) above over the amount paid by it pursuant to clause (iii) above. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) In case any Pass Through Trustee shall for any reason fail to purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on or prior to June 12, 1996 or such other date as shall be agreed in writing by the parties hereto, the written notice given by the Lessee pursuant to Section 17 of the Original Participation Agreement shall be deemed never to have been given, none of the Owner Participant, the Owner Trustee nor the Lessee shall have any obligation to pay to the holders of the Original Secured Certificates or the Indenture Trustee any amount in respect of the prepayment of the Original Secured Certificates, the Original Secured Certificates shall remain outstanding and in full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall not take place. (d) The closing (the "CLOSING") of the transactions described in this Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such other place as the parties hereto may agree. (e) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Refinancing Date. (f) In order to facilitate the transactions contemplated hereby, the Lessee and the Guarantor have entered into the Underwriting Agreement, dated the date hereof, among the Lessee, the Guarantor and the several underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to the terms and conditions hereof, the Lessee and the Guarantor will enter into each of the Pass Through Trust Agreements and will undertake to perform certain administrative and ministerial duties under such Pass Through Trust Agreements. SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured Certificates shall be payable as to principal in accordance with the terms of the Indenture, and the Refinancing Secured Certificates shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Refinancing Secured Certificates in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Refinancing Secured Certificates bearing the interest rate set forth opposite the name of such -6- 6 Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Refinancing Secured Certificates shall be dated and authenticated as of the Refinancing Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee and the Owner Participant to make the payments and participate in the transactions contemplated by this Agreement on the Refinancing Date are subject to the fulfillment, prior to or on the Refinancing Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder, and paragraph (r) shall not be a condition precedent to the obligations of the Pass Through Trustee hereunder): (a) The Owner Trustee shall have tendered the Refinancing Secured Certificates to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Refinancing Secured Certificates and shall have tendered the Refinancing Secured Certificates to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts or conformed copies of the following documents: (1) this Agreement; (2) the Lease Amendment No. 1; (3) the Indenture; (4) the PA Amendment No. L; (5) the Trust Agreement Amendment No. 1; (6) each of the Pass Through Trust Agreements; (7) the Intercreditor Agreement; and (8) the Liquidity Facility for each of the Class A, Class B and Class C Trusts. -7- 7 (c) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Lessee and the Guarantor (as the case may be) as to the person or persons authorized to execute and deliver this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the TIA Amendment No. 1 and any other documents to be executed on behalf of the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Lessee and the Guarantor or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the 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 the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby; and (3) a copy of the certificate of incorporation of the Lessee and the Guarantor, certified by the Secretary of State of the State of Minnesota in the case of the 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 the Lessee and the Guarantor, certified by the Secretary or Assistant Secretary of the 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 the 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 Refinancing Date, as to the due incorporation and good standing of the Lessee or the Guarantor (as the case may be) in such state. (d) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received a certificate signed by an authorized officer of the Lessee (and, with respect to the matters set forth in clauses (4) and (5) below, of the Guarantor), dated the Refinancing Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Original Lease and has a current, valid certificate of airworthiness; (2) the FAA Bill of Sale, the Original Lease and the Original Indenture have been duly recorded, and the Original Trust Agreement -8- 8 has been duly filed, with the FAA pursuant to the sections of Title 49, United States Code, relating to aviation (the "FEDERAL AVIATION ACT"); (3) the Aircraft has been registered with the FAA in the name of the Owner Trustee and the Lessee has authority to operate the Aircraft; (4) the representations and warranties contained herein of the Lessee and the Guarantor are correct as though made on and as of the Refinancing Date, except to the extent that such representations and warranties (other than those contained in clause (v) of Section 8(d)) relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (5) there has been no material adverse change in the financial condition of the Guarantor and its subsidiaries, taken as a whole, since December 31, 1995. (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement, the Indenture, the PA Amendment No. 1, 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 and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary or an Assistant Secretary of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Refinancing 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). -9- 9 (f) The Pass Through Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and any other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the 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; (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 Refinancing Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Refinancing 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). (g) The Pass Through Trustee and the Owner Trustee each shall have received a certificate signed by an authorized officer of the Owner Participant, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Refinancing 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). (h) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an independent insurance broker's report as to the due compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (i) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for the Lessee and the Guarantor, and an -10- 10 opinion addressed to it from the Lessee's legal department, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee and the Owner Participant each shall have received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form and substance satisfactory to each of them. (l) The Pass Through Trustee and the Owner Trustee each shall have received an opinion addressed to it from Dewey Ballantine, special counsel for the Owner Participant, and an opinion addressed to it from corporate counsel to the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee shall have received an opinion of White & Case, special counsel for the Liquidity Provider, and in-house German counsel for the Liquidity Provider, each in form and substance satisfactory to the Pass Through Trustee. (n) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The 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 Refinancing Secured Certificates to be purchased from the Owner Trustee. (p) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustees to make the payments described in Section 1(a)(ii) or for the Owner Trustee or the Owner Participant to participate in the transactions contemplated by this Agreement on the Refinancing Date. (q) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee or the Guarantor which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Refinancing Date shall have been duly obtained. -11- 11 (r) The Lessee and the Owner Participant shall each have executed and delivered to the other the TIA Amendment No. 1. Promptly following the recording of the Lease Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of the Lease Amendment No. 1 and the Indenture. SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in the transactions contemplated by this Agreement and to execute and deliver each of the Pass Through Trust Agreements and the PA Amendment No. 1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion referred to in subsections (j) through (n) of Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter from counsel rendering such opinion authorizing the Lessee and the Guarantor to rely on such opinion as if it were addressed to the Lessee and the Guarantor, (ii) each certificate referred to in subsections (e) through (g) of Section 3, (iii) executed counterparts or conformed copies of the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1 and (iv) such other documents and evidence with respect to each other party hereto as the Lessee, the Guarantor or their counsel 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) The respective obligation of each of the Lessee, the Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Pass Through Trustee are correct as though made on and as of the Refinancing 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), (ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) 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. SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Indenture. The -12- 12 Lessee and the Guarantor, by execution and delivery hereof, consent to such execution and delivery of the Indenture. The Indenture shall be effective as of the Refinancing Date. SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, by execution and delivery hereof, consent to the amendment to the Original Lease effected by, and request and instruct the Owner Trustee to execute and deliver the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1 shall be effective as provided therein. SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the execution and delivery of the PA Amendment No. 1 by each of the parties thereto, the Original Participation Agreement shall be amended as set forth in the PA Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall be a party thereto from and after the Refinancing Date to the extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing Date. SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) each of the 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 on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under (i) in the case of the Lessee, this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 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; -13- 13 (b) the 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; (c) the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, and the performance of the obligations of the Lessee or the Guarantor (as the case may be) under this Agreement, the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, have been duly authorized by all necessary corporate action on the part of the 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 the 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 the Lessee or the Guarantor (as the case may be) or the certificate of incorporation or by-laws of the 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 the Lessee or the Guarantor (as the case may be) under, any indenture, mortgage, contract or other agreement to which the 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; (d) neither the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 or any other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, nor the performance of the obligations of the Lessee or the Guarantor (as the case may be) hereunder or under the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement or the other Operative Documents to which the Lessee or the Guarantor (as the case may be) is a party, nor the consummation by the Lessee or the Guarantor (as the case may be) 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 in respect of, the Department of Transportation, the FAA, or any other federal, state or foreign -14- 14 governmental authority having jurisdiction, other than (i) 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, (ii) 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, (iii) the consents, approvals, notices, registrations and other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement, (iv) the registrations and filings referred to in Section 8(f), and (v) 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; (e) this Agreement constitutes, and each of the Participation Agreement, the Pass Through Trust Agreements, the Tax Indemnity Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment No. 1 and the Lease Amendment No. 1 shall have been executed and delivered by each of the parties thereto, will constitute, the legal, valid and binding obligations of the Lessee or the Guarantor (as the case may be) enforceable against the 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, 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; (f) except for the filings and registrations referred to in Section 7(a)(vi) of the Participation Agreement, such filings and registrations as shall have been made or effected subsequent thereto and the filing for recording pursuant to the Federal Aviation Act of the Indenture and the Lease Amendment No. 1, 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 the 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 other than the taking of possession by the Indenture Trustee of the original counterparts of -15- 15 the Original Lease and the Lease Amendment No. 1 (to the extent the Lease constitutes chattel paper) and the filing of continuation statements at periodic intervals with respect to the Uniform Commercial Code financing statements in effect on the Refinancing Date covering the security interests created by the Original Indenture or describing the Lease as a lease; (g) neither the 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; (h) neither the Lessee nor the Guarantor is an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (i) 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; and (j) 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. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the parties below represents, warrants and covenants to each of the other parties to this Agreement and to the Liquidity Provider as follows: (a) The Indenture Trustee in its individual capacity represents, warrants and covenants that: (1) 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 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 PA Amendment No. 1, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party; -16- 16 (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, the PA Amendment No. 1 and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party 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; (3) this Agreement constitutes, and the Participation Agreement, when the PA Amendment No. 1 has been executed and delivered by the Indenture Trustee, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) 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 (5) there are no Indenture Trustee Liens on the Aircraft or any portion of the Trust Estate. (b) The Owner Trustee, in its individual capacity (except as provided in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7) and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and (11) below) as Owner Trustee, represents and warrants that: (1) 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, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver the Original Trust Agreement, has the corporate power and authority to carry out the terms of the Trust Agreement, and has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of the Trust Agreement by the Owner Participant), as Owner Trustee, and to the extent expressly provided herein or therein, in its individual capacity, the corporate -17- 17 power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Refinancing Secured Certificates, the Lease, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) 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 and (assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant) this Agreement constitutes, and each of the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Indenture, when entered into, the Lease, when the Lease Amendment No. 1 shall have been entered into, and the Trust Agreement, when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, enforceable against it in its individual capacity or as Owner Trustee, as the case may be, in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, the Owner Trustee has duly authorized, and on the Refinancing Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Refinancing Secured Certificates pursuant to the terms and provisions hereof and of the Indenture, and each Refinancing Secured Certificate on the Refinancing Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Refinancing Secured Certificate and the Indenture; (4) neither the execution and delivery by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, the Original Participation Agreement, the PA Amendment No. 1, the Original Trust Agreement, the Trust Agreement Amendment No. 1, the Original Indenture, the Indenture, the Original Lease, the Lease Amendment No. 1, the Refinancing Secured Certificates or any other Operative Document to which it is a party, 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 hereby or 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 hereof and 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 -18- 18 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; (5) 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 Indenture, the Lease, the Refinancing 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 8(d); (6) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (7) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 -19- 19 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (8) 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 redemption of the Original Secured Certificates or the issuance of the Refinancing 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 (1), (2), (3) and (4) 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 of Utah, 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; (9) 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 (1), (2), (3) and (4) above; (10) 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; (11) the Owner Trustee has not, in its individual capacity or as Owner Trustee, directly or indirectly offered any Refinancing 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, the Original Loan Participants 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 Refinancing Secured Certificate, any Certificate or any interest in and to the Trust Estate, the Trust Agreement or any similar interest -20- 20 for sale to, or to solicit any offer to acquire any of the same from, any person; and (12) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) The Owner Participant is a corporation 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, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Original Participation Agreement, the Original Trust Agreement, the Tax Indemnity Agreement, the Trust Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; this Agreement has been duly authorized, executed and delivered by the Owner Participant; and this Agreement constitutes, and the Participation Agreement when the PA Amendment No. 1 shall have been entered into, the Tax Indemnity Agreement when the TIA Amendment No. 1 shall have been entered into, and the Trust Agreement when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their 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; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1, the Trust Agreement Amendment No. 1 or any other Operative Document to which it is a party nor (B) compliance by the Owner Participant with all of the provisions hereof or 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, 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; -21- 21 (3) 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 or was required, as the case may be, for the due execution, delivery or performance by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; (4) there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or arbitrator which would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Participation Agreement, the Tax Indemnity Agreement and the Trust Agreement; (5) 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 refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Refinancing 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 was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Refinancing 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 that 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 Indenture, (D) which the Owner Participant 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Massachusetts, -22- 22 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements, the Intercreditor Agreement and the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1, and (upon execution and delivery of the PA Amendment No. 1), the Participation Agreement, will 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; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the performance by the Pass Through Trustee of the Participation Agreement, the purchase by the Pass Through Trustee of the Refinancing 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; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby or by the Participation Agreement, 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 -23- 23 governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement or the Participation 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 Refinancing 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 as a grantor trust under subpart E, Part I of Subchapter J of the Code, such trusts will not be subject to any Taxes imposed by the Commonwealth of Massachusetts or any political subdivision thereof; (6) 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 Participation Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) 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, the Lessee or the Guarantor. -24- 24 (e) The Subordination Agent represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement and, when the PA Amendment No. 1 has been executed and delivered by each of the parties thereto, the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent each of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery by the Subordination Agent of the PA Amendment No. 1), the Participation Agreement will 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; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the Participation Agreement, or the performance by the Subordination Agent of the Participation 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; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby or by the Participation Agreement requires the consent or approval of, the giving of notice to, the -25- 25 registration with, or the taking of any other action with respect to, any Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement, the PA Amendment No. 1 or the Participation 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 Refinancing 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); (6) 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 PA Amendment No. 1, the Participation Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter, the Lessee or the Guarantor. SECTION 10. NOTICES. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and any such notice shall become effective upon being deposited in the United States -26- 26 mail, with proper postage for first-class registered or certified mail prepaid, or when delivered personally or, if promptly confirmed by mail as provided above, when dispatched by facsimile or other written telecommunication, addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement. SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Indenture Trustee and the Original Loan Participants in connection with the transactions contemplated by this 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) shall be paid promptly by the Owner Participant, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Refinancing Secured Certificates issued under the Indenture of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for the Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special counsel for the Original Loan Participants; (2) the fees, expenses and disbursements of Dewey Ballantine, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 11 and the agreements referred to herein are not consummated, the Lessee shall bear and pay all costs, expenses and fees referred to in this Section 11 at no after-tax cost to the Owner Trustee, Trust Estate or the Owner Participant; provided that if the transactions fail to be consummated -27- 27 as a result of the failure of the Owner Participant to act in good faith in consummating the transactions, or to otherwise comply with the terms hereof, the Owner Participant shall bear and pay its own fees, costs and expenses (including, without limitation, the fees and expenses of its special counsel) and the Lessee shall pay all other reasonable fees, costs and expenses as aforesaid. SECTION 12. 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. SECTION 13. MISCELLANEOUS. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations, warranties and agreements herein of the Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee, and the Lessee's, the Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the Subordination Agent's and the Pass Through Trustee's obligations under any and all thereof, shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. (b) This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only 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 each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and, subject to the terms of the Participation 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 Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject to the provisions of the Participation Agreement, its successors and permitted assigns. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. No purchaser or holder of any Refinancing Secured Certificates shall be deemed to be a successor or assign of any holder of the Original Secured Certificates. -28- 28 SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -29- 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. NORTHWEST AIRLINES, INC., Lessee By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -30- 30 NORTHWEST AIRLINES CORPORATION, Guarantor By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -31- 31 [______________________] Owner Participant By: _______________________________________ Title: Address: Attn: Telecopy No.: -32- 32 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: ___________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -33- 33 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent, Subordination Agent By: ___________________________________ Title: Address: c/o State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -34- 34 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee Indenture Trustee By: _____________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -35- 35 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: __________________________________ Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Facsimile: (801) 246-5053 -36- 36 SCHEDULE I TO REFUNDING AGREEMENT PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1A dated as of the Closing Date. 2. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1B dated as of the Closing Date. 3. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1C dated as of the Closing Date. 37 SCHEDULE II TO REFUNDING AGREEMENT REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
Interest Rate Purchaser and Maturity --------- ------------- Northwest Airlines Principal Purchase Pass Through Trust Amount Price --------- -------- 1996-1A [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1B [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1C [ _ ]% Refinancing Secured Certificates due [ ] $[ ]
EX-4.J1 78 TRUST AGREEMENT - 1996 F 1 TRUST AGREEMENT [NW 1996 F] This TRUST AGREEMENT [NW 1996 F] dated as of May 14, 1996 between [_________] a [_________] corporation (the "ORIGINAL OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); W I T N E S S E T H : ARTICLE I DEFINITIONS AND TERMS SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall otherwise require and except as contained in this Section 1.01, the capitalized terms used herein shall have the respective meanings assigned thereto in the Lease (as hereinafter defined) for all purposes hereof. All definitions contained in this Section 1.01 shall be equally applicable to both the singular and plural forms of the terms defined. For all purposes of this Trust Agreement the following terms shall have the following meanings: "Excluded Payments" has the meaning ascribed to such term in the Trust Indenture. "Indenture Event of Default" has the meaning which the term "Event of Default" has in the Trust Indenture. "Lease" means that certain Lease Agreement [NW 1996 F], to be dated as of the date hereof, and to be entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of this Trust Agreement, as said Lease Agreement may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Trust Agreement. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Event of Default" has the meaning which the term "Event of Default" has in the Lease. "Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns. 2 "Owner Participant" means the Original Owner Participant and each Subsequent Owner Participant to the extent that the same shall, at the relevant time, have an Ownership Interest. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by this Trust Agreement. "Participation Agreement" has the meaning ascribed to such term in the Lease. "Replacement Airframe" has the meaning ascribed to such term in the Trust Indenture. "Replacement Engine" has the meaning ascribed to such term in the Trust Indenture. "Subsequent Owner Participant" means any Person to which the Original Owner Participant or any transferee from the Original Owner Participant or any Subsequent Owner Participant shall have transferred at any time after the Delivery Date its undivided right, title and interest originally held by the Original Owner Participant in this Trust Agreement, the Trust Estate and the Participation Agreement, to the extent permitted by Section 8.1 of this Trust Agreement and Section 8 of the Participation Agreement; provided that in the event of any such transfer so long as the Lease shall be in effect or any Secured Certificates remain unpaid, such transferee and its transferor shall have complied with all of the terms of Section 8(n) of the Participation Agreement. "Trust Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant, the Loan Participants or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its individual capacity, or to the Loan Participants or any other holder of a Secured Certificate, or to any of their respective directors, officers, employees, servants and agents, pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. "Trust Indenture Estate" has the meaning ascribed to such term in the Trust Indenture. 2 3 "Trust Office" shall mean the principal corporate trust office of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or the principal corporate trust office of any successor Owner Trustee. "Trust Supplement" means a supplement to the Trust Indenture and to this Trust Agreement in substantially the form of Exhibit A to the Trust Indenture which shall particularly describe the Aircraft, and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Trust Agreement. ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS; DECLARATION OF TRUST SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant hereby authorizes and directs the Owner Trustee to execute and the Owner Trustee agrees for the benefit of the Owner Participant that it will on or before the Delivery Date, execute and deliver the Operative Documents and any other agreements, instruments or documents to which the Owner Trustee is a party in the respective forms thereof in which delivered from time to time by the Owner Participant to the Owner Trustee for execution and delivery and, subject to the terms hereof, to perform its duties and, upon instructions from the Owner Participant, exercise its rights under said Operative Documents in accordance with the terms thereof. SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the Owner Participant, subject, however, to the provisions of and the Lien created by the Trust Indenture and to the provisions of the Lease and the Participation Agreement. ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF SECURED CERTIFICATES SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, on the Delivery Date, subject to due compliance with the terms of Section 3.02 hereof: (a) purchase the Aircraft pursuant to the Participation Agreement and the Bill of Sale; 3 4 (b) accept from Lessee the delivery of the Bill of Sale and the FAA Bill of Sale; (c) cause the Aircraft to be leased to Lessee under the Lease, and in furtherance thereof execute and deliver a Lease Supplement covering the Aircraft; (d) execute and deliver the Trust Supplement covering the Aircraft; (e) issue to the Loan Participants Secured Certificates in the amounts and otherwise as provided in Section 1(a) of the Participation Agreement; (f) execute and deliver the financing statements referred to in Section 4(a)(vi) of the Participation Agreement, together with all other agreements, documents and instruments referred to in Section 4 of the Participation Agreement to which the Owner Trustee is a party; (g) effect the registration of the Aircraft in the name of the Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of Sale; (ii) an application for registration of the Aircraft in the name of the Owner Trustee (including without limitation an affidavit from the Owner Trustee in compliance with the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) this Trust Agreement; and (h) execute and deliver all such other instruments, documents or certificates and take all such other actions in accordance with the directions of the Owner Participant, as the Owner Participant may deem necessary or advisable in connection with the transactions contemplated hereby. SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation of the Owner Trustee to take the action required by Section 3.01 hereof with respect to the Aircraft shall be subject to the following conditions precedent: (a) the Original Owner Participant shall have made the full amount of its Commitment set forth in Schedule II of the Participation Agreement available to the Owner Trustee, in immediately available funds, in accordance with Section 1 of the Participation Agreement; and (b) the Owner Participant shall have notified the Owner Trustee that the terms and conditions of Section 4 of the Participation Agreement, insofar as they relate to the Aircraft, shall have been 4 5 complied with in a manner satisfactory to the Original Owner Participant. SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, take the actions specified to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in accordance with the provisions of such Section 8(x) provided Lessee shall have paid all amounts required by such Section 19(d) and 8(x). SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR REPLACEMENT ENGINES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of a Replacement Airframe and Replacement Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a Replacement Engine being substituted pursuant to Section 10(b) of the Lease, subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease, as the case may be: (a) to the extent not previously accomplished by a prior authorization, authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees of Lessee) to accept delivery of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engines; (b) accept from Lessee or other vendor of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine a bill of sale or bills of sale (if tendered), and the invoice, if any, with respect to the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine being furnished pursuant to Section 10(a) or (b) of the Lease; (c) in the case of a Replacement Airframe, make application to the Federal Aviation Administration for the registration in the name of the Owner Trustee of the Aircraft of which such Replacement Airframe is a part; (d) execute and deliver a Lease Supplement and a Trust Supplement covering (i) the Aircraft of which such Replacement Airframe is part or (ii) such Replacement Engine, as the case may be; (e) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that 5 6 would be Lessor Liens but for the proviso in the definition of Lessor Liens) the Airframe and Engines (if any) or the Engine being replaced to Lessee; (f) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Airframe and Engines or engines (if any) or the Engine or engine being replaced from the lien created under the Trust Indenture and release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such replaced Airframe and Engines, if any, or Engine) from the assignment and pledge under the Trust Indenture; and (g) upon instructions from the Owner Participant, take such further action as may be contemplated by clauses (A) and (B) of the third paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of Section 10(b) of the Lease, as the case may be. SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In the event of the substitution of a Replacement Airframe for the Airframe or the substitution of a Replacement Engine for any Engine or engine, all provisions of this Trust Agreement relating to such replaced Airframe or Engine or engine shall be applicable to such Replacement Airframe or Replacement Engine with the same force and effect as if such Replacement Airframe or Replacement Engine were the same airframe or engine as the Airframe or Engine being replaced but for the Event of Loss with respect to such Airframe or Engine. SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of an engine being transferred to the Owner Trustee pursuant to Section 5(b) of the Lease, subject to due compliance with the terms of such Section 5(b): (a) accept from Lessee the bill of sale with respect to such engine contemplated by such Section 5(b) (if tendered); (b) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) and to an Engine to Lessee as contemplated by such Section 5(b); and (c) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Engine being transferred to Lessee pursuant to such Section 5(b) from the lien of the Trust Indenture and to release the Purchase Agreement and 6 7 the Purchase Agreement Assignment (solely with respect to such Engine) from the assignment and pledge under the Trust Indenture. ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture Trustee. Until the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with the provisions of Article III of the Trust Indenture. (b) Payments to Owner Trustee; Other Parties. After the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, any payment of the type referred to in Section 4.01(a) hereof (other than Excluded Payments) received by the Owner Trustee, any payments received from the Indenture Trustee other than as specified in Section 4.01(d) hereof and any other amount received as part of the Trust Estate and for the application or distribution of which no provision is made herein, shall be distributed forthwith upon receipt by the Owner Trustee in the following order of priority: first, so much of such payment as shall be required to reimburse the Owner Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof shall be retained by the Owner Trustee; second, so much of the remainder for which provision as to the application thereof is contained in the Lease or any of the other Operative Documents shall be applied and distributed in accordance with the terms of the Lease or such other Operative Document; and third, the balance, if any, shall be paid to the Owner Participant. (c) Certain Distributions to Owner Participant. All amounts from time to time distributable by the Indenture Trustee to the Owner Participant pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be distributed by the Owner Trustee to the Owner Participant in accordance with the provisions of Article III of the Trust Indenture. (d) Excluded Payments. Any Excluded Payments received by the Owner Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded Payments are payable under the provisions of the Participation Agreement, the Tax Indemnity Agreement, the Lease and the Operative Documents on the day received (or on the next succeeding Business Day if the funds to be so distributed shall not have been received by the Owner Trustee by 12:00 noon, New York City time). 7 8 (e) Multiple Owner Participants. If as a result of a transfer by an Owner Participant under Section 8.01 of this Trust Agreement, there is more than one Owner Participant hereunder, each such Owner Participant shall hold in proportion to its respective beneficial interest in the Trust Estate, an undivided beneficial interest in the entire Trust Estate and is entitled to receive ratably with any other Owner Participant payments distributable by the Owner Trustee hereunder. No Owner Participant shall have legal title to the Aircraft or any other portion of the Trust Estate. SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make distributions or cause distributions to be made to the Owner Participant pursuant to this Article IV by transferring by wire transfer in immediately available funds on the day received (or the next succeeding Business Day if the funds to be so distributed shall not have been received by the Owner Trustee by 12:00 noon, New York time, the amount to be distributed to such account or accounts of the Owner Participant as the Owner Participant may designate from time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner Trustee will, if so requested by the Owner Participant in writing, pay any or all amounts payable to the Owner Participant pursuant to this Article IV either (i) by crediting such amount or amounts to an account or accounts maintained by the Owner Participant with the Owner Trustee in its individual capacity in immediately available funds, (ii) by payment at the Trust Office of the Owner Trustee, in immediately available funds, or (iii) by mailing an official bank check or checks in such amount or amounts payable to the Owner Participant at such address as the Owner Participant shall have designated in writing to the Owner Trustee. ARTICLE V DUTIES OF THE OWNER TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall have knowledge of a Lease Event of Default or Indenture Event of Default (or an event which with the passage of time or the giving of notice or both would constitute a Lease Event of Default or an Indenture Event of Default) the Owner Trustee shall give to the Owner Participant prompt telephonic or telecopy notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event. The notice shall set forth in reasonable detail the facts and circumstances known to it with respect to such Lease Event of Default or Indenture Event of Default. Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such action or 8 9 shall refrain from taking such action, not inconsistent with the provisions of the Trust Indenture, with respect to such Lease Event of Default, Indenture Event of Default or other event as the Owner Trustee shall be directed in writing by the Owner Participant. If the Owner Trustee shall not have received instructions as above provided within thirty (30) days after the mailing of such notice to the Owner Participant, the Owner Trustee until instructed otherwise in accordance with the preceding sentence may, but shall be under no duty to, take or refrain from taking such action with respect to such Lease Event of Default, Indenture Event of Default or other event, not inconsistent with the provisions of the Trust Indenture, as it shall deem advisable in the best interests of the Owner Participant. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by an officer of FSBU in the Corporate Trust Department, the Owner Trustee shall not be deemed to have knowledge of a Lease Event of Default, Indenture Event of Default or other event referred to in this Section 5.01 unless notified in writing by the Indenture Trustee, the Owner Participant or Lessee. SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of Sections 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of the Owner Participant, the Owner Trustee will take such of the following actions, not inconsistent with the provisions of the Trust Indenture, as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder or under any of the Operative Documents to which the Owner Trustee is a party or in respect of all or any part of the Trust Estate as shall be specified in such instructions; (ii) take such action to preserve or protect the Trust Estate (including the discharge of Liens) as may be specified in such instructions; (iii) approve as satisfactory to it all matters required by the terms of the Lease or the other Operative Documents to be satisfactory to the Owner Trustee, it being understood that without written instructions of the Owner Participant, the Owner Trustee shall not approve any such matter as satisfactory to it (it being understood that the provisions of Sections 3.03, 3.04 and 3.06 hereof do not constitute instructions by the Owner Participant for the Owner Trustee to approve of or consent to the matters to be approved of or consented to by the Owner Trustee in the sections of the Lease referred to in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of Lessee under the Operative Documents, after the expiration or earlier termination of the Lease, deliver the Aircraft to the Owner Participant in accordance with such instructions, convey all of the Owner Trustee's right, title and 9 10 interest in and to the Aircraft for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or net lease the Aircraft on such terms and to such lessee or lessees as shall be designated in such instructions. SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be required to take any action under Section 5.01 (other than the giving of the notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have been indemnified by the Owner Participant, in manner and form satisfactory to the Owner Trustee, against any liability, cost or expense (including reasonable counsel fees and disbursements) which may be incurred in connection therewith; and, if the Owner Participant shall have directed the Owner Trustee to take any such action or refrain from taking any action, the Owner Participant agrees to furnish such indemnity as shall be required and, in addition, to the extent not otherwise paid pursuant to the provisions of the Lease or of the Participation Agreement, to pay the reasonable compensation of the Owner Trustee for the services performed or to be performed by it pursuant to such direction and any reasonable fees and disbursements of counsel or agents employed by the Owner Trustee in connection therewith. The Owner Trustee shall not be required to take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably determine, or shall have been advised by counsel, that such action is contrary to the terms of any of the Operative Documents to which the Owner Trustee is a party, or is otherwise contrary to law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with any of the Operative Documents to which the Owner Trustee is a party, except as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, or (to the extent not inconsistent with the provisions of the Trust Indenture) as expressly provided by the terms hereof or in written instructions from the Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or obligations shall be read into this Trust Agreement against the Owner Trustee. FSBU agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof) promptly take such action as may be necessary to duly discharge and satisfy in full all Lessor Liens attributable to it in its individual capacity which it is required to discharge pursuant to Section 8(h) of the Participation Agreement and otherwise comply with the terms of said Section binding on it. SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to the contrary notwithstanding, the Owner Trustee shall comply with the provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of special counsel for the Owner Trustee, of all the applicable conditions precedent specified in Section 3.02 hereof and in Section 4 of the Participation Agreement. 10 11 SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to, and the Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate except (i) as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, (ii) as expressly provided by the terms hereof, or (iii) as expressly provided in written instructions from the Owner Participant pursuant to Section 5.01 or 5.02 hereof. ARTICLE VI THE OWNER TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts hereby created and agrees to perform the same but only upon the terms hereof applicable to it. The Owner Trustee also agrees to receive and disburse all monies received by it constituting part of the Trust Estate upon the terms hereof. FSBU shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence, (b) for performance of the terms of the last sentence of Section 5.04 hereof and the first sentence of Section 5.01 hereof, (c) for its or the Owner Trustee's failure to use ordinary care to disburse funds, (d) for liabilities that may result from the inaccuracy of any representation or warranty of it (or from the failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation Agreement and (e) for any Tax based on or measured by any fees, commissions or compensation received by it for acting as trustee in connection with any of the transactions contemplated by the Operative Documents. SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with written instructions furnished pursuant to Section 5.02 hereof and except as provided in, and without limiting the generality of, Sections 3.01 and 5.04 hereof and the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU shall have any duty (i) to see to any recording or filing of any Operative Document or of any supplement to any thereof or to see to the maintenance of any such recording or filing or any other filing of reports with the Federal Aviation Administration or other governmental agencies, except that FSBU, in its individual capacity, shall comply with the reporting requirements set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall, to the extent that information for that purpose is supplied by Lessee pursuant to any of the Operative Documents, complete and timely submit (and furnish the Owner Participant with a copy of) any and all reports relating to the Aircraft which may from time to time be required by the Federal Aviation Administration or any government or governmental authority having jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, other than to forward to the Owner Participant copies of 11 12 all reports and other written information which the Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against any part of the Trust Indenture Estate or the Trust Estate, except as provided in Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and records with respect to the Aircraft at any time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease or any other Operative Document. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity warrants that on the Delivery Date the Owner Trustee shall have received whatever title was conveyed to it by Lessee and that the Aircraft shall during the Term be free of Lessor Liens attributable to it, or (b) any representation or warranty as to the validity, legality or enforceability of this Trust Agreement or any Operative Document to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof except to the extent that any such statement is expressly made herein or therein as a representation by FSBU in its individual capacity or by the Owner Trustee and except that FSBU in its individual capacity hereby represents and warrants that this Trust Agreement has been, and (assuming due authorization, execution and delivery by the Original Owner Participant of this Trust Agreement) the Operative Documents to which it or the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by it or the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of itself or the Owner Trustee, as the case may be and that this Trust Agreement constitutes the legal, valid and binding obligation of FSBU or the Owner Trustee, as the case may be, enforceable against FSBU or the Owner Trustee, as the case may be, in accordance with its terms. SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as provided in Section 22 of the Lease, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law, and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. 12 13 SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The Owner Trustee shall incur no liability to anyone in acting in reliance upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Unless other evidence in respect thereof is specifically prescribed herein, any request, direction, order or demand of the Owner Participant or Lessee mentioned herein or in any of the Operative Documents to which the Owner Trustee is a party shall be sufficiently evidenced by written instruments signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director and in the name of the Owner Participant or Lessee, as the case may be. The Owner Trustee may accept a copy of a resolution of the Board of Directors or Executive Committee of Lessee, certified by the secretary or any assistant secretary of Lessee as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or Committee and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Owner Trustee may for all purposes hereof rely on a certificate signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. In the administration of trusts hereunder, the Owner Trustee may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may, at the expense of the Trust Estate, consult with counsel, accountants and other skilled persons to be selected and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such agent, attorney, counsel, accountant or other skilled person appointed by it with due care hereunder. SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder, the Owner Trustee acts solely as trustee and not in its individual capacity except as otherwise expressly provided herein; and, subject to the terms of the Participation Agreement and the Trust Indenture, all persons, other than the Owner Participant, as provided herein, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Trust Estate for payment or satisfaction thereof. SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the Owner Participant or (subject to the provisions of the Trust Indenture) the Trust Estate for any fee as compensation for its services hereunder; provided, however, that the Owner Trustee shall have a lien upon the Trust Estate (subject, however, to the lien of the Trust Indenture) for any such fee not paid by Lessee as contemplated by the last 13 14 paragraph of Section 7(c) of the Participation Agreement. Pursuant to Section 7(c) of the Participation Agreement and subject to Section 16 thereof, Lessee shall be required to pay the reasonable fees and expenses of the Owner Trustee comprising the compensation and reimbursement of expenses to which the Owner Trustee is entitled under this Section 6.07. SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all monies under this Trust Agreement or any agreement contemplated hereby. The Owner Participant shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Owner Participant. The Owner Trustee shall be responsible for causing to be prepared, at the request and expense of the Owner Participant, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. The Owner Participant or the Owner Trustee, as the case may be, upon request, will furnish the Owner Trustee or the Owner Participant, as the case may be, with all such information as may be reasonably required from the Owner Participant or the Owner Trustee, as the case may be, in connection with the preparation of such income tax returns. The Owner Trustee will give to the Owner Participant, upon request, such periodic information concerning receipts and disbursements by it with respect to the Trust Estate as would be helpful to the Owner Participant in preparing its tax returns. SECTION 6.09. FIXED INVESTMENT TRUSTS. Notwithstanding anything herein to the contrary, the Owner Trustee shall not be authorized and shall have no power to "vary the investment" of the Owner Participant within the meaning of Treasury Regulations Section 301.7701-4(c)(1). ARTICLE VII INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner Participant hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and hereby indemnify, protect, save and keep harmless FSBU in its individual capacity and its successors, assigns, legal representatives, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its individual capacity on or measured by any compensation received by FSBU in its individual capacity for its services hereunder or in connection with the transactions contemplated by the Operative Documents or otherwise excluded in subclause (e) below), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and including, without limitation, any liability of an owner, any strict liability and any liability without fault) of any kind and nature whatsoever which may be imposed on, incurred by or 14 15 asserted against FSBU in its individual capacity (whether or not also indemnified against by Lessee under the Lease or under the Participation Agreement or also indemnified against by any other person but only to the extent not otherwise paid or reimbursed by Lessee or such other person) in any way relating to or arising out of this Trust Agreement or any of the Operative Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of the Owner Trustee or FSBU in its individual capacity hereunder, except (a) in the case of willful misconduct or gross negligence on the part of the Owner Trustee or FSBU in its individual capacity in the performance or non-performance of its duties hereunder or under any of the other Operative Documents to which the Owner Trustee is a party or (b) those resulting from the inaccuracy of any representation or warranty of FSBU in its individual capacity (or from the failure of FSBU in its individual capacity to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture or, with respect to representations or warranties of FSBU in its individual capacity only, in Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the Participation Agreement or in any of the other Operative Documents or (c) as may result from a breach by FSBU in its individual capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in the case of the failure to use ordinary care on the part of the Owner Trustee or FSBU in its individual capacity in the disbursement of funds or (e) those claims arising under any circumstances or upon any terms where Lessee would not have been required to indemnify the Owner Trustee in its individual capacity pursuant to Section 7(b) or 7(c) of the Participation Agreement (disregarding, for this purpose, Sections 7(b)(ii)(3) (to the extent that such disposition referred to therein results from the Owner Trustee acting in accordance with written instructions of the Owner Participant), 7(b)(ii)(5)(i) (to the extent that it results from the willful misconduct or gross negligence of the Owner Participant to the extent imposed on the Owner Trustee), 7(b)(ii)(8), 7(c)(B) (to the extent that such failure referred to therein results from the Owner Trustee's acting in accordance with written instructions of the Owner Participant), 7 (c)(D) (to the extent such disposition therein results from the Owner Trustee's acting in accordance with written instructions of the Owner Participant), 7(c)(F),7(c)(H), 7(c)(I) and 7(c)(J) of the Participation Agreement and disregarding, for this purpose, those claims arising or resulting from any action taken by or inaction of the Owner Trustee in accordance with written instructions of the Owner Participant). The indemnities contained in this Section 7.01 extend to FSBU only in its individual capacity and shall not be construed as indemnities of the Trust Indenture Estate or the Trust Estate (except to the extent, if any, that FSBU in its individual capacity has been reimbursed by the Trust Indenture Estate or the Trust Estate for amounts covered by the indemnities contained in this Section 7.01). The indemnities contained in this Section 7.01 shall survive the termination of this Trust Agreement. In addition, if necessary, FSBU in its individual capacity shall be entitled to indemnification from the Trust Estate, subject to the Lien of the Trust Indenture, for any liability, 15 16 obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee, the Owner Participant or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same FSBU in its individual capacity shall have a Lien on the Trust Estate, subject to the Lien of the Trust Indenture, which shall be prior to any interest therein of the Owner Participant. The payor of any indemnity under this Article VII shall be subrogated to any right of the person indemnified in respect of the matter as to which such indemnity was paid. ARTICLE VIII TRANSFER OF THE OWNER PARTICIPANT'S INTEREST SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n) of the Participation Agreement shall (with the same force and effect as if set forth in full, mutatis mutandis, in this Section 8.01) be applicable to any assignment, conveyance or other transfer by any Owner Participant of its right, title or interest in and to the Participation Agreement, the Trust Estate or this Trust Agreement. If there is more than one Owner Participant, no assignment, conveyance or other transfer by an Owner Participant of any of its right, title or interest in and to this Trust Agreement or the Trust Estate shall be valid unless each other Owner Participant's prior written consent (which consent may be withheld in the sole discretion of such other Owner Participants) is given to such assignment, conveyance or other transfer. SECTION 8.02. ACTIONS OF THE OWNER PARTICIPANTS. If at any time prior to the termination of this Trust Agreement there is more than one Owner Participant, then during such time, if any action is required to be taken by all Owner Participants and whenever any direction, authorization, approval, consent, instruction, or other action is permitted to be given or taken by the Owner Participant it shall be given or taken only upon unanimous agreement of all Owner Participants; provided, however, that the termination of this Trust Agreement pursuant to Section 11.01 hereof may be effected upon the election of any Owner Participant. ARTICLE IX SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the Participation Agreement and (ii) may resign at any time without cause by giving at least sixty (60) 16 17 days' prior written notice to the Owner Participant, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such resignation to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In addition, the Owner Participant may at any time remove the Owner Trustee without cause by a notice in writing delivered to the Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such removal to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or removal of the Owner Trustee, the Owner Participant may appoint a successor Owner Trustee by an instrument signed by the Owner Participant. If a successor Owner Trustee shall not have been appointed within thirty (30) days after such notice of resignation or removal, the Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor shall have been appointed as above provided. Any successor Owner Trustee so appointed by such court shall immediately and without further act be superseded by any successor Owner Trustee appointed as above provided. (b) Execution and Delivery of Documents, etc. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee and the Owner Participant an instrument accepting such appointment, and thereupon such successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts hereunder with like effect as if originally named the Owner Trustee herein; but nevertheless, upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to such successor Owner Trustee all monies or other property then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will execute such documents as are provided to it by such successor Owner Trustee and will take such further actions as are requested of it by such successor Owner Trustee as are reasonably required to cause registration of the Aircraft included in the Trust Estate to be transferred upon the records of the Federal Aviation Administration, or other governmental authority having jurisdiction, into the name of the successor Owner Trustee. (c) Qualification. Any successor Owner Trustee, however appointed, shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement and shall also be a bank or trust company organized under the laws of the United States or any state thereof having a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. 17 18 (d) Merger, etc. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee may be transferred, shall, subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without further act. SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee shall have been directed to do so by the Owner Participant, the Owner Trustee and the Owner Participant shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement) approved by the Owner Trustee and the Owner Participant, either to act as co-trustee, jointly with the Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as an "ADDITIONAL TRUSTEE"). In the event an Indenture Event of Default not arising from a Lease Event of Default shall occur and be continuing, the Owner Trustee may act under the foregoing provisions of this Section 9.02 without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 9.02 in such contingency. Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and 18 19 obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; (E) the Owner Participant, at any time, by an instrument in writing may remove any such additional trustee unless such additional trustee was appointed by the Owner Trustee without the concurrence of the Owner Participant during the occurrence of an Indenture Event of Default not arising from a Lease Event of Default, in which case the Owner Trustee shall have the power to remove any such additional trustee without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact for it in such connection in such contingency; and (F) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, the Trust Indenture or affect the interests of the Indenture Trustee or the holders of the Secured Certificates in the Trust Indenture Estate. ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS SECTION 10.01. SUPPLEMENTS AND AMENDMENTS. (a) Supplements and Amendments. This Trust Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Owner Trustee and the Owner Participant. Subject to Section 10.02 hereof and the first sentence of Section 10 of the Participation Agreement, the Owner Trustee will execute any amendment, supplement or other modification of this Trust Agreement or of any other Operative Document to which the Owner Trustee is a party which it is requested to execute by the Owner Participant, except that the Owner Trustee shall not execute any such amendment, supplement or other modification which, by the express 19 20 provisions of any of the above documents, requires the consent of any other party unless such consent shall have been obtained. (b) Delivery of Amendments and Supplements to Certain Parties. A signed copy of each amendment or supplement referred to in Section 10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each holder of a Secured Certificate. SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to executing any document required to be executed by it pursuant to the terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its counsel to the effect that the execution of such document is authorized hereunder. If in the opinion of the Owner Trustee any such document adversely affects any right, duty, immunity or indemnity in favor of the Owner Trustee hereunder or under any other Operative Document to which the Owner Trustee is a party, the Owner Trustee may in its discretion decline to execute such document. SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be necessary for any written request furnished pursuant to Section 10.01 hereof to specify the particular form of the proposed documents to be executed pursuant to such Section, but it shall be sufficient if such request shall indicate the substance thereof. SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the execution by the Owner Trustee of any document entered into pursuant to Section 10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof to the Owner Participant, but the failure of the Owner Trustee to mail such conformed copy shall not impair or affect the validity of such document. SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be required to enable the Owner Trustee to enter into the Lease Supplement covering the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and Section 3.01 hereof. ARTICLE XI MISCELLANEOUS SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement and the trusts created hereby shall be of no further force or effect upon the earlier of (a) both the final discharge of the Trust Indenture pursuant to Section 10.01 thereof and the sale or other final disposition by the Owner Trustee of all property constituting part of the Trust Estate and the final distribution by the Owner Trustee of all monies or other property or proceeds constituting part of the Trust Estate in 20 21 accordance with Article IV hereof, provided that at such time Lessee shall have fully complied with all of the terms of the Lease and the Participation Agreement or (b) twenty-one years less one day after the death of the last survivor of all of the descendants of the grandparents of David Rockefeller living on the date of the earliest execution of this Trust Agreement by any party hereto, but if this Trust Agreement and the trusts created hereby shall be or become authorized under applicable law to be valid for a period commencing on the 21st anniversary of the death of such last survivor (or, without limiting the generality of the foregoing, if legislation shall become effective providing for the validity of this Trust Agreement and the trusts created hereby for a period in gross exceeding the period for which this Trust Agreement and the trusts created hereby are hereinabove stated to extend and be valid), then this Trust Agreement and the trust created hereby shall not terminate under this subsection (b) but shall extend to and continue in effect, but only if such nontermination and extension shall then be valid under applicable law, until the day preceding such date as the same shall, under applicable law, cease to be valid; otherwise this Trust Agreement and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof, subject to the Owner Participant's right to revoke such trusts and cause the Trust Estate (subject to the Lien of the Trust Indenture) to be distributed. SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE. The Owner Participant shall not have legal title to any part of the Trust Estate. [No transfer, by operation of law or otherwise, of any right, title and interest of the Owner Participant in and to the Trust Estate hereunder shall operate to terminate] this Trust Agreement or the trusts hereunder or entitle any successors or transferees of the Owner Participant to an accounting or to the transfer of legal title to any part of the Trust Estate. SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment, sale, transfer or other conveyance of its interest in the Aircraft by the Owner Trustee made pursuant to the terms hereof or of the Lease or the Participation Agreement shall bind the Owner Participant and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Owner Participant in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY. Except for the terms of Section 8(n) of the Participation Agreement incorporated in Article VIII hereof and except as otherwise provided in Articles IX and X hereof, nothing herein, whether expressed or implied, shall be construed to give any Person other than the Owner Trustee and the Owner Participant any legal or equitable right, remedy or claim under or in respect of this Trust Agreement; but this Trust Agreement shall be held to be for the sole and exclusive benefit of the Owner Trustee and the Owner Participant. 21 22 SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. (a) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 11.05(a). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.05(a), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee or the Owner Participant, to the respective addresses set forth below the signatures of such parties on the signature page of the Participation Agreement, or (B) if to a Subsequent 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. (b) Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Trust Agreement, the Participation Agreement, 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 the Participation 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. SECTION 11.06. SEVERABILITY. Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.07. WAIVERS, ETC. No term or provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing entered into in compliance with the terms of Article X hereof; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. 22 23 SECTION 11.08. COUNTERPARTS. This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.09. BINDING EFFECT, ETC. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII hereof, its assigns. Any request, notice, direction, consent, waiver or other instrument or action by the Owner Participant shall bind its successors and assigns. Any Owner Participant which shall cease to have any Ownership Interest shall thereupon cease to be a party hereto or an Owner Participant for any reason and shall have no further obligations hereunder. SECTION 11.10. HEADINGS; REFERENCES. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. SECTION 11.12. PERFORMANCE BY THE OWNER PARTICIPANT. Any obligation of the Owner Trustee in its individual capacity or as Owner Trustee hereunder or under any other Operative Document or other document contemplated herein, may be performed by the Owner Participant and any such performance shall not be construed as a revocation of the trust created hereby. 23 24 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [ ], Owner Participant By ------------------------------------- Title: ---------------------------------- FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By -------------------------------------- Title: ---------------------------------- 24 EX-4.J2 79 FIRST AMENDMENT TO TRUST AGREEMENT-1996 F 1 FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 F] This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 F], dated as of June 12, 1996, between [ ], a [ ] corporation (the "OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Trust Agreement (as defined below); W I T N E S S E T H: WHEREAS, Northwest Airlines, Inc. (the "LESSEE"), the Owner Participant, the Owner Trustee, [ ], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and State Street Bank and Trust Company, as Indenture Trustee (the "INDENTURE TRUSTEE") entered into the Participation Agreement [NW 1996 F], dated as of May 14, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 F], dated as of May 14, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 F] relating to the Aircraft, dated as of May 14, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 F] dated May 14, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to 2 Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 F], dated as of May 14, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 F], dated May 14, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, Lessee, Northwest Airlines Corporation, as Guarantor, the Owner Trustee, State Street Bank and Trust Company, as Pass Through Trustee, the Owner Participant, the Indenture Trustee and State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent, have entered into the Refunding Agreement [NW 1996 F], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"), providing for a refinancing operation as contemplated by Section 17 of the Original Participation Agreement; WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 F], dated as of the date hereof (the " INDENTURE"), under which Indenture the Owner Trustee shall issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1996 F], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); and WHEREAS, the Owner Participant and the Owner Trustee wish to amend the Original Trust Agreement as set forth herein to give effect to the transactions contemplated by the Refunding Agreement; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Trust Agreement is amended as follows: SECTION 1. AMENDMENT OF SECTION 11.01 OF THE ORIGINAL TRUST AGREEMENT . Section 11.01 of the Original Trust Agreement is hereby amended by adding the following clause to the end thereof after the word "distributed": "provided, however, such right is subject to the provisions of Section 10 of the Participation Agreement." SECTION 2. AMENDMENT OF SECTION 11.05(a) OF THE ORIGINAL TRUST AGREEMENT. Section 11.05(a) of the Original Trust Agreement is hereby amended by deleting -2- 3 the word "Participation" in clause (A) of the second sentence thereof and substituting therefor the word "Refunding". SECTION 3. DIRECTION. Pursuant to and in conformity with Section 10.01(a) of the Trust Agreement, the Owner Participant hereby requests the Owner Trustee to execute this Amendment. SECTION 4. RATIFICATION. Except as hereby modified, the Original Trust Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Trust Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Trust Agreement or any word or phrase referring to a section or provision of the Trust Agreement is deemed for all purposes to be a reference to the Trust Agreement or such section or provision as amended pursuant to this Amendment. SECTION 5. MISCELLANEOUS. This Amendment 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. The terms of this Amendment shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII of the Original Trust Agreement as amended hereby, its assigns. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. -3- 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [Owner Participant] By: __________________________ Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, By: __________________________ Name: Title: -4- EX-4.J3 80 TRUST INDENTURE-1996 F 1 AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 F] AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 F], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Owner Trustee under the Trust Agreement referred to below (together with its successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity, except as expressly stated herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE"). W I T N E S S E T H WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and the Owner Trustee have entered into the Trust Agreement whereby, among other things, (i) the Owner Trustee has established a certain trust for the use and benefit of the Owner Participant subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of, and with the priority of payment to, the holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has been authorized and directed to execute and deliver this Trust Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 F] dated as of May 14, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the Trust Agreement and Indenture Supplement [NW 1996 F] (the "SUPPLEMENT") dated May 14, 1996 to the Original Indenture, (iii) the Original Indenture and the Supplement were recorded by the Federal Aviation Administration on May 16, 1996 and were assigned Conveyance No. I56073 and (iv) the Lease Agreement [NW 1996 F] dated as of even date with the Original Indenture between the Owner Trustee and Lessee and the Lease Supplement No. 1 [NW 1996 F] were recorded by the Federal Aviation Administration on May 16, 1996 and were assigned Conveyance No. I56072 and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Loan Participants Secured Certificates (as defined in the Original Indenture); WHEREAS, the parties have agreed that subject to certain conditions, Lessee shall have the right to cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Secured Certificates issued to the Loan Participants pursuant to the Original Indenture shall be redeemed and new Secured Certificates (the "REFINANCING SECURED CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Trust Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Refinancing Secured Certificates and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of all of the Owner Trustee's right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Certificate Holders, subject to Section 2.15 and Article III hereof; 2 WHEREAS, all things have been done to make the Secured Certificates, when executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid, binding and enforceable obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Trust Indenture the valid, binding and legal obligation of the Owner Trustee for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened: -2- 3 GRANTING CLAUSE NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Secured Certificates from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions herein and in the Participation Agreement and the Secured Certificates contained, for the benefit of the Certificate Holders and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Certificate Holders by the Owner Trustee and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Secured Certificates by the holders thereof, and for other good and valuable consideration the receipt and adequacy whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors in trust and assigns, for the security and benefit of the Certificate Holders, a first priority security interest in and mortgage lien on all right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges, other than Excluded Payments (which collectively, excluding Excluded Payments but including all property hereafter specifically subjected to the Lien of this Trust Indenture by the Trust Agreement and Indenture Supplement or any mortgage supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire title as provided herein and in the Lease), all as more particularly described in the Trust Agreement and Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture; (2) the Lease and any Lease Supplement and all Rent thereunder (including, without limitation, all amounts of Interim Rent, Basic Rent, Supplemental Rent and payments of any kind thereunder (excluding any Excluded Payments)), and the Guarantee; (3) the Purchase Agreement (to the extent specified in the Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent and Agreement and the Bill of Sale; (4) all rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the lien of this Indenture; (5) all insurance and requisition proceeds with respect to the Aircraft, including but not limited to the insurance required under Section 11 of the Lease, but excluding insurance proceeds described in clauses (ii) and (iii) of the definition of Excluded Payments; -3- 4 (6) all rights of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under the Participation Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder, but excluding all Excluded Payments; (7) all monies and securities from time to time deposited or required to be deposited with the Indenture Trustee pursuant to any terms of this Indenture or the Lease or required hereby or by the Lease to be held by the Indenture Trustee hereunder (other than Excluded Payments); and (8) all proceeds of the foregoing. Concurrently with the delivery of the Original Indenture, the Owner Trustee has delivered to the Indenture Trustee the original executed counterpart of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt is attached), and executed copies of the Participation Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and its successors and assigns, in trust for the benefit and security of the Loan Participants and the Certificate Holders, except as provided in Section 2.15 and Article III hereof without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (8) inclusive above, subject to the terms and provisions set forth in this Trust Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Owner Trustee shall remain liable under the Indenture Agreements to perform all of the obligations assumed by it thereunder, except to the extent prohibited or excluded from doing so pursuant to the terms and provisions thereof, and the Indenture Trustee and the Certificate Holders shall have no obligation or liability under the Indenture Agreements, by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to the Indenture Agreements, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. Subject to the terms hereof, the Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, and with full power (in the name of the Owner Trustee or otherwise) to ask for, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds but in all cases excluding Excluded Payments) due and to become due under or arising out of the Indenture Agreements, and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Without limiting the generality of the foregoing, but subject to the rights of the Owner Trustee and the Owner Participant hereunder, during the continuance of any Event of Default under this Trust Indenture, the Indenture Trustee shall have the right under such power of attorney to accept any offer in connection with the exercise of remedies as set forth herein of any purchaser to purchase the Airframe and Engines and upon such purchase to execute and deliver in the name of and on behalf of the Owner Trustee an appropriate bill of sale and other instruments of transfer relating to the Airframe and Engines, when purchased by such purchaser, and to perform all other necessary or appropriate acts with respect to any such purchase, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or -4- 5 appropriate to protect and preserve the right, title and interest of the Indenture Trustee in and to such Rents (other than Excluded Payments) and other sums and the security intended to be afforded hereby; provided, however, that no action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or liabilities of the Owner Trustee to any Person beyond those obligations and liabilities specifically set forth in this Trust Indenture and in the other Operative Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture shall not have been fully discharged, to make all payments of Rent (other than Excluded Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to, or as directed by, the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Trust Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Trust Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem necessary or desirable to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be created hereby or to obtain for the Indenture Trustee the full benefits of the assignment hereunder and of the rights and powers herein granted. The parties hereto acknowledge that neither the Owner Trustee nor the Owner Participant shall have any obligation as to any recording, filing, refiling or re-recording of any documents or instruments in regard to maintaining the perfection of the security interests created hereunder, in the Trust Indenture Estate or any security interest that may be claimed to have been created by the Lease or the ownership interest of the Owner Trustee in the Aircraft. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants and agrees that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that it will not, except as otherwise provided in this Trust Indenture and except with respect to Excluded Payments, (i) accept any payment from Lessee under any Indenture Agreement, (ii) enter into any agreement amending or supplementing any Indenture Agreement, (iii) execute any waiver or modification of, or consent under, the terms of, or exercise any rights, powers or privileges under, any Indenture Agreement, (iv) settle or compromise any claim (other than those relating to an Excluded Payment) arising under any Indenture Agreement or (v) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any Indenture Agreement to arbitration thereunder. The Owner Trustee does hereby further agree that it will not without the written consent of the Indenture Trustee: (a) except as set forth in Section 8(bb) of the Participation Agreement, collect or agree to the receipt or collection of any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease but excluding any Excluded Payment prior to the due date for the payment thereof provided for by the Lease or assign, transfer or hypothecate (other than to the Indenture Trustee hereunder) any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease but excluding any Excluded Payment, then due or to accrue in the future under the Lease in respect of the Airframe and Engines; or (b) except as contemplated by the Trust Agreement in connection with the appointment of a successor owner trustee, sell, mortgage, transfer, assign or hypothecate (other than to the Indenture Trustee hereunder) its interest in the Airframe and Engines or any part -5- 6 thereof or in any amount to be received by it from the use or disposition of the Airframe and Engines, other than amounts distributed to it pursuant to Article III hereof. It is hereby further agreed that any and all property described or referred to in the granting clauses hereof which is hereafter acquired by the Owner Trustee shall ipso facto, and without any further conveyance, assignment or act on the part of the Owner Trustee or the Indenture Trustee, become and be subject to the Lien herein granted as fully and completely as though specifically described herein, but nothing contained in this paragraph shall be deemed to modify or change the obligations of the Owner Trustee contained in the foregoing paragraphs. Notwithstanding the Granting Clause or any of the foregoing paragraphs, there is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excluded Payments. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "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. "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 hereof. "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 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. "Cash Equivalents" shall mean the investments specified in Section 22(a) of the Lease. "Certificate Holder" shall mean any holder from time to time of one or more Secured Certificates. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Continuous Stay Period" shall have the meaning specified in Section 4.04(a) hereof. -6- 7 "Corporate Trust Department" or "Trust Office" means the principal corporate trust office of the Owner Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, 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 and each Certificate Holder. "Corporate Trust Office" shall mean the principal office of the Indenture Trustee located at Two International Place, 4th Floor, Boston, Massachusetts 02110, 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 and each Certificate Holder. "Debt" shall mean any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments or for the deferred purchase price of property, goods or services. "Debt 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" means any event or condition that with the giving of notice or the lapse of time or both would become an Event of Default. "Dollars" and "$" shall mean the lawful currency of the United States of America. "Enforcement Date" shall have meaning specified in Section 4.03 hereof. "Event of Default" shall have the meaning specified in Section 4.02 hereof. "Excess Amount" shall have the meaning specified in Section 2.03(b) hereof. "Excluded Payments" shall mean (i)(A) 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) and 7(c) of the Participation Agreement and (B) any other payment to the Owner Participant pursuant to any provision of any Operative Document, (ii) proceeds of public liability insurance (or proceeds of governmental indemnities in lieu thereof) 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) 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) all Indemnity Adjusted Payments, (vi) fees payable to the Owner Trustee or the Indenture Trustee pursuant to the last sentence of Section 7(c) of the Participation Agreement, (vii) provided that the Secured Certificates shall have been duly assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the Owner Trustee pursuant to the third sentence of Section 19(d) of the Lease, (viii) any payment of the foregoing under the Guarantee, (ix) interest accrued on any of the above, and (x) any right to enforce the payment of any amount described in clauses (i) through (ix) above. "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 Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Guarantor" shall have the meaning specified in the Lease. -7- 8 "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 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. "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" shall mean that certain Lease Agreement [NW 1996 F], dated as of May 14, 1996, entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of the Original Trust Indenture, as said Lease Agreement has been, or may from time to time be, supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Indenture. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Default" shall mean any event or condition that with the giving of notice or the lapse of time or both would become a Lease Event of Default. "Lease Event of Default" shall mean an "Event of Default" as defined in the Lease. "Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Lessee Operative Documents" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. "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 hereof (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 (plus, in the case of Series C Secured Certificates, 75 basis points) 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 -8- 9 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. "Mortgaged Property" shall have the meaning specified in Section 3.03 hereof. "Owner Indemnitee" shall have the meaning specified in the definition of Excluded Payments herein. "Owner Participant" shall mean [ ], so long as such party shall have any interest in the Trust Estate, and transferees thereof as permitted by Section 8 of the Participation Agreement. "Participants" shall mean and include the Loan Participants and the Owner Participant. "Participation Agreement" shall mean that certain Participation Agreement [NW 1996 F], dated as of May 14, 1996, among the Owner Trustee, the Indenture Trustee, Lessee and the Participants, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Past Due Rate" shall mean, with respect to the Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in effect from time to time. "Payment Date" shall mean each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Secured Certificates have been paid in full. "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. "QIB" shall have the meaning specified in Section 2.08 hereof. "Replacement Airframe" shall mean any airframe substituted for the Airframe pursuant to Section 5.06 hereof. "Replacement Engine" shall mean any engine substituted for an Engine pursuant to Section 5.06 hereof. "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. "Section 1110 Period" shall have the meaning specified in Section 4.04(a) hereof. "Secured Certificates" shall mean and include any Secured Certificates issued hereunder, and issued in exchange therefor or replacement thereof. -9- 10 "Secured Obligations" shall have the meaning specified in Section 2.06 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Holder" shall have the meaning specified in Section 2.15(c) hereof. "Series A" or "Series A Secured Certificates" means Secured Certificates issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A." "Series B" or "Series B Secured Certificates" means Secured Certificates issued and designated as "Series B" hereunder, 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" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series C." "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. "Transactions" means the transactions contemplated by the Participation Agreement and the other Operative Documents. "Trust Agreement and Indenture Supplement" shall mean a supplement to the Trust Agreement and to this Indenture, in substantially the form of Exhibit A hereto, 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. "Trust Indenture", "this Trust Indenture", "the Trust Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this Amended and Restated Trust Indenture and Security Agreement [NW 1996 F] as it may from time to time be supplemented or amended as herein provided, including supplementing by the Trust Agreement and Indenture Supplement pursuant hereto. "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 this Trust Indenture, excluding Excluded Payments. SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this Trust Indenture the terms used but not defined herein are used as defined in the Lease. ARTICLE II THE SECURED CERTIFICATES SECTION 2.01. Form of Secured Certificates. The Secured Certificates shall be substantially in the form set forth below: THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER REGISTERED -10- 11 UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [NW 1996 F] DATED AS OF MAY 14, 1996. SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N542US. No.____ Date: [______,__] $_________________ INTEREST RATE MATURITY DATE [________] [______,______] FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 F], dated as of May 14, 1996, between the Owner Participant named therein and the Owner Trustee (herein as such Trust Agreement may be supplemented or amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Interest Rate indicated above. The Principal Amount of this Secured Certificate shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Secured Certificate set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including _______, _____. Notwithstanding the foregoing, the final payment made on this Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Secured Certificate. Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "TRUST INDENTURE" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 F], dated as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Secured Certificate and not defined herein shall have the respective meanings assigned in the Trust Indenture. This Secured Certificate shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Trust Indenture or the Participation Agreement shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such -11- 12 payments in accordance with the terms of Section 2.03 and Article III of the Trust Indenture and each holder hereof, by its acceptance of this Secured Certificate, agrees that (A) it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the holder hereof as above provided, (B) neither the Owner Trustee nor the Indenture Trustee is personally liable or liable in any manner to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Trust Indenture or in the Participation Agreement, for any liability under the Trust Indenture or the Participation Agreement, and (C) the Owner Participant is not personally liable or liable in any manner to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Participation Agreement, for any liability under the Participation Agreement; provided, however, that nothing herein contained shall limit, restrict or impair the right of the Indenture Trustee, subject always to the terms and provisions of the Trust Indenture, to accelerate the maturity of this Secured Certificate upon occurrence of an Event of Default under the Trust Indenture in accordance with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment against the Owner Trustee on this Secured Certificate for purposes of realizing upon the Trust Indenture Estate and to exercise all rights and remedies provided under the Trust Indenture or otherwise realize upon the Trust Indenture Estate. There shall be maintained a Secured Certificate Register for the purpose of registering transfers and exchanges of Secured Certificates at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Trust Indenture. The Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Trust Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Secured Certificate, except that in the case of any final payment with respect to this Secured Certificate, the Secured Certificate shall be surrendered promptly thereafter by the Indenture Trustee to the Owner Trustee for cancellation. The holder hereof, by its acceptance of this Secured Certificate, agrees that, except as provided in the Trust Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts hereunder) to the date of such payment, second, to the payment of the Principal Amount of this Secured Certificate then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of Principal Amount of this Secured Certificate remaining unpaid in the inverse order of their normal maturity. This Secured Certificate is one of the Secured Certificates referred to in the Trust Indenture which have been or are to be issued by the Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Secured Certificates. The provisions of this Secured Certificate are subject to the Trust Indenture. Reference is hereby made to the Trust Indenture and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Secured Certificate and the rights and obligations of the holders of, and the nature and extent of the security for, any other Secured Certificates executed and delivered under the Trust Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust Indenture, to all of which terms and conditions in the Trust Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Secured Certificate. As provided in the Trust Indenture and subject to certain limitations therein set forth, this Secured Certificate is exchangeable for a like aggregate Principal Amount of Secured Certificates of different authorized denominations, as requested by the holder surrendering the same. Prior to due presentment for registration of transfer of this Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Secured Certificate is registered as the -12- 13 owner hereof for all purposes whether or not this Secured Certificate be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Secured Certificate is subject to redemption as provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This Secured Certificate is also subject to assumption by Lessee as provided in Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.14 of the Trust Indenture but not otherwise. [The indebtedness evidenced by this Secured Certificate is, to the extent and in the manner provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Trust Indenture) in respect of [Series A Secured Certificates](1) [Series A and Series B Secured Certificates](2), and this Secured Certificate is issued subject to such provisions. The Certificate Holder of this Secured Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]** Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Secured Certificate shall not be entitled to any benefit under the Trust Indenture or be valid or obligatory for any purpose. THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. * * * - --------------------- (1) To be inserted in the case of a Series B Secured Certificate. (2) To be inserted in the case of a Series C Secured Certificate. ** To be inserted for each Secured Certificate other than any Series A Secured Certificate. -13- 14 IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Certificate to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By ------------------------------------------ Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Secured Certificates referred to in the within-mentioned Trust Indenture. STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By ------------------------------------------ Name: Title: -14- 15 SCHEDULE I SECURED CERTIFICATE AMORTIZATION Percentage of Principal Amount Payment Date to be Paid ------------ ---------------- [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES. The Secured Certificates shall be dated the date of issuance thereof, shall be issued in three separate series consisting of Series A, Series B and Series C and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Agreements as set forth in Schedule II hereto in connection therewith and (ii) the Secured Certificates issued under the Original Indenture shall be concurrently redeemed. The Secured Certificates shall be issued in registered form only. The Secured Certificates shall be issued in denominations of $1,000 and integral multiples thereof, except that one Secured Certificate of each Series may be in an amount that is not an integral multiple of $1,000. Each Secured Certificate shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Secured Certificate shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Secured Certificates. Notwithstanding the foregoing, the final payment made under each Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Secured Certificate. Each Secured Certificate shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Certificate Holders, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case pursuant to Section 7 of the Participation Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Advances (as -15- 16 defined in the Liquidity Facilities) under any Liquidity Facility except to the extent included in Net Interest and Related Charges, and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used in this Section, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes, plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Secured Certificate a fraction, the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes issued under Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any Series D Secured Certificates or Series D Equipment Notes. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to the Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount which would be payable if such drawings bore interest at the Designated Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding Liquidity Facility) which result from any Interest Drawing, Final Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities). As used in this Section "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) except with respect to that portion of any Final Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section, a Payment Default when used in connection with a Secured Certificate or Equipment Note means a default in the payment of principal thereof or interest thereon other than a default in the payment of principal or interest on a Series D Equipment Note which has not been cured other than solely because of acceleration. The following terms are used in this Section as defined in the Intercreditor Agreement without regard to any amendment, modification or supplement thereto after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and Series D Equipment Notes. The Secured Certificates shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Secured Certificates bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Secured Certificates or did not hold such offices at the respective dates of such Secured Certificates. The Owner Trustee may from time to time execute and deliver Secured Certificates with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Secured Certificates shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Secured Certificates to be authenticated hereunder on original issue with respect to the Aircraft. No Secured Certificate shall be secured by or entitled to any benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears on such Secured Certificate a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Secured Certificates shall be conclusive evidence, and the only evidence, that such Secured Certificate has been duly authenticated and delivered hereunder. -16- 17 SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY. (a) Without impairing any of the other rights, powers, remedies, privileges, liens or security interests of the Certificate Holders under this Trust Indenture, each Certificate Holder, by its acceptance of a Secured Certificate, agrees that as between it and the Owner Trustee, except as expressly provided in this Trust Indenture, the Participation Agreement or any other Operative Document, (i) the obligation to make all payments of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Secured Certificates, and the performance by the Owner Trustee of every obligation or covenant contained in this Trust Indenture and in the Participation Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Trust Indenture and any agreement referred to herein other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Trust Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Owner Trustee is responsible for, or is making, in its individual capacity, for which there would be personal liability of the Owner Trustee), no recourse shall be had with respect to this Trust Indenture 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, and (ii) none of the Owner Trustee, in its individual capacity, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable hereunder, under the Participation Agreement or any of the other Operative Documents or under the Secured Certificates except as expressly provided herein or in the Participation Agreement; provided, however, that nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Trust Indenture or such other agreements of rights and remedies against the Trust Estate. These provisions are not intended as any release or discharge of the indebtedness represented by the Secured Certificates and the Trust Indenture, but are intended only as a covenant not to sue the Owner Trustee or the Indenture Trustee in their individual capacities, except as expressly provided herein or in the Participation Agreement, or the Owner Participant, except as expressly provided in the Participation Agreement, for a deficiency with respect to such indebtedness, the indebtedness represented by this Trust Indenture and the Secured Certificates to remain in full force and effect as fully as though these provisions were not contained in this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders have expressly reserved all their rights and remedies against the Trust Indenture Estate, including the right, in the event of a default in the payment of all or part of the Principal Amount of, interest on, Make-Whole Amount, if any, or any other amount due with respect to any Secured Certificate within the periods provided for in Section 4.02(b) hereof, or upon the occurrence and continuation of any other Event of Default under this Trust Indenture, to foreclose upon this Trust Indenture, and/or to receive the proceeds from the Trust Indenture Estate and otherwise to enforce any other right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner Participant from personal liability, or constitute a covenant not to sue the Owner Participant, for any breach by it of any of its covenants, representations or warranties contained in the Participation Agreement for the benefit of the Indenture Trustee or the Certificate Holders or for any of the payments it has agreed to make to the Indemnitee Trustee or the Certificate Holders pursuant to the Participation Agreement or (y) release the Owner Trustee or constitute a covenant not to sue the Owner Trustee for any breach by it of any representations, warranties or covenants of the Owner Trustee contained in the Operative Documents for the benefit of the Indenture Trustee or the Certificate Holders or (z) release the Owner Trustee in its individual capacity from personal liability, or constitute a covenant not to sue the Owner Trustee in its individual capacity for any breach by it of any representations, warranties or covenants of the Owner Trustee made in its individual capacity in the Operative Documents for the benefit of the Indenture Trustee or the Certificate Holders. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant -17- 18 to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, 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 any Certificate Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of (x) the Owner Trustee (in its individual capacity) under the Participation Agreement or this Trust Indenture or by separate agreement or (y) the recourse liability of the Owner Participant under the Participation Agreement), to make payment on account of any amount payable as principal, Make-Whole Amount, if any, interest or other amounts on the Secured Certificates, (iii) the Certificate Holders shall have or shall have been permitted to foreclose the Lien of this Trust Indenture, and (iv) any Certificate Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Owner Trustee (in its individual capacity) or the Owner Participant on account of clause (ii) above, then such Certificate Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Trustee (in its individual capacity) or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a Certificate Holder 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 clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Certificate Holder 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 the Participation Agreement or this Trust Indenture (and any exhibits or annexes hereto or thereto) or by separate agreement or from retaining any amount paid by Owner Participant under Section 2.14 or 4.03 hereof. SECTION 2.04. METHOD OF PAYMENT. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Secured Certificate or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Certificate Holders in the manner provided herein. The Owner Trustee shall not have any responsibility for the distribution of such payment to any Certificate Holder. Notwithstanding the foregoing or any provision in any Secured Certificate to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such holder's Secured Certificate or Secured Certificates to such holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such holder with a bank located in the continental United States the amount to be distributed to such holder, for credit to the account of such holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate such holders for loss of use of funds at the Debt Rate until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Secured Certificate, except that, in the case of the final payment in respect of any Secured Certificate, such Secured Certificate shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Secured Certificate is registered on the Secured Certificate Register as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable with respect to such Secured Certificate and for all other purposes, and none of the Owner Trustee or the Indenture Trustee shall be affected by any notice to the contrary. So long as any signatory to the Participation Agreement or nominee thereof shall be a -18- 19 registered Certificate Holder, all payments to it shall be made to the account of such Certificate Holder specified in Schedule I thereto and otherwise in the manner provided in or pursuant to the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Secured Certificate (and such exclusion and withholding shall constitute payment in respect of such Secured Certificate) any and all United States withholding taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Secured Certificates, to withhold such amounts and timely pay the same to the appropriate authority in the name of and on behalf of the Certificate Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Certificate Holder (with a copy to the Owner Trustee and Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Certificate Holder may reasonably request from time to time. The Indenture Trustee and each Certificate Holder agree that (i) no such withholding or action with respect thereto shall constitute or give rise to any Event of Default and (ii) in the event of the failure of the Indenture Trustee to withhold and pay over any such taxes to the appropriate taxing authority, no indemnity will be sought from the Owner Trustee, the Owner Participant or the Trust Estate. If a Certificate Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Secured Certificate(s) held by such holder is made (but prior to the making of such payment), or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by Law (after taking into account any applicable exemptions claimed by the Certificate Holder) to be withheld from payments hereunder or under the Secured Certificates held by such holder in respect of United States federal income tax. If a Certificate Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Secured Certificates held by such holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Certificate Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Secured Certificates held by such holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Certificate Holder withholding taxes at the appropriate rate under Law and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. The Indenture Trustee and each Certificate Holder agree that (i) no such withholding or action with respect thereto shall constitute or give rise to any Event of Default and (ii) in the event of the failure of the Indenture Trustee to withhold and pay over any such taxes to the appropriate taxing authority, no indemnity will be sought from the Owner Trustee, the Owner Participant or the Trust Estate. -19- 20 SECTION 2.05. APPLICATION OF PAYMENTS. In the case of each Secured Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Secured Certificate (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Secured Certificate; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Secured Certificate remaining unpaid (provided that such Secured Certificate shall not be subject to redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Secured Certificate in the inverse order of their normal maturity. SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE. A Certificate Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Secured Certificates held by such Certificate Holder and all other sums then payable to such Certificate Holder hereunder and under the other Operative Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall have been paid in full. SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED CERTIFICATES. The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the registration of Secured Certificates and the registration of transfers of Secured Certificates. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Secured Certificate Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the purpose of registering Secured Certificates and transfers of Secured Certificates as herein provided. A holder of any Secured Certificate intending to exchange such Secured Certificate shall surrender such Secured Certificate to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Secured Certificate, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Secured Certificate, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Secured Certificates of a like aggregate Principal Amount and of the same series. At the option of the Certificate Holder, Secured Certificates may be exchanged for other Secured Certificates of any authorized denominations of a like aggregate Principal Amount, upon surrender of the Secured Certificates to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Secured Certificates are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Secured Certificates which the Certificate Holder making the exchange is entitled to receive. All Secured Certificates issued upon any registration of transfer or exchange of Secured Certificates (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Trust Indenture, -20- 21 as the Secured Certificates surrendered upon such registration of transfer or exchange. Every Secured Certificate presented or surrendered for registration of transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Certificate Holder or such holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of any applicable state. The Indenture Trustee shall make a notation on each new Secured Certificate of the amount of all payments of Principal Amount previously made on the old Secured Certificate or Secured Certificates with respect to which such new Secured Certificate is issued and the date to which interest on such old Secured Certificate or Secured Certificates has been paid. Interest shall be deemed to have been paid on such new Secured Certificate to the date on which interest shall have been paid on such old Secured Certificate, and all payments of the Principal Amount marked on such new Secured Certificate, as provided above, shall be deemed to have been made thereon. The Owner Trustee shall not be required to exchange any surrendered Secured Certificates as provided above during the ten-day period preceding the due date of any payment on such Secured Certificate. The Owner Trustee shall in all cases deem the Person in whose name any Secured Certificate shall have been issued and registered as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable by the Owner Trustee with respect to such Secured Certificate and for all purposes until a notice stating otherwise is received from the Indenture Trustee and such change is reflected on the Secured Certificate Register. The Indenture Trustee will promptly notify the Owner Trustee and Lessee of each registration of a transfer of a Secured Certificate. Any such transferee of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to the provisions of the Participation Agreement applicable to Certificate Holders, including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(ff), 13(b), 13(c), 15(b), 15(c) and 16, and shall be deemed to have represented and warranted (except as provided above), and covenanted, to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by the original Loan Participants in the Participation Agreement. Subject to compliance by the Certificate Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates upon transfer or exchange within 10 Business Days of the date a Secured Certificate is surrendered for transfer or exchange. SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED CERTIFICATES. If any Secured Certificate shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the holder of such Secured Certificate, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Secured Certificate, payable in the same Principal Amount dated the same date and captioned as issued in connection with the Aircraft. The Indenture Trustee shall authenticate each replacement Secured Certificate on request by the Owner Trustee and shall make a notation on each replacement Secured Certificate of the aggregate amount of all payments of Principal Amount previously made on the mutilated, destroyed, lost or stolen Secured Certificate with respect to which the replacement Secured Certificate is issued and the date to which interest on such mutilated, destroyed, lost or stolen Secured Certificate has been paid. If the Secured Certificate being replaced has become mutilated, such Secured Certificate shall be surrendered to the Indenture Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the Secured Certificate being replaced has been destroyed, lost or stolen, the holder of such Secured Certificate shall furnish to the Owner Trustee and the Indenture Trustee such security or indemnity as may be required by them to save the Owner Trustee and the Indenture Trustee harmless and evidence satisfactory to the Owner Trustee and the Indenture Trustee of the destruction, loss or theft of such Secured Certificate and of the ownership thereof. If a "qualified institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen Secured Certificate, then the written indemnity of such QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Lessee, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Secured Certificate. Subject to compliance by the Certificate Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates within 10 Business Days of the date of the written request therefor from the Certificate Holder. -21- 22 SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION. (a) No service charge shall be made to a Certificate Holder for any registration of transfer or exchange of Secured Certificates, but the Indenture Trustee, as Secured Certificate Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Secured Certificates; provided, however, that neither the Owner Trustee nor the Owner Participant shall bear any such costs of registration, transfer or exchange including, without limitation, in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Secured Certificates surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Secured Certificates. SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES. (a) On the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders but without Make-Whole Amount. (b) If the Lease is terminated with respect to the Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13 hereof and to Section 8(x) of the Participation Agreement, on the date the Lease is so terminated all the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES. All of the Secured Certificates may be redeemed by the Owner Trustee in connection with a transaction described in, and subject to the terms and conditions of, Section 17 of the Participation Agreement upon at least 30 days' revocable prior written notice to the Indenture Trustee and the Certificate Holders, and the Secured Certificates shall, as provided in Section 17 of the Participation Agreement, be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION. (a) Neither any redemption of any Secured Certificate nor any purchase by the Owner Trustee of any Secured Certificate may be made except to the extent and in the manner expressly permitted by this Trust Indenture. No purchase of any Secured Certificate may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Secured Certificates shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Certificate Holder of such Secured Certificates to be redeemed or purchased, at such Certificate Holder's address appearing in the Secured Certificate Register; provided that, in the case of a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be deemed revoked in the event that the Lease does not in fact terminate on the specified termination date or if notice of such redemption shall have been given in connection with a refinancing of Secured Certificates and the Indenture Trustee receives written notice of such revocation from Lessee or the Owner Trustee not later than three days prior to the redemption date. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and -22- 23 payable upon each such Secured Certificate, and that, if any such Secured Certificates are then outstanding, interest on such Secured Certificates shall cease to accrue on and after such redemption date, and (4) the place or places where such Secured Certificates are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Secured Certificates to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption date in immediately available funds the redemption price of the Secured Certificates to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid (and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee or at any office or agency maintained for such purposes pursuant to Section 2.07, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Secured Certificates then outstanding shall cease to bear interest. Upon surrender of any such Secured Certificate for redemption or purchase in accordance with said notice, such Secured Certificate shall be redeemed at the redemption price. If any Secured Certificate called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Secured Certificate as of such redemption date. SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE. If, in accordance with Section 8(x) of the Participation Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a full recourse basis) all of the obligations of the Owner Trustee hereunder, under the Secured Certificates and all other Operative Documents by supplemental indenture satisfactory to the Indenture Trustee (which shall contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease and (ii) other provisions necessary or advisable to effectuate such assumption), then upon delivery of such supplemental indenture, payment by Lessee of all expenses (including reasonable fees and expenses of counsel) for the Owner Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of the Secured Certificates and other amounts owing to the Certificate Holders substantially in the form of the Guarantee, and delivery of an opinion of counsel for Lessee that such assumption has been duly and validly effected, the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Secured Certificates and all other Operative Documents and the Owner Participant shall be released and discharged from any further obligations under the Participation Agreement and any other Operative Document to which it is a party, except with respect to any such obligations that accrued prior thereto. SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES. The Owner Trustee and the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.14, purchase all but not less than all of the Secured Certificates outstanding hereunder, and each Certificate Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind other than (i) of title to the Secured Certificates so conveyed and (ii) against Liens on such Secured Certificates arising by, through or under such holder), all of the right, title and interest of such Certificate Holder in and to the Secured Certificates held by it, and such purchaser or its nominee shall assume all of such holder's obligations under the Participation Agreement and hereunder. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Participation Agreement to the holder thereof. Such option to purchase the Secured Certificates may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there -23- 24 shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default, the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Trustee or the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Secured Certificates shall become irrevocable upon the sixteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Certificate Holders will comply with all the provisions of Section 2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes, charges and expenses required pursuant to Section 2.09 in connection with the issuance of such new Secured Certificate shall be borne by the Owner Participant. SECTION 2.15. SUBORDINATION. (a) The Owner Trustee and, by acceptance of its Secured Certificates of any Series, each Certificate Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g) hereof, except as expressly provided in Article III hereof. (b) By the acceptance of its Secured Certificates of any Series (other than Series A), each Certificate Holder of such Series agrees that in the event that such Certificate Holder, in its capacity as a Certificate Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.15 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article III hereof. (c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured Obligations in respect of Series A Secured Certificates have been paid in full and (ii) after the Secured Obligations in respect of Series A Secured Certificates have been paid in full, the Certificate Holders of Series B until the Secured Obligations in respect of Series B Secured Certificates have been paid in full. SECTION 2.16. DEFEASANCE. (a) The Owner Trustee will be deemed to have paid and will be discharged from any and all obligations in respect of the Secured Certificates on the 90th day (or such other period as may be specified in the relevant provision of the United States Bankruptcy Code) (such period being the "Preference Period") after the date of the deposit referred to in clause (i) of this Section 2.16(a) if: (i) with reference to this Section 2.16(a), the Owner Trustee has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee (or another trustee satisfying the requirements of Section 8.02) and conveyed all right, title and interest for the benefit of the Certificate Holders, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Indenture Trustee, which provides irrevocable instructions therein to apply such money or the proceeds of -24- 25 such U.S. Government Obligations to the payment of such principal and interest with respect to the Secured Certificates, as trust funds in trust, specifically entrusted to the Indenture Trustee for the benefit of the Certificate Holders for payment of the principal of and interest, if any, on the Secured Certificates, and dedicated solely to, the benefit of the Certificate Holders, in and to (A) money in an amount, (B) U.S. Government Obligations that, through the payment of interest, and principal in respect thereof in accordance with their terms, will provide, not later than one day before the due date of any payment referred to in this clause (i), money in an amount or (C) a combination thereof in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Indenture Trustee, to pay and discharge, without consideration of the reinvestment of such interest and after payment of all federal, state and local withholding taxes or other similar charges and assessments in respect thereof payable by the Indenture Trustee with respect to the amounts deposited pursuant to clause (A), (B) or (C), the principal of and accrued interest on the outstanding Secured Certificates at the maturity of such principal or interest; (ii) the Owner Trustee shall have delivered to the Indenture Trustee (A) either (1) a ruling directed to the Indenture Trustee received from the Internal Revenue Service to the effect that the Certificate Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Owner Trustee's exercise of its option under this Section 2.16(a) and will be subject to federal income tax on that same amount and in the same manner and at the same times as would have been the case if such option had not been exercised or (2) an Opinion of Counsel to the same effect as the ruling described in clause (1) above accompanied by a ruling to that effect published by the Internal Revenue Service, unless there has been a change in the applicable federal income tax law since the date of this Indenture such that a ruling from the Internal Revenue Service is no longer required and (B) an Opinion of Counsel to the effect that (1) the creation of the defeasance trust does not violate the Investment Company Act of 1940 and (2) after the passage of the Preference Period, the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code (or any successor or replacement provision) in a case commenced by or against the Owner Trustee or Lessee under either such statute, and either (I) the trust funds will no longer remain the property of the Owner Trustee or Lessee (and therefore will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally) or (II) if a court were to rule under any such law in any case or proceeding that the trust funds remained the property of the Owner Trustee or Lessee (y) assuming such funds remained in the possession of the Indenture Trustee prior to such court ruling to the extent not paid to the Certificate Holders, the Indenture Trustee will hold, for the benefit of the Certificate Holders, a valid and perfected security interest in such trust funds that is not avoidable in bankruptcy or otherwise except for the effect of Section 552(b) of the United States Bankruptcy Code (or any successor or replacement provision) on interest on the trust funds accruing after the commencement of a case under such statute and (z) the Certificate Holders will be entitled to receive adequate protection of their interests in such trust funds if such trust funds are used in such case or proceeding; and (iii) the Owner Trustee shall have made arrangements reasonably satisfactory to the Indenture Trustee for payment or satisfaction of all amounts due under the third paragraph of Section 2.02. After any such irrevocable deposit and satisfaction of the condition precedent provided in clause (ii) of this Section 2.16(a), the Indenture Trustee upon request shall execute and deliver appropriate instruments to release the Lien of this Trust Indenture in accordance with Section 10.01 and shall acknowledge in writing the discharge of the Owner Trustee's obligations under the Secured Certificates and this Trust Indenture except for those surviving obligations in the immediately succeeding paragraph. Notwithstanding the foregoing, prior to the end of the Preference Period, none of the Owner Trustee's obligations under this Trust Indenture shall be discharged. Subsequent to the end of the Preference Period, the Owner Trustee's obligations in Sections 2.07 and 2.08 shall survive until the Secured Certificates are no longer outstanding. -25- 26 (b) In lieu of satisfying its obligations set forth in Section 2.16(a), the Owner Trustee may elect, in its sole discretion, to satisfy the conditions specified in clauses (i) and (ii) of Section 2.16(a) without regard to the requirement described in Section 2.16(a)(ii)(A) and may, in lieu of satisfying the requirements set forth in Section 2.16(a)(ii)(A), provide only an Opinion of Counsel to the effect that the Certificate Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Owner Trustee's providing of the deposit referred to in Section 2.16(a)(i) and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit had not been made. If the Owner Trustee elects such option, then the Indenture Trustee upon request shall execute and deliver appropriate instruments to release the Lien of this Trust Indenture in accordance with Section 10.01 and the Owner Trustee shall be released from its obligations set forth in Section 4.01 (other than Section 4.01(a)). All other obligations of the Owner Trustee hereunder shall remain in full force and effect. For the avoidance of doubt, the effect of the Owner Trustee's exercise of its option set forth in this subsection (b) shall be to create an economic defeasance rather than the legal defeasance that would result if the option set forth in subsection (a) above were to be exercised. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. Basic Rent Distribution. Except as otherwise provided in Section 3.03 hereof, each installment of Basic Rent or Interim Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly distributed in the following order of priority: FIRST, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Secured Certificates shall be distributed to the Certificate Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Secured Certificate bears to the aggregate amount of the payments then due under all Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Secured Certificates shall be distributed to the Certificate Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Secured Certificate bears to the aggregate amount of the payments then due under all Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series C Secured Certificates shall be distributed to the Certificate Holders of Series C ratably, -26- 27 without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Secured Certificate bears to the aggregate amount of the payments then due under all Series C Secured Certificates; and SECOND, the balance, if any, of such installment remaining thereafter shall be distributed to the Owner Trustee; provided, however, that if an Event of Default shall have occurred and be continuing, then such balance shall not be distributed as provided in this clause "Second" but shall be held by the Indenture Trustee as part of the Trust Indenture Estate and invested in accordance with Section 5.09 hereof until whichever of the following shall first occur: (i) all Events of Default shall have been cured or waived, in which event such balance shall be distributed as provided in this clause "Second", (ii) Section 3.03 hereof shall be applicable, in which event such balance shall be distributed in accordance with the provisions of such Section 3.03, or (iii) the 120th day after the receipt of such payment in which case such payment shall be distributed as provided in this clause "Second". SECTION 3.02. EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION; REFINANCING. Except as otherwise provided in Section 3.03 hereof, any payments received by the Indenture Trustee (i) with respect to the Aircraft as the result of an Event of Loss, (ii) pursuant to a voluntary termination of the Lease pursuant to Section 9 or 19(d) thereof, or (iii) in connection with a refinancing of the Secured Certificates pursuant to Section 17 of the Participation Agreement shall be applied to redemption of the Secured Certificates and to all other amounts payable hereunder or to the Indenture Trustee or any Certificate Holder under the Participation Agreement by applying such funds in the following order of priority: FIRST, (a) to reimburse the Indenture Trustee and the Certificate Holders for any reasonable costs or expenses incurred in connection with such redemption for which they are entitled to reimbursement, or indemnity by Lessee, under the Operative Documents and then (b) to pay any other amounts then due to the Indenture Trustee and the Certificate Holders under this Trust Indenture, the Participation Agreement or the Secured Certificates; SECOND, (i) to pay the amounts specified in paragraph (i) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, to pay the amounts specified in paragraph (ii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, to pay the amounts specified in paragraph (iii) of clause "Third" of Section 3.03 hereof plus Make-Whole Amount, if any, then due and payable in respect of the Series C Secured Certificates; and THIRD, as provided in clause "Fourth" of Section 3.03 hereof; provided, however, that if a Replacement Airframe or Replacement Engine shall be substituted for the Airframe or Engine subject to such Event of Loss as provided in Section 10 of the Lease and in accordance with Section 5.06 hereof, any insurance, condemnation or similar proceeds which result from such Event of Loss and are paid over to the Indenture Trustee shall be held by the Indenture Trustee as permitted by Section 6.04 hereof (provided that such moneys shall be invested as provided in Section 5.09 hereof) as additional security for the obligations of Lessee under the Lessee Operative Documents and, unless otherwise applied pursuant to the Lease, such proceeds (and -27- 28 such investment earnings) shall be released to Lessee at Lessee's written request upon the release of such damaged Airframe or Engine and the replacement thereof as provided in the Lease. SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT. Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Section 15 of the Lease or Article IV hereof) after an Event of Default shall have occurred and be continuing and after the occurrence of an Indenture Trustee Event, as well as all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly distributed by the Indenture Trustee in the following order of priority: FIRST, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate (all such property being herein called the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) , but other than income tax on, or measured by, fees payable to the Indenture Trustee in its individual capacity pursuant to the Operative Documents to which it is a party incurred by the Indenture Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Certificate Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or any Certificate Holder, liquidated or otherwise, upon such Event of Default shall be applied by the Indenture Trustee as between itself and the Certificate Holders in reimbursement of such expenses and any other expenses for which the Indenture Trustee or the Certificate Holders are entitled to reimbursement under any Operative Document and in the case the aggregate amount to be so distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as shall be required to reimburse the then existing or prior Certificate Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to such then existing or prior Certificate Holders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Certificate Holder pursuant to said Section 5.03 hereof; THIRD, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series A Secured Certificates (other than Make-Whole Amount) to the date of distribution, shall be distributed to the Certificate Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount) to the date of distribution; -28- 29 (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series B Secured Certificates [(other than Make-Whole Amount)] to the date of distribution, shall be distributed to the Certificate Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than the Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than the Make-Whole Amount) to the date of distribution; and (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series C Secured Certificates (other than Make-Whole Amount) to the date of distribution, shall be distributed to the Certificate Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than the Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than the Make-Whole Amount) to the date of distribution; and FOURTH, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee. No Make-Whole Amount shall be due and payable on the Secured Certificates as a consequence of the acceleration of the Secured Certificates. SECTION 3.04. CERTAIN PAYMENTS. (a) Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in this Trust Indenture and for which such provision is made in the Lease, the Participation Agreement or any other Operative Document shall be applied forthwith to the purpose for which such payment was made in accordance with the terms of the Lease, the Participation Agreement or such other Operative Document, as the case may be. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of the Participation Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the third paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the -29- 30 Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the third paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) [Intentionally Omitted] (d) Notwithstanding anything to the contrary contained in this Trust Indenture, any amounts received by the Indenture Trustee which constitute Excluded Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. (e) Notwithstanding any provision of this Trust Indenture to the contrary, any amounts held by the Indenture Trustee that would, but for the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall, notwithstanding the provisions of said Section, be distributed to Lessee unless and until a Lease Event of Default shall have occurred and be continuing. SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any other Operative Document shall be distributed by the Indenture Trustee to the extent received or realized at any time (i) prior to the payment in full of all Secured Obligations due the Certificate Holders, in the order of priority specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in full of all Secured Obligations due the Certificate Holders, in the following order of priority: FIRST, to the extent payments or amounts described in clause "First" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "First" of Section 3.03 hereof, and SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof. Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04 hereof, all payments received and amounts realized by the Indenture Trustee under the Lease or otherwise with respect to the Aircraft (including, without limitation, all amounts realized upon the sale or release of the Aircraft after the termination of the Lease with respect thereto), to the extent received or realized at any time after payment in full of all Secured Obligations due the Certificate Holders, shall be distributed by the Indenture Trustee in the order of priority specified in clause (ii) of the immediately preceding sentence of this Section 3.05. SECTION 3.06. PAYMENTS TO OWNER TRUSTEE. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account (within the time limits contemplated by Section 2.04(a)) specified in Schedule I to the Participation Agreement. SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE. -30- 31 All payments received by the Indenture Trustee pursuant to the Guarantee shall be distributed forthwith by the Indenture Trustee in the same order of priority, and in the same manner, as it would have distributed the payment in respect of which such payment under the Guarantee was received. ARTICLE IV COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. Covenants of Owner Trustee. The Owner Trustee hereby covenants and agrees (the covenants and agreements only in clause (b) below being made by the Owner Trustee in its individual capacity) as follows: (a) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Secured Certificates and hereunder in accordance with the terms of the Secured Certificates and this Trust Indenture and all amounts, if any, payable by it to the Certificate Holders under the Participation Agreement; (b) the Owner Trustee in its individual capacity covenants and agrees that it shall not, directly or indirectly, cause or permit to exist a Lessor Lien attributable to it in its individual capacity with respect to the Aircraft or any other portion of the Trust Estate; that it will promptly, at its own expense, take such action as may be necessary to duly discharge such Lessor Lien attributable to it in its individual capacity; and that it will make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Lessor Liens attributable to it in its individual capacity; (c) in the event the Owner Trustee shall have Actual Knowledge of an Event of Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Event of Default or Event of Loss to the Indenture Trustee, each Certificate Holder, Lessee and the Owner Participant; (d) the Owner Trustee will furnish to the Certificate Holders and the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of any Termination Notice and a copy of each report or notice received pursuant to Section 9(a) and 11(c) of the Lease to the extent that the same shall not have been furnished to the Certificate Holders or the Indenture Trustee pursuant to the Lease; (e) except with the consent of the Indenture Trustee (acting pursuant to instructions given in accordance with Section 9.01 hereof), the Owner Trustee will not contract for, create, incur, assume or suffer to exist any Debt (other than the Secured Certificates), and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the Debt of any other person; and (f) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02.EVENT OF DEFAULT. "EVENT OF DEFAULT" means any of the following events (whatever the reason for such Event of Default and whether such event shall be voluntary or involuntary or come about or be effected by operation of Law -31- 32 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): (a) any Lease Event of Default (provided that any such Lease Event of Default caused solely by a failure of Lessee to pay to the Owner Trustee or the Owner Participant when due any amount that is included in the definition of Excluded Payments shall not constitute an Event of Default unless notice is given by the Owner Trustee to the Indenture Trustee that such failure shall constitute an Event of Default); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due and payable under any Secured Certificate or hereunder (other than any such failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof or as a result of a Lease Event of Default or a Lease Default) and such failure shall have continued unremedied for ten Business Days in the case of any payment of Principal Amount or interest or Make-Whole Amount, if any, thereon and, in the case of any other amount, for ten Business Days after the Owner Trustee or the Owner Participant receives written demand from the Indenture Trustee or any Certificate Holder; or (c) any Lien required to be discharged by the Owner Trustee, in its individual capacity pursuant to Section 4.01(b) hereof or in its individual or trust capacity pursuant to Section 8(h) of the Participation Agreement, or by the Owner Participant pursuant to Section 8(h) of the Participation Agreement shall remain undischarged for a period of 30 days after the Owner Trustee or the Owner Participant, as the case may be, shall have received written notice from the Indenture Trustee or any Certificate Holder of such Lien; or (d) any representation or warranty made by the Owner Participant or the Owner Trustee herein, in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in any certificate furnished by the Owner Participant or the Owner Trustee to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents shall prove to have been false or incorrect when made in any material respect and continues to be material; and if such misrepresentation is capable of being corrected and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 60 days (or, without affecting Section 4.02(f) hereof, in the case of the representations made in Section 8(c) of the Participation Agreement as to the citizenship of the Owner Trustee in its individual capacity or of the Owner Participant, respectively, as soon as is reasonably practicable but in any event within 60 days) following notice thereof from the Indenture Trustee or any Certificate Holder to the Owner Trustee or the Owner Participant, as the case may be; or (e) other than as provided in (c) above or (f) below, any failure by the Owner Trustee or Owner Participant to observe or perform in any material respect any other covenant or obligation of the Owner Trustee or Owner Participant, as the case may be, for the benefit of the Indenture Trustee or the Certificate Holders contained in the Participation Agreement, Section 4.01(a) of the Trust Agreement, the Secured Certificates or this Trust Indenture which is not remedied within a period of 60 days after notice thereof has been given to the Owner Trustee and the Owner Participant (or, if such failure cannot be remedied during such 60-day period and the Owner Trustee and/or the Owner Participant have been and are diligently proceeding to remedy such failure, such additional period not in excess of 120 days, if such failure is capable of being remedied during such additional period, as may be necessary to remedy such failure); or (f) if at any time when the Aircraft is registered under the laws of the United States, the Owner Participant shall not be a Citizen of the United States, and as the result thereof the registration of the Aircraft under the Federal Aviation Act, and regulations then applicable thereunder, shall cease to be effective; provided that no Event of Default shall be deemed to have occurred under this paragraph (f) -32- 33 unless such circumstances continue unremedied for more than 60 days after the Owner Participant has Actual Knowledge of the state of facts that resulted in such ineffectiveness and of such loss of citizenship; or (g) at any time either (i) the commencement of an involuntary case or other proceeding in respect of the Owner Participant, the Owner Trustee or the Trust Estate 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 seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii) the commencement by the Owner Participant, the Owner Trustee or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee or the Trust Estate to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or the making by the Owner Participant, the Owner Trustee or the Trust Estate of any assignment for the benefit of creditors or the Owner Participant or the Owner Trustee shall take any action to authorize any of the foregoing; provided, however, that an event referred to in this Section 4.02(g) with respect to the Owner Participant shall not constitute an Event of Default if within 30 days of the commencement of the case or proceeding (A) a final non-appealable order, judgment or decree shall be entered in such case or proceeding by a court or a trustee, custodian, receiver or liquidator, or (B) an opinion of counsel, reasonably satisfactory to the Indenture Trustee, shall be provided by the Owner Participant, in each case to the effect that, no part of the Trust Estate (except for the Owner Participant's beneficial interest therein) and no right, title or interest under the Trust Indenture Estate shall be included in, or be subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 4.02(g); provided further that an event referred to in this Section 4.02(f) with respect to the Owner Participant shall not constitute an Event of Default if, not later than 90 days following such event, the Owner Participant has been replaced with an entity eligible to act as Owner Participant in accordance with Section 8(n) of the Participation Agreement. SECTION 4.03. CERTAIN RIGHTS. The Indenture Trustee shall give the Certificate Holders, the Owner Trustee and the Owner Participant prompt written notice of any Event of Default of which the Indenture Trustee has Actual Knowledge and, if any such Event of Default results from a Lease Event of Default that can be cured by the payment of money (it being understood that defaults requiring action such as the obtaining of insurance and the procuring of maintenance services can be so remedied), shall give the Certificate Holders, the Owner Trustee and the Owner Participant not less than ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence and consummate the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the provisions of Section 15 of the Lease. If an Event of Default shall have occurred and be continuing, the Owner Trustee shall have the following rights hereunder, any of which may be exercised directly by the Owner Participant. If as a result of the occurrence of an Event of Default in respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease, the Indenture Trustee shall have insufficient funds to make any payment of Principal Amount and interest on any Secured Certificate on the day it becomes due and payable, the Owner Trustee may, without the consent or concurrence of any Certificate Holder, but shall not be obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the manner provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an amount equal to the portion of the Principal Amount and interest (including interest, if any, on any overdue payments of such portion of Principal Amount and interest) then due and payable on the Secured Certificates, and, unless the Owner Trustee has cured Events of Default in respect of -33- 34 payments of Basic Rent on each of the three immediately preceding Basic Rent payment dates, or the Owner Trustee has cured six previous Events of Default in respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any Event of Default which would otherwise have arisen on account of the nonpayment by Lessee of such installment of Interim Rent or Basic Rent (but not any other Default or Event of Default which shall have occurred and be continuing). If any Event of Default (other than in respect of the nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured by the payment of money (it being understood that defaults requiring action such as the obtaining of insurance and the procuring of maintenance services can be so remedied) has occurred, the Owner Trustee may, without the consent or concurrence of any Certificate Holder, but shall not be obligated to, cure such Event of Default by making such payment prior to the Enforcement Date as is necessary to accomplish the observance or performance of the defaulted covenant, condition or agreement to the party entitled to the same. Except as hereinafter in this Section 4.03 provided, the Owner Trustee shall not, as a result of exercising the right to cure any such Event of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable under the Lease for or on account of costs or expenses incurred in connection with the exercise of such right, nor shall any claim of the Owner Trustee against Lessee or any other party for the repayment of such costs or expenses impair the prior right and security interest of the Indenture Trustee in and to the Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the first or second preceding paragraphs of this Section 4.03, the Owner Trustee shall be subrogated to the rights of the Indenture Trustee and the Certificate Holders in respect of the Interim Rent or Basic Rent which was overdue at the time of such payment and interest payable by Lessee on account of its being overdue and any Supplemental Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant to the immediately preceding paragraph (but in either case shall have no rights as a secured party hereunder), and thereafter, the Owner Trustee shall be entitled to receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt thereof by the Indenture Trustee; provided, however, that (i) if the Principal Amount and interest on the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to all Secured Certificates shall have been paid in full, be subordinate to the rights of the Indenture Trustee and the Certificate Holders in respect of such payment of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and (ii) the Owner Trustee shall not be entitled to seek to recover any such payment (or any payment in lieu thereof) except pursuant to the foregoing right of subrogation until payment of the Principal Amount and interest that has become due in accordance with Section 4.04(b) hereof. SECTION 4.04. REMEDIES. (a) If an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, then and in every such case the Indenture Trustee may, subject to the second paragraph of this Section 4.04(a), exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article IV and shall have and may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and, in the event such Event of Default is also a Lease Event of Default, any and all of the remedies pursuant to Section 15 of the Lease and may take possession of all or any part of the properties covered or intended to be covered by the Lien created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee and Lessee and all persons claiming under any of them wholly or partly therefrom, provided, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft or foreclose the Lien of this Trust Indenture. Unless an Event of Default not resulting from or relating to a Lease Event of Default has occurred and is continuing, the Owner Participant may bid at any public sale and become the purchaser. Without limiting any of the foregoing but subject to the immediately succeeding paragraph, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Trust Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder as a result of an Event of Default which arises solely by reason of one -34- 35 or more events or circumstances which constitute a Lease Event of Default unless the Indenture Trustee as security assignee of the Owner Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 15 of the Lease to terminate the Lease (so long as the Aircraft is not subsequently re-leased to Lessee or an Affiliate thereof) or take possession and/or sell the Aircraft with respect to the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any person. In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any rights or remedy of the Indenture Trustee hereunder) to participate in such proceedings. It is expressly understood and agreed that, subject only to the immediately preceding paragraph, the inability, described in such paragraphs, of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising any or all of its rights, powers and remedies under this Trust Indenture, including, without limitation, this Article IV. (b) If an Event of Default shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery of written notice or notices to the Owner Trustee and the Owner Participant, declare all the Secured Certificates to be due and payable, whereupon the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued but unpaid interest thereon (without Make-Whole Amount) and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. This Section 4.04(b), however, is subject to the condition that, if at any time after the Principal Amount of the Secured Certificates shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Secured Certificates and all other amounts payable under the Secured Certificates (except the Principal Amount of the Secured Certificates which by such declaration shall have become payable) shall have been duly paid, and every other Default and Event of Default with respect to any covenant or provision of this Trust Indenture shall have been cured, then and in every such case a Majority in Interest of Certificate Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. (c) The Certificate Holders shall be entitled, at any sale pursuant to Section 15 of the Lease or this Section 4.04, to credit against any purchase price bid at such sale by such holder all or any part of the unpaid obligations owing to such Certificate Holder and secured by the Lien of this Trust Indenture (but only to the extent that such purchase price would have been paid to such Certificate Holder pursuant to Article III hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c) were not given effect). -35- 36 (d) In the event of any sale of the Trust Indenture Estate, or any part thereof, pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Trust Indenture, the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued interest thereon (without Make-Whole Amount), and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement (or its designee) is a Certificate Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any Mortgaged Property or take any action with respect to any Mortgaged Property so acquired by it if such acquisition or action would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. RETURN OF AIRCRAFT, ETC. (a) If an Event of Default shall have occurred and be continuing and the Indenture Trustee shall have foreclosed, or shall concurrently be foreclosing, the Lien of this Trust Indenture and shall be taking steps for the sale or repossession of the Aircraft, subject to Section 4.03 hereof, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Mortgaged Property included in the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents to the fullest extent permitted by applicable law, and (ii) pursue all or part of such Mortgaged Property wherever it may be found and, in the event that a Lease Event of Default has occurred and is continuing, may enter any of the premises of Lessee wherever such Mortgaged Property may be or be supposed to be and search for such Mortgaged Property and take possession of and remove such Mortgaged Property. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Trust Indenture. (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Mortgaged Property, make all such expenditures for maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modifications or alterations to and of the Mortgaged Property, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the Mortgaged Property and to carry on the business and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Mortgaged Property, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modification or alteration of the Mortgaged Property or any part thereof as the Indenture Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Mortgaged Property and every part thereof, except Excluded Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Trust Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, improvement, modification or alteration of the Mortgaged Property and of conducting the business thereof, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Mortgaged Property or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Trust Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee with respect hereto. -36- 37 SECTION 4.06. REMEDIES CUMULATIVE. Subject to the other provisions of Article IV hereof, each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or Lessee or to be an acquiescence therein. SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS. In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Trust Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Owner Trustee, the Owner Participant, the Indenture Trustee and Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Mortgaged Property, and all rights, remedies and powers of the Owner Trustee, the Owner Participant, the Indenture Trustee or Lessee shall continue as if no such proceedings had been instituted. SECTION 4.08. WAIVER OF PAST DEFAULTS. Upon written instruction from a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Default or Event of Default hereunder and its consequences and upon any such waiver such Default or Event of Default shall cease to exist and any Event of Default arising from any such Default shall be deemed to have been cured for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon; provided, that in the absence of written instructions from all the Certificate Holders, the Indenture Trustee shall not waive any Default or Event of Default (i) in the payment of the Principal Amount, Make-Whole Amount, if any, and interest and other amounts due under any Secured Certificate then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Certificate Holder. SECTION 4.09. APPOINTMENT OF RECEIVER. The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee thereof) for all or any part of the Mortgaged Property, whether such receivership be incidental to a proposed sale of the Mortgaged Property or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Mortgaged Property shall be entitled to exercise all the rights and powers of the Indenture Trustee with respect to the Mortgaged Property. SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC. The Owner Trustee irrevocably appoints the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture, whether pursuant to foreclosure or power of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Owner Trustee hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing -37- 38 and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Trust Indenture, the right of any Certificate Holder to receive payment of principal of, and premium, if any, and interest on a Secured Certificate on or after the respective due dates expressed in such Secured Certificate, or to bring suit for the enforcement of any such payment on or after such respective dates in accordance with the terms hereof, shall not be impaired or affected without the consent of such Certificate Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default arising from a failure to pay Rent, the Indenture Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms of Sections 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default or Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture Trustee shall not have received instructions as above provided within 20 days after mailing notice of such Event of Default to the Certificate Holders, the Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default or Default as it shall determine advisable in the best interests of the Certificate Holders. If the Indenture Trustee shall at any time declare the Lease to be in default pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall forthwith notify the Owner Participant, the Certificate Holders, the Owner Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall not be deemed to have knowledge of a Default or an Event of Default (except, in the case of the Indenture Trustee, the failure of Lessee to pay any installment of Interim Rent or Basic Rent within one Business Day after the same shall become due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee, the Owner Participant or one or more Certificate Holders. SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, subject to the terms of this Section 5.02, take such of the following actions as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder as shall be specified in such instructions; (ii) give such notice or direction or exercise such right, remedy or power under the Lease, the Participation Agreement, the Purchase Agreement, or any other part of the Trust Indenture Estate as shall be specified in such instructions; and (iii) after the occurrence and during the continuance of an Event of Default, approve as satisfactory to the Indenture Trustee all matters required by the terms of the Lease to be satisfactory to the Owner Trustee, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall not approve any such matter as satisfactory to the Indenture Trustee; provided, -38- 39 that anything contained in this Trust Indenture, the Lease or the other Operative Documents to the contrary notwithstanding: (1) the Owner Trustee or the Owner Participant may, at all times without the consent of the Indenture Trustee, (A) to the exclusion of the Indenture Trustee demand, collect, sue for or otherwise obtain all amounts included in Excluded Payments from Lessee, (B) unless the Lien of this Trust Indenture shall have been foreclosed upon, grant or withhold its consent to amendments or supplements to Indenture Agreements required in accordance with Article IX hereof and (C) seek legal or equitable remedies to require Lessee to maintain the insurance coverage referred to in Section 11 of the Lease; provided, that the rights referred to in this clause (1) shall not be deemed to include the exercise of any remedies provided for in Section 15 of the Lease other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by Lessee of such amounts included in Excluded Payments or performance by Lessee of such insurance covenant or to recover damages for the breach thereof; (2) at all times prior to the foreclosure of the Lien of this Trust Indenture, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be unreasonably withheld if no right or interest of the Owner Trustee or the Owner Participant shall be diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; (3) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, each of the Owner Trustee, the Owner Participant and, except with respect to clauses (iii) and (iv), the Indenture Trustee shall have the right (i) to receive from Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which any thereof is permitted or required to give or furnish to the Owner Trustee or Lessor pursuant to any Operative Document (including pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 11(e) of the Lease specifically confers on Lessor, and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of Lessor under Section 21 of the Lease; (4) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee shall at all times, to the exclusion of the Indenture Trustee, have the right to adjust Rent, Stipulated Loss Values and Termination Values as provided in Section 3(d) of the Lease; (5) unless an Indenture Trustee Event shall have occurred, to exercise all of the rights of Lessor under Section 7(b) of the Lease; (6) whether or not a Default or Event of Default shall have occurred and is continuing, the Owner Trustee may, without the consent of the Indenture Trustee, (i) solicit and make bids with respect to the Aircraft under Section 9 of the Lease in respect of a termination of the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales value" and "fair market rental value" under Section 19 of the Lease for all purposes except following an Event of Default pursuant to Section 15 of the Lease, and (iii) make an election pursuant to and in accordance with the provisions of Section 9(c) of the Lease; and (7) so long as no Event of Default shall have occurred and be continuing, all other rights of the "Lessor" under the Lease shall be exercised by the Owner Trustee to the exclusion of the Indenture Trustee including, without limitation, the right to (i) exercise all rights with respect to Lessee's use and -39- 40 operation, modification or maintenance of the Aircraft and any Engine which the Lease specifically confers on Lessor, (ii) consent to and approve any assignment pursuant to Section 13 of the Lease and (iii) request further assurances pursuant to Section 16 of the Lease; provided that the foregoing shall not limit (A) any rights separately granted to the Indenture Trustee under the Operative Agreements or (B) the right of the Indenture Trustee to receive any funds to be delivered to the "Lessor" under the Lease (except with respect to Excluded Payments) and under the Purchase Agreement. Notwithstanding anything to the contrary contained herein (including this Section 5.02), the Indenture Trustee shall have the right, to the exclusion of the Owner Trustee and the Owner Participant (other than with respect to Excluded Payments), to (A) declare the Lease to be in default under Section 15 thereof and (B) subject only to the provisions of Sections 4.03, 4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15 (other than in connection with Excluded Payments) at any time that a Lease Event of Default shall have occurred and be continuing. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as specified by Lessee pursuant to Section 8(e) of the Participation Agreement or as may be specified from time to time in written instructions of a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee will furnish to each Certificate Holder (and, during the continuation of an Indenture Trustee Event, to the Owner Trustee and Owner Participant), promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder, including, without limitation, a copy of any Termination Notice (as defined in the Lease) and a copy of each report or notice received pursuant to Sections 9(a) and 11(c) of the Lease, respectively, to the extent that the same shall not have been furnished to such Certificate Holder pursuant hereto or to the Lease. (b) If any Lease Event of Default shall have occurred and be continuing and the Owner Trustee shall not have cured fully such Lease Event of Default under and in accordance with Section 4.03 hereof, on request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall declare the Lease to be in default pursuant to Section 15 thereof and exercise those remedies specified by such Certificate Holders. The Indenture Trustee agrees to provide to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with such declaration by the Indenture Trustee, notice of such declaration by the Indenture Trustee. SECTION 5.03. INDEMNIFICATION. The Indenture Trustee shall not be under any obligation to take any action under this Trust Indenture or any other Operative Document and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds or otherwise incur the risk of any financial liability in the performance of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (the written indemnity of any Certificate Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Indenture Trustee shall be accepted as reasonable assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture or any other Operative Document be deemed to impose a duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or of the Lease or is otherwise contrary to Law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR INSTRUCTIONS. The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Trust Indenture or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Trust Indenture or as expressly provided in -40- 41 written instructions from Certificate Holders as provided in this Trust Indenture; and no implied duties or obligations shall be read into this Trust Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof), promptly take such action as may be necessary duly to discharge all liens and encumbrances on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the ownership of the Aircraft or the administration of the Trust Indenture Estate or any other transaction pursuant to this Trust Indenture or any document included in the Trust Indenture Estate. SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR INSTRUCTIONS. The Owner Trustee and the Indenture Trustee agree that they will not use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate except (i) as required by the terms of the Lease or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Trust Indenture and in accordance with the express terms hereof. SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES. At any time an Airframe or Engine is to be replaced under or pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of Default is continuing, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid, but only upon compliance by Lessee with the applicable provisions of Section 10 of the Lease and upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee, requesting such release specifically describing the Airframe and/or Engine(s) so to be released. (2) A certificate signed by a duly authorized officer of Lessee stating the following: A. With respect to any Replacement Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe to be received (including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number) as consideration for the Airframe to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of such Replacement Airframe free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Airframe will on such date be in good working order and condition, and that such Replacement -41- 42 Airframe has been or, substantially concurrently with such withdrawal, will be duly registered in the name of the Owner Trustee under the Federal Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and that Lessee will have the full right and authority to use such Replacement Airframe; (iv) the existence of the insurance required by Section 11 of the Lease with respect to such Replacement Airframe and the payment of all premiums then due thereon; (v) that the Replacement Airframe is of the same or an improved model as the Airframe requested to be released from this Indenture; (vi) the fair market value of the Replacement Airframe as of the date of such certificate (which in the judgment of Lessee shall be not less than the then fair market value of the Airframe requested to be released (assuming such Airframe was in the condition and repair required to be maintained under the Lease)); (vii) the fair market value of the Airframe immediately prior to the date the Airframe suffered an Event of Loss (assuming that such Airframe was in the condition and repair required under the Lease); (viii) that no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default, has occurred which has not been remedied or waived, and that Lessee will not be in default, by the making and granting of the request for release and the addition of a Replacement Airframe, in the performance of any of the terms and covenants of the Lease; and (ix) that the release of the Airframe so to be released will not be in contravention of any of the provisions of this Indenture; or B. with respect to the replacement of any Engine: (i) a description of the Engine which shall be identified by manufacturer's serial number; -42- 43 (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) as consideration for the Engine to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Engine will on such date be in good working order and condition and that such Replacement Engine is substantially the same as the Engine to be released (or as improved model); (iv) the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then fair market value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease)); (v) the fair market value of the Engine to be released (immediately prior to any Event of Loss suffered by such Engine and assuming that such Engine was in the condition and repair required under the Lease); (vi) that each of the conditions specified in Section 10(b) of the Lease with respect to such Replacement Engine have been satisfied and that Lessee will not be in default, by the making and granting of the request for release and the addition of the Replacement Engine, in the performance of any of the terms and covenants of the Lease; (vii) that, with respect to the replacement of an Engine pursuant to Section 9(d) of the Lease, no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default has occurred which has not been remedied or waived; and (viii) that the release of the Engine so to be released will not be in contravention of any of the provisions of this Indenture. (3) (a) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting -43- 44 such Replacement Airframe or Replacement Engine and any related warranty rights to the lien of this Indenture. (b) With respect to the replacement of any Engine, such Uniform Commercial Code financing statements covering the lien created by this Indenture as deemed necessary or desirable by counsel for the Indenture Trustee to protect the lien under the Indenture in the Replacement Engine. (4) A certificate from either an aircraft engineer (who may be an employee of Lessee) or a firm of independent aircraft appraisers selected by Lessee confirming the accuracy of the information set forth in clause (2)A(vi) of this Section 5.06. (5) The opinion of in-house counsel to Lessee, or other counsel satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Trust Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be lawfully released from the lien of this Trust Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Trust Indenture, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate and interest of the Owner Trustee to and the lien of this Trust Indenture on such Replacement Aircraft or Replacement Engine. SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS. If a Replacement Airframe or Replacement Engine is being substituted as contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Certificate Holders and Lessee, subject to fulfillment of the conditions precedent and compliance by Lessee with its obligations set forth in Section 10 of the Lease and the requirements of Section 5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to execute and deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease. -44- 45 SECTION 5.08. EFFECT OF REPLACEMENT. In the event of the substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced and (b) the provisions of this Trust Indenture shall no longer be applicable to the Airframe or Engine or Engines being replaced, which shall be released from the Lien of this Indenture. SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of the Lease shall be held in accordance with the terms of such Section and the Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of the Owner Trustee under such Section. Any amounts held by the Indenture Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee may acquire the same using its best efforts. Unless otherwise expressly provided in this Trust Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Trust Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever such sale is necessary to make a distribution required by this Trust Indenture. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse all monies constituting part of the Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its individual capacity, and the Indenture Trustee, in its individual capacity, shall not be answerable or accountable under any circumstances, except (i) for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be willful misconduct or negligence), (ii) in the case of the Indenture Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii) for liabilities that may result, in the case of the Owner Trustee, from the inaccuracy of any representation or warranty of the Owner Trustee expressly made in its individual capacity in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents) or, in the case of the Indenture Trustee (in its individual capacity), from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable for any action or -45- 46 inaction of the other or of the Owner Participant. The Owner Trustee shall not be deemed to be a trustee for the Certificate Holders for any purpose. SECTION 6.02. ABSENCE OF DUTIES. In the case of the Indenture Trustee, except in accordance with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the Lease or of this Trust Indenture or any other document, or to see to the maintenance of any such registration, recording or filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Lessee's covenants under the Lease with respect to the Aircraft. The Owner Participant shall not have any duty or responsibility hereunder, including, without limitation, any of the duties mentioned in clauses (i) through (v) above; provided, that nothing contained in this sentence shall limit any obligations of the Owner Participant under the Participation Agreement or relieve the Owner Participant from any restriction under Section 4.03 hereof. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR DOCUMENTS. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its individual capacity warrants that (i) the Owner Trustee has received on the Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Trustee in its individual capacity. Neither the Owner Trustee, in its individual capacity or as Owner Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual or trust capacities, makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Trust Indenture, the Trust Agreement, the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Owner Trustee made in its individual capacity and the representations and warranties of the Indenture Trustee in its individual capacity, in each case expressly made in this Trust Indenture or in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement). The Loan Participants, the Certificate Holders and the Owner Participant make no representation or warranty hereunder whatsoever. SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the Certificate Holders, Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by Law or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under such general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for any interest thereon (except that the Indenture Trustee shall invest -46- 47 all monies held as directed by Lessee so long as no Lease Event of Default or Lease Default has occurred and is continuing (or in the absence of such direction, by the Majority In Interest of Certificate Holders) in Cash Equivalents; provided, however, that any payments received, or applied hereunder, by the Indenture Trustee shall be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL. Neither the Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors (or Executive Committee thereof) of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Secured Certificates outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to Lessee the manner of ascertainment of which is not specifically described herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee and the Indenture Trustee for any action taken or omitted to be taken by them in good faith in reliance thereon. The Indenture Trustee shall assume, and shall be fully protected in assuming, that the Owner Trustee is authorized by the Trust Agreement to enter into this Trust Indenture and to take all action to be taken by it pursuant to the provisions hereof, and shall not inquire into the authorization of the Owner Trustee with respect thereto. In the administration of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled persons. SECTION 6.06. CAPACITY IN WHICH ACTING. The Owner Trustee acts hereunder solely as trustee as herein and in the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein, in the Trust Agreement and in the Participation Agreement. SECTION 6.07. COMPENSATION. The Indenture Trustee shall be entitled to reasonable compensation, including expenses and disbursements (including the reasonable fees and expenses of counsel), for all services rendered hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by Lessee, and shall have the right, on and subsequent to an Event of Default hereunder, to use or apply any monies held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against the Loan Participants, the Certificate Holders, the Owner Trustee or the Owner Participant for any fee as compensation for its services as trustee under this Trust Indenture. SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS. In the administration of the trusts created hereunder, the Indenture Trustee shall have the right to seek instructions from a Majority in Interest of Certificate Holders should any provision of this Trust Indenture appear to conflict with any other provision herein or should the Indenture Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no liability in refraining from acting until it receives such -47- 48 instructions. The Indenture Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.08. ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. SCOPE OF INDEMNIFICATION. The Owner Trustee, not in its individual capacity, but solely as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its individual and trust capacities), and its successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Trust Indenture), claims, actions, suits, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever, which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also indemnified against by any other Person under any other document) in any way relating to or arising out of this Trust Indenture or any other Operative Document to which it is a party or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder except only in the case of willful misconduct or gross negligence (or negligence in the case of handling funds) of the Indenture Trustee in the performance of its duties hereunder or resulting from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in Section 8 of the Participation Agreement or Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities under such Sections; provided that, so long as the Lease is in effect, the Indenture Trustee, unless otherwise prohibited by law, shall not make any claim under this Section 7.01 for any claim or expense without first making demand on Lessee for the payment on behalf of Lessor of such claim or expense pursuant to the Lease or the Participation Agreement, including, without limitation, Section 7(b) or 7(c) of the Participation Agreement. In addition, if necessary, the Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement including upon any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee, Lessee and the Certificate Holders. SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In -48- 49 addition, a Majority in Interest of Certificate Holders may at any time (but only with the consent of Lessee, which consent shall not be unreasonably withheld, except that such consent shall not be necessary if a Lease Event of Default is continuing) remove the Indenture Trustee without cause by an instrument in writing delivered to the Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Certificate Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so long as no Lease Event of Default shall have occurred and be continuing, shall be subject to Lessee's reasonable approval. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as above provided. (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee an instrument accepting such appointment and assuming the obligations of the Indenture Trustee under the Participation Agreement arising from and after the time of such appointment, and thereupon such successor Indenture Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee herein; but nevertheless upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all monies or other property then held by such predecessor Indenture Trustee hereunder. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having its principal place of business in the Borough of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations under the Operative Documents are guaranteed by an affiliated entity having) a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. (d) Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Indenture Trustee may be transferred, shall, subject to the terms of paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the Indenture Trustee under this Trust Indenture without further act, except that such Person shall give prompt subsequent notice of such transaction to the Owner Trustee and the Owner Participant. SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Trust Indenture Estate shall be situated or to make any claim or bring any suit with respect to or in connection with the Trust Indenture Estate, this Trust Indenture, any other Indenture Agreement, the Secured Certificates or any of the transactions contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interests of the Certificate Holders (and the Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture Trustee shall have been requested to do so by a Majority in Interest of Certificate Holders, then in any such case, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and such other instruments as may from time to time be necessary or advisable either (1) to constitute one or more bank or trust companies or -49- 50 one or more persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as additional trustee or trustees of all or any part of the Trust Indenture Estate, or to act as separate trustee or trustees of all or any part of the Trust Indenture Estate, in each case with such rights, powers, duties and obligations consistent with this Trust Indenture as may be provided in such supplemental indenture or other instruments as the Indenture Trustee or a Majority in Interest of Certificate Holders may deem necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional and separate trustee, subject in each case to the remaining provisions of this Section 8.03. If the Owner Trustee shall not have taken any action requested of it under this Section 8.03(a) that is permitted or required by its terms within 15 days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing provisions of this Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and perform any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee. In case any additional or separate trustee appointed under this Section 8.03(a) shall die, become incapable of acting, resign or be removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to the Indenture Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.03(a). (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Trust Indenture Estate or otherwise payable under any Operative Document to the Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights, powers, duties and obligations conferred or imposed upon any additional or separate trustee shall be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly except to the extent that applicable Law of any jurisdiction in which any particular act is to be performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of the Indenture Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Indenture Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.03 shall be subject to, and shall have the benefit of Articles IV through VIII and Article X hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. (c) If at any time the Indenture Trustee shall deem it no longer necessary or desirable in order to conform to any such law or take any such action or shall be advised by such counsel that it is no longer so necessary or desirable in the interest of the Certificate Holders, or in the event that the Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Certificate Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when and to the extent it could so act under Section 8.03(a) hereof. -50- 51 ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS. (a) Except as provided in Section 5.02 hereof, the Owner Trustee agrees it shall not enter into any amendment of or supplement to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee and a Majority in Interest of Certificate Holders. Anything to the contrary contained herein notwithstanding, without the necessity of the consent of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter into amendments of or additions to the Lease to modify Section 5 (except to the extent that such amendment would affect the rights or exercise of remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such amendments, modifications and changes do not and would not affect the time of, or reduce the amount of, Rent payments (other than Excluded Payments) until after the payment in full of all Secured Obligations or otherwise adversely affect the Certificate Holders. (b) Without limiting the provisions of Section 9.01(a) hereof, the Indenture Trustee agrees with the Certificate Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Certificate Holders, or does not adversely effect the Certificate Holders, but upon the written request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each holder of an affected Secured Certificate then outstanding, no such amendment of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11 or 2.15 or Article III or Section 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an Event of Default) of the Lease, the definitions of "Event of Default", "Default", "Lease Event of Default", "Lease Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Secured Certificate, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in favor of the Owner Trustee, the Indenture Trustee or the Certificate Holders (except that the Owner Trustee (in its individual capacity) or the Indenture Trustee, as the case may be, may consent to any waiver or reduction of an indemnity payable to it), (iv) consent to any change in the Trust Indenture or the Lease which would permit redemption of Secured Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as permitted by Section 2.14 hereof, (v) except as contemplated by the Lease or the Participation Agreement, reduce the amount or extend the time of payment of Interim Rent, Basic Rent, Stipulated Loss Value, or Termination Value for the Aircraft in each case as set forth in the Lease, or modify, amend or supplement the Lease or consent to any assignment of the Lease, in either case releasing Lessee from its obligations in respect of the payment of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections -51- 52 3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. So long as no Lease Event of Default has occurred and is continuing, without the consent of Lessee no amendment or supplement to this Trust Indenture or waiver or modification of the terms hereof shall adversely affect Lessee. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Certificate Holder for any of the following purposes: (i) (a) to cure any defect or inconsistency herein or in the Secured Certificates, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Certificate Holders in its capacity solely as Certificate Holder; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Trust Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Certificate Holders, or to surrender any rights or power herein conferred upon the Owner Trustee, the Owner Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and (vii) to include on the Secured Certificates any legend as may be required by law. SECTION 9.02. TRUSTEES PROTECTED. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of Section 9.01 hereof adversely affects any right, duty, immunity or indemnity with respect to such institution under this Trust Indenture or the Lease, such institution may in its discretion decline to execute such document. SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to Section 9.01 hereof, the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each Certificate Holder at its address last set forth in the Secured Certificate Register, but the failure of the Indenture Trustee to mail such copies shall not impair or affect the validity of such document. SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST AGREEMENT AND INDENTURE SUPPLEMENT. No written request or consent of the Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof shall be required to enable the Owner Trustee to enter into any Lease Supplement specifically required by the terms of the Lease or to execute and deliver a Trust Agreement and Indenture Supplement specifically required by the terms hereof. -52- 53 ARTICLE X MISCELLANEOUS SECTION 10.01. TERMINATION OF TRUST INDENTURE. Upon (or at any time after) payment in full of the Principal Amount of, Make-Whole Amount, if any, and interest on and all other amounts due under all Secured Certificates and provided that there shall then be no other Secured Obligations due to the Certificate Holders and the Indenture Trustee hereunder or under the Participation Agreement, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft and the Engines from the Lien of this Trust Indenture and releasing the Lease, the Bill of Sale, the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto from the assignment and pledge thereof hereunder and the Indenture Trustee shall execute and deliver such instrument as aforesaid and give written notice thereof to Lessee; provided, however, that this Trust Indenture and the trusts created hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property constituting part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all monies or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE HOLDERS. No holder of a Secured Certificate shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Secured Certificate or other right, title and interest of any Certificate Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Trust Indenture or entitle such holder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Trust Indenture Estate. SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING. Any sale or other conveyance of the Trust Indenture Estate, or any part thereof (including any part thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind the Certificate Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders in and to such Trust Indenture Estate or part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS. Nothing in this Trust Indenture, whether express or implied, shall be construed to give any person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or equitable right, remedy or claim under or in respect of this Trust Indenture. SECTION 10.05. NOTICES. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), with a copy to the Owner Participant addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee, -53- 54 addressed to it at its office at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to any Participant, Lessee or any Certificate Holder, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party (if any) set forth on the signature pages to the Refunding Agreement or in the Secured Certificate Register. Whenever any notice in writing is required to be given by the Owner Trustee, any Participant or the Indenture Trustee or any Certificate Holder or Lessee to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after being mailed, addressed as provided above. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Trust Indenture. SECTION 10.06. SEVERABILITY. Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS. No term or provision of this Trust Indenture or the Secured Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Owner Trustee and the Indenture Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any Secured Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 10.08. SUCCESSORS AND ASSIGNS. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the permitted successors and assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificate Holder shall bind the successors and assigns of such holder. This Trust Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby, thereby and by the Participation Agreement. Each Certificate Holder by its acceptance of a Secured Certificate agrees to be bound by this Trust Indenture and all provisions of the Participation Agreement applicable to a Loan Participant or a Certificate Holder. SECTION 10.09. HEADINGS. The headings of the various Articles and sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.10. NORMAL COMMERCIAL RELATIONS. Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or any bank or other Affiliate of such Participant may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Lessee, fully to the same extent as if this Trust Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. -54- 55 SECTION 10.11. GOVERNING LAW; COUNTERPART FORM. THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the parties hereto in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.12. VOTING BY CERTIFICATE HOLDERS. All votes of the Certificate Holders shall be governed by a vote of a Majority in Interest of Certificate Holders, except as otherwise provided herein. SECTION 10.13. BANKRUPTCY. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee hereunder), shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any of the provisions of this Trust Indenture or the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner Trustee will take any action contrary to Lessee's rights under the Lease, including the right to possession and use of, and the quiet enjoyment of, the Aircraft, except in accordance with provisions of the Lease. -55- 56 IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to be duly executed by their respective officers thereof duly authorized as of the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, as Owner Trustee By: ----------------------------------------- Name: --------------------------------------- Title: STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By: ----------------------------------------- Name: --------------------------------------- Title: -56- 57 EXHIBIT A TO TRUST INDENTURE AND MORTGAGE TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 F] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 F], dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 F] dated as of May 14, 1996 (the "TRUST AGREEMENT"), between the Owner Trustee and the Owner Participant named therein. W I T N E S S E T H: WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 F], dated as of June 12, 1996 (as amended and supplemented to the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft (such term and other terms used but not defined herein having the respective meanings ascribed thereto in the Trust Indenture), and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for recordation on the date hereof with the FAA as one document; NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust Indenture Estate covers all of Owner Trustee's right, title and interest in and to the following described property: 58 AIRFRAME One airframe identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number - ------------ ----- ------------ -------------- together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Two aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows: Manufacturer Manufacturer's Model Serial Number - ------------ -------------------- ------------- together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to any of such engines. Together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts). As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Loan Participants and of the Certificate Holders, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under the Lease Supplement [of even date herewith] covering the property described above subject, however, to all of the terms of the Trust Indenture including, without limitation, the rights of the Owner Trustee and the Owner Participant under Section 5.02 of the Trust Indenture. Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Certificate Holders, except EXHIBIT A-2 59 as provided in Section 2.15 and Article III of the Trust Indenture without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Trust Indenture Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. EXHIBIT A-3 60 IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, Owner Trustee By: ------------------------------------------ Name: Title: EXHIBIT A-4 61 SCHEDULE I
PRINCIPAL AMOUNT INTEREST RATE ---------------- ------------- Series A $25,329,837 7.67% Series B $ 8,287,407 8.07% Series C $ 6,381,986 8.97%
62 SECURED CERTIFICATES AMORTIZATION SERIES A AIRCRAFT: N542US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 1.84826358% Jul 2, 1998 0.00073036% Jan 2, 1999 2.04440698% Jul 2, 1999 0.00040269% Jan 2, 2000 2.04460437% Jul 2, 2000 0.00020529% Jan 2, 2001 2.04481361% Jul 2, 2001 0.00000000% Jan 2, 2002 2.04480967% Jul 2, 2002 0.00000000% Jan 2, 2003 2.04480967% Jul 2, 2003 0.00000000% Jan 2, 2004 2.04480967% Jul 2, 2004 0.00000000% Jan 2, 2005 2.04480967% Jul 2, 2005 0.00000000% Jan 2, 2006 2.04480967% Jul 2, 2006 0.00000000% Jan 2, 2007 2.04481361% Jul 2, 2007 0.00000000% Jan 2, 2008 2.04480967% Jul 2, 2008 0.00000000% Jan 2, 2009 2.04480967% Jul 2, 2009 0.00000000% Jan 2, 2010 10.94516737% Jul 2, 2010 0.00000000% Jan 2, 2011 12.71303596% Jul 2, 2011 0.00000000% Jan 2, 2012 13.68812721% Jul 2, 2012 17.03142412% Jan 2, 2013 15.75209603% Jul 2, 2013 0.89631490% Jan 2, 2014 4.63192625
63 SERIES B AIRCRAFT: N542US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00258223% Jul 2, 1998 0.00000000% Jan 2, 1999 2.08328130% Jul 2, 1999 0.00000000% Jan 2, 2000 2.08326923% Jul 2, 2000 0.00000000% Jan 2, 2001 2.08328130% Jul 2, 2001 0.00000000% Jan 2, 2002 2.08393289% Jul 2, 2002 0.00000000% Jan 2, 2003 2.08398115% Jul 2, 2003 0.00000000% Jan 2, 2004 2.08402942% Jul 2, 2004 0.00000000% Jan 2, 2005 2.08408975% Jul 2, 2005 0.00000000% Jan 2, 2006 2.08236424% Jul 2, 2006 0.00000000% Jan 2, 2007 2.08125412% Jul 2, 2007 0.00000000% Jan 2, 2008 13.01526521% Jul 2, 2008 0.00000000% Jan 2, 2009 22.98583863% Jul 2, 2009 0.00000000% Jan 2, 2010 2.62562222% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 35.93951643% Jul 2, 2014 4.83767721% Jan 2, 2015 1.84401466%
64 SERIES C AIRCRAFT: N542US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.60370361% Jul 2, 1999 0.00000000% Jan 2, 2000 3.67861979% Jul 2, 2000 0.00000000% Jan 2, 2001 4.84938388% Jul 2, 2001 0.00000000% Jan 2, 2002 6.12517796% Jul 2, 2002 0.00000000% Jan 2, 2003 7.51540351% Jul 2, 2003 0.00000000% Jan 2, 2004 9.03033946% Jul 2, 2004 0.00000000% Jan 2, 2005 10.68115787% Jul 2, 2005 0.00000000% Jan 2, 2006 5.48255668% Jul 2, 2006 0.00000000% Jan 2, 2007 12.93797887% Jul 2, 2007 0.00000000% Jan 2, 2008 13.95521708% Jul 2, 2008 0.00000000% Jan 2, 2009 0.00000000% Jul 2, 2009 0.00000000% Jan 2, 2010 0.00000000% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 0.00000000% Jul 2, 2014 0.00000000% Jan 2, 2015 23.14046129%
65 SCHEDULE II 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. EX-4.J4 81 LEASE AGREEMENT-1996 F 1 LEASE AGREEMENT [NW 1996 F] This LEASE AGREEMENT [NW 1996 F], dated as of May 14, 1996, between FIRST SECURITY BANK OF UTAH, 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. The following terms shall have the following meanings for all purposes of this Lease Agreement [NW 1996 F] and shall be equally applicable to both the singular and the plural forms of the terms herein defined: "Administrative Agent" means [ ], a [ ] banking corporation, as administrative agent pursuant to the Participation Agreement, and any successor acting as administrative agent. "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. "After-Tax Basis" means an additional amount which when added to the amount of payment otherwise required to be made on an After-Tax Basis, after deduction of all Federal, state, local and foreign taxes required to be paid by or on behalf of a Person in respect of the receipt or realization of any such amounts, results in a sum equal to the payment required under the provisions of the Operative Documents to be made on an After-Tax Basis. Any payment under the Operative Documents which does not actually result in an increase (or a decrease in a refund) of the Owner Participant's Federal, state, local or foreign income tax liability for the year of the accrual or receipt of such payment but which reduces any net operating loss or business credit or foreign tax credit carryover of the recipient shall be treated as giving rise to an actual increase in (or a decrease in a refund of) tax liability for the year in which such tax attribute if not reduced thereby would have given rise to a reduction in such recipient's tax liability (or such recipient's allowable refund in respect of any 2 such taxes). With respect to the Owner Participant, for purposes of this definition, it shall be assumed that United States federal, state, local and foreign income taxes are payable at the Highest Marginal Rate (as defined in the Tax Indemnity Agreement) then applicable to the Owner Participant. "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 two 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 Boeing 757-251 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. "Assumed Interest Rate" has the meaning set forth in Section 3(c) hereof. "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 - 2 - 3 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 Commencement Date and ending on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. "Bill of Sale" means a full warranty bill 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 Bill of Sale shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good title to the Airframe and each Engine described in such Bill 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 New York, New York; Boston, Massachusetts; Salt Lake City, Utah; or Minneapolis, Minnesota and, in connection with any payment of Rent and so long as any Secured Certificate is a Eurodollar Loan (as defined in the Trust Indenture), such day is also a day for trading by and between banks in the interbank Eurodollar market. "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. "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. - 3 - 4 "Commencement Date" means January 2, 1997. "Commitment" means the commitment of a Loan Participant 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 1996 F], 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. "Credit Agreement" means the Credit Agreement, dated as of November 2, 1995, among Lessee, the banks, financial institutions and other institutional lenders listed on the signature pages thereof, [ ], as documentation agent, [ ], as administrative agent, and [ ], as syndication agent, as the same may be amended, supplemented or otherwise modified from time to time. "Debt Rate" has the meaning set forth in the Trust Indenture. "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, 2003, provided, however, that if the chief legal officer or chief tax officer of Lessee has actual knowledge that the Depreciation Period is other than the period specified in the Tax Assumptions as a result of an "Operative Event" (as defined in the Tax Indemnity Agreement), then ending on the last day of the Owner Participant's taxable year in which a depreciation or cost recovery deduction is allowed or allowable with respect to the Aircraft. "Documentation Agent" means [ ], a bank organized under the laws of the [ ], as documentation agent pursuant to the Participation Agreement, and any successor acting as documentation agent. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of the two Pratt & Whitney Model PW2037 engines listed by manufacturer's serial number in the initial Lease Supplement, - 4 - 5 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 two 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 hereunder. The term "Engines" means, as of any date of determination, all Engines then leased hereunder. "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 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government) 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 for a period in excess of 180 consecutive days or, if earlier, until the end of the Term or, in the case of a requisition of title by the United States Government or any other government of registry of the Aircraft which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government, as the case may be, the requisition of title shall not have been reversed within 90 days from the date of such requisition of title or, if earlier, at the end of the Term (it being understood that a requisition of title by any government other than as expressly provided above shall constitute an immediate Event of Loss); (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, prior to the - 5 - 6 expiration of such 180 day period, shall have undertaken and shall be diligently carrying forward in a manner that does not discriminate against the Aircraft all steps which are necessary or desirable to permit the normal use of such property by Lessee, and, within one year of such prohibition, Lessee 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, provided, notwithstanding any of the foregoing, such prohibition shall constitute an Event of Loss if such use shall have been prohibited for a period of two 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any instrumentality or agency of any thereof whose obligations are backed by the full faith and credit of such government, which shall have occurred during the Basic Term (or the Interim 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; (vi) any divestiture of title to or interest in an Engine treated as an Event of Loss pursuant to Section 7(b) hereof; and (vii) the operation of or location of the Aircraft, while under requisition for use by any government, in an area excluded from coverage by any insurance policy in effect with respect to the Aircraft required by this Agreement, unless in the case of a requisition by the United States Government or any other government of registry of the Aircraft which is listed on Exhibit C to the Participation Agreement and is designated a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government, Lessee shall have obtained an indemnity in lieu thereof from such government or such agency or instrumentality. 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 the Transition 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 the Transition Date; provided, however, that, to the extent that the aggregate amount of interest due and payable on the Transition Date on the Secured Certificates for the period from and including the Delivery Date to but excluding the Transition Date is less than the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Transition Date if such Secured Certificates had borne interest at the Assumed Interest Rate for such period, the - 6 - 7 corresponding percentage set forth in Exhibit B shall be decreased by the amount which when multiplied by Lessor's Cost will equal such differential. "Expenses" has the meaning specified in Section 7(c) of the Participation Agreement. "FAA Bill of Sale" means a bill 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. "Funding Loss Amount" has the meaning assigned to that term in the Trust Indenture. "Guarantee" means the Guarantee [NW 1996 F], dated as of the date hereof, made by the Guarantor in favor of the Parties, 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 the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Administrative Agent, the Documentation Agent, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents. "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. - 7 - 8 "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. "Interest Period" means Interest Period as defined in the Trust Indenture. "Interim Rent" means the rent payable for the Aircraft for the Interim Term pursuant to Section 3(b) hereof. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions hereof. "Lease Agreement", "this Lease Agreement", "this Lease", "this Agreement", "herein", "hereof", "hereunder", "hereby" or other like words mean this Lease Agreement [NW 1996 F] 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 semi-annual periods throughout the Basic Term and any Renewal Term ending on a Lease Period Date, the first such period commencing on and including the Commencement Date and each succeeding period commencing on the date immediately following the preceding Lease Period Date. "Lease Period Date" means July 2, 1997 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 - 8 - 9 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 Bill of Sale, the Bill 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 of Utah, 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 of Utah, 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 of Utah, 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 of Utah, 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 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 of Utah, 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 of Utah, 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 risk of interference with the payment of Rent (other than Excluded Payments in favor of First Security Bank of Utah, 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. - 9 - 10 "Lien" means any mortgage, pledge, lien, charge, claim, encumbrance, lease, sublease, sub-sublease or security interest. "Loan Participant" means each institution executing the Participation Agreement as a Loan Participant, and its respective successors and assigns, and any Certificate Holder; at any time when there is only one Certificate Holder, "each Loan Participant" shall mean such 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 assigned to that term in the Trust Indenture. "Manufacturer" means The Boeing Company, a Delaware corporation. "Manufacturer Documents" means the Purchase Agreement and the Consent and Agreement. "Moody's" means Moody's Investors Service, Inc. "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 after-tax present value, as of the Delivery Date, of Basic Rent set forth in Exhibit B hereto through and including the date on which the Special Purchase Price is payable pursuant to Section 19(d) hereof, and the Special Purchase Price payable as of such date, computed on the basis of the same methodology, constraints and assumptions as were utilized in determining Basic Rent, the Special Purchase Price, Stipulated Loss Value and Termination Value percentages as of the Delivery Date. "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 Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Guarantee, the Owner Participant Guaranty, the Purchase Agreement Assignment and the Consent and Agreement. - 10 - 11 "Overall Transaction" means all the transactions contemplated by the Operative Documents. "Owner Participant" means the corporation executing the Participation Agreement as the Owner Participant and 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 Participant Guarantor" means the entity executing the Owner Participant Guaranty as guarantor thereunder. "Owner Participant Guaranty" means the Owner Participant Guaranty [NW 1996 F], dated as of the date hereof, made by the Owner Participant Guarantor in favor of Lessee, Lessor, the Loan Participants and the Indenture Trustee, as such Owner Participant Guaranty may be amended or supplemented from time to time pursuant to the applicable provisions thereof. "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 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 1996 F], dated as of the date hereof, among Lessee, the Loan Participants, the Indenture Trustee, the 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. - 11 - 12 "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. "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 (calculated based on the actual number of days elapsed in a year consisting of 365 days or 366 days, as the case may be) equal to (x) 1% over the Base Rate for the first 5 Business Days from the date such payment became due, and (y) 3% over the Base Rate thereafter. "Permitted Carrier" means an air carrier domiciled and principally based in a country set forth on Exhibit C to the Participation Agreement and designated therein as a "Specified Country". "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 C to the Participation Agreement. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Prepaid Rent" has the meaning assigned in Section 3(g) hereof. "Purchase Agreement" means the Purchase Agreement No. 1631, dated December 1, 1989, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1996 F], 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. - 12 - 13 "Reimbursement Amount" has the meaning set forth in Section 3(g) hereof. "Renewal Term" means any Fixed Renewal Term or Fair Market Renewal Term as those terms are defined in Section 19 hereof. "Rent" means Interim Rent, Basic Rent and Supplemental Rent, collectively. "Rent Differential Amount" has the meaning set forth in Section 3(c) hereof. "Restricted Country" has the meaning set forth on Exhibit C to the Participation Agreement. "Return Site" means a major airport on Lessee's route system located within the forty-eight contiguous states of the United States. "S&P" means Standard & Poor's Corporation. "Secured Certificates" has the meaning assigned to that term in the Trust Indenture. "Special Purchase Price" shall mean the amount denominated as such in Exhibit B hereto. "Specified Country" has the meaning set forth on Exhibit C to the Participation Agreement. "Stipulated Loss Value" with respect to the Aircraft as of any date through and including January 2, 2019, 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). To the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Interim Term or the Lease Period in which such Stipulated Loss Value Date occurs up to and including such Stipulated Loss Value Date is greater or less than the amount included in calculating the percentage set forth in Exhibit C with respect to such Stipulated Loss Value Date on account of such interest, the corresponding percentage set forth in Exhibit C shall be adjusted appropriately to compensate for such differential. "Stipulated Loss Value" as of any date after January 2, 2019 shall be the amount determined as provided in Section 19(a) hereof. - 13 - 14 "Stipulated Loss Value Date" means the 2nd calendar day of each calendar month during the Interim Term, 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. "Supplemental Rent" means all amounts, liabilities and obligations (other than Interim Rent and Basic Rent) which Lessee assumes or agrees to pay to Lessor or others hereunder, under the Participation Agreement, under the Tax Indemnity Agreement or under any of the other Operative Documents. The parties acknowledge that Supplemental Rent is a general category and, accordingly, agree that any provision of any Operative Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment. "Tax Indemnitee" means the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors and permitted assigns. "Tax Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1996 F], dated as of the date hereof, 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, 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 Interim Term, 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 January 2, 2019, means, but subject always to the provisions of - 14 - 15 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). In the event that the Termination Date with respect to which Termination Value is determined is a date on which Basic Rent is payable in advance as indicated on Exhibit B, to the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Lease Period ending on such Termination Date is greater or less than the amount included in calculating the corresponding percentage set forth in Exhibit D with respect to such Termination Date on account of such interest, the corresponding percentage set forth in Exhibit D shall be adjusted appropriately to compensate for such differential. "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker, special counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Vedder, Price, Kaufman & Kammholz, special counsel to the Loan Participants, such information to be furnished by the Documentation Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee and Guarantor, such information to be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements (but excluding any sales, use and other transfer taxes which apply to the Aircraft), such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, and the reasonable out-of-pocket expenses of the Owner Participant, such information to be furnished by the Owner Participant, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust Indenture, such information to be furnished by the Indenture Trustee, (v) the fees of Aeroeconomics, Inc. and BK Associates, Inc. with respect to the appraisals of the Aircraft pursuant to Sections 4(a)(xx) and 4(a)(xxix), respectively, of the Participation Agreement, such information to be furnished by the Owner Participant in the case of Aeroeconomics, Inc. and by the Documentation Agent in the case of BK Associates, Inc., (vi) the reasonable and actual fees, expenses and disbursements of Dewey Ballantine, special counsel to the Owner Participant, such information to be furnished by the Owner Participant, (vii) the fee and reasonable disbursements of Babcock and Brown Financial Corporation, such information to be furnished by Lessee, and (viii) the fee payable to the Loan Participants on the Delivery Date. - 15 - 16 "Transition Date" means the date designated as such in Exhibit B hereto. "Trust Agreement" means that certain Trust Agreement [NW 1996 F], dated as of the date hereof, between the Owner Participant and First Security Bank of Utah, 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 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 1996 F], dated as of the date hereof, between Lessor and the Indenture Trustee, as originally executed or as modified, amended or supplemented in accordance with the provisions thereof. "Trust Supplement" means a supplement to the Trust Agreement and the Trust Indenture, substantially in the form of Exhibit A to the Trust Indenture. "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 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. SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to satisfaction of the conditions set forth in Section 4(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 Section 4(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 - 16 - 17 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) Interim Term and Basic Term. The Interim Term shall commence on the Delivery Date and end on and include the day immediately preceding the Commencement Date unless earlier terminated pursuant to the provisions hereof. The Basic Term shall commence on the Commencement Date and end on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. (b) Interim Rent. Lessee shall pay Interim Rent on the Commencement Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for Interim Rent on the Commencement Date. Although the Interim Rent percentage set forth in Exhibit B hereto has been computed on the assumption that the rate of interest on the Secured Certificates will be the Assumed Interest Rate, Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, the Interim Rent payable on the Commencement Date shall be increased or decreased (but not below zero) by the difference between (i) the aggregate amount of interest due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to but excluding the Commencement Date and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to the Commencement Date if such Secured Certificates had borne interest at the Assumed Interest Rate. If the amount determined in accordance with clause (i) of the preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be increased by such difference. If the amount determined in accordance with clause (i) of the preceding sentence shall be less than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be decreased (but not below zero) by such difference. (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 applicable Lease Period Date specified in Exhibit B hereto. Although the Basic Rent percentages set forth in Exhibit B hereto have been computed on the assumption that the rate of interest on the Secured Certificates throughout the Term will be 6.5% per annum, computed on the basis of a 360-day year of twelve 30-day - 17 - 18 months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, each installment of Basic Rent shall be increased or decreased (but not below zero), as the case may be, by the Rent Differential Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with respect to the Basic Term, the difference between (i) the aggregate amount of interest due and payable on such Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on such Lease Period Date if such Secured Certificates had borne interest at the Assumed Interest Rate, in each case for the period from and including the Lease Period Date (or the Commencement Date in the case of the first Lease Period) next preceding such Lease Period Date to but excluding such Lease Period Date. If, as of any Lease Period Date, the amount determined in accordance with clause (i) of the immediately preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Basic Rent payable on such Lease Period Date shall be increased by the Rent Differential Amount. If, as of any Lease Period Date, the amount determined in accordance with such clause (ii) shall exceed the amount determined in accordance with such clause (i), the amount of Basic Rent due on such Lease Period Date shall be decreased (but not below zero) by the Rent Differential Amount. (d) Adjustments to Basic Rent. (i) In the event that (A) the Delivery Date occurs other than on May 14, 1996, or (B) Transaction Expenses paid by Lessor pursuant to Section 16 of the Participation Agreement are determined to be other than 1.0% 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, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated on or prior to November 30, 1996 using the same methods and assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and Special Purchase Price, 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. (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, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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, subject to the Owner Participant's consent, which the Owner - 18 - 19 Participant may withhold in its sole discretion, 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, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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 and the Special Purchase Price 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 Amount set forth in Exhibit B in a manner consistent with such recalculation. In addition, (X) any recalculation of Basic Rent, Stipulated Loss Value or Termination Value percentages made pursuant to this Section 3(d) shall take into account any decrease in the Excess Amount with respect to the Transition Date required by the proviso to the definition of "Excess Amount", (Y) after January 31, 1997 but prior to July 2, 1997, the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C and the Termination Value percentages set forth in Exhibit D shall be recalculated to take into account any decrease in Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) of this sentence, and (Z) at the time of any payment of Stipulated Loss Value or Termination Value, the Stipulated Loss Value percentage set forth in Exhibit C or the Termination Value percentage set forth in Exhibit D, by reference to which the amount of such payment is determined shall be recalculated to take into account any decrease in the Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) or clause (Y) of this sentence. (iv) Any recalculation of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price 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. In addition, notwithstanding any other provisions herein, in no event shall the Special Purchase Price be adjusted to an amount that is less than the greater of (A) the Termination Value as of July 2, 2012, (B) the estimated fair market value of the Aircraft on July 2, 2012, determined as of the Delivery Date and set forth in the opinion received from Aeroeconomics, Inc. pursuant to Section - 19 - 20 4(a)(xx) of the Participation Agreement (the "APPRAISAL"), and (C) 101% multiplied by the present value as of July 2, 2012 of (x) the remaining scheduled Basic Rent through the end of the Basic Term plus (y) 42.2% of Lessor's Cost (i.e., the fair market value of the Aircraft as of the end of the Basic Term as set forth in the Appraisal) (the present value calculation described in this clause (C) shall utilize a semi-annual compounded discount rate no lower than that utilized by the Owner Participant in determining the Special Purchase Price as of the Delivery Date, but in no event shall such discount rate be less than 11.8% per annum). Such recalculated Basic Rent, Excess Amount and Stipulated Loss Value and Termination Value percentages and the Special Purchase Price 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 Interim Rent and 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 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), 4.07 and 4.08(1) of Rev. Proc. 75-28 and with Section 467 of the Internal Revenue Code of 1986, as amended, as each is then in effect as long as the Schedule of Basic Rent was in compliance with Section 467 of the Code as in effect on the Closing Date, it being understood that, to the extent that any grandfather, effective date, or similar provisions in any regulations under Section 467 or other administrative pronouncement interpreting Section 467 promulgated or issued after the Closing - 20 - 21 Date causes such regulations or pronouncement not to be applicable to the Schedule of Basic Rent in effect on the Closing Date, such Schedule shall be deemed to be in compliance with Section 467 as in effect on the Closing Date (provided that the test of Rev. Proc. 75-28 Section 4.08(1) and Section 467 shall be applied on a prospective basis from the date of such adjustment if and to the extent permitted by applicable law, as then in effect) 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, on behalf of Lessor, as Supplemental Rent when due any amount of premium payable when due under the Trust Indenture and shall pay on behalf of Lessor amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when the same shall become due and payable. 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 Interim Rent and 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 of Utah, National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124-000-12, Account No. 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW 1996 F (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, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1996 F (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 10 Business Days prior to the date such payment of Rent is due). 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 - 21 - 22 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 the Transition Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall on the Transition Date, prepay on the Transition 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 shall, under all circumstances and whether or not an Event of Default shall be continuing on the Transition Date, pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount equal to the excess, if any, of the interest on the Secured Certificates relating to the period from and including the Delivery Date to but excluding the Transition Date over the Excess Amount payable on the Transition Date; provided, further, 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 equal to the Base Rate as in effect from time to time plus 5% per annum 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 - 22 - 23 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 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 Interim Rent or 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 of Utah, 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 that 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 - 23 - 24 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, 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 Return Site then being serviced by Lessee's 757-200 aircraft, which Return Site shall be chosen by Lessor and reasonably acceptable to Lessee (provided, that at Lessor's request, Lessee will consider in good faith a Return Site not then being serviced by Lessee's 757-200 aircraft, provided, further, that, in the case of a return to a Return Site not then being serviced by Lessee's 757-200 aircraft, Lessee is able to return the Airframe immediately following a revenue passenger flight with the Airframe to such Return Site), and Lessor will give Lessee at least ten (10) days' prior written notice of the Return Site; 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 and not due to any act or failure to act on the part of Lessee; the Airframe will be fully equipped with the Engines (or other Pratt & Whitney Model PW2037 engines or two engines of the same or another manufacturer of not less than equivalent utility, fair market sales 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 both 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 without the necessity of any further expense being incurred by Lessor, (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 - 24 - 25 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 Exhibit F. Lessor agrees to pay Lessee those amounts specified in Exhibit F to be for the cost, expense or account of Lessor. 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 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) bill 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 bill 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 bill 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 that 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) Lessee shall invoice Lessor, and 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 thirty (30) 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 - 25 - 26 facilities for the Aircraft (maintenance costs and other out-of-pocket costs other than parking fees incurred by Lessee in connection with such storage 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 that 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 Sublessee) either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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, the 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 forty-five (45) days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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 - 26 - 27 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 Boeing 757-200 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 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 or such manner as shall have been approved by the Owner Participant pursuant to Section 7(b)(x) and without in any way discriminating against the Aircraft, by reason of its leased status, including, without limitation, the termination of airworthiness directives; 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 (which records, logs and other materials, as between Lessor and Lessee and all parties claiming through Lessee, shall be the property of Lessor but shall be maintained by Lessee during the Term and shall become the property of Lessee upon Lessee's purchase of the Aircraft pursuant to the terms of this Lease or upon the occurrence of an Event of Loss and Lessee's compliance with Section 10 hereof); 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, - 27 - 28 rule, regulation or order in any reasonable manner which does not materially adversely affect Lessor or the Owner Participant 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 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 Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee 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 any 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 Permitted 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 - 28 - 29 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; (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; - 29 - 30 (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 (which, if entered into with tax-exempt entities during the Depreciation Period, may not exceed three years) 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 (the term of which, during the Depreciation Period, may not exceed three years), 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 the Owner Participant and the Indenture Trustee in their sole discretion, 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 the Sublessee under such sublease is a foreign air carrier (other than a foreign air carrier principally based and domiciled in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Sublessee is principally based and domiciled 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 domiciled and principally based in a country listed on Exhibit C to the Participation Agreement and designated therein as a "Restricted Country", Lessor and the Indenture Trustee shall have received an opinion of counsel to Lessee to the effect that (I) the terms of the proposed - 30 - 31 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 and domiciled, (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, (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 Lessor (or Lessee, as "lessee", or the proposed Sublessee, as "sublessee", as appropriate) and to the Lien of the Trustee Indenture, (V) such Sublease will not result in a risk of unindemnified Taxes to Lessor or the Owner Participant (it being agreed that in the event such opinion cannot be given in a form reasonably satisfactory to the Owner Participant, such opinion will be waived if (A) the Owner Participant has received assurances satisfactory to it to the effect that such Sublease will not result in any such risk, or (B) Lessee shall have entered into a binding agreement to indemnify in a manner satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant for such unindemnified Taxes; provided, however, that if (a) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (b) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such subleasing or (c) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee), (VI) none of the Owner Trustee, the Owner Participant or the Indenture Trustee will be required to register to do business in such country as a result of such sublease, after (A) taking into account any other contacts of the Owner Trustee and the Owner Participant with such jurisdiction (provided, that upon request by Lessee (such request having been acknowledged by the Owner Participant's general counsel), the Owner Trustee and the Owner Participant must respond - 31 - 32 within fourteen (14) Business Days after receipt of such request describing its contacts in such jurisdiction, or else such party shall be deemed for purposes of this clause (VI) to have no such contacts) and (B) assuming that the Indenture Trustee has no other contacts with such jurisdiction, and (VII) there is no tort liability for owners not in possession of aircraft in such country more onerous than under the laws of the United States or any state thereof (it being agreed that in the event such opinion cannot be given in a form reasonably satisfactory to the Owner Participant, such opinion will be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover the risk of such tort liability), 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; provided, further, that in the event the Sublessee's maintenance program for the Airframe will be a block overhaul program, a sublease entered into pursuant to this clause (x) to such Sublessee shall not extend beyond the date which is six months prior to the expiration of the Basic Term or any Renewal Term then in effect (and Lessee, if the last Sublessee was not a U.S. Air Carrier, shall upon expiration of the sublease to such Sublessee (1) incorporate the Aircraft into Lessee's approved maintenance program for aircraft of the same make and model and in active commercial service and (2) place the Aircraft into active passenger service or, in lieu thereof, upon the return of the Aircraft to Lessor pursuant to Section 5, Lessee shall comply with those return conditions that would have been applicable had Lessee adopted a block overhaul program) unless either the Owner Participant shall have previously approved in writing the maintenance procedures of the Sublessee or Lessee shall have irrevocably committed to purchase the Aircraft at, or extend the Term of this Lease by a period of at least six months from, the end of the Basic Term or such Renewal Term, as the case may be. 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 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 - 32 - 33 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 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 (A) fifteen (15) days prior to entering into any Sublease with a term of more than one (1) year, (B) five (5) Business Days prior to entering into any Sublease with a term equal to or less than one (1) year with a Permitted Sublessee and (C) five (5) days prior to entering into any Sublease with a term equal to or less than one (1) year with any proposed Sublessee other than a Permitted Sublessee, 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 of Utah, 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 - 33 - 34 (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 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 - 34 - 35 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) 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, the Owner Participant, 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 diminish the value, utility or remaining useful life of the Airframe or such Engine, or materially impair the condition or airworthiness thereof, below the value, utility, remaining useful life, condition or airworthiness 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 original cost of all Obsolete Parts which shall have been removed and not replaced shall not exceed $500,000. 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 - 35 - 36 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, remaining useful life, condition or airworthiness 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]. (2) Lessee shall have the right to elect to terminate this Lease on any Lease Period Date occurring on or after January 2, 2003 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 its best efforts to obtain bids in Dollars 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, lease or ownership 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 - 36 - 37 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 cash bid therefor (net of any brokerage commissions) 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 that 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 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 sale price of the Aircraft sold by Lessor after deducting the reasonable expenses incurred by Lessor, the Owner Participant or the Indenture Trustee 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) on behalf of Lessor, the premium and Funding Loss 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 that 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. 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 premium and Funding Loss Amount, if any, due on the Secured Certificates and, so long as - 37 - 38 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 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, if Lessee revokes its Termination Notice or, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that payment by Lessee of the amount specified in clause (3)(A) above in connection with a termination where Lessor has not elected to retain title will not constitute a preference under applicable U.S. bankruptcy laws, a Default or an Event of Default of the type referred to in Section 14(e) hereof shall exist on such Termination Date (unless, in the case of any such Default or Event of Default, Lessee has obtained an order from the applicable bankruptcy court approving the payment of any such amount), 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, the Indenture Trustee 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, in which case Lessee shall pay only the reasonable costs and expenses of the Indenture Trustee), 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, Basic Rent or any other amounts hereunder arising subsequent to such date of sale or retention shall cease to accrue, Lessee shall have no further obligation in this respect 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 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 and a Termination Notice may be given not more than once during any 365-day period. If (x) there is a sale of the Aircraft pursuant to this Section 9(c), (y) an Event of Default of the type described in Section 14(c) relating to Section 7(a) or Section 8 shall have occurred and be continuing on the date of such sale and (z) the fair market sales value of the Aircraft on the date of such sale is lower than it would have been had no such Event of Default occurred, Lessee shall pay to Lessor, in addition to any other amounts due hereunder, the amount in excess of Termination Value that Lessor would have received had no such Event of Default occurred. Lessor and Lessee shall confer in good faith with a view to reaching agreement on what the fair market sales value of the Aircraft would have been in the absence of such Event of Default. If Lessor and Lessee have not so agreed within 10 days after notice by Lessor or the Owner Participant of the occurrence of such Event of Default, the question - 38 - 39 shall be determined by an appraisal in accordance with the procedures described in Section 19(c). (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 Interim Rent or 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) the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence) (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 the Commencement Date or 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 Interim Rent or Basic Rent that would have been due on the Commencement Date or such Lease Period Date as if such Event of Loss had not occurred, or (ii) 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, 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 - 39 - 40 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. 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, if Basic Rent is payable in arrears on the date of such payment as indicated on Exhibit B hereto, Basic Rent due on such payment date, and all Supplemental Rent), under the Participation Agreement and under the Tax Indemnity Agreement, (1) Basic Rent, Supplemental Rent, Stipulated Loss Value, Termination Value or any other amount due hereunder shall cease to accrue, and Lessee shall have no further obligation in any such respect, provided, that the obligations of Lessee under the other Operative Documents which, by their express terms, are stated to survive shall not be terminated, (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 that 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 bill 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. Notwithstanding anything to the contrary contained in the foregoing, in the event that any payment of Stipulated Loss Value is to be made pursuant to this Section 10(a) on a date that is subsequent to the scheduled expiration of the Term, then Lessee shall, in addition to any other amounts payable pursuant to this Section 10(a), pay on the relevant Loss Payment Date such additional amount as is necessary to preserve the Owner Participant's Net Economic Return. Any calculation of any such additional amount shall be made by the Owner Participant and shall be subject to the verification procedures set forth in Exhibit E hereto. 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 (Lessee shall in connection therewith provide the certificate or the appraisal described in Section 5.06(4) of the Trust Indenture) 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 any airframe so substituted hereunder shall have a year of manufacture after December 31, 1994 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 bill of sale and a - 40 - 41 Federal Aviation Administration bill 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 that 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 bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft 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, (7)(x) furnish Lessor with an opinion of tax counsel chosen by the Owner Participant and reasonably acceptable to Lessee to the effect that such substitution will not result in any adverse tax consequences to the Owner Participant or (y) indemnify the Owner Participant as to such tax consequences in a manner reasonably satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (a) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB+/Baa1" or better from either S&P or Moody's so long as the rating by the other agency is not less than "BBB" or "Baa2", as the case may be, or (b) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such substitution or (c) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the - 41 - 42 Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee, and (8) 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 Interim Rent or 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 Pratt & Whitney Model PW2037 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, and Lessee shall in connection therewith provide the certificate or appraisal described in Section 5.06(2)(B)(iv) of the Trust Indenture; provided that both 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) bill 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 that 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 bill 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 - 42 - 43 "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 Interim Rent or 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) and the Owner Participant 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 to Lessor and Lessee, as their interests may appear; 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) and the Owner Participant 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 which is a Specified Country. 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any instrumentality or agency of any thereof whose obligations are backed by the full faith and credit of such government, 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, instrumentality or agency, as the case may be, prior to the end of the Term, Lessee shall be obligated to return the Airframe and such Engines or engines to Lessor - 43 - 44 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, instrumentality or agency. 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 Exhibit F) 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) bill 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 bill 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens), against receipt from Lessor of a bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 which is a Specified Country. 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government (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. (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 - 44 - 45 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 or a Default of the type referred to in Section 14(a) or 14(e) 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 or 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 any 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 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 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 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 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 - 45 - 46 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 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 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, any 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 by Lessee 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 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 - 46 - 47 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 or a Default of the type referred to in Section 14(a) or 14(e) 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 - 47 - 48 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 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) and the Owner Participant 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) and the Owner Participant 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 - 48 - 49 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). (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 by Lessee 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, 1996, a report, signed by Marsh & McLennan, Incorporated 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 - 49 - 50 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. (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. (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 or a Default of the type referred to in Section 14(a) or 14(e) 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 - 50 - 51 any such Event of Default or 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 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 unless an Event of Default shall have occurred and be continuing) 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; 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: - 51 - 52 (a) Lessee shall not have made a payment of Interim Rent, Basic Rent or Stipulated Loss Value within ten (10) 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 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 and in clauses (i)(B) and (ii) of the first sentence of second paragraph of Exhibit F) 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 one hundred eighty (180) 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 the representations and warranties in, or in connection with, the Credit Agreement) 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 - 52 - 53 (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 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 Section 14(c) or (d) hereof, 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 - 53 - 54 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, if any, 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 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 Stipulated Loss Value Date not earlier than ten days from the date of such notice, may demand that the 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 Interim Rent or Basic Rent for the Aircraft due on or after the payment date specified in such notice), any unpaid Interim Rent or Basic Rent due on the payment date so specified (unless Basic Rent is payable in advance on such date but 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 Stipulated Loss Value Date specified as the payment date in - 54 - 55 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 Stipulated Loss Value Date specified as the payment date in such notice at an annual rate equal to the Base Rate plus 3%; or (ii) an amount equal to the excess, if any, of the Stipulated Loss Value for such Aircraft, computed as of the Stipulated Loss Value Date specified as the payment date in such notice over the fair market sales value of such Aircraft (computed as hereafter in this Section provided) as of the Stipulated Loss Value 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 Interim Rent or Basic Rent for the Aircraft due on or after such date), any unpaid Interim Rent or 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 and an all cash, contemporaneous sale, 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 - 55 - 56 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 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 will endeavor 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 and any such public sale shall be conducted in general so as to afford Lessee (and any Sublessee) a commercially reasonable opportunity to bid (it being understood that Lessor shall - 56 - 57 incur no liability for its failure to provide any such notice). 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 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 at its expense 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 1997, 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 - 57 - 58 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 telecopy 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President-Finance and Treasurer (Telecopy No. (612) 726-0665), 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 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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. This Lease is a net lease. 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, - 58 - 59 (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, upon compliance with the notice provisions set forth in Section 19(e) hereof, to renew this Lease for up to three 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"). 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. At the expiration of the third Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have the option, upon compliance with the notice provisions set forth in Section 19(e) hereof, to renew this Lease for a renewal term of not less than one year and not more than three 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"). The aggregate length of all Fair Market Renewal Terms pursuant to this Section 19(a)(2) may not exceed five years. (3) If no written notice is delivered by Lessee to Lessor pursuant to Section 19(e) 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), 14(e) or 14(f) 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 - 59 - 60 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 any portion of Basic Rent during the Basic Term was payable in advance, in which case the same proportion of Basic Rent (i.e., the total Basic Rent payable during the Basic Term divided into the total Basic Rent payable in advance during the Basic Term) shall be payable in advance during such Renewal Term, 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 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 compliance with the notice provisions set forth in Section 19(e) hereof, to purchase the Aircraft on the last Business Day of the Basic Term or any Renewal Term for a purchase price equal to the fair market sales value of the Aircraft; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the purchase price by Lessee will not constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled to purchase the Aircraft if there shall exist on such last Business Day of the Basic Term or any Renewal Term, as the case may be, a Default of the type referred to in Section 14(e) hereof. 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 that 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. 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 - 60 - 61 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 this Lease, including the purchase and renewal options of 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 a notice from Lessee pursuant to Section 19(e) hereof, 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, 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 July 2 , 2012 (or, if July 2, 2012 is not a Business Day, the Business Day immediately succeeding July 2, 2012), Lessee shall have the - 61 - 62 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; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the Special Purchase Price by Lessee will not constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled to purchase the Aircraft if there shall exist on July 2, 2012 (or, if July 2, 2012 is not a Business Day, on the Business Day immediately succeeding July 2, 2012) a Default of the type referred to in Section 14(e) hereof. 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 2.15 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 that 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. (e) In order to exercise any right pursuant to Sections 19(a) or 19(b) hereof, Lessee shall, no earlier than 540 days and no later than 270 days prior to the expiration of the Basic Term or any Renewal Term, as the case may be, deliver to Lessor a notice in writing stating that it intends to exercise one of the options set forth in Sections 19(a) or 19(b) hereof. Any such notice shall be revocable until the date that is 270 days prior to the expiration of the Basic Term or such Renewal Term, as the case may be. Failure to revoke any such notice prior to such 270th day prior to the end of the Basic Term or such Renewal Term, as the case may be, shall constitute a binding and irrevocable election by Lessee to exercise one of the options set forth in Sections 19(a) or 19(b) hereof. In the event that any such notice has so been provided to Lessor, Lessee shall, no earlier than the 270th day and no later than the 90th day prior to the expiration of the Basic Term or such Renewal Term, as the case may be, specify which of the options in Sections 19(a) or 19(b) Lessee intends to elect. For the avoidance of doubt, the parties agree and acknowledge that Lessee may not specify which of the options in Sections 19(a) or 19(b) it intends to elect prior to the date that is 270 days earlier than the expiration of the Basic Term or such Renewal Term, as the case may be. 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 - 62 - 63 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 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 Moody's or AA or better by S&P and having a final maturity of ninety (90) days or less from date of purchase thereof; and (iii) commercial paper - 63 - 64 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 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 a Default of the type referred to in Section 14(a) or 14(e) or an Event of Default shall have occurred and be continuing. If a Default of the type referred to in Section 14(a) or 14(e) or an Event of Default shall have occurred and be continuing, Lessor, or if the Trust Indenture shall not have been discharged, the Indenture Trustee as assignee of Lessor, shall hold any such gain as security for the obligations of Lessee under this Lease and apply it against such obligations as and when due, and once all such Defaults and Events of Default have been remedied, any gain not so applied shall be remitted to Lessee. 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 - 64 - 65 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. 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 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. SECTION 27. HOLDOVER RENT. In the event that Lessee shall fail to return the Aircraft in accordance with Section 5 hereof at the scheduled expiration of the Term, then, unless such failure shall occur as a result of (x) the Aircraft having suffered an Event of Loss or (y) Lessee having purchased the Aircraft pursuant to Section 19 hereof and, in the case of either clauses (x) or (y) above, Lessee shall have made all payments required to be made pursuant to such Sections, Lessee shall pay to Lessor, for each such day beyond the scheduled expiration of the Term during which the Aircraft is not returned to Lessor in accordance with Section 5 hereof, an amount equal to the higher of (A) the daily fair market rental value of the Aircraft during such period, computed in accordance with Section 19(c) hereof, and (B) the average daily Basic Rent payable by Lessee during the Term. - 65 - 66 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 OF UTAH, 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: Senior Vice President-Finance and Treasurer 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 - 67 EXHIBIT A TO LEASE AGREEMENT [NW 1996 F] LEASE SUPPLEMENT NO. [NW 1996 F] LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement [NW 1996 F], dated as of May 14, 1996, 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 1996 F], dated as of May 14, 1996, relating to one Boeing 757-251 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 Boeing 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the date hereof consists of the following components: - ------------------------ (1) This language for Lease Supplement No. 1. (2) This language for other Lease Supplements. 68 (i) Airframe: FAA Registration No. ______; manufacturer's serial no. _____; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P______ and P______ (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 January 2, 2019. 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 The Boeing Company, or any subcontractor or supplier of The Boeing Company, 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 69 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 OF UTAH, 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 70 EXHIBIT B TO LEASE AGREEMENT [NW 1996 F] INTERIM RENT, 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. Interim Rent, Basic Rent and Excess Amount: Excess Amount Transition (Percentage of Date Lessor's Cost) ---- -------------- Interim Rent Commencement (Percentage of Date Lessor's Cost) ---- -------------- * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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. 71 INTERIM RENT, 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 (Percentage of Lease Period Date Lessor's Cost) ----------------- -------------- * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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 72 Lessor's Cost for the Aircraft: Special Purchase Price: Transition Date: EXHIBIT B - PAGE 3 73 EXHIBIT C TO LEASE AGREEMENT [NW 1996 F] 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 --------------- ---------------- 74 EXHIBIT D TO LEASE AGREEMENT [NW 1996 F] 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 ---- ---------- 75 EXHIBIT E TO LEASE AGREEMENT [NW 1996 F] RENT RECALCULATION 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 Amount, Special Purchase Price, 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 mutually acceptable to Lessee and 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 15 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 Amount, Special Purchase Price, 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 book yield and aggregate after-tax cash flow utilizing the multiple investment sinking fund method of analysis, computed on the basis of the same methodology, constraints 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 and maintaining periodic FASB 13 earnings at a level not less than 95% in any calendar year of the periodic FASB 13 earnings which were originally calculated in connection with the Basic Rent, Special Purchase Price, Stipulated Loss Value and Termination Value percentages as of the Delivery Date subject, however, to Section 3(d)(vi) of the Lease; provided that the periodic 76 FASB 13 earnings constraint shall be not less than 94% for calendar year 1997 with respect to the first refinancing pursuant to Section 17 of the Participation Agreement. EXHIBIT E - PAGE 2 EX-4.J5 82 FIRST AMENDMENT TO LEASE AGREEMENT-1996 F 1 FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 F] This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 F], dated as of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee under the Trust Agreement [NW 1996 F], dated as of May 14, 1996 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a certain Lease Agreement [NW 1996 F], dated as of May 14, 1996 (the "ORIGINAL LEASE"), between Lessee and Lessor (the Original Lease, as supplemented by Lease Supplement No. 1 [NW 1996 F] ("LEASE SUPPLEMENT NO. 1") between Lessor and Lessee, dated May 14, 1996, herein called the "LEASE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; WITNESSETH: WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the Aircraft, which consists of the following components: (i) Airframe: FAA Registration No. N542US; manufacturer's serial No. 26489; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P727174 and P727175; WHEREAS, Section 17 of the Participation Agreement [NW 1996 F], dated as of May 14, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee, [ ] (the "OWNER PARTICIPANT"), the loan participants named therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured Certificates issued by the Owner Trustee under the Trust Indenture and Security Agreement [NW 1996 F], dated as of May 14, 1996, between Lessor (not in its individual capacity except as expressly provided therein but as trustee) and the Indenture Trustee may be refinanced under certain circumstances; WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW 1996 F], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State Street Bank and Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines Corporation (the "GUARANTOR"); WHEREAS, Lessor and Lessee desire to recalculate the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price in order to reflect, among other things, the interest rate of the refinanced Secured Certificates; 2 WHEREAS, in connection with the recalculation of the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, Lessor and Lessee desire to amend the Lease; WHEREAS, a counterpart of the Original Lease, to which were attached and made a part thereof counterparts of Lease Supplement No. 1, the Trust Indenture and Security Agreement [NW 1996 F], dated as of May 14, 1996, and the Trust Agreement and Indenture Supplement [NW 1996 F], dated May 14, 1996, was recorded by the Federal Aviation Administration (the "FAA") on May 16, 1996, and assigned Conveyance No. I56072; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE. (a) The definitions of "Business Day", "Excess Amount", "Indemnitee", "Loan Participant", "Operative Documents", "Stipulated Loss Value", "Supplemental Rent", "Tax Indemnitee", and "Termination Value" in Section 1 of the Lease are hereby amended applicable on and after the Closing Date to read as follows: "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. "EXCESS AMOUNT" for the Closing Date or the Commencement 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 the Closing Date or the Commencement Date. "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) 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). "LOAN PARTICIPANT" means for any period prior to the Closing, the Original Loan Participants and their successors and assigns, and from and after the Closing, the Purchasers and their successors and registered assigns, including any Certificate Holder. -2- 3 "OPERATIVE DOCUMENTS" means each of the Participation Agreement, the documents referred to in Section 4(a)(v) of the Participation Agreement (including any amendments, modifications or supplements thereto), the Refunding Agreement, the Trust Indenture Amendment and the Refinancing Secured Certificates, collectively, and "Operative Document" shall mean each of the Operative Documents, individually. "STIPULATED LOSS VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v) hereof, the amount determined by multiplying Lessor's Cost 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 January 2, 2019 shall be the amount determined as provided in Section 19(a) hereof. "SUPPLEMENTAL RENT" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Interim Rent or 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 the Other Pass Through Trust Agreement, 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 and 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. "TERMINATION VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v), the amount determined by multiplying Lessor's Cost by the percentage specified in Exhibit D hereto opposite the Termination Date with -3- 4 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). (b) The following definitions are hereby inserted in Section 1 of the Lease in alphabetical order to be applicable on and after the Closing Date: "CLOSING" means the consummation of the refinancing operation contemplated by Section 1 of the Refunding Agreement. "CLOSING DATE" means the date on which the Closing shall occur. "INDEMNITY ADJUSTED PAYMENT" means any indemnity payment made pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Provider and the Subordination Agent. "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 Westdeutsche Landesbank Girozentrale, acting through its New York branch, as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider under the Liquidity Facilities, or any successor thereto. "MAKE-WHOLE AMOUNT" has the meaning assigned to that term in the Trust Indenture. "ORIGINAL LOAN PARTICIPANTS" means each institution executing the Participation Agreement as a Loan Participant. "ORIGINAL TRUST INDENTURE" means the Trust Indenture and Security Agreement [NW 1996 F], dated as of May 14, 1996, between the Owner Trustee and State Street Bank and Trust Company, as amended, modified and supplemented prior to the Closing Date. "OTHER PASS THROUGH TRUST AGREEMENT" means the pass through trust agreement and supplement pursuant to which the Class D pass through trust certificates are issued. -4- 5 "PASS THROUGH CERTIFICATES" means the pass through certificates to be issued by the Pass Through Trustee in connection with the Refinancing 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 Refunding Agreement to be entered into by and between Lessee and the Pass Through Trustee in connection with the Refinancing Transaction. "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. "PURCHASERS" means the Pass Through Trustees under each Pass Through Trust Agreement. "REFINANCING CERTIFICATE" means a certificate of an authorized representative of the Owner Participant delivered pursuant to Section 17(a)(1) of the Participation Agreement, setting forth, among other things, the Refinancing Date, the principal amount of debt to be issued by the Owner Trustee on the Refinancing Date, and the proposed revised schedules of Excess Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages, and the proposed Amortization Schedules. "REFINANCING DATE" means the proposed date on which the outstanding Secured Certificates will be redeemed and refinanced pursuant to Section 17 of the Participation Agreement. "REFINANCING EXPENSES" means the costs, fees, commissions and other expenses payable by the Owner Participant pursuant to Section 11(a) of the Refunding Agreement. "REFINANCING SECURED CERTIFICATES" means the Secured Certificates to be issued by Lessor to the Purchasers pursuant to the Trust Indenture Amendment and the Refunding Agreement on the Closing Date. "REFINANCING TRANSACTION" means a refinancing transaction pursuant to Section 17 of the Participation Agreement involving, among other things, (i) the redemption of the Secured Certificates issued on the Refinancing Date and the concurrent issuance and sale of the Refinancing Secured Certificates to the Pass Through Trustees (or their designee) and (ii) the issuance and sale of the Pass Through Certificates by the Pass Through Trustees. -5- 6 "REFUNDING AGREEMENT" means that certain Refunding Agreement [NW 1996 F], dated as of June 3, 1996, among Lessor, Lessee, the Owner Participant, the Purchasers, the Indenture Trustee, the Subordination Agent, and the Guarantor, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "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. "TRUST INDENTURE AMENDMENT" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 F], dated as of the Closing Date, 1996, between Lessor and State Street Bank and Trust Company, as Indenture Trustee. "TRUST INDENTURE ESTATE" has the meaning assigned to that term in the Trust Indenture. (c) The definitions of "Administrative Agent", "Assumed Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in Section 1 of the Lease are hereby deleted on and after the Closing Date. SECTION 2. AMENDMENT OF SECTION 3 OF THE LEASE. (a) Section 3(b) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (b) Section 3(c) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (c) Section 3(d)(i) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (i) In the event that (A) the Closing Date occurs other than on June 12, 1996, (B) Transaction Expenses paid by Lessor pursuant to Section 16 of the Participation Agreement are determined to be other than 1.0% of Lessor's Cost, or (C) Refinancing Expenses paid by Lessor or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement are determined to be other than 1.3281% of Lessor's Cost, then in each case, the Basic Rent percentages set forth in Exhibit B and the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated by the Owner Participant, on or prior to November 15, 1996 using the same methods and assumptions used to -6- 7 calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, 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. (d) Section 3(d)(ii) of the Lease is hereby amended by (i) deleting on and after the Closing Date "(A)" at the beginning thereof, (ii) on and after the Closing Date deleting the word "and" at the end of clause (A) thereof and substituting a period therefor, and (iii) deleting on and after the Closing Date clause (B) thereof in its entirety. (e) Section 3(d)(iii) of the Lease is hereby amended by deleting on and after the Closing Date the second sentence thereof. (f) The second sentence of Section 3(e) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "Lessee shall pay, on behalf of Lessor, 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 such Section 2.10(b) or Section 2.11." (g) Section 3(f) of the Lease is hereby amended by deleting on and after the Closing Date the numbers and punctuation "124-000-12" in the first sentence thereof and substituting therefor the numbers and punctuation "124-0000-12". (h) Section 3(g) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (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 the Commencement Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall, on the Commencement Date, prepay on the Commencement 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 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 -7- 8 rate per annum equal to the Base Rate as in effect from time to time plus 5% per annum 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 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 to 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 Interim Rent or 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 Make-Whole Amount, if any, due with respect to) the Secured Certificates then outstanding. (i) The following new Section 3(h) shall be added to the end of Section 3 of the Lease to be applicable on and after the Closing Date: (h) In the event that Lessee exercises its option to satisfy any indemnity obligation under the Tax Indemnity Agreement pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement, Lessee shall pay, in addition to any other payments due hereunder, (i) on each Lease Period Date, the portion of the Indemnity Adjusted Payments then due and payable on such date as set forth in an appropriate schedule to the Tax Indemnity Agreement and (ii) on the date that Stipulated Loss Value, Termination Value or the Special Purchase Price becomes due and payable, as the case may be, the Indemnity Adjusted Payment then due and payable by reference to the date as of which such Stipulated Loss Value, Termination Value or Special Purchase Price is payable as set forth in an appropriate schedule to the Tax Indemnity Agreement. -8- 9 SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE. Section 7(b)(x)(2) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the Owner Participant and the Indenture Trustee" and substituting therefor the word "Lessor", and (ii) deleting on and after the Closing Date the word "their" and substituting therefor the word "its". SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE. Section 9(c) of the Lease is hereby amended by deleting on and after the Closing Date the word "premium" each time it appears therein and substituting therefor the words "Make-Whole Amount" and by deleting on and after the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount" each time such words and such words and punctuation appear. SECTION 5. AMENDMENT OF SECTION 10(a) OF THE LEASE. Section 10(a) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier that thirty (30) days after such occurrence)" in clause (i)(y) thereof and substituting therefor the words "an earlier Business Day irrevocably specified fifteen days in advance by notice from Lessee to Lessor and the Indenture Trustee" and (ii) inserting on and after the Closing Date the words and punctuation ", which appraisal shall be from a firm of independent aircraft appraisers satisfactory to the Owner Participant," after the words "the certificate or the appraisal" in the third parenthetical phrase of clause (A) of the third paragraph thereof. SECTION 6. AMENDMENT OF SECTION 14(d) OF THE LEASE. Section 14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date the words and punctuation ", the Refunding Agreement" after the words "Participation Agreement" and (ii) adding on and after the Closing Date the words "and except for representations or warranties contained in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in the Refunding Agreement) or any document or instrument furnished pursuant to either thereof" after the word "Agreement" at the end of the first parenthetical phrase therein. SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "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: -9- 10 (i) if to Lessee, for U.S. Mail at 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President - Finance and Treasurer, (Telecopy No. (612) 726-0665), or to such other address, telex number or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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 on the signature pages of the Refunding Agreement." SECTION 8. AMENDMENT OF SECTION 19(d) OF THE LEASE. The second sentence of Section 19(d) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: 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. SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the Lease is hereby amended by (i) deleting on and after the Closing Date the word "or" between the words "Trust Agreement" and the words "the Trust Indenture" and substituting a comma therefor and (ii) inserting on and after the Closing Date the words "or the Refunding Agreement" after the words "Trust Indenture". SECTION 10. AMENDMENT OF EXHIBITS. (a) Exhibits B, C and D to the Lease attached hereto are applicable on and after the Closing Date. Exhibits B, C and D to the Lease are applicable until the Closing Date. -10- 11 (b) The parties hereto agree that Exhibits B, C and D attached hereto reflect the recalculation of Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price to take into account the interest rates borne by the Secured Certificates as of the Closing Date. SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease set forth in Sections 1 through 10 hereof shall be effective as of the date hereof. SECTION 12. RATIFICATION. Except as amended hereby, the Lease as heretofore supplemented continues and shall remain in full force and effect in all respects. SECTION 13. MISCELLANEOUS. Any provision of this Amendment 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 Amendment 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. Nothing contained herein shall be construed as conveying to Lessee any right, title or interest in the Aircraft except as a lessee. The section and paragraph headings in this Amendment 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 Amendment. THIS AMENDMENT 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 Amendment 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. To the extent, if any, that this Amendment 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 Amendment 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 as mortgagee under the Trust Indenture on the signature page thereof. -11- 12 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment to be duly executed on the day and year first above written. FIRST SECURITY BANK OF UTAH, 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: (1) Receipt of this original counterpart of the foregoing Amendment is hereby acknowledged this _____ day of ______________, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: ____________________________________ Title: ____________ (1) This language contained in the original counterpart only. EX-4.J6 83 GUARANTEE - 1996 F 1 GUARANTEE [NW 1996 F] This GUARANTEE [NW 1996 F], dated as of May 14, 1996 (as amended, modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I hereto (collectively, together with their successors and permitted assigns, the "PARTIES", and, individually, a "PARTY"). WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to enter into a Lease Agreement [NW 1996 F], dated as of the date hereof (as amended, modified or supplemented from time to time, the "LEASE"), between the Lessee and First Security Bank of Utah, National Association, not in its individual capacity but solely as Owner Trustee (as defined therein), except as expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing 757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines (such aircraft and engines, and any substitute Airframe and Engines under the Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation Agreement [NW 1996 F], dated as of the date hereof (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), among the Lessee and the Parties; and WHEREAS, it is a condition precedent to the obligations of the Parties to consummate the transactions contemplated by the Participation Agreement that the Guarantor execute and deliver this Guarantee; and WHEREAS, the Lessor will assign by way of collateral security certain of its right, title and interest in and to this Guarantee to the Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and Security Agreement [NW 1996 F], dated as of the date hereof, between the Lessor and the Indenture Trustee (as amended, modified or supplemented from time to time, the "TRUST INDENTURE"), as security for the obligations of the Lessor referred to therein; and WHEREAS, the capitalized terms used herein that are not defined herein are used herein as defined in the Lease; NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and to induce the other Parties referred to above to enter into the Participation Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. GUARANTEE. (a) The Guarantor does hereby acknowledge that it is fully aware of the terms and conditions of the Lease, the Participation Agreement and the other Operative 2 Documents and the transactions and the other documents contemplated thereby, and does hereby irrevocably and fully and unconditionally guarantee, as primary obligor and not as surety merely, to the Parties, as their respective interests may appear, the payment by the Lessee of all payment obligations when due under the Lease (including, without limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement and the other Operative Documents to which the Lessee is a party (such obligations of the Lessee guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative Documents, and the timely performance of all other obligations of the Lessee thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby agree that in the event that the Lessee fails to pay any Financial Obligation when due for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within five days after the date on which such Financial Obligation became due and payable and the applicable grace period has expired, the Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Financial Obligation was not paid when due and for five days after the applicable grace period has expired, the amount of such Financial Obligation. The Guarantor hereby agrees that in the event the Lessee fails to perform any Nonfinancial Obligation for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within 10 Business Days after the date on which such Nonfinancial Obligation is required to be performed (for avoidance of doubt, to include any applicable grace period), the Guarantor shall cause such Nonfinancial Obligation to be performed within 10 Business Days following the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Nonfinancial Obligation was not performed when so required and that any applicable grace period has expired. (b) The obligations of the Guarantor hereunder shall not be, to the fullest extent permitted by law, affected by: the genuineness, validity, regularity or enforceability (or lack thereof) of any of the Lessee's obligations under the Lease or any other Operative Document to which the Lessee is a party, any amendment, waiver or other modification of the Lease or such other Operative Document (except that any such amendment or other modification in writing shall be given effect in determining the obligations of the Guarantor hereunder), or by any substitution, release or exchange of collateral for or other guaranty of any of the Obligations (except to the extent that such substitution, release or exchange is - 2 - 3 undertaken in accordance with the terms of the Operative Documents) without the consent of the Guarantor, or by any priority or preference to which any other obligations of the Lessee may be entitled over the Lessee's obligations under the Lease and the other Operative Documents to which the Lessee is a party, or by any other circumstance that might otherwise constitute a legal or equitable defense to or discharge of the obligations of a surety or guarantor including, without limitation, any defense arising out of any laws of the United States of America or any State thereof which would excuse, discharge, exempt, modify or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not, to the fullest extent permitted by law, affect the liability of the Guarantor hereunder: (a) the extension of the time for or waiver of, at any time or from time to time, without notice to the Guarantor, the Lessee's performance of or compliance with any of its obligations under the Operative Documents (except that such extension or waiver in writing shall be given effect in determining the obligations of the Guarantor hereunder)), (b) any assignment, transfer, sublease or other arrangement by which the Lessee transfers possession or loses control of the use of the Aircraft, (c) any defect in the title, condition, design, operation or fitness for use of, or damage to or loss or destruction of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or with any other Person, or any sale, transfer, lease or disposal of any of its assets or (e) any change in the ownership of any shares of capital stock of the Lessee. (c) This Guarantee is an absolute, present and continuing guaranty of payment and performance and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Lessee any unpaid amounts due or otherwise to enforce performance by the Lessee. The Guarantor specifically agrees, to the fullest extent permitted by law, that it shall not be necessary or required, and that the Guarantor shall not be entitled to require, that any Party (i) file suit or proceed to obtain or assert a claim for personal judgment against the Lessee for the Obligations, or (ii) make any effort at collection of the Obligations from the Lessee, or (iii) foreclose against or seek to realize upon any security now or hereafter existing for the Obligations, including the Trust Estate or the Trust Indenture Estate (as such term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations, or make any effort at collection of the Obligations from any such other Person, or exercise or assert any other right or remedy to which any Party is or may be entitled in connection with the Obligations or any security or other guaranty therefor, or (v) assert or file any claim against the assets of the Lessee or any other guarantor or other Person liable for the Obligations, or any part thereof, before or as a condition of enforcing the liability of the Guarantor under this Guarantee or requiring payment of said Obligations by the Guarantor hereunder, or at any time thereafter. (d) The Guarantor agrees, to the fullest extent permitted by law, that, without limiting the generality of this Guarantee, if an Event of Default shall have occurred and be continuing and the Lessor (or any assignee thereof including, without limitation, the Indenture Trustee) shall be prevented by applicable law from exercising its remedies (or any of - 3 - 4 them) under Section 15 of the Lease, the Lessor (or any assignee thereof, including, without limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive hereunder from the Guarantor, upon demand therefor the sums that would otherwise have been due from the Lessee under the Lease had such remedies been able to be exercised. The Guarantor hereby unconditionally waives, to the fullest extent permitted by law, any requirement that, as a condition precedent to the enforcement of the obligations of the Guarantor hereunder, the Lessee or all or any one or more of any other guarantors of any of the Obligations be joined as parties to any proceedings for the enforcement of any provision of this Guarantee. 2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be deemed to create any right in any Person except a Party and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person. 3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives notice of the acceptance of this Guarantee and of the performance or nonperformance by the Lessee, demand for payment from the Lessee or any other Person, notice of nonpayment or failure to perform on the part of the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent permitted by law, all other demands or notices whatsoever, other than the request for payment hereunder and notice provided for in Section 1 hereof. The obligations of the Guarantor shall be absolute and unconditional and shall remain in full force and effect until satisfaction of all Obligations hereunder and, without limiting the generality of the foregoing, to the extent not prohibited by applicable law, shall not be released, discharged or otherwise affected by the existence of any claims, set-off, defense or other rights that the Guarantor may have at any time and from time to time against any Party, whether in connection herewith or any unrelated transactions. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Financial Obligation is rescinded or must otherwise be returned by any Party upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding with respect to the Lessee or otherwise, all as though such payment had not been made. The Guarantor, by virtue of any payment or performance hereunder to a Party, shall be subrogated to such Party's claim against the Lessee or any other Person relating thereto; provided, however, that the Guarantor shall not be entitled to receive payment from the Lessee in respect of any claim against the Lessee arising from a payment by the Guarantor: (a) while an Event of Default shall have occurred and be continuing, in which case no such payment in respect of such a claim by the Guarantor may be made by the Lessee; or (b) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings relating to the Lessee, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Lessee, whether or not involving insolvency or bankruptcy proceedings, in which case the Obligations shall be paid and performed in full before any payment in respect of a claim by the Guarantor shall be made by or on behalf of the Lessee. - 4 - 5 4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or waiver or modification of, or consent under, the terms hereof, shall be effective unless evidenced by an instrument in writing signed by the Guarantor and each Party against whom such amendment, supplement, waiver, modification or consent is to be enforced. 5. PAYMENTS. All payments by the Guarantor hereunder in respect of any Obligation shall be made in Dollars and otherwise as provided in the Lease, the Participation Agreement or any other Operative Document in which such Obligation is contained; provided that the Guarantor consents to all the terms of the Trust Indenture and agrees to make all payments hereunder directly to the Indenture Trustee until such time as the Indenture Trustee shall give notice to the Guarantor that the Lien of the Trust Indenture has been fully discharged and thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay directly to the Lessor, in its individual capacity, or to the Owner Participant or another Party, as the case may be, any amount owing to such Person as Supplemental Rent for indemnities provided in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or otherwise not constituting part of the Trust Indenture Estate (as such term is defined in the Trust Indenture). 6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust Indenture, the Lessor will assign, and create a security interest in, certain of its rights hereunder to and for the benefit of the Indenture Trustee. From and after the execution and delivery of the Trust Indenture, and until receipt by the Guarantor of a written notice from the Indenture Trustee to the effect that the Trust Indenture has been fully satisfied and discharged, no remedy or election hereunder may be exercised by the Lessor or consent given by the Lessor, except by or with the prior written consent of the Indenture Trustee, and the Guarantor will make payment of all amounts hereunder that are assigned to the Indenture Trustee directly to the Indenture Trustee, and such payments shall discharge the obligations of the Guarantor to the Lessor to the extent of such payments. 7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Parties as follows: (a) It is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware. It has all requisite corporate power and authority to own and operate its properties, to carry on its business as presently conducted and to enter into and perform its obligations under this Guarantee. (b) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with or the taking of any other action in respect of, any Federal, state, municipal or other governmental department, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, is now, or under existing law in the future will be, required or necessary on its behalf to authorize the execution, delivery and performance (other than as contemplated by the Operative Documents in the case of the - 5 - 6 performance of the Non-Financial Obligations) by it of this Guarantee, or for the legality, validity, binding effect or enforceability hereof. (c) Neither the execution and delivery of this Guarantee, the performance of its obligations hereunder, nor its consummation of the transactions contemplated hereby, will conflict with or result in any breach of, or constitute a default under, or result in any creation or imposition of any Lien upon any of its property or assets under, any applicable laws or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject, or its Articles of Incorporation or by-laws. (d) The execution, delivery and performance by it of this Guarantee have been duly authorized by all necessary corporate action. This Guarantee has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 8. JURISDICTIONAL MATTERS. The Guarantor (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 Guarantee brought by any party, 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 Guarantee may not be enforced in or by such courts. The Guarantor hereby generally consents to service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of the Guarantor in New York City as from time to time may be designated by the Guarantor in writing to the Parties. 9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Parties, with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and (c) shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of, and shall be enforceable by, each of the Parties to the fullest extent permitted by applicable laws. The headings in this Guarantee are for purposes of reference only, and shall not limit or otherwise affect the meanings hereof. - 6 - 7 10. NOTICES. All requests, notices or other communications hereunder shall be in writing, addressed as follows: If to the Guarantor: Northwest Airlines Corporation for U.S. Mail: 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 for Overnight courier: 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President -- Finance and Treasurer Telecopy No.: (612) 726-0665 If to a Party: to the address or telecopy number set forth in the Participation Agreement All requests, notices or other communications shall be given in the manner, and shall be effective at the times and under the terms, set forth in Section 13(b) of the Participation Agreement. 11. NO WAIVERS. No failure on the part of any Party to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder or under the Lease, the Participation Agreement or the other Operative Documents, and any other agreement or instrument relating thereto will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise of such right or remedy or the exercise of any other right or remedy or under the Lease, the Participation Agreement or the other Operative Documents, and any other agreement or instrument relating thereto. 12. SURVIVAL. All representations and warranties contained herein or made in writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee regardless of any investigation made by any Party or any other Person. 13. SEVERABILITY. To the fullest extent permitted by applicable law, any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or any provision in any other Operative Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. - 7 - 8 14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES 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 GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK. 15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by such Party in enforcing, or collecting under, this Guarantee. 16. TERMINATION. Subject to the provisions of Section 3 hereof, this Guarantee shall terminate upon the indefeasible payment and performance in full of all of the Obligations. 17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to the Obligations described in Section 1 and nothing in this Guarantee shall be deemed to constitute a guarantee of payment of any of the Secured Certificates or shall give rise to any inference that the Lessee or the Guarantor has so guaranteed such payment. - 8 - 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed as of the date first hereinabove set forth. NORTHWEST AIRLINES CORPORATION By: ------------------------------------ Name: Joseph E. Francht, Jr. Title: Senior Vice President-Finance and Treasurer Accepted as of the above date: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION in its individual capacity and as Owner Trustee By: -------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY in its individual capacity and as Indenture Trustee By: -------------------------------- Name: Title: - 9 - 10 SCHEDULE I TO GUARANTEE [NW 1996 F] PARTIES First Security Bank of Utah, National Association, in its individual capacity and as Owner Trustee State Street Bank and Trust Company, as Indenture Trustee [Owner Participant] [Bridge Lenders] EX-4.J7 84 PARTICIPATION AGREEMENT-1996 F 1 PARTICIPATION AGREEMENT [NW 1996 F] THIS PARTICIPATION AGREEMENT [NW 1996 F] dated as of May 14, 1996, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of the State of Minnesota (herein called "LESSEE"), (ii) the institution listed on Schedule I hereto and identified therein as the "OWNER PARTICIPANT" which executes and delivers a counterpart of this Agreement and of the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date referred to below, (iii) the institutions listed on Schedule I and identified therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, 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"), and (v) State Street Bank and Trust Company, a Massachusetts trust company, in its individual capacity and as Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein, in such latter capacity together with any successor indenture trustee, called the "INDENTURE TRUSTEE"); W I T N E S S E T H: WHEREAS, pursuant to the Purchase Agreement (as such term is defined in the Lease hereinafter referred to) between Lessee and the Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things, certain Boeing 757-251 aircraft, including the Aircraft which has been delivered by the Manufacturer to Lessee and is the subject of this Agreement; WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Lessee and the Owner Trustee are entering into a Purchase Agreement Assignment [NW 1996 F], dated as of the date hereof (herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to the Owner Trustee certain rights and interests of Lessee under the Purchase Agreement with respect to the Aircraft; and (ii) the Manufacturer has executed the Consent and Agreement [NW 1996 F] (herein called the "CONSENT AND AGREEMENT"), substantially in the form attached to the Purchase Agreement Assignment (herein called the "CONSENT AND AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996 F], 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 2 Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE") for the use and benefit of the Owner Participant; WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with the execution and delivery of this Agreement are entering into the Trust Indenture and Security Agreement [NW 1996 F], 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 issues to each of the Loan Participants one or more secured certificates (herein called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan Participants arising from the Loan Participants' making secured loans to the Owner Trustee to finance a portion of the Owner Trustee's purchase of the Aircraft, which Secured Certificates are to be secured by the mortgage and security interests created by the Owner Trustee in favor of the Indenture Trustee, and 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; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1996 F], dated as of the date hereof (such Lease Agreement, as the same may be amended or supplemented from time to time to the extent permitted by the terms thereof and this Agreement, herein called the "LEASE", such term to include, unless the context otherwise requires, the Lease Supplement referred to below), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft is sold and delivered by Lessee to the Owner Trustee under the Bill 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; WHEREAS, certain terms are used herein as defined in Section 13(a) hereof; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and conditions of this Agreement, each Loan Participant agrees to finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule II opposite the name of such Loan Participant. Each Loan Participant shall make such Loan to the Owner Trustee on a date to be designated pursuant to Section 2 hereof, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not -2- 3 later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite such Loan Participant's name in Schedule II hereto. Upon the occurrence of the above transfers by the Loan Participants to the Owner Trustee, to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon, the Owner Trustee shall issue and the Indenture Trustee shall authenticate Secured Certificates which shall be delivered simultaneously to the Loan Participants under the Trust Indenture to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon. The Owner Trustee agrees to pay the Secured Certificates in installments in the amounts and on the dates provided in the Trust Indenture together with interest thereon and all other amounts payable with respect thereto, all as more fully provided in the Trust Indenture. (b) Participation by Owner Participant. Subject to the terms and conditions of this Agreement, the Owner Participant hereby agrees to participate in the payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft on a date to be designated pursuant to Section 2 hereof, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite the Owner Participant's name in Schedule II hereto. (c) General Provisions. The amount of the participation of each of the Loan Participants and the Owner Participant to be made as provided above in the payment of Lessor's Cost for the Aircraft is hereinafter called such party's "COMMITMENT" for the Aircraft. In case any of the Loan Participants or the Owner Participant shall default in its obligation under the provisions of this Section 1, no other such party shall have any obligation to make any portion of such defaulted amount available or to increase the amount of its Commitment and the obligation of such nondefaulting party shall remain subject to the terms and conditions set forth in this Agreement. Upon receipt by the Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant to this Section 1 and the satisfaction of the conditions set forth in Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take title to and accept delivery of the Aircraft. In consideration of the transfer of title to and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall, simultaneously with such transfer of title and delivery, pay to Lessee from the amounts so furnished it by the Participants, the Lessor's Cost. (d) Determination of Interest Period. The length of each Interest Period shall be determined by Lessee on behalf of the Owner Trustee in accordance with Section 2.02 of the Trust Indenture. SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each Participant, the Owner Trustee and the Indenture Trustee at least two Business Days' telecopy -3- 4 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 and the amount of each Participant's Commitment for the Aircraft. As to each Participant, the making of its Commitment for the Aircraft available in the manner required by Section 1 shall constitute a waiver of such notice. SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant agrees that its releasing the amount of its Commitment for the Aircraft to the account of the Owner Trustee in accordance with the terms of Section 1 shall constitute, subject to satisfaction or waiver of the conditions set forth in Section 4(a), without further act, authorization and direction by the Owner Participant to the Owner Trustee: (i) to pay to Lessee the Lessor's Cost for the Aircraft; (ii) to the extent not previously accomplished by a prior authorization, to authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees, or an agent or agents, of Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant to the Acceptance Certificate; (iii) to accept from Lessee the Bill of Sale and the FAA Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9); (iv) to execute an Aircraft Registration Application, the Lease Supplement and the Trust Supplement, in each case covering the Aircraft; (v) to borrow from the Loan Participants to finance a portion of the Lessor's Cost for the Aircraft and to issue to the Loan Participants Secured Certificates in aggregate principal amount equal to the amount borrowed, pursuant hereto and to the Trust Indenture; and (vi) to take such other action as may be required to be taken by the Owner Trustee on the Delivery Date by the terms of any Operative Document. SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations in the Aircraft. It is agreed that the obligations of each of the Loan Participants and the Owner Participant to participate in the payment of Lessor's Cost and to make available the amount of its respective Commitment are subject to the satisfaction prior to or on the Delivery Date of the following conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it relates to representations and warranties only contained in the Tax Indemnity Agreement), (xx), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and (xxvii) shall not be a condition precedent to the obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a condition precedent to the obligations of the Owner Participant: -4- 5 (i) The Loan Participants 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 applicable law or regulations or guidelines or interpretations thereof by appropriate regulatory authorities shall be in effect which, in the opinion of such Loan Participant or the Owner Participant, as the case may be, or their respective counsel, would make it a violation of law or regulations or guidelines for such Loan Participant or the Owner Participant to make its Commitment available in accordance with Section 1 hereof or, in the case of such Loan Participant, to acquire a Secured Certificate or to realize the benefits of the security afforded by the Trust Indenture. (iii) In the case of the Owner Participant, the Loan Participants shall have made available the amount of their Commitments for the Aircraft in accordance with Section 1 hereof. (iv) In the case of the Loan Participants, 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 Documentation Agent and the Owner Participant and shall be in full force and effect and executed counterparts shall have been delivered to the Loan Participants and the Owner Participant, or their respective counsel, provided that only each Loan Participant shall receive an executed original of its respective Secured Certificate and provided, further, that an excerpted copy of the Purchase Agreement shall only be delivered to and retained by the Owner Trustee and the Owner Participant (but the Indenture Trustee shall also retain an excerpted copy of the Purchase Agreement which may be inspected by the Documentation Agent and its counsel before the Delivery Date and subsequent to the Delivery Date may be inspected and reviewed by the Indenture Trustee, any Loan Participant and their respective counsel if and only if there shall occur and be continuing an Event of Default), 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 shall only be delivered to Lessee and the Owner Participant and their respective counsel: (1) an excerpted copy of the Purchase Agreement (insofar as it relates to the Aircraft); (2) the Purchase Agreement Assignment; (3) the Lease; -5- 6 (4) a Lease Supplement covering the Aircraft dated the Delivery Date; (5) the Tax Indemnity Agreement; (6) the Trust Agreement; (7) a Trust Supplement covering the Aircraft dated the Delivery Date; (8) the Bill of Sale; (9) the FAA Bill of Sale; (10) an acceptance certificate covering the Aircraft in the form agreed to by the Documentation Agent, 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; (12) the Secured Certificates; (13) the Consent and Agreement; (14) the Guarantee; and (15) the Owner Participant Guaranty. All of the foregoing documents, together with this Agreement, are sometimes referred to herein, collectively, as the "OPERATIVE DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT". (vi) A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the Granting Clause of the Trust Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Owner 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 Owner Participant or the Documentation Agent shall have been executed and delivered by Lessee or the Owner Trustee and duly filed. (vii) The Loan Participants and the Owner Participant shall have received the following, in each case in form and substance satisfactory to the Documentation Agent and the Owner Participant: -6- 7 (1) a certified copy of the Certificate of Incorporation and By-Laws of Lessee and a copy of resolutions of the board of directors of Lessee, certified by a Vice President, the Secretary or an Assistant Secretary of Lessee, duly authorizing the sale of the Aircraft and the lease by Lessee of the Aircraft under the Lease and the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the Purchase Agreement Assignment, the Tax Indemnity Agreement and each other document required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof, and a certified copy of the Certificate of Incorporation and By-Laws of the Guarantor and a copy of resolutions of the Board of Directors of the Guarantor, certified by a Vice President, the Secretary or an Assistant Secretary of the Guarantor, duly authorizing the execution, delivery and performance by the Guarantor of the Guarantee; (2) such other documents and evidence with respect to Lessee, the Guarantor, the Manufacturer, the Owner Trustee, the Owner Participant, the Owner Participant Guarantor, the Indenture Trustee, and the Loan Participants as the Loan Participants or the Owner Participant, or the respective counsel for the Loan Participants or the Owner Participant, may reasonably request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; and (3) a certificate of Lessee as to the person or persons authorized to execute and deliver this Agreement, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft and any other documents to be executed on behalf of Lessee in connection with the transactions contemplated hereby and as to the signatures of such person or persons, and a certificate of the Guarantor as to the person or persons authorized to execute and deliver the Guarantee and as to the signatures of such person or persons. (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 following statements shall be true, and the Documentation Agent and the Owner Participant shall have received evidence satisfactory to it to the effect that: -7- 8 (1) the Owner Trustee has good title (subject to filing and recording the FAA Bill of Sale with the Federal Aviation Administration) to the Aircraft on such Delivery Date, free and clear of Liens other than the rights of Lessee under the Lease and Lease Supplement covering the Aircraft, the mortgage and security interests created by the Trust Indenture, the rights of the Owner Participant under the Trust Agreement and the Trust Supplement, and Liens permitted by clause (v) of Section 6 of the Lease; (2) the Aircraft has been duly certified by the Federal Aviation Administration (or there shall have been received adequate assurances from the Federal Aviation Administration that the certification will be issued as soon as the registration of the Aircraft is complete) as to type and airworthiness in accordance with the terms of the Lease; (3) the FAA Bill of Sale, the Lease, the Lease Supplement, the Trust Indenture and the Trust Supplement covering the Aircraft shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the Federal Aviation Administration, and the Trust Agreement shall have been filed (or shall be in the process of being so filed) with the Federal Aviation Administration; and (4) application for registration of the Aircraft in the name of the Owner Trustee has been duly made with the Federal Aviation Administration. (x) On the Delivery Date, (A) the representations and warranties of Lessee, the Owner Participant and the Owner Trustee contained in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing, or would result from the purchase, sale, lease or mortgage of the Aircraft, which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default. (xi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for Lessee and the Guarantor, as to New York and certain federal law matters, and Lessee's and the Guarantor's in-house or other counsel, as to Minnesota and certain federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota and has the corporate power and authority to carry on its business as now conducted and to enter into and -8- 9 perform its obligations under the Lessee Documents. Lessee is a Certificated Air Carrier. The Guarantor is a corporation duly organized and validly existing pursuant to the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under the Guarantee; (2) the execution, delivery and performance of the Lessee Documents by Lessee and of the Guarantee by the Guarantor have been duly authorized by all necessary corporate action on the part of Lessee and the Guarantor, as the case may be, do not require any approval of stockholders of Lessee or the Guarantor, as the case may be, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of Lessee or the Guarantor, as the case may be (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of any thereof by Lessee or the Guarantor, as the case may be, nor the performance by Lessee or the Guarantor, as the case may be, of its respective obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on Lessee or the Guarantor, as the case may be, or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Permitted Liens) upon any property of Lessee or the Guarantor, as the case may be, under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter, by-law or permit issued by any Minnesota or United States governmental authority to which Lessee or the Guarantor, as the case may be, is a party or by which Lessee or the Guarantor, as the case may be, or its properties may be bound or affected; (3) neither the execution and delivery by Lessee of the Lessee Documents or by the Guarantor of the Guarantee nor the performance by Lessee or the Guarantor of their respective 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, except for (A) the registration of the Aircraft (including the placement on board of the owner's copy of the application for registration of the Aircraft and, if necessary, a flying time wire), recordations and other actions referred to in paragraph 5 below and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents or the Guarantee after the Delivery Date; (4) the Guarantee has been duly entered into and delivered by the Guarantor, the Purchase Agreement (insofar as it relates to the Aircraft) has been duly entered into and delivered by Lessee, and each of the other Lessee Documents has been duly entered into and delivered by Lessee and each of such -9- 10 other Lessee Documents and the Guarantee constitutes 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 its respective terms, except as limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally, (C) applicable laws which may affect the remedies provided in the Lease, which laws, however, do not in the opinion of such counsel make the remedies provided in the Lease inadequate for the practical realization of the benefits provided thereby, but no opinion is expressed as to the amount or priority of any recovery under any particular circumstances and, in particular, no opinion is expressed as to the effect on such remedies of Section 1-201(37) of the Uniform Commercial Code, as in effect in any jurisdiction, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations; (5) subject to the registration of the Aircraft with the Federal Aviation Administration in the name of the Owner Trustee, and assuming the due and timely filing for recordation in accordance with the provisions of the Federal Aviation Act of (A) the FAA Bill of Sale, (B) the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and made a part thereof and (C) the Trust Indenture with the Trust Supplement attached thereto and made a part thereof, with respect to such portion of the Aircraft as is covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code by virtue of the same constituting an "aircraft" or an "aircraft engine" as defined in the Federal Aviation Act, no further filing or recording of any document (including any financing statement with respect to the Lease under Article 9 of the Uniform Commercial Code of Minnesota or Utah), is necessary in any applicable jurisdiction within the United States in order (x) to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee or any third parties or (y) to create and perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee or any third parties. With respect to such portion of the Aircraft, if any, as may not be deemed to constitute an "aircraft" or "aircraft engine" as defined in the Federal Aviation Act, except for the filing of financing statements in appropriate filing offices in the States of Minnesota and Utah and such other states as may be specified in such counsel's opinion, and for the filings of periodic continuation statements with respect to such filings as and when required, (x) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary under Article 9 of the Uniform Commercial Code in order to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee and any third parties in any applicable jurisdiction within the United States, and (y) under the federal laws of the United States and -10- 11 the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary or advisable under Article 9 of the Uniform Commercial Code in order to create or perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee and any third parties in any applicable jurisdiction within the United States; and (6) there are no legal or governmental proceedings pending or, to the best knowledge of such in-house counsel, threatened to which Lessee or Guarantor or any of their respective subsidiaries is a party or to which any of the properties of Lessee or Guarantor or any of their respective subsidiaries is subject other than those proceedings summarized in the Guarantor's publicly filed annual, quarterly and other reports filed with the Securities and Exchange Commission, and proceedings which such in-house counsel believes would not reasonably be expected to have a material adverse effect on Lessee and its subsidiaries, taken as a whole, or on the power or ability of Lessee to perform its obligations under the Lessee Documents. The opinion contemplated by this paragraph (xi) shall be to such further effect with respect to such other matters as the Documentation Agent or the Owner Participant may reasonably request. Such opinion with respect to the matters specified in this paragraph (xi) may rely exclusively (A) upon the opinion of special counsel in Oklahoma City, Oklahoma, referred to in paragraph (xv) of this Section 4(a) with respect to the matters stated therein, and (B) upon the opinion of Ray, Quinney & Nebeker with respect to the opinion in paragraph (5) above insofar as it relates to the laws of the State of Utah and (C) upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, with respect to matters of fact, and may state that no opinion is expressed as to laws other than laws of the State of New York (in the case of such special counsel's opinion), the State of Minnesota and the Delaware General Corporation Law (in the case of Lessee's in-house or other counsel's opinion) and the Federal laws of the United States. Such counsel may assume that, except for the filings and recordations contemplated herein, there are no filings or recordations with respect to the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement or the Trust Indenture with the Federal Aviation Administration, or of Uniform Commercial Code financing statements naming the Owner Trustee as a debtor in the filing offices of the Secretary of State of Minnesota, the Secretary of State of Utah or in any other filing office in the States of Minnesota or Utah, or in such other filing offices in such other jurisdictions as shall be identified in such counsel's opinion. (xii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from a counsel to the Manufacturer, with respect to the -11- 12 Manufacturer Documents and such other matters as such parties may reasonably request. (xiii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, to the effect that: (1) First Security Bank of Utah, National Association is a national banking association duly organized, validly existing and in good standing under the laws of the United States, is a Citizen of the United States and has under the laws of the State of Utah and federal banking law the power, authority and legal right to execute, deliver and carry out in its capacity as Owner Trustee or in its individual capacity, as the case may be, the terms of the Owner Trustee Documents, including the Secured Certificates; (2) each of the Owner Trustee Documents has been duly authorized, executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, and each of the Owner Trustee Documents constitutes the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations, and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (3) the execution, delivery and performance by the Owner Trustee and by First Security Bank of Utah, National Association, in its individual capacity, or both, as the case may be, of the Owner Trustee Documents and the consummation of the transactions by the Owner Trustee and by First Security Bank of Utah, National Association in its individual capacity contemplated thereby are not and will not be in violation of the articles of association or By-Laws of First Security Bank of Utah, National Association or of any indenture, mortgage, credit agreement, license or other agreement or instrument known to -12- 13 such counsel after due inquiry to which First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee is a party or by which it is bound, or of any Federal or Utah law, governmental rule or regulation applicable to First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee or any judgment or order applicable to it and known to such counsel after due inquiry; (4) neither the execution and delivery by the Owner Trustee and, where appropriate, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, of the Owner Trustee's Documents nor the consummation of any of the transactions by the Owner Trustee, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing Federal law governing the banking and trust powers of First Security Bank of Utah, National Association or Utah law (except for filings pursuant to the Uniform Commercial Code, and except for compliance with requirements of the Federal Aviation Act as to which such counsel may express no opinion); (5) the Trust Agreement, as supplemented by the Trust Supplement, duly creates for the benefit of the Owner Participant the trust interest in the Trust Estate which the Trust Agreement by its terms purports to create; (6) assuming that Utah law were to govern the perfection of the security interests in the Trust Indenture Estate under the Trust Indenture, except for (i) the Indenture Trustee's taking of possession of the original counterparts of the Lease and the Lease Supplement covering the Aircraft (insofar as the Lease and the Lease Supplement covering the Aircraft may constitute chattel paper (as such term is defined in the Uniform Commercial Code as in effect in Utah)) and all monies and securities (including instruments) required to be deposited with the Indenture Trustee, and (ii) the filing of Uniform Commercial Code financing statements with the office of the Division of Corporations and Commercial Code of the State of Utah with respect to the security interests created in the Trust Indenture Estate under the Trust Indenture, naming the Owner Trustee as debtor and the Indenture Trustee as secured party, which filing has been duly effected, no other filing or recording or refiling or rerecording is necessary in the State of Utah to create, perfect or maintain the perfected status of such security interest (except for the timely filing of continuation statements in respect of such financing statements); (7) assuming that the Operative Documents were negotiated to a substantial degree in the State of New York and that the closing of a substantial portion of the transactions contemplated by the Operative Documents occurred -13- 14 in the State of New York, the choice of New York law to govern the Participation Agreement, the Lease, and each other Operative Document (other than the Trust Agreement) to which the Owner Trustee or First Security Bank of Utah, National Association in its individual capacity, or both, is a party is, under the laws of the State of Utah, a valid choice of law and should, in a properly presented case, be honored by the courts of the State of Utah; (8) the Owner Trustee has received from Lessee such title to the Aircraft as Lessee had immediately prior to the conveyance to the Owner Trustee, subject to the rights of the Owner Trustee and Lessee under the Lease and the security interest created pursuant to the Trust Indenture and the Trust Supplement; (9) no taxes, fees or other charges, except taxes imposed on fees payable to the Owner Trustee, will be imposed by Salt Lake City or the State of Utah or any political subdivision or taxing authority thereof on or with respect to the execution, delivery or performance of any of the Operative Documents and the trust created pursuant to the Trust Agreement will not be subject to any such taxes, fees or other charges on, based on or measured by the net income of the Trust Estate (as distinguished from the net income of the Owner Participant) solely by reason of the Owner Trustee's location in Salt Lake City or the State of Utah (assuming for purposes of this opinion that the Owner Participant, the Owner Trustee and the Trust Estate would not be subject to any such tax, fee or other charge if the Owner Trustee performed its duties under the Trust Agreement and the Trust Indenture from an office located outside Utah); and (10) there are no pending or, to the knowledge of such counsel after due inquiry, threatened proceedings against or affecting the Owner Trustee before any court or administrative agency, individually or in the aggregate, which, if determined adversely to it, would materially adversely affect the power or ability of the Owner Trustee to perform its obligations under the Owner Trustee Documents. Such opinion shall be to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Indenture Trustee or Lessee may reasonably request. Such opinion may state that (A) no opinion is expressed as to laws other than the laws of the State of Utah, the Federal laws of the United States governing the banking and trust powers of First Security Bank of Utah, National Association, and the Federal Aviation Act as it relates to paragraph (1) and (B) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. Such opinion may assume (M) the due authentication of the Secured Certificates by the Indenture Trustee, (N) that the Operative Documents (other than the Trust Agreement) are legal, valid and binding under the laws of the State of New York and (O) the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and of the other Operative -14- 15 Documents by each of the parties thereto other than First Security Bank of Utah, National Association in its individual capacity and as the Owner Trustee. (xiv) The Loan Participants shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Trustee and Lessee, from Dewey Ballantine, special counsel for the Owner Participant and the Owner Participant Guarantor, and the Owner Participant's in-house counsel, to the collective effect that: (1) the Owner Participant is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Documents; the Owner Participant Guarantor is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Guaranty; (2) the Owner Participant Documents have been duly authorized, executed and delivered by the Owner Participant and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitute legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations; the Owner Participant Guaranty has been duly authorized, executed and delivered by the Owner Participant Guarantor and constitutes the legal, valid and binding obligation of the Owner Participant Guarantor, enforceable against the Owner Participant Guarantor in accordance with its terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; (3) neither the execution and delivery by the Owner Participant of the Owner Participant Documents or by the Owner Participant Guarantor of the Owner Participant Guaranty nor the consummation of any of the transactions by the Owner Participant or the Owner Participant Guarantor contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency of the United States, the State of Delaware or the State in -15- 16 which the principal office of the Owner Participant or the Owner Participant Guarantor is located (or any governmental subdivision of any thereof) (except as shall have been duly obtained or given, specifying the same); (4) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the other parties, if any, thereto (other than the Owner Participant in the case of this Agreement), and the due authentication of the Secured Certificates by the Indenture Trustee, the Owner Trustee Documents (other than the Trust Agreement) constitute legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (5) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the Indenture Trustee as aforesaid, the Trust Indenture duly creates for the benefit of the Indenture Trustee the security interests which the Trust Indenture purports to create and the Indenture Trustee is entitled to the benefits and security afforded by the Trust Indenture; (6) the execution, delivery and performance of the Owner Participant Documents by the Owner Participant does not require any approval of stockholders of the Owner Participant, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Documents by the Owner Participant nor the performance by the Owner Participant of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on the Owner Participant or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any New York, Delaware or United States governmental authority to which the Owner Participant is a party or by which it or its properties may be bound or affected; the execution, -16- 17 delivery and performance of the Owner Participant Guaranty by the Owner Participant Guarantor does not require any approval of stockholders of the Owner Participant Guarantor, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant Guarantor (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Guaranty by the Owner Participant Guarantor, nor the performance by the Owner Participant Guarantor of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on the Owner Participant Guarantor or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant Guarantor under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any New York, Delaware or United States governmental authority to which the Owner Participant Guarantor is a party or by which it or its properties may be bound or affected; and (7) there are no pending or, to the best knowledge of such counsel, threatened actions or proceedings against or affecting the Owner Participant before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant, would have a material adverse effect on the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; there are no pending or, to the best knowledge of such counsel, threatened actions or proceedings against or affecting the Owner Participant Guarantor before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant Guarantor, would have a material adverse effect on the Owner Participant Guarantor or the ability of the Owner Participant Guarantor to perform its obligations under the Owner Participant Guaranty; and to such further effect with respect to such other matters or documents relating to the Owner Participant's or the Owner Participant Guarantor's obligations in connection with this Agreement as the Documentation Agent, the Indenture Trustee, the Owner Trustee or Lessee may reasonably request. Such opinion may rely upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, as to matters of fact. Such opinion may state that (M) no opinion is expressed as to laws other than the General Corporation Law of the State of Delaware, the laws of the State of New York and the Federal laws of the United States, and (N) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. -17- 18 (xv) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to the effect that: (1) the FAA Bill of Sale, the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and the Trust Indenture with the Trust Supplement attached thereto are in due form for recording by and have been duly filed for recordation with the Federal Aviation Administration in accordance with the provisions of Section 44107 of Title 49 of the United States Code; (2) proper application for registration of the Aircraft in the name of the Owner Trustee together with the affidavits of the Owner Trustee and the Owner Participant required by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations and the Trust Agreement have been duly filed with the Federal Aviation Administration in accordance with the Federal Aviation Act, and such counsel is of the opinion that the Federal Aviation Administration will issue a Certificate of Aircraft Registration (AC Form 8050-3) in response to said application; (3) the Owner Trustee is the owner of the legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interests created by the Trust Indenture and such other Liens as are permitted by the Lease or this Agreement; (4) the Aircraft is eligible for registration in the name of the Owner Trustee and will be duly registered in due course in the name of the Owner Trustee pursuant to and in accordance with the provisions of Sections 44102 and 44103 of Title 49 of the United States Code; (5) the Trust Indenture as supplemented by the Trust Supplement creates a duly and validly perfected first priority security interest in the Aircraft and a duly perfected assignment of all the right, title and interest of the Owner Trustee in, to and under the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), subject only to the Lease and to Liens permitted by the Lease and the Trust Indenture, it being understood that no opinion need be expressed as to the validity or enforceability of such security interest under local law or as against third parties in respect of the Aircraft when the same is outside the United States; -18- 19 (6) none of the Trust Indenture, the Trust Agreement, the Trust Supplement, the Lease or the Lease Supplement is required to be filed or recorded in any other place within the United States in order to perfect the security interest in the Aircraft and the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), under the applicable laws of any jurisdiction within the United States; (7) no authorization, approval, consent, license or order of, or registration with, or giving of notice to, the FAA Aircraft Registry is required for the valid authorization, delivery or performance of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture and the Trust Supplement except for such authorizations, approvals, consents, licenses, orders, registrations, and notices as have been effected; and (8) no other registration of the Aircraft and no filings or recordings (other than the filings and recordings with the FAA referred to above) are necessary to provide constructive notice to third parties in any jurisdiction within the United States of the Owner Trustee's title to the Aircraft or the beneficial interest of the Owner Participant in the Aircraft. Such opinion may state that no opinion is expressed as to laws other than the Federal laws of the United States. Said opinion may also contain a statement to the effect that such opinion is limited to the records maintained by the Federal Aviation Administration Aircraft Registry and does not cover liens that are perfected without the filing of notice thereof with the Federal Aviation Administration, such as Federal tax liens, liens arising under Section 1368(a) of Title 29 of the United States Code and possessory artisans' liens, and is subject to the accuracy of FAA personnel in the filing, indexing and recording of instruments filed with the FAA and in the search for encumbrance cross-reference index cards for the Engines. Said opinion may also rely on the opinion obtained by such counsel from counsel for the Aeronautical Center of the FAA, satisfactory in form and scope to such counsel, and on past practice of the FAA which is consistent with such Aeronautical Center counsel's opinion. (xvi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, to the effect that: (1) State Street Bank and Trust Company is a Massachusetts trust company, duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the full corporate power, -19- 20 authority and legal right to enter into and perform its obligations under the Indenture Trustee Documents and, in its capacity as Indenture Trustee, to authenticate the Secured Certificates to be delivered on the Delivery Date; (2) the execution, delivery and performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the Indenture Trustee Documents and the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby and compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with the terms thereof including, without limitation, the authentication of the Secured Certificates to be delivered on the Delivery Date, have been duly authorized by all necessary corporate action on the part of State Street Bank and Trust Company, and neither the execution and delivery thereof nor the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby nor compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with any of the terms and provisions thereof (i) does or will contravene any law or governmental rule or regulation of the United States governing the banking or trust powers of State Street Bank and Trust Company or the Commonwealth of Massachusetts or any order or judgment known to such counsel and applicable to or binding on State Street Bank and Trust Company, or (ii) does or will contravene or result in any breach of, or constitute any default under, the charter documents or By-Laws of State Street Bank and Trust Company or the provisions of any indenture, mortgage, contract or other agreement, in each case known to such counsel, to which State Street Bank and Trust Company is a party or by which it or any of its properties is or may be bound or affected; (3) neither the execution and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, of the Indenture Trustee Documents or the certificates of authentication on the Secured Certificates to be delivered on the Delivery Date, nor the performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the transactions contemplated thereby requires or required the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or Massachusetts governmental authority or agency governing the banking or trust powers of State Street Bank and Trust Company or under any Massachusetts law; (4) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each -20- 21 such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; (5) the Secured Certificates to be issued and dated the Delivery Date have been duly authenticated and delivered by the Indenture Trustee pursuant to the terms of the Indenture Trustee Documents; (6) to the best knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting State Street Bank and Trust Company before any court or administrative agency or arbitration board or tribunal which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of State Street Bank and Trust Company to perform its obligations under the Indenture Trustee Documents; and (7) there are no taxes, fees or other governmental charges ("TAXES") payable under the laws of the Commonwealth of Massachusetts with respect to the execution of and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the Indenture Trustee Documents (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts. Neither State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, the Owner Participant, the Owner Trustee, nor the trust created by the Trust Agreement will, as a result of the transactions contemplated thereby, be subject to any taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would have not been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts, and there are no taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) upon or with respect to the Aircraft or any Engine or any part of any interest therein, or the purchase, ownership, delivery, lease, sublease, possession, presence, use, operation, condition, storage, maintenance, -21- 22 modification, alteration, repair, sale, return, transfer or other disposition of the Aircraft or any Engine which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts; and to such further effect with respect to such other matters incident to the matters covered thereby as the Documentation Agent, the Owner Participant, the Owner Trustee and Lessee may reasonably request. Such opinion may state that no opinion is expressed as to laws other than the internal substantive laws of the Commonwealth of Massachusetts and the Federal laws of the United States. Such opinion may further state that with respect to paragraph (4) in connection with the opinion relating to legality, validity and binding effect of the documents there referred to, such counsel has assumed that the laws of the jurisdictions whose laws govern such documents are not materially different from the internal substantive laws of the Commonwealth of Massachusetts. (xvii) The Loan Participants shall have received from Vedder, Price, Kaufman & Kammholz, special counsel for the Loan Participants, a favorable opinion satisfactory in substance and form to the Documentation Agent, as to such matters incident to the transactions contemplated hereby as the Documentation Agent may reasonably request. (xviii) The Loan Participants and the Owner Participant shall have received a certificate signed by the President, any Executive Vice President, any Senior Vice President or any Vice President of Lessee, dated the Delivery Date, addressed to the Loan Participants and the Owner Participant and certifying as to the matters stated in paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this Section 4(a). Copies of the orders, permits, waivers, authorizations, exemptions and approvals referred to in Section 4(a)(viii) shall have been furnished to the Loan Participants and the Owner Participant. (xix) The Owner Participant and the Loan Participants shall, by making their Commitments available as provided in Section 1(b) of this Agreement, be deemed to have reaffirmed the representations and warranties made by them in Section 8 of this Agreement. (xx) The Owner Participant shall have received an opinion, in form and substance satisfactory to the Owner Participant, from Aeroeconomics, Inc., independent aircraft appraisers, or such other recognized aircraft appraiser, to the effect, among other relevant matters, that (A) the Aircraft will have, at the end of the third Fixed Renewal Term, (i) at least 20% of its original economic life remaining and (ii) a fair market value of at least 20% of Lessor's Cost (without taking into account any increase or decrease for inflation or deflation during the Interim Term, the Basic Term and the Fixed Renewal Terms or the terms of any purchase option provided in -22- 23 the Lease) and taking into account any costs to the Owner Trustee or the Owner Participant of removal and delivery of the Aircraft to the Owner Trustee at the end of the third Fixed Renewal Term; (B) the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost; and (C) it will be commercially feasible for a third party to utilize the Aircraft at the end of the third Fixed Renewal Term. (xxi) The Loan Participants and Owner Participant shall have received an independent insurance broker's report, in form and substance satisfactory to the Documentation Agent 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. (xxii) On the Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to the Airframe or any Engine has occurred. (xxiii) Lessor's Cost for the Aircraft shall be $50,000,000. (xxiv) 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. (xxv) The representations and warranties of the Indenture Trustee and the Loan Participants contained in Section 8 shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and each Participant shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President of the Indenture Trustee addressed to such Participant and certifying as to the foregoing matters with respect to the Indenture Trustee. (xxvi) The Owner Participant shall have received from Dewey Ballantine, special counsel to the Owner Participant, 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. (xxvii) In the opinion of the Owner Participant and its special counsel, there shall have been, since the date hereof, 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 -23- 24 hereof, 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. (xxviii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants and the Owner Participant, and reasonably satisfactory as to scope and substance to the Documentation Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for 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. (xxix) The Loan Participants shall have received an opinion, in form and substance reasonably satisfactory to the Documentation Agent, from BK Associates, Inc., independent aircraft appraisers, to the effect that the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost. (xxx) Lessee shall have executed and delivered to the Owner Participant a letter from the Owner Participant to Lessee relating to Lessee's weighted average cost of capital. 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 Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to the due and valid registration of the Aircraft in the name of the Owner Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement, such Trust Supplement, the Lease and 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. It is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are all subject to the fulfillment to the satisfaction of Lessee 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, -24- 25 exemptions, authorizations and approvals shall be in full force and effect on the Delivery Date. (ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii) and 4(a)(iv) hereof shall have been satisfied. (iii) Those documents described in Section 4(a)(v) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Lessee and the Guarantor) in the manner specified in Section 4(a)(v), shall each be satisfactory in form and substance to Lessee, shall be in full force and effect on the Delivery Date, and an executed counterpart of each thereof (other than the Secured Certificates) shall have been delivered to Lessee or its special counsel. (iv) Lessee shall have received a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant, or other evidence of authority satisfactory to Lessee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing or evidencing authority for the execution, delivery and performance by the Owner Participant of all of the Owner Participant Documents, a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant Guarantor, certified as of the Delivery Date by the Secretary or Assistant Secretary of the Owner Participant Guarantor, duly authorizing the execution, delivery and performance by the Owner Participant Guarantor of the Owner Participant Guaranty, and a copy of the general authorizing resolutions of the boards of directors of the Indenture Trustee and the Owner Trustee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Indenture Trustee and the Owner Trustee, respectively, which authorize the execution, delivery and performance by the Indenture Trustee of the Indenture Trustee Documents and the Secured Certificates and by the Owner Trustee of the Owner Trustee Documents, together with such other documents and evidence with respect to the Indenture Trustee, the Owner Participant, the Owner Participant Guarantor and the Owner Trustee as Lessee or its special counsel may reasonably request in order to establish the 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) The representations and warranties of the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, contained in Section 8 hereof shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and Lessee shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President or other authorized representative of the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively, addressed to Lessee and -25- 26 certifying as to the foregoing matters with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively. (vi) Lessee shall have received the opinions set forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case addressed to Lessee and dated the Delivery Date and in each case in scope and substance reasonably satisfactory to Lessee and Lessee's special counsel. (vii) 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. (viii) No applicable law or regulations or guidelines or interpretations by appropriate regulatory authorities shall be in effect which, in the opinion of Lessee or its special counsel, would make it a violation of law or regulations or guidelines for Lessee to enter into any transaction contemplated by the Operative Documents. (ix) 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. (x) Lessee shall have been paid Lessor's Cost for the Aircraft. SECTION 5. PUBLICITY. Each party hereto agrees that it will use its best efforts not to disclose, or permit any of its employees or agents to disclose, the identity of the Owner Participant or the terms of the Operative Documents in connection with the issuance or release for external publication of any article or advertising or publicity matter relating to the terms and conditions of any of the Operative Documents or the transactions contemplated thereby without the prior written consent of the Owner Participant and Lessee, provided that nothing in this Section 5 shall prevent the Loan Participants from publishing a tombstone which may include the initial principal amount of the Secured Certificates, provided, further, that no such tombstone shall disclose the identity of the Owner Participant without the prior written consent of the Owner Participant. SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate Holder (as defined in the Trust Indenture) shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Trust Indenture when and if the principal of and interest on all Secured Certificates held by such holder and all other sums -26- 27 payable to such holder hereunder, under the Trust Indenture and under such Secured Certificates shall have been paid in full. Each of the Loan Participants 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 Loan Participants 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. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and the Owner Participant that as of the Delivery Date: (i) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires, other than failures to qualify which would not have a material adverse effect on the consolidated business, assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents; is a Certificated Air Carrier; has its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) located at Eagan, Minnesota; holds all licenses, certificates, permits and franchises from the appropriate agencies of the United States and/or all other governmental authorities having jurisdiction necessary to authorize Lessee to engage in air transport and to carry on scheduled passenger service as presently conducted (other than those licenses, certificates, permits and franchises which, if not obtained, would not have a material adverse effect on the consolidated business assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents); and has the corporate power and authority to own or hold under lease its properties wherever located or used and to enter into and perform its obligations under the Lessee Documents; (ii) the execution, delivery and performance by Lessee of the Lessee Documents will, on the Delivery Date, have been duly authorized by all necessary corporate action on the part of Lessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Lessee except such as have been duly obtained or by the Delivery Date will have been duly obtained, and none of such agreements contravenes any law, judgment, government rule, regulation or order binding on Lessee or the certificate of incorporation or By-Laws of Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its properties may be bound or affected; -27- 28 (iii) neither the execution and delivery by Lessee of the Lessee Documents nor the performance by Lessee of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, any Federal, State or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee 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 will on the Delivery Date 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), (B) the registration of the Aircraft referred to in Section 4(a)(ix)(4) and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Delivery Date; (iv) on the Delivery Date the Lessee Documents will each constitute legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof (subject to the qualifications set forth in clause (4) of the form of opinion of counsel to Lessee in Section 4(a)(xi)); (v) there are no pending or, to the best of Lessee's knowledge, threatened actions, suits or proceedings before any court or administrative agency which might materially adversely affect the business, condition (financial or otherwise), operations or properties of Lessee and its subsidiaries taken as a whole or Lessee's ability to perform its obligations under the Operative Documents; (vi) except for (A) the registration of the Aircraft pursuant to the Federal Aviation Act, (B) the filing for recording pursuant to said 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 Bill of Sale, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such documents under the Uniform Commercial Code of Minnesota and Utah and such other states as may be specified in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the taking of possession by the Indenture Trustee of the original counterpart of each of the Lease and the Lease Supplement covering the Aircraft, no further action, including any 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 in order to establish and perfect the Owner Trustee's title to and the Indenture Trustee's security interest in the Aircraft as against Lessee and any third parties in any applicable jurisdictions in the United States; (vii) there has not occurred any event which constitutes an Event of Default under the Lease (or any event which with the giving of notice or the passage of time or -28- 29 both would constitute an Event of Default under the Lease) which is presently continuing; (viii) 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; (ix)(a) The consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of December 31, 1995 and the related consolidated statements of operations, cash flows and common stockholders' equity of the Guarantor and its consolidated subsidiaries for the year then ended, which have been audited by independent certified public accountants, copies of which have been furnished to the Owner Participant and each Loan Participant, fairly present the consolidated financial condition of the Guarantor and its consolidated subsidiaries as at such date and the results of operations and cash flow of the Guarantor and its consolidated subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied and since December 31, 1995 there has been no material adverse change in the consolidated financial condition, cash flow or results of operations of the Guarantor and its consolidated subsidiaries; (x) on the Delivery Date, the Owner Trustee will receive good title to the Aircraft free and clear of all Liens, except Liens permitted by clause (v) of Section 6 of the Lease, the rights of Lessee under the Lease and the Lease Supplement covering the Aircraft, the Lien of the Trust Indenture and the beneficial interest of the Owner Participant in the Aircraft; (xi) 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 or U of the Board of Governors of the Federal Reserve System; (xii) Lessee is not in default in the performance of any term or condition of the Purchase Agreement which materially adversely impairs the transactions contemplated hereby; (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 or any interest therein; -29- 30 (xiv) On the Delivery Date, the Aircraft will be duly certified by the FAA as to type and airworthiness, will be insured by Lessee in accordance with the terms of the Lease and will be in the condition and state of repair required under the terms of the Lease; and (xv) neither Lessee nor any subsidiary of Lessee is an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended. (b) General Tax Indemnity. [Reserved] -30- 31 (c) General Indemnity. [Reserved] -31- 32 (d) Income Tax. For purposes of this Section 7, the term "INCOME TAX" means any Tax based on or measured by gross or net income or receipts (other than taxes in the nature of sales, use, license, property or value added Taxes (except value added taxes in the nature of any income, franchise, capital, doing business, excess profits or net worth tax) (including, without limitation, capital gains taxes, minimum taxes, income taxes collected by withholding and taxes on tax preference items), and Taxes which are capital, doing business, excess profits or net worth taxes and interest, additions to tax, penalties, or other charges in respect thereof. SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner Participant represents that it is acquiring its interest in the Trust Estate for investment and not with a present intent as to any resale or distribution thereof (subject nonetheless to any requirement of law that the disposition of its properties shall at all times be and remain within its control) and that neither it nor anyone acting on its behalf has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended, or the securities laws, rules and regulations of any state. (b) Lessee represents and warrants that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended, or the securities laws, rules and regulations of any state. (c) Each of the Owner Participant and First Security Bank of Utah, National Association, in its individual capacity, represents and warrants to the other parties to this Agreement that it is, and on the Delivery Date will be, a Citizen of the United States without making use of any voting trust, voting powers agreement or similar arrangement. The Owner Participant agrees, solely for the benefit of Lessee and the Loan Participants, that if (i) it shall -32- 33 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 hereto 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 in the first sentence of this Section 8(c) 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 Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). First Security Bank of Utah, 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 of Utah, National Association, shall obtain actual knowledge that First Security Bank of Utah, National Association, has ceased to be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under the Federal Aviation Act as in effect at such time or, if it is not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Loan Participants, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or First Security Bank of Utah, National Association, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an event which would constitute an Event of Default but for lapse of time or the giving of notice or both) shall not have occurred and be continuing under the Lease due to non-compliance by Lessee with the registration requirements in the Lease. (d) First Security Bank of Utah, 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 of Utah, 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 of Utah, 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 -33- 34 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 of Utah, National Association, in its individual capacity, represents that it has not offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire the same from, anyone, and that no officer or responsible employee of the Corporate Trust Department of First Security Bank of Utah, 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 or any similar securities related to the Aircraft 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 or the securities laws, rules and regulations of any state. (f) The Owner Participant and each of the Loan Participants agree that, at any time after the Depreciation Period, as long as no Event of Default or a Default of the type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and be continuing, Lessee may elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit A hereto (or such other country as the Owner Participant 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 qualified in the laws of the relevant jurisdiction and reasonably satisfactory to the Owner Participant, 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, -34- 35 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) none of the Owner Trustee, the Owner Participant or the Indenture Trustee will be required to register to do business in the country in which the Aircraft is to be registered as a result of such reregistration, after (1) taking into account any other contacts of the Owner Trustee and the Owner Participant with such jurisdiction (provided, that upon request by Lessee (such request having been acknowledged by the Owner Participant's general counsel), the Owner Trustee and the Owner Participant must respond within fourteen (14) Business Days after receipt of such request describing its contacts in the jurisdiction of reregistration, or else such party shall be deemed for purposes of this clause (D) to have no such contacts) and (2) assuming that the Indenture Trustee has no other contacts with such jurisdiction, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), and (F) (unless Lessee shall have agreed to provide insurance covering the risk of requisition of use of such Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use. In addition, as a condition precedent to any such change in registration, (a) Lessee shall furnish to the Owner Trustee and the Indenture Trustee an Officer's Certificate to the effect that the insurance required by Section 11 of the Lease shall be in full force and effect at the time of such change in registration after giving effect to such change in registration and that the new country of registry imposes aircraft maintenance standards not materially different from those of the United States, France, Germany, Japan, the Netherlands or the United Kingdom and (b) the Owner Participant shall have received assurances satisfactory to it that (i) the original indemnities in favor of it under this Agreement afford it substantially the same protection as provided prior to such change in registry, and (ii) such change will not result in the risk of, or the imposition of, or increase the amount of, any Tax for which Lessee is not required to indemnify under the Operative Documents, or is not then willing to enter into a binding agreement to indemnify in a manner satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (A) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (B) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional -35- 36 adverse tax consequences resulting from such reregistration or (C) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee. Lessee shall pay all costs, expenses, fees, recording and registration taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. (g) The Owner Participant represents and warrants to Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in its capacity as such and in its individual capacity, as follows: (i) the Owner Participant is a corporation duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under the Owner Participant Documents; (ii) the Owner Participant Documents have been duly authorized by all necessary corporate action on the part of the Owner Participant, do not require any approval not already obtained of stockholders of the Owner Participant or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of the Owner Participant, and have been duly executed and delivered by the Owner Participant, and, subject to and in reliance upon the representations made by the Loan Participants and Lessee in Section 8(q) hereof, neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by the Owner Participant with any of the terms and provisions thereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order 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 financing or the citizenship requirements of the Owner Participant under applicable aviation law) or contravene or result in any breach of or constitute any 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, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Owner Participant is a party or by which it or its properties may be bound or affected provided, that no representation or warranty as to ERISA (as hereinafter defined) is made by the Owner Participant except as set forth in Section 8(q)(A); (iii) each of the Owner Participant Documents constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant -36- 37 in accordance with the terms thereof (subject to the qualifications set forth in clause (2) of the opinion of counsel to the Owner Participant in Section 4(a)(xiv)); (iv) there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which, if determined adversely to the Owner Participant, would materially adversely affect the financial condition of the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; (v) upon the execution and delivery of the Trust Indenture, the Trust Indenture Estate will be free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Participant; (vi) neither the execution and delivery of the Owner Participant Documents nor the performance by the Owner Participant of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, state or foreign government authority or agency except for those exceptions referred to in Section 7(a)(iii) which may be applicable to the Owner Participant and the Owner Participant Documents (it being understood that no representation or warranty is made with respect to the 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 aviation law); and (vii) the Owner Participant is not an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended. (h) Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from Lessor Liens (including for this purpose Liens that 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. -37- 38 (i) State Street Bank and Trust Company, in its individual capacity, covenants and agrees that it shall not cause or permit to exist any Lien, arising as a result of (A) claims against the Indenture Trustee not related to its interest in the Aircraft or the administration of the Trust Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not permitted by, or failure of the Indenture Trustee to take any action required by, the Operative Documents to the extent such acts arise or such failure arises from or constitutes gross negligence or willful misconduct, (C) claims against the Indenture Trustee relating to Taxes or Expenses which are excluded from the indemnification provided by Section 7 pursuant to said Section 7, or (D) claims against the Indenture Trustee arising out of the transfer by the Indenture Trustee of all or any portion of its interest in the Aircraft, the Trust Estate, the Trust Indenture Estate or the Operative Documents other than a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9 hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of Default is continuing and prior to the time that the Indenture Trustee has received all amounts due pursuant to the Trust Indenture. (j) Each Loan Participant represents, warrants, covenants and agrees as to itself: (i) that this Agreement has been duly authorized, executed and delivered by such Loan Participant and this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of its jurisdiction of organization; and (iii) that such Loan Participant has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. (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, and which is consistent with the applicable provisions of the Credit Agreement and subject to the provisions hereof. (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 -38- 39 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) under this Agreement or the Trust Indenture (and any exhibits or annexes thereto) or the Owner Participant under this Agreement. (m) State Street Bank and Trust Company represents and warrants, in its individual capacity, to Lessee, the Owner Trustee and each Participant as follows: (i) it is a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other 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 trust agreement or other similar arrangement, is likely to change and that it will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other similar arrangement; (ii) it is a Massachusetts trust company duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the requisite corporate power and authority to enter into and perform its obligations under the Trust Indenture and this Agreement and to authenticate the Secured Certificates to be delivered on the Delivery Date; (iii) the Indenture Trustee Documents and the authentication of the Secured Certificates to be delivered on the Delivery Date have been duly authorized by all -39- 40 necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or state law or governmental rule or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its charter or By-Laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (iv) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. (n) So long as the Aircraft shall be subject to the Lease and at all times prior to the release of the Lien of the Trust Indenture, the Owner Participant will not, directly or indirectly, sell, assign, convey or otherwise transfer any of its right, title or interest in and to the Aircraft, this Agreement, the Trust Estate, the Tax Indemnity Agreement, or the Trust Agreement or any proceeds therefrom to any person or entity, unless the proposed transferee is a "Transferee" (as defined below), and such sale, assignment, conveyance or transfer is with respect to all, but not less than all, of such Transferee's right, title and interest to a single entity (except that the Owner Participant may transfer to one or more Transferees all or any portion of its interest, if any, in the residual value of the Aircraft (which interest shall not include any of the Owner Participant's right, title or interest in any of the Operative Documents); provided that such transfer of residual value shall result in no increase, decrease or change in any of Lessee's, any Loan Participant's, or the Indenture Trustee's obligations, rights or responsibilities under the Operative Documents and that such Transferee or Transferees of residual value shall have no right to consent or object to any matter or decision under, or relating to, the Aircraft or any of the Operative Documents and provided, further, that no Lien shall result from such transfer). A "TRANSFEREE" shall mean either (A) a bank or other financial institution or insurance company with a combined capital, surplus and undivided profits of at least $50,000,000 or a corporation whose tangible net worth is at least $50,000,000, 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, insurance company, or corporation, provided that such bank, financial institution, insurance company, or corporation furnishes to the Owner Trustee, the Loan Participants, 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 Loan Participants, 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 the form attached as Exhibit D hereto; provided, however, that any Transferee shall not be -40- 41 (i) an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or (ii) 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 (unless such entity is General Electric Company, International Lease Finance Corporation, any similar entity or any of their respective Affiliates, provided, that (I) such entity is not included within the immediately preceding clause (i) of this subsection (n) and (II) no such entity has, through ownership of common or preferred stock, effective voting control of an entity described in such immediately preceding clause (I)). 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 (or has effected a voting trust agreement, voting powers agreement or other similar arrangement so as not to affect the then continued (if applicable) United States registration of the Aircraft), and has full power and authority to enter into the transactions contemplated hereby, (N) the Transferee has the requisite power and authority to enter into and carry out the transactions contemplated hereby and such Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants an opinion of counsel in the form attached as Exhibit E hereto, (O) the Transferee enters into (i) an agreement in the form attached as Exhibit B hereto or (ii) such other form approved by 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 each other Operative Document to which the Owner Participant is a party 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 and makes the representations and warranties comparable to those made by the Owner Participant thereunder provided that with respect to ERISA, the Transferee makes the representations and warranties contained in Section 7(h) of the agreement in the form attached as Exhibit B hereto, (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 (provided that the term "applicable Federal law" shall not include ERISA), (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 unless such transfer is effected in connection with the exercise of remedies as a result of and during the continuance of an Event of Default in which case any expenses incurred by Lessee in connection with such transfer shall not be reimbursed, 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 -41- 42 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 20 days' prior written notice thereof to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, specifying the name and address of the proposed Transferee. Upon any such transfer, Lessee shall, at the Transferee's expense, use its reasonable efforts promptly to cause to be obtained new insurance certificates (consistent with the provisions of Section 11 of the Lease) that reflect the interest of the Transferee in the Aircraft. (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 of Utah, 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)(A) Each Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Secured Certificate or any interests represented thereby with the assets of any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1) of the Code or of any entity the assets of which constitute "plan" assets under ERISA. 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 as set forth in the preceding sentence and a covenant as set forth in this sentence. (B) Lessee represents and warrants that: none of (i) the execution and delivery of this Agreement and the other Operative Documents, (ii) the initial purchase by the Loan Participants of the Secured Certificates, and (iii) the initial acquisition by the Owner Participant of its beneficial interest in the Trust Estate will involve any non-exempt prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation being made in reliance upon and subject to the accuracy of the representations contained in subparagraph (A) of this Section 8(q)). -42- 43 (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 and not specifically reserved to Lessee under Section 1 thereof, 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 Loan Participants 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. (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. Each Loan Participant agrees that Lessee may, on behalf of the Owner Trustee and upon notice to the affected Certificate Holder, arrange for another institution (which may be a Certificate Holder) to purchase the Secured Certificates of the affected Certificate Holder by paying the affected Certificate Holder an amount equal to the unpaid principal amount of the Secured Certificates held by the affected Certificate Holder plus accrued but unpaid interest thereon to the date of payment of such principal amount plus all other amounts owed to such affected Certificate Holder under the Operative Documents (including any Funding Loss Amount payable as a result of the applicable purchase occurring on a day other than the last day of an Interest Period). For purposes of this Section 8(t), "AFFECTED CERTIFICATE HOLDER" shall mean a Certificate Holder which has asserted claims -43- 44 against the Owner Trustee or Lessee under or sought rights or remedies provided by Section 7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture. (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) First Security Bank of Utah, National Association, in its individual capacity, represents and warrants that: (i) the Trust Agreement and, assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, each of the other Owner Trustee Documents has been duly executed and delivered by one of its officers who is duly authorized to execute and deliver such instruments on behalf of First Security Bank of Utah, National Association or the Owner Trustee, as the case may be; (ii) the Trust Estate is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to First Security Bank of Utah, National Association, in its individual capacity, and there are no Liens affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Trust Indenture Estate resulting from any act or claim against First Security Bank of Utah, National Association, in its individual capacity, arising out of any event or condition not related to the ownership, leasing, use or operation of the Aircraft or to any other transaction contemplated by this Agreement or any of the Operative Documents, including any such Lien resulting from the nonpayment by First Security Bank of Utah, National Association, in its individual capacity, of any Taxes imposed or measured by its net income; (iii) there has not occurred any event which constitutes (or to the best of its knowledge would, with the passage 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 First Security Bank of Utah, National Association, in its individual capacity, and which is presently continuing; (iv) it is a national banking association duly organized, validly existing and in good standing under the laws of the United States and has the full corporate power, authority and legal right to enter into and perform its obligations under each of the Owner Trustee Documents; (v) each of the Owner Trustee Documents has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof -44- 45 nor its performance of any of the terms and provisions thereof will violate any Federal law governing the banking and trust powers of First Security Bank of Utah, National Association, or Utah law or regulation or contravene or result in any breach of the provisions of its articles of association or By-Laws or any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (vi) each of the Owner Trustee Documents has been duly executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, each thereof is the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (vii) there are no Taxes payable by it (either in its individual capacity or as Owner Trustee), the Trust Estate, the Owner Participant, Lessee, the Indenture Trustee or the Loan Participants to the State of Utah in connection with the execution, delivery and performance of the Operative Documents solely because First Security Bank of Utah, National Association is a national banking association with its principal office in the State of Utah and will perform its obligations under the Operative Documents in the State of Utah, other than franchise or other taxes based on or measured by any fees or compensation received or accrued by First Security Bank of Utah, National Association for services rendered in connection with the transactions contemplated by the Operative Documents. (w) The Owner Participant covenants and agrees that if (i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to Lessee written notice of Lessor's election to retain title to the Aircraft and (iii) the Owner Trustee has failed to make, on or before the Termination Date, any payment required to be made by the Owner Trustee pursuant to Section 9(c) in connection with its retention of title to the Aircraft, the Owner Participant will indemnify Lessee for any losses, damages, costs or expenses of any kind (including any additional rents paid by Lessee and any fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a consequence of such failure by the Owner Trustee. The Owner Participant further covenants and agrees to pay those costs and expenses specified to be paid by the Owner Participant pursuant to Exhibit E to the Lease. (x) Each of the Owner Participant, the Owner Trustee, the Indenture Trustee, each Loan Participant and Lessee covenants and agrees that if Lessee elects (a) to -45- 46 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. (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 each Participant an agreement in form and substance reasonably satisfactory to such 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; (iv) Lessee shall have delivered to the Owner Trustee, the Indenture Trustee and each 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 Participants, 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; and (v) 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, shall make such filings and recordings with the FAA pursuant -46- 47 to the Federal Aviation Act, as shall be necessary or desirable to evidence such consolidation, merger, conveyance, transfer or lease with or to such entity. Upon any such consolidation or merger or any such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety in accordance with this subparagraph (A) of Section 8(y), the successor corporation or Person formed by such consolidation or into which Lessee is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, Lessee under this Agreement with the same effect as if such successor corporation or Person had been named as Lessee herein. No such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety shall have the effect of releasing Lessee or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this subparagraph (A) of Section 8(y) from its liability in respect of any Operative Document to which it is a party. (B) Lessee shall at all times maintain its corporate existence except as permitted by subparagraph (A) of this Section 8(y). (z) Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust Supplement and any financing statements or other instruments as are necessary to maintain, so long as the Trust Indenture or the Lease is in effect, the perfection of the security interests created by the Trust Indenture and any security interest that may be claimed to have been created by the Lease and the interest of the Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the Indenture Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable them to take such action. Lessee will notify the Owner Trustee, the Owner Participant and the Indenture Trustee of any change in the location of its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) promptly after making such change or in any event within the period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. (aa) Section 3 of the Lease contemplates that, under certain circumstances, the Owner Participant will make certain recalculations of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the Owner Participant hereby agrees to make such recalculations as and when contemplated by the Lease and subject to all the terms and conditions of the Lease and promptly to take such further actions as may be necessary or desirable to give effect to and to cause the Owner Trustee to give effect to the provisions of Section 3 of the Lease. (bb) To the extent that any Excess Amount is due on the Commencement Date, the Owner Participant shall have the right to prepay to the Indenture Trustee all or a portion of such Excess Amount on the last Business Day occurring in 1996, and the Indenture Trustee agrees that it shall invest such amount in accordance with the terms set forth in the -47- 48 Trust Indenture. The Owner Participant hereby agrees with Lessee, and only with Lessee, and not for the benefit of any other party to this Participation Agreement, that it will pay in full to Lessee upon termination of the Lease the Reimbursement Amount for which Lessee has not previously received an offset pursuant to Section 3(g) of the Lease. (cc) The Owner Participant hereby agrees to notify Lessee or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York time on the third Business Day prior to the day for which an Excess Amount is indicated stating whether or not the Owner Participant intends to pay such Excess Amount in full by 10:30 A.M. (New York time) on the due date. (dd) [________________] agrees to act as Administrative Agent hereunder. The Administrative Agent agrees to notify each of the Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual interest expected to accrue on the Secured Certificates during each Interest Period promptly after the commencement of such Interest Period and after the occurrence of any event that would cause such actual interest expected to accrue during such Interest Period to change from the amount previously notified. The Administrative Agent further agrees to perform all of the functions that are required to be performed by the Administrative Agent pursuant to the terms of the Trust Indenture. (ee) The Owner Participant hereby agrees with Lessee that it will pay, or cause to be paid, all costs and expenses that are for the account of the Owner Trustee pursuant to Sections 5(a) and 5(d) of the Lease. The Owner Participant further agrees with Lessee that it will provide the information contemplated to be provided by it pursuant to clause (VI) of Section 7(b)(x) of the Lease within the time period contemplated therein. (ff) 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(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture). (gg) [__________________] agrees to act as Documentation Agent hereunder and to perform all of the functions that are required to be performed by the Documentation Agent hereunder. (hh) [__________________], [___________________] and [_________________] each agrees to furnish to the Administrative Agent timely information for the purpose of determining each Eurodollar Rate (as defined in the Trust Indenture). (ii) Lessee agrees and covenants that it shall not purchase or guarantee or acquire any interest in any Secured Certificate or any other certificate for which a Secured Certificate is security except as provided in Section 8(x). -48- 49 SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall, pursuant to this Section 9 and in accordance with the requirements of Section 3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt payment structures. Within forty-five Business Days after the need for an adjustment to Rent has been established pursuant to Section 3 of the Lease, the Owner Participant shall deliver to Lessee a certificate of an authorized representative of the Owner Participant (the "REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of debt amortization and Basic Rent, Excess Amounts, Special Purchase Price, Stipulated Loss Value and Termination Value percentages. Within forty-five days of its receipt of the Reoptimization Certificate, Lessee may demand a verification, pursuant to Exhibit E of the Lease, of the information set forth in the Reoptimization Certificate. Upon the acceptance by Lessee of the accuracy of the information set forth in the Reoptimization Certificate or the determination pursuant to such verification procedures of such information, the Owner Participant will cause the Owner Trustee (M) to execute a Lease Supplement setting forth the reoptimized Basic Rent, Excess Amounts, Special Purchase Price, Stipulated Loss Value and Termination Value percentages, and (N) to exchange new Secured Certificates containing reoptimized amortization schedules for the Secured Certificates outstanding immediately prior to such reoptimization. (b) In connection with reoptimization adjustments of Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree to changes in the amortization schedule of the Secured Certificates, and (N) each Loan Participant will exchange the Secured Certificates held by it immediately prior to such reoptimization for new Secured Certificates containing reoptimized amortization schedules; provided that such changes do not (X) change the final maturity of any Secured Certificates to beyond twenty years from the Delivery Date or (Y) increase the weighted average lives of the Secured Certificates as of the Delivery Date to more than 15 years. SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the Owner Trustee hereby (A) agrees with Lessee, the Loan Participants 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 (B) agrees with Lessee and the Loan Participants not to revoke the Trust Agreement without the prior written consent of Lessee and the Loan Participants so long as the Lease or the Lien of the Trust Indenture remain in effect. 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 10.05 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 -49- 50 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 Bill 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 Bill of Sale, second, the Lease, with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the Trust Indenture, with the Trust Supplement attached. (c) Lessee agrees that it will consummate, with Owner Participant, on terms substantially identical to those set forth in the Operative Documents, a leveraged lease transaction in respect of the next Boeing 757-251 aircraft delivered by the Manufacturer to Lessee subsequent to the date of this Agreement. 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 -50- 51 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 attributed thereto in the Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set forth in the Trust Indenture. Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it may be amended from time to time. (b) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto or to the Guarantor shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier (only if such communication is also given or made by an additional method herein permitted), 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 Owner Trustee, the Loan Participants, the Administrative Agent, the Documentation 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, or (D) if to the Guarantor, addressed to the Guarantor at such address as the Guarantor shall have furnished by notice to the parties hereto. (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, Wickersham & Taft, 100 Maiden Lane, New York, New -51- 52 York 10038, Attention: Managing Attorney, or such office of Lessee in New York City as from time to time may be designated by Lessee in writing to the Owner Participant, the Owner Trustee and the Indenture Trustee. SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant agrees that if, at any time, the Trust Estate becomes subject to any Taxes for which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States from the state in which it is then located, the situs of the trust may be moved with the written consent of the Owner Participant (which consent shall not be unreasonably withheld) and the Owner Participant will take 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 Loan Participants may reasonably request in form and substance satisfactory to such parties, (B) the rights and obligations under the Operative Documents of the Owner Participant and the Loan Participants 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 Loan Participants shall have received an opinion or opinions of counsel (satisfactory to the Owner Participant and the Loan Participants), in scope, form and substance satisfactory to the Owner Participant and the Loan Participants 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 Loan Participants, 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 Loan Participants and to the Owner Participant covering the matters described in Section 4(a)(xiii) hereof and such other matters as the Loan Participants and the Owner Participant may reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner Participant, the Indenture Trustee and the Loan Participants on an 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, the Indenture Trustee and the Loan Participants in connection with such change of situs. SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, or the Indenture Trustee under the -52- 53 terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture Trustee. (b) The representations, warranties, indemnities and agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee, the Administrative Agent, the Documentation Agent and the Owner Participant provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan Participants', the Indenture Trustee's, the Administrative Agent's, the Documentation Agent's and the Owner Participant's obligations under any and all thereof, shall survive the making available of the respective Commitments by the Loan Participants and 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, and shall be enforceable by, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and assigns, each Certificate Holder and its successors and registered assigns, the Indenture Trustee and its successors as Indenture Trustee under the Trust Indenture, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, the Administrative Agent and the Documentation Agent. 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 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 -53- 54 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 Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan Participants shall promptly submit to the Owner Trustee and Lessee for their review 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 July 30, 1996). The Owner Participant agrees to transfer to the Owner Trustee promptly but in any event no later than August 30, 1996 such amount as shall be necessary in order to enable the Owner Trustee to pay Transaction Expenses. To the extent of funds received by it, the Owner Trustee agrees to pay all invoices of Transaction Expenses that have been approved by it and Lessee promptly upon receipt thereof. Notwithstanding the foregoing, to the extent that Transaction Expenses exceed 1% of Lessor's Cost, Lessee at its sole option shall have the right to pay directly its special counsel fees and the fee and reasonable disbursements of Babcock and Brown Financial Corporation. SECTION 17. REFINANCINGS. (a) So long as no Event of Default or a Default of the type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and be continuing, Lessee shall have the right to refinance all (but not less than all) of the Secured Certificates with Dollar denominated debt 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 (including the terms of any debt to be issued in connection with such refinancing); provided that no such refinancing shall subject the Owner Participant to any adverse, or the risk of any adverse, tax consequence unless Lessee agrees to indemnify the Owner Participant for such unindemnified adverse tax consequence (any such indemnity to be satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (1) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (2) Lessee provides the Owner -54- 55 Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such refinancing or (3) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee); provided further that (x) the Owner Participant agrees that it will not be entitled to any indemnity from Lessee for any failure of the debt in such refinancing to constitute "qualified nonrecourse indebtedness" within the meaning of Treasury Regulation Section 1.861-10T(b) with respect to the first refinancing described in the next paragraph, provided it is satisfactory to, or has no adverse tax consequences for, the Owner Participant and (y) no offering material related to any public refinancing shall disclose the identity of the Owner Participant. The Owner Participant has been informed by Lessee that the debt to be issued in connection with such refinancing may be issued in several classes, each of which may have a different interest rate, final maturity date and priority of payment. The Owner Participant acknowledges that it has been informed that one or more of such classes may be entitled to the benefit of a liquidity facility which shall not be provided by Lessee or a Person who is an Affiliate of Lessee, and which will entitle the Indenture Trustee (or a collateral agent therefor) to make drawings thereunder to pay interest on a current basis on the enhanced classes of debt for up to three semi-annual interest payments following a payment default with respect to such enhanced classes. The Owner Participant acknowledges being informed that under such a structure drawings of the entire amount available under the liquidity facility for any class (and the deposit of the proceeds thereof into a cash collateral account) will be required in the event of a ratings decline with respect to the related liquidity provider or in the event that the liquidity facility is not extended or replaced prior to its scheduled expiration and that amounts owed to the liquidity facility provider for both drawings and interest thereon will generally be senior to all Loan Participant claims. The Owner Participant agrees that in any refinancing operation it will consider in good faith these and any other conditions which do not impair the customary rights of an owner participant in a leveraged lease transaction. In the event that any such agreement is concluded: (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 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 proposed date on which the outstanding Secured Certificates will be redeemed (such date, 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 increased or decreased and (D) the proposed revised -55- 56 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 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 (such debt securities, the "NEW DEBT") except that the principal amount of New Debt may exceed by no more than 105% 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; (5) the Owner Participant shall pay all of the expenses of the first refinancing (including, but not limited to, the fees, expenses and disbursements of counsel and any placement or underwriting fees) and such expenses shall be treated as Transaction Expenses; 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 -56- 57 assumptions and constraints 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 and constraints 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), 4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc. 75-28 Section 4.08(1) shall be applied on a prospective basis from the date of such adjustment) and Section 467 of the Code as then in effect as long as the Schedule of Basic Rent was in compliance with Section 467 of the Code as in effect on the Closing Date, it being understood that, to the extent that any grandfather, effective date, or similar provisions in any regulations under Section 467 or other administrative pronouncement interpreting Section 467 promulgated or issued after the Closing Date causes such regulations or pronouncement not to be applicable to the Schedule of Basic Rent in effect on the Closing Date, such Schedule shall be deemed to be in compliance with Section 467 as in effect on the Closing Date. (b) The final maturity and weighted average life of the New Debt on an aggregate basis shall not exceed by more than six months those of the Secured Certificates. (c) 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. (d) The Owner Participant, at the time of the closing of the second or third refinancing pursuant to this Section 17, if any, shall be paid a fee of $25,000 in respect of each such refinancing provided, that in the event that a similar refinancing is concurrently being effected on identical terms under any of the other transactions entered into in 1996 by the Owner Participant and Lessee for the lease of Boeing 757-251 aircraft pursuant to which a fee is payable pursuant to the corresponding provisions of the applicable participation agreement, Lessee shall not be required to pay a separate fee of $25,000 for each such refinancing, it being the intent of the parties that a total fee of $50,000 shall be paid by Lessee for all such concurrent refinancings on identical terms for which a fee is otherwise payable pursuant to the corresponding provisions of the applicable participation agreement. SECTION 18. AGENTS. (a) Each Loan Participant hereby appoints and authorizes each of the Administrative Agent and the Documentation Agent (each, an "AGENT") to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Operative Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. Each Agent shall have no duties or responsibilities except those expressly set forth in the Operative Documents. As to any matters not expressly provided for hereby or by the Trust Indenture, each Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining -57- 58 from acting) upon the instructions of the Majority in Interest of Certificate Holders (as defined in the Trust Indenture), and such instructions shall be binding upon all Loan Participants and all Certificate Holders; provided, however, that such Agent shall not be required to take any action that exposes such Agent to personal liability or that is contrary to the Operative Documents or applicable law. Each Agent agrees to give to each Loan Participant prompt notice of each notice given to it by the Owner Trustee pursuant to the terms of the Operative Documents with respect to which such Loan Participant has not otherwise received such notice. (b) No Agent nor such Agent's directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the Trust Indenture, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Loan Participant and shall not be responsible to any Loan Participant for any statements, warranties or representations (whether written or oral) made in or in connection with the Operative Documents; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Operative Documents on the part of any party thereto or to inspect the property (including the books and records) of any such party; (iv) shall not be responsible to any Loan Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Operative Documents or any other instrument or document furnished pursuant thereto; and (v) shall incur no liability under or in respect of the Operative Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. (c) With respect to their Loans and any Secured Certificates issued to them, [_________] and [__________] shall have the same rights and powers under the Operative Documents as any other Loan Participant and may exercise the same as though they were not Agents and the term "Loan Participant" or "Certificate Holder" shall, unless otherwise expressly indicated, include [__________] and [__________] in their individual capacity. [__________] and its Affiliates and [__________] and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Owner Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any Person who may do business with or own securities of any of such Persons, all as if [__________] and [__________] were not Agents and without any duty to account therefor to the Loan Participants. (d) Each Loan Participant acknowledges that it has, independently and without reliance upon the Agents or any other Loan Participant and based on the financial statements referred to in Section 7(a)(ix) of this Agreement and such other documents and -58- 59 information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Loan Participant also acknowledges that it will, independently and without reliance upon the Agents or any other Loan Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. (e) Subject to the appointment and acceptance of a successor agent as provided below, any Agent may resign at any time by giving written notice thereof to the Loan Participants, the Owner Trustee and Lessee and may be removed at any time with or without cause by the Majority in Interest of Certificate Holders (as defined in the Trust Indenture). Upon any such resignation or removal, the Majority in Interest of Certificate Holders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority in Interest of Certificate Holders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or removal of the retiring Agent by the Majority in Interest of Certificate Holders, then the retiring Agent may, on behalf of the Loan Participants, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the Trust Indenture. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section 18 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the Trust Indenture. Notwithstanding anything contrary herein, the Administrative Agent and the Documentation Agent hereunder and under the Trust Indenture shall be the same institution, respectively, as the Administrative Agent and the Documentation Agent under (and as defined in) the Credit Agreement. -72- 60 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: -------------------------------------------- Title: Sr. Vice President-Finance and Treasurer Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 [______________], Owner Participant By: -------------------------------------------- Title: Address: Attn: Telecopy No.: - Signature Page - 61 STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: -------------------------------------------- Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: -------------------------------------------- Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 - Signature Page - 62 by [Insert Bridge Lenders], as agent Loan Participant and Documentation Agent By: -------------------------------------------- Title: By: -------------------------------------------- Title: Address: Attn: Telecopy No.: - Signature Page - 63 SCHEDULE I NAMES AND ADDRESSES Lessee: Northwest Airlines, Inc. U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 Wire Transfer First Bank, N.A., Minneapolis ABA No. 091000022 Acct. No. 150250099440 Owner Participant: Payments made to the Owner Participant as provided in Section 3.06 of the Trust Indenture shall be made to: 64 Indenture Trustee: State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 Wire Transfer State Street Bank and Trust Company ABA No. 011-00-0028 for credit to State Street Bank and Trust Company Acct. No. 9903-943-0 Attn: Corporate Trust Department Reference: Northwest/NW 1996 F Owner Trustee: First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 Payments made to the Owner Trustee as provided in Section 3(f) of the Lease shall be made to: First Security Bank of Utah, National Association ABA No. 124-0000-12 Acct. No. 051-0922115 Attn: Corporate Trust Department Credit: Northwest/NW 1996 F SCHEDULE I - PAGE 2 65 SCHEDULE II COMMITMENTS
Percentage of Loan Participants: Lessor's Cost ----------------- -------------
66
Owner Participant: - ----------------- ------------ Total Commitments: 100%
SCHEDULE II - PAGE 2 67 EXHIBIT A TO PARTICIPATION AGREEMENT [NW 1996 F] SCHEDULE OF COUNTRIES FOR REREGISTRATION Argentina Japan Australia Luxembourg Austria Malaysia Belgium Mexico Brazil Netherlands Canada New Zealand Chile Norway Denmark People's Republic of China Finland Portugal France Republic of China (Taiwan) Germany Singapore Greece South Africa Hungary South Korea Iceland Spain India Sweden Indonesia Switzerland Ireland Thailand Italy United Kingdom
68 EXHIBIT B TO PARTICIPATION AGREEMENT [NW 1996 F] ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 F] ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 F], dated as of __________, ____, between ____________________________________, a _____________ corporation (the "ASSIGNOR"), and __________________________, a __________ corporation (the "ASSIGNEE"). W I T N E S S E T H: WHEREAS, the parties hereto desire to effect (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Participation Agreement [NW 1996 F], dated as of May 14, 1996, among Northwest Airlines, Inc., the Assignor, each Loan Participant named therein, First Security Bank of Utah, National Association, and State Street Bank and Trust Company (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), including, without limitation, any indemnity payments payable to the Assignee directly or indirectly thereunder, (ii) the Trust Agreement identified in the Participation Agreement (the "TRUST AGREEMENT"), (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Tax Indemnity Agreement identified in the Participation Agreement, and (v) the proceeds therefrom and (b) the assumption by the Assignee of the obligations of the Assignor accruing from and after the Effective Time; and WHEREAS, such documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Participation Agreement): 1. ASSIGNMENT. The Assignor has sold, assigned, conveyed, transferred and set over, and does hereby sell, assign, convey, transfer and set over, unto the Assignee as of the date hereof all of its present and future right, title and interest in, under and with respect to the Trust Estate, the Aircraft, the Participation Agreement, the Trust Agreement, the Tax Indemnity Agreement and all other Operative Documents to which the Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which the Assignor is bound, and any proceeds therefrom, together with all other documents and 69 instruments evidencing any of such right, title and interest, except such rights of the Assignor as have accrued to the Assignor prior to the Effective Time (as subsequently defined) (including specifically, but without limitation, the right to receive any amounts due or accrued to the Assignor under the Trust Agreement prior to the Effective Time and the right to receive any indemnity payment pursuant to the Participation Agreement or the Tax Indemnity Agreement with respect to events occurring prior to the Effective Time). 2. ASSUMPTION. The Assignee hereby undertakes all of the duties and obligations of the "Owner Participant" accruing on or subsequent for the Effective Time (for the avoidance of doubt, excluding any duties, obligations and liabilities of the Assignor required to be performed by it on or prior to the date hereof under the Participation Agreement, the Trust Agreement, any of the other Operative Documents to which the Assignor is a party or by which it is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which the Assignor is a party or by which the Assignor is bound), pursuant to the Participation Agreement, the Trust Agreement, and each other Operative Document to which the Assignor is a party, each contract, agreement, document or instrument hereby assigned and each other contract, agreement, document or instrument relating to the Trust Estate by which the Assignor is bound, and hereby confirms that it shall be deemed a party to the Participation Agreement, the Trust Agreement and each other Operative Document to which the Assignor is a party or by which it is bound and each such other contract, agreement, document and instrument, and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Owner Participant. The assignment and assumption contemplated hereby shall not release the Assignor from its obligations under the Participation Agreement or the Trust Agreement except to the extent expressly assumed by the Assignee pursuant to this Section 2, provided, that Assignor's rights under Section 7 of the Participation Agreement and under the Tax Indemnity Agreement to the extent relating to acts, conditions or events occurring or existing prior to the date hereof shall be retained in full by Assignor. 3. APPOINTMENT AS ATTORNEY-IN-FACT. In furtherance of the within assignment, the Assignor hereby constitutes and appoints the Assignee, and its successors and assigns, the true and lawful attorneys of the Assignor, with full power of substitution, in the name of the Assignee or in the name of the Assignor but on behalf of and for the benefit of and at the expense of the Assignee, to collect for the account of the Assignee all items sold, transferred or assigned to the Assignee pursuant hereto; to institute and prosecute, in the name of the Assignor or otherwise, but at the expense of the Assignee, all proceedings that the Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and compromise at the expense of the Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by the Assignee; and to do all such acts and things in relation thereto at the expense of the Assignee as the Assignee shall reasonably deem advisable. The Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by the Assignor in any manner or for any reason or by virtue of any dissolution of the Assignor. EXHIBIT B - PAGE 2 70 4. PAYMENTS. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee, and the Assignee hereby covenants and agrees to pay over to the Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignee that, under Section 1 hereof, belong to the Assignor. 5. FURTHER ASSURANCES. Each party hereto shall, at any time and from time to time, upon the request of any other party hereto, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the other party may reasonably request to obtain the full benefits of this Assignment and of the right and powers herein granted. 6. INVESTMENT PURPOSE. The Assignee hereby represents that it is acquiring the trust and other interests hereby assigned to it for its own account for the purpose of investment and not with a view to the distribution or resale of either thereof. 7. REPRESENTATIONS AND WARRANTIES. The Assignee represents and warrants that: (a) it is duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations and the obligations of the Owner Participant under the Operative Documents to which it is or will be a party; (b) this Assignment and Assumption Agreement has been duly authorized by all necessary action on its part, does not require any approval not already obtained of its stockholders or any approval or consent not already obtained of any trustee or holders of any of its indebtedness or obligations, and has been duly executed and delivered by the Assignee, and neither the execution and delivery thereof, nor the consummation of the transactions contemplated hereby, nor compliance by the Assignee with any of the terms and provisions hereof or of any of the Operative Documents to which it will become a party or by which it will be bound, will contravene any United States Federal or state law, judgment, governmental rule, regulation or order applicable to or binding on the Assignee (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA (except as set forth in subsection 7(h) below) or aviation or to the nature of the equipment to be owned by the Owner Trustee, other than such laws, rules, or regulations relating to lease transactions generally or to the citizenship requirements of the Assignee under the Federal Aviation Act) or contravene or result in any breach of or constitute any default under, or result in the creation of any Lien (other EXHIBIT B - PAGE 3 71 than Liens provided for in the Operative Documents) upon any property of the Assignee or, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Assignee is a party or by which it or its properties may be bound or affected; (c) each of the Operative Documents to which it will become a party, assuming such document is the legal, valid and binding obligation of each other party thereto, will constitute the legal, valid and binding obligation of the Assignee, enforceable in accordance with its terms; (d) there are no pending or, to the knowledge of the Assignee, threatened actions or proceedings against the Assignee before any court or administrative agency which, if determined adversely to the Assignee, would materially adversely affect the ability of the Assignee to perform its obligations under any Operative Document to which it will become a party; (e) upon the execution and delivery of this Assignment and Assumption Agreement, the Trust Estate and the Trust Indenture Estate will be free and clear of Lessor Liens (including for the this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Assignee; (f) neither the execution and delivery by the Assignee of this Assignment and Assumption Agreement, nor the consummation by it of any of the transactions contemplated hereby, requires the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or other governmental authority or agency (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 lease transactions generally or to the citizenship requirements of the Assignee under applicable aviation law); (g) the Assignee is not an "investment company" or a company controlled by an "investment company" required to register as such under the Investment Company Act of 1940, as amended; (h) either (x) no part of the funds to be used by it to acquire any right, title or interest in the Trust Estate, or in this Agreement, the Trust Agreement, the Tax Indemnity Agreement or any other of the Operative Documents to which the Assignee is a party or by which the Owner Participant is bound, directly or indirectly constitutes, or may be deemed under the Code, ERISA or any applicable state law or any rulings or regulations thereunder to be, the assets of any "employee benefit plan" as defined in Section 3(3) of EXHIBIT B - PAGE 4 72 ERISA or of any "plan" within the meaning of Section 4975(e)(1) of the Code or of any entity the assets of which constitute "plan" assets under ERISA, or (y) the transfer to and ownership of such right, title and interest by the Assignee is and will continue to be covered by Prohibited Transaction Class Exemption 91-38 or 95-60. (i) on the date hereof [it is a Citizen of the United States (without use of a voting trust agreement or voting powers agreement)] [it has entered into a voting powers or voting trust agreement which has been approved by the FAA (to the extent required by the Federal Aviation Act or the FAA)]; (j) the transfer to it of all of the Assignor's right, title and interest as Owner Participant will not adversely affect the continued registration of the Aircraft in the name of the Owner Trustee or violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or violate any provisions of the Securities Act of 1933, as amended, or any other applicable Federal or state law (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA (except as set forth in subsection 7(h) above)); and (k) [it is a "Transferee" satisfying the conditions set forth in Section 8(n) of the Participation Agreement] [alternatively, guaranty meeting the requirements of Section 8(n) of the Participation Agreement to be provided]; and (1) such Transferee is not (i) an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or (ii) 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 (unless such entity is General Electric Company, International Lease Finance Corporation, any similar entity or any of their respective Affiliates, provided, that (I) such entity is not included within the immediately preceding clause (i) of this subsection (l) and (II) no such entity has, through ownership of common or preferred stock, effective voting control of an entity described in such immediately preceding clause (i). 8. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor represents and warrants that: (a) it is a corporation duly organized and validly existing in good standing under the laws of the State of ____________ and has the requisite power, authority and legal right to enter into and carry out the transactions contemplated hereby; EXHIBIT B - PAGE 5 73 (b) this Agreement has been duly authorized, executed and delivered by it and constitutes the legal, valid and binding obligation of Assignor, enforceable against it in accordance with its terms; (c) no action or proceeding is pending, has been instituted or, to the knowledge of Assignor, is threatened, before any court or governmental agency, nor has any order, judgment or decree been issued or, to the knowledge of Assignor, is threatened, by any court or governmental agency which would materially adversely affect the ability of Assignor to complete and consummate its obligations contemplated hereby; (d) the Trust Estate is free of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to it; (e) it has fully performed all of its obligations under the Participation Agreement and under each other Operative Document to which it is a party or by which it is bound, which obligations by their terms are required to be satisfied or performed prior to the Effective Time or prior to the consummation of the transactions contemplated hereby; (f) neither the execution, delivery and performance by it of this Agreement, nor compliance by it with any of the provisions thereof requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness obligations of it or contravenes or will contravene any law or any order of any court or governmental authority of agency applicable to or binding on it (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA) or contravenes or will contravene the provisions of, or constitute a default under, its [Certificate of Incorporation] or [By-Laws] or any indenture, mortgage, contract or any agreement or instrument to which it is a party or by which it or any of its property may be bound or affected; (g) the transfer to Assignee of all of the Assignor's right, title and interest as Owner Participant will not violate, or affect registration of the Aircraft under, any provision of the Federal Aviation Act (or any rules or regulations promulgated thereunder), violate the Securities Act of 1933, as amended (and no registration pursuant to such Act or the rules and regulations thereunder shall be required in connection with such transfer), or violate any other applicable Federal or state law (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA); and (h) Assignor has assumed the risk of any loss of Interest Deductions, Amortization Deductions and MACRS Deductions and the risk of any Inclusion EXHIBIT B - PAGE 6 74 Event (each as defined in the Tax Indemnity Agreement) resulting from the transfer to Assignee pursuant to the Assignment. 9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE. 10. COUNTERPARTS. This Assignment may be executed in any number of counterparts, all of which together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 11. THIRD PARTY BENEFICIARIES. Each party hereto agrees, for the benefit of the Owner Trustee, each Loan Participant, each Certificate Holder, the Indenture Trustee and Lessee (collectively, the "BENEFICIARIES"), that the representations, warranties and covenants of such party contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. 12. EFFECTIVENESS. This Agreement shall be effective upon its execution and delivery by each of Assignor and Assignee, the exact time of occurrence of which (the "EFFECTIVE TIME") shall be agreed in a writing signed by Assignor and Assignee addressed to Lessee, the Owner Trustee and the Indenture Trustee. EXHIBIT B - PAGE 7 75 IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. [ASSIGNOR] By ------------------------------------ Title [ASSIGNEE] By ------------------------------------ Title EXHIBIT B - PAGE 8 76 EXHIBIT C TO PARTICIPATION AGREEMENT [NW 1996 F] SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES ** Argentina * Japan * Australia * Luxembourg * Austria ** Malaysia * Belgium ** Mexico ** Brazil * Netherlands * Canada * New Zealand ** Chile * Norway * Denmark ** People's Republic of China * Finland Portugal * France ** Republic of China (Taiwan)*** * Germany Singapore ** Greece ** South Africa ** Hungary South Korea * Iceland Spain ** India * Sweden ** Indonesia * Switzerland * Ireland ** Thailand * Italy * United Kingdom - --------------- * Designates "Specified Country". ** Designates "Restricted Country". *** 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 C - PAGE 1 77 EXHIBIT D TO PARTICIPATION AGREEMENT FORM OF GUARANTY [LETTERHEAD OF GUARANTOR] PARENT GUARANTY Dated as of ____________ ____, ______ [Lessee] [Trust Company] [Indenture Trustee] [Loan Participants] One Boeing Model 757-251 Aircraft Manufacturer's Serial Number [ ] Ladies and Gentlemen: Reference is hereby made to the Participation Agreement [NW 1996 F] (as from time to time amended or supplemented, the "Participation Agreement"), dated as of May 14, 1996, among Northwest Airlines, Inc. ("Lessee"), [_______________] (the "Owner Participant"), First Security Bank of Utah, National Association, not in its individual capacity, except as expressly provided therein, but solely as trustee (the "Owner Trustee" and "Lessor") under the Trust Agreement, dated as of May 14, 1996, between the Trustee and the Owner Participant (the "Trust Agreement"), State Street Bank and Trust Company (the "Indenture Trustee") and the Loan Participants listed on Schedule I thereto. Capitalized terms used herein without definition have the respective meanings ascribed thereto in the Participation Agreement. Pursuant to Section 8 of the Participation Agreement and in connection with the transfer of the Interest (as defined in the Assignment and Assumption Agreement dated as of the date hereof between [Transferor], a ____________ corporation ("Transferor") and [Transferee], a ____________ corporation ("Transferee") (the "Assumption Agreement'')) to be consummated as of the date hereof from Transferor to Transferee, the wholly-owned subsidiary of _________________________ ("Guarantor"), and the execution by Guarantor of the guaranty of Transferee's obligations as contemplated by the Assumption Agreement (this "Guaranty"), Guarantor represents and warrants to, and covenants with, Lessee, First Security Bank of Utah, National Association, in its individual capacity ("Trust Company"), Indenture Trustee and Loan Participants, as follows: EXHIBIT D - PAGE 1 78 1. Ownership of Transferee. Guarantor directly or indirectly owns and holds all of the issued and outstanding shares of capital stock of Transferee. 2. Additional Representations and Warranties. (i) Guarantor is a corporation duly organized and validly existing pursuant to the laws of ___________________, and has the corporate power and authority to enter into and perform this Guaranty. (ii) The execution, delivery and performance by Guarantor of this Guaranty has been duly authorized by all necessary corporate action on the part of Guarantor, does not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Guarantor except such as have been duly obtained, and this Guaranty will not contravene any applicable law or corporate charter or by-law, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien upon the property of Guarantor under, any indenture, mortgage, contract or other agreement to which Guarantor is a party or by which it may be bound or affected. (iii) Neither the execution and delivery by Guarantor of this Guaranty, nor the consummation of the transactions by Guarantor contemplated hereby, nor the performance of the obligations hereunder or under any other documents contemplated hereby or thereby by Guarantor requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, United States Federal, state, or foreign governmental authority or agency. (iv) This Guaranty has been duly executed and validly delivered by Guarantor and constitutes the legal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its terms except as the enforcement of this Guaranty may be affected by applicable bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally. (v) There are no pending or, to Guarantor's knowledge, threatened actions or proceedings before any court or administrative agency which might materially adversely affect the consolidated financial condition, business or operations of Guarantor, or the ability of Guarantor to perform its obligations under this Guaranty. (vi) No broker's or finder's fees or commissions or advisory fees are or may become payable in connection with this Guaranty or the Assumption Agreement or, if any such fee is payable, such fee will be the responsibility of Guarantor. (vii) On the date hereof the Trust Estate will be free of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to Guarantor. (viii) Guarantor is (A) a Citizen of the United States (or has effected a voting trust agreement, voting powers agreement or other similar arrangement) and (B) a bank, EXHIBIT D - PAGE 2 79 insurance company, financial institution or domestic corporation the net worth of which is at least $50,000,000. 3. Guaranty. (a) Guarantor hereby unconditionally and irrevocably guarantees, not merely as surety but as obligor: (i) the due and punctual payment of any and all sums which are payable by Transferee pursuant to any provision of the Assumption Agreement (and in particular, Section 4 thereof) and the Participation Agreement, the Tax Indemnity Agreement and any other Operative Document assumed by Transferee pursuant to the Assumption Agreement (collectively, the "Guaranteed Agreements"), and (ii) the due and punctual performance of and compliance with and observance of all other obligations, covenants, warranties and undertakings of or conditions contained in or arising under the Guaranteed Agreements binding upon or made by Transferor and assumed by Transferee under the Assumption Agreement, in each case, whether or not Guarantor shall have contributed funds to Lessor or Transferee, as the case may be, for such payment or performance by Lessor or Transferee (such payments and other obligations guaranteed hereunder hereinafter referred to as the "Obligations"). (b) Guarantor agrees that this Guaranty is an unconditional and absolute guaranty of payment and performance (not merely enforceability) and that its undertakings hereunder are not contingent upon your bringing any action against Transferee or resorting to any security and hereby expressly waives any claim that its undertakings hereunder are so contingent. (c) Guarantor hereby waives promptness, diligence, demand and all notices whatsoever as to the obligations and covenants guaranteed hereby and acceptance of this Guaranty, and waives any other circumstance which might otherwise constitute a defense available to, or a discharge of, the undersigned, and agrees that it shall not be required to consent to, or receive any notice of, any amendment or modification of, or waiver, consent or extension with respect to, the Guaranteed Agreements that may be made or given as provided therein. (d) Guarantor agrees to pay any costs and expenses (including reasonable fees and disbursements of counsel) that may be paid or incurred by the beneficiaries hereof in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty. (e) Guarantor understands and agrees that its obligations hereunder shall be construed as continuing, absolute and unconditional without regard to (i) the validity, regularity or enforceability of any Operative Document, any of the Obligations or any collateral security therefor or guaranty or right of offset with respect thereto at any time or EXHIBIT D - PAGE 3 80 from time to time held by any beneficiary hereof, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by Transferee against any beneficiary hereof or (iii) any other circumstances whatsoever (with or without notice to or knowledge of Transferee or Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of Transferee for the Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any other instance. 4. Quiet Enjoyment. So long as no Event of Default shall have occurred and be continuing, Guarantor will not permit Transferee or Lessor to take or cause to be taken any action contrary to Lessee's rights under the Lease, including, without limitation, Lessee's rights to possession and use of the Aircraft. 5. No Discharge. The obligations of Guarantor hereunder are absolute, unconditional and irrevocable and will not be discharged by, and this Guaranty shall remain in full force and effect notwithstanding: (a) the assignment, conveyance or other transfer by Guarantor of any or all of its interest in or capital stock of Transferee, unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer); (b) the assignment, conveyance or other transfer by Transferee of any or all of its interest in the Trust Estate (as defined in the Trust Agreement), unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer) unless Guarantor guarantees the obligations of the transferee under Section 8(n) of the Participation Agreement; (c) the assignment, conveyance or other transfer by Lessor of any or all of its interest in the Aircraft; (d) any extension or renewal with respect to any obligation of Transferee or Lessor under the Guaranteed Agreements; (e) any modification of, or amendment or supplement to, any of the Guaranteed Agreements; (f) any furnishing or acceptance of additional security or any release of any security; (g) any waiver, consent or other action or inaction or any exercise or non-exercise of any right, remedy or power with respect to Transferee or Lessor, or any change in the structure of Transferee or Lessor; or (h) any insolvency, bankruptcy, reorganization, arrangement, composition, liquidation, dissolution, or similar proceedings with respect to the Trustee or Transferee; or any other occurrence whatsoever, except payment in full of all amounts payable by Transferee under the Guaranteed Agreements and performance in full of all Obligations of Transferee in accordance with the terms and conditions of the Guaranteed Agreements. 6. Reinstatement. Guarantor agrees that this Guaranty shall be automatically reinstated with respect to any payment made prior to any termination of the Guaranty by or on behalf of Transferee pursuant to the Participation Agreement or the other EXHIBIT D - PAGE 4 81 Operative Documents to which Transferee is a party if and to the extent that such payment is rescinded or must be otherwise restored, whether as a result of any proceedings in bankruptcy or reorganization or otherwise. 7. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any set-off or application of funds of Guarantor by any beneficiary hereof, Guarantor shall not be entitled to be subrogated to any of the rights of any beneficiary hereof against Transferee or any collateral, security or guarantee or right of set-off held by any beneficiary hereof for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payment made by Guarantor hereunder, until all amounts and performance owing to the beneficiaries hereof by Transferee on account of the Obligations are paid and performed in full. 8. Severability. Any provision of this Guaranty Agreement that 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. 9. Miscellaneous. This Guaranty shall: (a) be binding upon Guarantor, its successors and assigns; (b) inure to the benefit of, and be enforceable by, Lessee, Trust Company, Indenture Trustee, and Loan Participants, and their respective successors and assigns and each other holder from time to time of any interest in the Aircraft or the Operative Documents, but shall not, and is not intended to, create rights in any other third parties; (c) not be waived, amended or modified without the written consent of Lessee, Trust Company, Indenture Trustee, and Loan Participants; (d) BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; and (e) subject to Section 6 hereof, remain in full force and effect until, and shall be terminated upon (1) the payment in full of all sums payable by Transferee, as the case may be, under the Guaranteed Agreements, and by Guarantor hereunder, and performance in full of Transferee, in accordance with the terms and provisions of the Guaranteed Agreements and Guarantor in accordance with the terms of this Guaranty or (2) the date on which Transferee shall meet the requirements set forth in Section 8 of the Participation Agreement without benefit of this Guaranty; provided that Guarantor hereby covenants and agrees that if Transferee shall at any time thereafter (while Transferee shall be Owner Participant under the Participation Agreement) fail to meet such requirements, Guarantor shall immediately reinstate this Guaranty or execute and deliver to the addressees of this Guaranty a guaranty substantially identical hereto. All notices to, or requests of, demands on and other communications with Guarantor shall be made as set forth in the Participation Agreement. [rest of page intentionally left blank] EXHIBIT D - PAGE 5 82 Very truly yours, [GUARANTOR] By: ---------------------------------- Name: Title: [SIGNATURE PAGE] EXHIBIT D - PAGE 6 83 EXHIBIT E TO PARTICIPATION AGREEMENT FORM OF OPINION OF TRANSFEREE COUNSEL _____________ ___, _______ To Each of the Persons Named on Schedule A Attached Hereto Re: Transfer of Interest in one Boeing Model 757-251 Aircraft, and Operative Documents related to Acquisition Thereof on __________ ____, ______ Ladies and Gentlemen: We have acted as [special][internal] counsel to [Transferee], a _____________ corporation (the "Transferee"), in connection with the transfer by [Transferor], a __________________ corporation (the "Transferor") to Transferee, of all of its right, title and interest in and to the Aircraft and the Operative Documents to which the Transferor is a party or by which it is bound (collectively, the "Transferee Documents") and the assumption by the Transferee of the Transferor's obligations thereunder. The transfer is being accomplished by an Assignment and Assumption Agreement, dated as of ____________ ____, _____ made by the Transferee and agreed to and acknowledged by the Transferor (the "Assumption Agreement"). Capitalized terms used but not otherwise defined herein are defined as set forth in or by reference in the Participation Agreement referred to in the Assumption Agreement. In connection with the opinions expressed herein, we have examined executed counterparts of the Transferee Documents. We have also examined and relied upon the accuracy of the originals or certified, conformed, photocopied or telecopied copies of such corporate records, certificates, instruments and other documents as we have deemed necessary or appropriate to enable us to render the opinions expressed herein. In all such examinations, we have assumed the genuineness of signatures (other than those of the Transferee) on original documents and the conformity to such original documents of all copies submitted to us as certified, conformed, photocopied or telecopied copies, and as to certificates and telegraphic and telephonic confirmations given by public officials, we have assumed the same to have been properly given and to be accurate. As to all matters of fact material to our opinions, we have, when relevant facts were not independently established, relied upon representations and warranties contained in the Operative Documents and upon the statements and certificates furnished to us. Based upon and subject to the foregoing and the matters hereinafter set forth, we are of the opinion that: EXHIBIT E - PAGE 1 84 1. The Transferee is a corporation duly organized, validly existing and in good standing under the laws of the State of ______________. 2. The Transferee has full corporate power, authority and legal right to carry on its business as now conducted and is duly authorized and empowered to [execute and deliver] the Transferee Documents and to perform its obligations thereunder in accordance with the conditions and provisions thereof. 3. The execution, delivery and performance by the Transferee of the Transferee Documents have been duly authorized by the Transferee[, and each of the Transferee Documents has been duly executed and delivered by it]. 4. No filing with, notice to or authorization or approval from any governmental or public body or authority of the United States of America or the State of ____________ is required in connection with the execution, delivery and performance by the Transferee of the Transferee Documents. 5. There are no actions, suits or proceedings (whether or not purportedly on behalf of the Transferee) pending or, to our knowledge, threatened against or affecting the Transferee or any property rights of the Transferee at law or in equity or before any court, commission or other administrative agency or instrumentality, which, either individually or in the aggregate, if determined adversely would materially affect the condition, financial or otherwise, of the Transferee or its ability to perform its obligations under the Transferee Documents; and, to our knowledge, the Transferee is not in default with respect to any order or decree of any court or governmental commission, agency or instrumentality which would materially affect the condition, financial or otherwise, of the Transferee or its ability to perform its obligations under the Transferee Documents. 6. Neither the execution and delivery by the Transferee of the Transferee Documents nor the consummation of the transactions therein contemplated or the fulfillment of or compliance with, the terms and provisions thereof will conflict with or result in a breach of, any of the terms, conditions or provisions of (i) any law or regulation of the United States of America or the State of ____________, or (ii) to the best of our knowledge, any order, injunction or decree of any court or governmental instrumentality binding upon the Transferee, or (iii) the Certificate of Incorporation or the By-Laws of the Transferee or (iv) to the best of our knowledge, any bond, debenture, note, mortgage, indenture, agreement or other instrument to which the Transferee is now a party or by which it or its property may be bound, or would constitute (with the giving of notice or the passage of time or both) a default thereunder or result in the creation or imposition of any lien, charge, security interest or other encumbrance (except as expressly contemplated by the Operative Documents) or any nature whatsoever upon the Aircraft pursuant to the terms of any such agreement or instrument. 7. Each of the Transferee Documents constitutes a legal, valid and binding obligation of the Transferee, enforceable against the Transferee in accordance with the terms thereof, except as the enforceability thereof may be limited by (a) general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), EXHIBIT E - PAGE 2 85 (b) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (c) public policy considerations (in the case of the indemnity provisions contained therein). 8. Neither the execution and delivery by the Transferee of the Transferee Documents, nor the consummation by the Transferee of any of the transactions contemplated thereby requires the consent or approval of, the giving of notice to, or the registration or filing with, or the taking of any other action with respect to, any governmental authority or agency of the United States of the State of _______________. We express no opinion as to the laws of any jurisdiction other than the laws of the State of ______________ and the federal laws of the United States of America. We note that the Trust Agreement is governed by the laws of the State of Utah. Insofar as the foregoing opinions relate to the legality, validity, binding effect and enforceability of the Trust Agreement, we have assumed for purposes of such opinions (notwithstanding the express provisions of such agreements to the contrary) that such agreement is governed by the laws of the State of ______________ and we express no opinion as to the enforceability of the choice of law provisions in such agreement. In addition, we express no opinion herein as to (i) any federal or state securities laws, (ii) any tax laws, (iii) any aviation laws, (iv) any laws, statutes, rules or regulations applicable to the particular nature of the equipment acquired by the Owner Trustee pursuant to the Participation Agreement or the Purchase Agreement Assignment and (v) ERISA or any other pension and employee benefit laws, rules or regulations. In addition, we express no opinion as to title in or to the Trust Estate on the part of any Person. Insofar as our opinions expressed herein relate to the Tax Indemnity Agreement, such opinions are addressed and are being rendered solely to Lessee. In rendering the opinions expressed herein, we have assumed that (a) each of the Transferee Documents has been duly authorized, executed and delivered by the respective parties thereto (other than the Transferee) and constitutes a legal, valid and binding obligation of each of such parties (other than the Transferee) enforceable against each of such parties in accordance with the terms thereof, (b) each of such parties (other than the Transferee) has the requisite power, authority and legal right to enter into and perform its respective obligations under the Transferee Documents and (c) the transactions provided for in the Transferee Documents are not within the prohibitions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended. This opinion is furnished by us at the request of the Transferee, with their consent for the sole benefit of the addressees hereof, each of whom we understand and agree may rely upon the opinions set forth herein. No other person or entity is entitled to rely on this opinion without our express written consent. This opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated herein. Very truly yours, EXHIBIT E - PAGE 3 86 SCHEDULE A [Lessee] [Trust Company] [Indenture Trustee] [Loan Participants] SCHEDULE A - PAGE 1 EX-4.J8 85 FIRST AMENDMENT TO PARTICIPATION AGREEMENT-1996 F 1 FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 F] This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 F], dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) [______________], a [________] corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (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 (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; W I T N E S S E T H: WHEREAS, Lessee, the Owner Participant, the Owner Trustee, [________________________], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 F], dated as of May 14, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 F], dated as of May 14, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 F], dated May 14, 1996 2 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 F] relating to the Aircraft, dated as of May 14, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 F] dated May 14, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 F], dated as of May 14, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 F] relating to the Aircraft, dated as of May 14, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 F] dated as of May 14, 1996 (the "GUARANTEE"), pursuant to which the Guarantor guaranteed certain obligations of Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant Guarantor entered into the Owner Participant Guaranty [NW 1996 F] dated as of May 14, 1996 (the "OWNER PARTICIPANT GUARANTY"), pursuant to which the Owner Participant Guarantor guaranteed certain obligations of the Owner Participant under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent have entered into the Refunding Agreement [NW 1996 F], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"); -2- 3 WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 F], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1996 F], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 F] dated as of June 3, 1996 (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Participant and the Owner Trustee have entered into the First Amendment to Trust Agreement [NW 1996 F] dated as of the date hereof (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT") WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in Section 1 of the Refunding 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing 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 Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (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 -3- 4 Subordination Agent entered into the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Participation Agreement is amended as follows: SECTION 1. AMENDMENT OF SECTION 1(D) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 2. AMENDMENT OF SECTION 7(B)(I) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(i) of the Original Participation Agreement is hereby amended by (i) adding the words "or the Pass Through Certificates" (1) before and after the clause "or transfer of the Secured Certificates" in clause (E) thereof and (2) after the clause "the Secured Certificates" in clause (F) thereof and (ii) adding the words and punctuation "(including any Make-Whole Amount)" after the word "premium" in clause (F) thereof. SECTION 3. AMENDMENT OF SECTION 7(B)(II) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation Agreement is hereby amended by (i) deleting the words "other than a Loan Participant" from clauses (1) and (3) thereof; (ii) deleting clauses (2) and (4) thereof in their entirety and substituting therefor "Intentionally Omitted", (iii) deleting the words "a Loan Participant" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (iv) deleting the words "any Loan Participant or any Certificate Holder" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (B) in clause (10) thereof and substituting therefor "or", (vi) deleting "(C)" in clause (10) thereof and substituting therefor "(B)", and (vii) deleting the parenthetical clause and the proviso from clause (12) thereof. SECTION 4. AMENDMENT OF SECTION 7(B)(III) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation Agreement is hereby amended by (i) deleting the words "U.S. Withholding Taxes" where such words first appear in the second sentence of the first paragraph thereof and substituting therefor "any Income Tax imposed by the Unites States Federal government required to be withheld from payments on the Secured Certificates or the Pass Through Certificates (a "U.S. WITHHOLDING TAX")" and (ii) deleting the second sentence in the last paragraph thereof. SECTION 5. AMENDMENT OF SECTION 7(B)(X) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement is hereby amended by (i) deleting the third and fourth sentences thereof and (ii) deleting the words "other than a Loan Participant" in the first sentence thereof. -4- 5 SECTION 6. AMENDMENT OF SECTION 7(C) OF THE ORIGINAL PARTICIPATION AGREEMENT . Section 7(c) of the Original Participation Agreement is hereby amended by (i) deleting the word "and" between the words "expenses" and "Transaction Expenses" in the second parenthetical phrase of the first paragraph thereof and substituting a comma therefor, (ii) inserting after the phrase "to Section 16 hereof" in such second parenthetical phrase the words "and Refinancing Expenses to the extent not required to be paid by the Owner Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement", (iii) adding the words and punctuation "and, only in the case of an Indemnitee who is the Owner Participant and its Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents, the Intercreditor Agreement, the Liquidity Facilities and the Pass Through Trust Agreements and, only in the case of an Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words "respect thereof" in the first clause (A) thereof, and (iv) adding the words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after the words "Operative Documents" in the second clause (A) thereof and in the second clause (B) thereof. SECTION 7. [Reserved] SECTION 8. AMENDMENT OF SECTION 8(F) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby amended by deleting the words "each of the Loan Participants" and substituting therefor the words "the Indenture Trustee" in the first line thereof. SECTION 9. AMENDMENT OF SECTION 8(N) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", any Loan Participant's," from the first sentence thereof, (ii) deleting the words and punctuation "the Loan Participants," each time they appear in the second sentence thereof, (iii) deleting the "," between the words "Owner Trustee" and "the Indenture Trustee" in clause (N) of the third sentence thereof and substituting therefor "and", (iv) deleting the words "and the Loan Participants" from clause (N) of the third sentence thereof, and (v) deleting the words and punctuation "the Loan Participants," from the fifth sentence thereof. -5- 6 SECTION 10. AMENDMENT OF SECTION 8(Q)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement is hereby amended by (i) deleting the word "Each" in the first sentence thereof and substituting therefor the words "The Owner" and (ii) adding a new sentence to the end thereof to read as follows: "The Pass Through Trustee agrees that it will not agree to any amendment, modification or waiver of Section 1.01(e)(i) of the initial supplement (other than the initial supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust Agreement without the prior written consent of the Owner Participant.". SECTION 11. AMENDMENT OF SECTION 8(T) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is hereby amended by deleting the fourth and fifth sentences thereof. SECTION 12. AMENDMENT OF SECTION 8(X) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", each Loan Participant" therefrom and (ii) adding a new second paragraph thereto at the end thereof: 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. Section1110; 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. Section1110. SECTION 13. AMENDMENT OF SECTION 8(Y)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement is hereby amended by (i) deleting the words "each" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii) deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Indenture Trustee and the Owner", (iii) inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement Assignment", the words and punctuation ", the Refunding Agreement", (iv) deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and substituting therefor the words "the Owner", and (v) deleting the word "Participants" from Section 8(y)(A)(iv) and substituting therefor the words "the Indenture Trustee and the Owner Participant". SECTION 14. AMENDMENT OF SECTION 8(DD) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. -6- 7 SECTION 15. AMENDMENT OF SECTION 8(GG) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(gg) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 16. AMENDMENT OF SECTION 8(HH) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(hh) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 17. AMENDMENT OF SECTION 8(II) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(ii) of the Original Participation Agreement is hereby amended to read in its entirety as follows: (ii) Lessee agrees and covenants that it shall not purchase, guarantee or acquire any interest in (i) any Secured Certificate (except as provided in Section 8(x)) or Pass Through Certificate or (ii) any Advance by the Liquidity Provider. SECTION 18. AMENDMENT OF SECTION 9 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 19. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", the Loan Participants" from clause (A) thereof, (ii) deleting the words "Loan Participants" the second time they appear in clause (B) thereof and substituting therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05" from clause (iii) of the second sentence thereof. SECTION 20. AMENDMENT OF SECTION 13(B) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby amended by deleting the words "at the foot of this Agreement" in clause (A) of the second sentence thereof and substituting therefor the words "on the signature pages to the Refunding Agreement". SECTION 21. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is hereby amended by (i) deleting the words "Loan Participants" each time they appear in clauses (A), (B), and (D) thereof and substituting therefor the words "Indenture Trustee", (ii) deleting the "," both times it appears between the words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and substituting therefor "and", and (iii) deleting the words "and the Loan Participants" both times they appear in clause (E) thereof. SECTION 22. AMENDMENT OF SECTION 15(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Section 15. Miscellaneous. (a) The Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent -7- 8 requested of the Owner Trustee, as Lessor, under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor. SECTION 23. AMENDMENT OF SECTION 17 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is hereby amended by adding the following new subclause (7) to clause (a) thereof: (7) in connection with any proposed refinancing, if, on the date which is two Business Days prior to the last date on which notice of revocation of redemption may be given pursuant to Section 2.12(b) of the Trust Indenture, the Owner Participant is not satisfied in its sole discretion that such refinancing will occur on the date specified for such refinancing in the notice provided pursuant to Section 2.11 of the Trust Indenture, then Lessee shall not effect such proposed refinancing and shall provide notice to such effect to the Indenture Trustee pursuant to Section 2.12(b) of the Trust Indenture. SECTION 24. AMENDMENT OF SECTION 18 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 25. RATIFICATION. Except as hereby modified, the Original Participation Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Participation Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Participation Agreement or any word or phrase referring to a section or provision of the Participation Agreement is deemed for all purposes to be a reference to the Participation Agreement or such section or provision as amended pursuant to this Amendment. SECTION 26. MISCELLANEOUS. (a) Without in any way affecting the provisions of the letter agreement dated May 14, 1996 between the Owner Participant and Lessee (which letter agreement shall remain in full force and effect) relating to future financings, each of the parties hereto agrees that the transactions contemplated hereby shall constitute one of the three refinancing operations permitted in Section 17 of the Participation Agreement. (b) Each party hereto acknowledges and agrees that the Purchaser is a Loan Participant under the Participation Agreement, the Lease and the other Operative Documents, and is entitled to the benefits of the covenants and other provisions therein running in favor of the Loan Participants, and to the security purported to be afforded by the Trust Indenture, but that (i) the Purchaser has no liability arising out of any actions or inactions of the Original Loan Participants or any prior Certificate Holder or any event or condition which occurred or existed prior to the Closing, (ii) the Purchaser is making no representations or warranties other than those set forth in the Refunding Agreement, and (iii) the Purchaser has no liability or obligation under any covenant in any of such agreements for any period prior to the Closing. -8- 9 (c) This Amendment 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 Amendment 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 Amendment shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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. THIS AMENDMENT 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 AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -9- 10 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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: ----------------------------------- Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: ----------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ----------------------------------- Name: Title: [___________________], as Owner Participant By: ----------------------------------- Name: Title: -10- 11 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Subordination Agent By: ----------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee By: ----------------------------------- Name: Title -11- 12 SCHEDULE I TO PARTICIPATION AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. -12- EX-4.J9 86 REFUNDING AGREEMENT-1996 F 1 REFUNDING AGREEMENT [NW 1996 F] This REFUNDING AGREEMENT [NW 1996 F], dated as of June 3, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii) [ ], a [ ] corporation (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Participation Agreement (as defined below) as if the Closing Date had occurred. W I T N E S S E T H: WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, [______________________________], as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANTS") and the Indenture Trustee entered into the Participation Agreement [NW 1996 F], dated as of May 14, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust 2 Indenture and Security Agreement [NW 1996 F], dated as of May 14, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 F], dated May 14, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participants secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participants in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Lessee entered into the Lease Agreement [NW 1996 F] relating to the Aircraft, dated as of May 14, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 F] dated May 14, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 F], dated as of May 14, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 F] relating to the Aircraft, dated as of May 14, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 F] dated as of May 14, 1996 (the "GUARANTEE") pursuant to which the Guarantor guaranteed certain obligations of the Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and the Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 F], dated as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; -3- 3 WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Trustee and the Lessee entered into the First Amendment to Lease Agreement [NW 1996 F], dated as of the date hereof (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"), containing amendments, modifications and additions necessary to give effect to the transactions described herein; WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into the First Amendment to Trust Agreement [NW 1996 F], dated as of the Refinancing Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT"); WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent will enter into the First Amendment to Participation Agreement [NW 1996 F], dated as of the Refinancing Date (the "PA AMENDMENT NO. 1"; the Original Participation Agreement, as amended by the PA Amendment No. 1, the "PARTICIPATION AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 F] dated as of the date hereof (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing Secured Certificates bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will enter 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 Refinancing Date (the "INTERCREDITOR AGREEMENT"); and -4- 4 WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on June 12, 1996 or on such other date agreed to by the parties hereto (the "REFINANCING DATE"): (i) immediately prior to the Closing, the Owner Participant shall pay to the Owner Trustee an amount equal to the unpaid interest on the Original Secured Certificates accrued up to but not including the Refinancing Date; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Refinancing Secured Certificates being issued to such Pass Through Trustee as set forth in clause (vii) below; (iii) the Owner Trustee shall pay to the Indenture Trustee for the benefit of the holders of the Original Secured Certificates an amount equal to the aggregate principal amount of Original Secured Certificates outstanding on the Refinancing Date, together with accrued and unpaid interest on the Original Secured Certificates up to but not including the Refinancing Date, and all other amounts payable to such holders by the Owner Trustee under the Original Indenture and the Original Participation Agreement; (iv) pursuant to the Indenture, the Indenture Trustee shall disburse to the holders of the Original Secured Certificates the amounts of principal and interest, and other amounts, if any, described in clause (iii) above, owing to them on the Refinancing Date with respect to the Original Secured Certificates as a prepayment of the Original Secured Certificates; (v) simultaneously with the disbursement by the Indenture Trustee of amounts described in clause (iv) above to the holders of the Original Secured Certificates, the Indenture Trustee shall receive the Original Secured Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture; (vii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Refinancing Secured Certificates of the -5- 5 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; and (viii) the Owner Trustee shall disburse to the Owner Participant the excess of the amounts received by it pursuant to clauses (i) and (ii) above over the amount paid by it pursuant to clause (iii) above. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. (c) In case any Pass Through Trustee shall for any reason fail to purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on or prior to June 12, 1996 or such other date as shall be agreed in writing by the parties hereto, the written notice given by the Lessee pursuant to Section 17 of the Original Participation Agreement shall be deemed never to have been given, none of the Owner Participant, the Owner Trustee nor the Lessee shall have any obligation to pay to the holders of the Original Secured Certificates or the Indenture Trustee any amount in respect of the prepayment of the Original Secured Certificates, the Original Secured Certificates shall remain outstanding and in full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall not take place. (d) The closing (the "CLOSING") of the transactions described in this Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such other place as the parties hereto may agree. (e) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Refinancing Date. (f) In order to facilitate the transactions contemplated hereby, the Lessee and the Guarantor have entered into the Underwriting Agreement, dated the date hereof, among the Lessee, the Guarantor and the several underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to the terms and conditions hereof, the Lessee and the Guarantor will enter into each of the Pass Through Trust Agreements and will undertake to perform certain administrative and ministerial duties under such Pass Through Trust Agreements. SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured Certificates shall be payable as to principal in accordance with the terms of the Indenture, and the Refinancing Secured Certificates shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Refinancing Secured Certificates in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Refinancing Secured Certificates bearing the interest rate set forth opposite the name of such -6- 6 Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Refinancing Secured Certificates shall be dated and authenticated as of the Refinancing Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee and the Owner Participant to make the payments and participate in the transactions contemplated by this Agreement on the Refinancing Date are subject to the fulfillment, prior to or on the Refinancing Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder, and paragraph (r) shall not be a condition precedent to the obligations of the Pass Through Trustee hereunder): (a) The Owner Trustee shall have tendered the Refinancing Secured Certificates to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Refinancing Secured Certificates and shall have tendered the Refinancing Secured Certificates to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts or conformed copies of the following documents: (1) this Agreement; (2) the Lease Amendment No. 1; (3) the Indenture; (4) the PA Amendment No. L; (5) the Trust Agreement Amendment No. 1; (6) each of the Pass Through Trust Agreements; (7) the Intercreditor Agreement; and (8) the Liquidity Facility for each of the Class A, Class B and Class C Trusts. -7- 7 (c) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Lessee and the Guarantor (as the case may be) as to the person or persons authorized to execute and deliver this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the TIA Amendment No. 1 and any other documents to be executed on behalf of the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Lessee and the Guarantor or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the 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 the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby; and (3) a copy of the certificate of incorporation of the Lessee and the Guarantor, certified by the Secretary of State of the State of Minnesota in the case of the 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 the Lessee and the Guarantor, certified by the Secretary or Assistant Secretary of the 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 the 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 Refinancing Date, as to the due incorporation and good standing of the Lessee or the Guarantor (as the case may be) in such state. (d) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received a certificate signed by an authorized officer of the Lessee (and, with respect to the matters set forth in clauses (4) and (5) below, of the Guarantor), dated the Refinancing Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Original Lease and has a current, valid certificate of airworthiness; (2) the FAA Bill of Sale, the Original Lease and the Original Indenture have been duly recorded, and the Original Trust Agreement -8- 8 has been duly filed, with the FAA pursuant to the sections of Title 49, United States Code, relating to aviation (the "FEDERAL AVIATION ACT"); (3) the Aircraft has been registered with the FAA in the name of the Owner Trustee and the Lessee has authority to operate the Aircraft; (4) the representations and warranties contained herein of the Lessee and the Guarantor are correct as though made on and as of the Refinancing Date, except to the extent that such representations and warranties (other than those contained in clause (v) of Section 8(d)) relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (5) there has been no material adverse change in the financial condition of the Guarantor and its subsidiaries, taken as a whole, since December 31, 1995. (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement, the Indenture, the PA Amendment No. 1, 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 and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary or an Assistant Secretary of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Refinancing 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). -9- 9 (f) The Pass Through Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and any other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the 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; (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 Refinancing Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Refinancing 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). (g) The Pass Through Trustee and the Owner Trustee each shall have received a certificate signed by an authorized officer of the Owner Participant, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Refinancing 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). (h) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an independent insurance broker's report as to the due compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (i) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for the Lessee and the Guarantor, and an -10- 10 opinion addressed to it from the Lessee's legal department, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee and the Owner Participant each shall have received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form and substance satisfactory to each of them. (l) The Pass Through Trustee and the Owner Trustee each shall have received an opinion addressed to it from Dewey Ballantine, special counsel for the Owner Participant, and an opinion addressed to it from corporate counsel to the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee shall have received an opinion of White & Case, special counsel for the Liquidity Provider, and in-house German counsel for the Liquidity Provider, each in form and substance satisfactory to the Pass Through Trustee. (n) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The 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 Refinancing Secured Certificates to be purchased from the Owner Trustee. (p) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustees to make the payments described in Section 1(a)(ii) or for the Owner Trustee or the Owner Participant to participate in the transactions contemplated by this Agreement on the Refinancing Date. (q) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee or the Guarantor which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Refinancing Date shall have been duly obtained. -11- 11 (r) The Lessee and the Owner Participant shall each have executed and delivered to the other the TIA Amendment No. 1. Promptly following the recording of the Lease Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of the Lease Amendment No. 1 and the Indenture. SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in the transactions contemplated by this Agreement and to execute and deliver each of the Pass Through Trust Agreements and the PA Amendment No. 1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion referred to in subsections (j) through (n) of Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter from counsel rendering such opinion authorizing the Lessee and the Guarantor to rely on such opinion as if it were addressed to the Lessee and the Guarantor, (ii) each certificate referred to in subsections (e) through (g) of Section 3, (iii) executed counterparts or conformed copies of the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1 and (iv) such other documents and evidence with respect to each other party hereto as the Lessee, the Guarantor or their counsel 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) The respective obligation of each of the Lessee, the Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Pass Through Trustee are correct as though made on and as of the Refinancing 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), (ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) 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. SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Indenture. The -12- 12 Lessee and the Guarantor, by execution and delivery hereof, consent to such execution and delivery of the Indenture. The Indenture shall be effective as of the Refinancing Date. SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, by execution and delivery hereof, consent to the amendment to the Original Lease effected by, and request and instruct the Owner Trustee to execute and deliver the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to execute and deliver the Lease Amendment No. 1. The Lease Amendment No. 1 shall be effective as provided therein. SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the execution and delivery of the PA Amendment No. 1 by each of the parties thereto, the Original Participation Agreement shall be amended as set forth in the PA Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall be a party thereto from and after the Refinancing Date to the extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing Date. SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) each of the 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 on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under (i) in the case of the Lessee, this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 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; -13- 13 (b) the 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; (c) the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, and the performance of the obligations of the Lessee or the Guarantor (as the case may be) under this Agreement, the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, have been duly authorized by all necessary corporate action on the part of the 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 the 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 the Lessee or the Guarantor (as the case may be) or the certificate of incorporation or by-laws of the 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 the Lessee or the Guarantor (as the case may be) under, any indenture, mortgage, contract or other agreement to which the 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; (d) neither the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 or any other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, nor the performance of the obligations of the Lessee or the Guarantor (as the case may be) hereunder or under the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement or the other Operative Documents to which the Lessee or the Guarantor (as the case may be) is a party, nor the consummation by the Lessee or the Guarantor (as the case may be) 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 in respect of, the Department of Transportation, the FAA, or any other federal, state or foreign -14- 14 governmental authority having jurisdiction, other than (i) 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, (ii) 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, (iii) the consents, approvals, notices, registrations and other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement, (iv) the registrations and filings referred to in Section 8(f), and (v) 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; (e) this Agreement constitutes, and each of the Participation Agreement, the Pass Through Trust Agreements, the Tax Indemnity Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment No. 1 and the Lease Amendment No. 1 shall have been executed and delivered by each of the parties thereto, will constitute, the legal, valid and binding obligations of the Lessee or the Guarantor (as the case may be) enforceable against the 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, 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; (f) except for the filings and registrations referred to in Section 7(a)(vi) of the Participation Agreement, such filings and registrations as shall have been made or effected subsequent thereto and the filing for recording pursuant to the Federal Aviation Act of the Indenture and the Lease Amendment No. 1, 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 the 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 other than the taking of possession by the Indenture Trustee of the original counterparts of -15- 15 the Original Lease and the Lease Amendment No. 1 (to the extent the Lease constitutes chattel paper) and the filing of continuation statements at periodic intervals with respect to the Uniform Commercial Code financing statements in effect on the Refinancing Date covering the security interests created by the Original Indenture or describing the Lease as a lease; (g) neither the 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; (h) neither the Lessee nor the Guarantor is an "investment company" within the meaning of the Investment Company Act of 1940, as amended; (i) 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; and (j) 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. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the parties below represents, warrants and covenants to each of the other parties to this Agreement and to the Liquidity Provider as follows: (a) The Indenture Trustee in its individual capacity represents, warrants and covenants that: (1) 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 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 PA Amendment No. 1, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party; -16- 16 (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, the PA Amendment No. 1 and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party 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; (3) this Agreement constitutes, and the Participation Agreement, when the PA Amendment No. 1 has been executed and delivered by the Indenture Trustee, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the Indenture Trustee enforceable against it in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (4) 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 (5) there are no Indenture Trustee Liens on the Aircraft or any portion of the Trust Estate. (b) The Owner Trustee, in its individual capacity (except as provided in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7) and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and (11) below) as Owner Trustee, represents and warrants that: (1) 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, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver the Original Trust Agreement, has the corporate power and authority to carry out the terms of the Trust Agreement, and has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of the Trust Agreement by the Owner Participant), as Owner Trustee, and to the extent expressly provided herein or therein, in its individual capacity, the corporate -17- 17 power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Refinancing Secured Certificates, the Lease, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) 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 and (assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant) this Agreement constitutes, and each of the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Indenture, when entered into, the Lease, when the Lease Amendment No. 1 shall have been entered into, and the Trust Agreement, when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, enforceable against it in its individual capacity or as Owner Trustee, as the case may be, in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, the Owner Trustee has duly authorized, and on the Refinancing Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Refinancing Secured Certificates pursuant to the terms and provisions hereof and of the Indenture, and each Refinancing Secured Certificate on the Refinancing Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Refinancing Secured Certificate and the Indenture; (4) neither the execution and delivery by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, the Original Participation Agreement, the PA Amendment No. 1, the Original Trust Agreement, the Trust Agreement Amendment No. 1, the Original Indenture, the Indenture, the Original Lease, the Lease Amendment No. 1, the Refinancing Secured Certificates or any other Operative Document to which it is a party, 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 hereby or 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 hereof and 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 -18- 18 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; (5) 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 Indenture, the Lease, the Refinancing 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 8(d); (6) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (7) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 -19- 19 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (8) 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 redemption of the Original Secured Certificates or the issuance of the Refinancing 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 (1), (2), (3) and (4) 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 of Utah, 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; (9) 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 (1), (2), (3) and (4) above; (10) 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; (11) the Owner Trustee has not, in its individual capacity or as Owner Trustee, directly or indirectly offered any Refinancing 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, the Original Loan Participants 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 Refinancing Secured Certificate, any Certificate or any interest in and to the Trust Estate, the Trust Agreement or any similar interest -20- 20 for sale to, or to solicit any offer to acquire any of the same from, any person; and (12) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) The Owner Participant is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the corporate power and authority to carry on its present business and operations and to own or lease its properties, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Original Participation Agreement, the Original Trust Agreement, the Tax Indemnity Agreement, the Trust Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; this Agreement has been duly authorized, executed and delivered by the Owner Participant; and this Agreement constitutes, and the Participation Agreement when the PA Amendment No. 1 shall have been entered into, the Tax Indemnity Agreement when the TIA Amendment No. 1 shall have been entered into, and the Trust Agreement when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their 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; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1, the Trust Agreement Amendment No. 1 or any other Operative Document to which it is a party nor (B) compliance by the Owner Participant with all of the provisions hereof or 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, 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; -21- 21 (3) 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 or was required, as the case may be, for the due execution, delivery or performance by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; (4) there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or arbitrator which would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Participation Agreement, the Tax Indemnity Agreement and the Trust Agreement; (5) 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 refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Refinancing 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 was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Refinancing 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 that 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 Indenture, (D) which the Owner Participant 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). (d) The Pass Through Trustee represents, warrants and covenants that: (1) the Pass Through Trustee is duly incorporated, validly existing and in good standing under the laws of the Commonwealth of Massachusetts, -22- 22 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements, the Intercreditor Agreement and the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1, and (upon execution and delivery of the PA Amendment No. 1), the Participation Agreement, will 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; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the performance by the Pass Through Trustee of the Participation Agreement, the purchase by the Pass Through Trustee of the Refinancing 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; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby or by the Participation Agreement, 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 -23- 23 governmental authority or agency regulating the Pass Through Trustee's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement or the Participation 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 Refinancing 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 as a grantor trust under subpart E, Part I of Subchapter J of the Code, such trusts will not be subject to any Taxes imposed by the Commonwealth of Massachusetts or any political subdivision thereof; (6) 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 Participation Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) 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, the Lessee or the Guarantor. -24- 24 (e) The Subordination Agent represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement and, when the PA Amendment No. 1 has been executed and delivered by each of the parties thereto, the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent each of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery by the Subordination Agent of the PA Amendment No. 1), the Participation Agreement will 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; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the Participation Agreement, or the performance by the Subordination Agent of the Participation 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; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby or by the Participation Agreement requires the consent or approval of, the giving of notice to, the -25- 25 registration with, or the taking of any other action with respect to, any Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement, the PA Amendment No. 1 or the Participation 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 Refinancing 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); (6) 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 PA Amendment No. 1, the Participation Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter, the Lessee or the Guarantor. SECTION 10. NOTICES. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and any such notice shall become effective upon being deposited in the United States -26- 26 mail, with proper postage for first-class registered or certified mail prepaid, or when delivered personally or, if promptly confirmed by mail as provided above, when dispatched by facsimile or other written telecommunication, addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement. SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Indenture Trustee and the Original Loan Participants in connection with the transactions contemplated by this 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) shall be paid promptly by the Owner Participant, including, without limitation: (1) the reasonable fees, expenses and disbursements allocable to the Refinancing Secured Certificates issued under the Indenture of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for the Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special counsel for the Original Loan Participants; (2) the fees, expenses and disbursements of Dewey Ballantine, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider. (b) In the event that the transactions contemplated by this Section 11 and the agreements referred to herein are not consummated, the Lessee shall bear and pay all costs, expenses and fees referred to in this Section 11 at no after-tax cost to the Owner Trustee, Trust Estate or the Owner Participant; provided that if the transactions fail to be consummated -27- 27 as a result of the failure of the Owner Participant to act in good faith in consummating the transactions, or to otherwise comply with the terms hereof, the Owner Participant shall bear and pay its own fees, costs and expenses (including, without limitation, the fees and expenses of its special counsel) and the Lessee shall pay all other reasonable fees, costs and expenses as aforesaid. SECTION 12. 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. SECTION 13. MISCELLANEOUS. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations, warranties and agreements herein of the Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass Through Trustee, and the Lessee's, the Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the Subordination Agent's and the Pass Through Trustee's obligations under any and all thereof, shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. (b) This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only 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 each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and, subject to the terms of the Participation 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 Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject to the provisions of the Participation Agreement, its successors and permitted assigns. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. No purchaser or holder of any Refinancing Secured Certificates shall be deemed to be a successor or assign of any holder of the Original Secured Certificates. -28- 28 SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -29- 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. NORTHWEST AIRLINES, INC., Lessee By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -30- 30 NORTHWEST AIRLINES CORPORATION, Guarantor By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -31- 31 [ ], Owner Participant By: _______________________________________ Title: Address: Attn: Telecopy No.: -32- 32 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: ___________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -33- 33 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent, Subordination Agent By: ___________________________________ Title: Address: c/o State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -34- 34 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee Indenture Trustee By: _____________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -35- 35 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: __________________________________ Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Facsimile: (801) 246-5053 -36- 36 SCHEDULE I TO REFUNDING AGREEMENT PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1A dated as of the Closing Date. 2. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1B dated as of the Closing Date. 3. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1C dated as of the Closing Date. 37 SCHEDULE II TO REFUNDING AGREEMENT REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
Interest Rate Purchaser and Maturity --------- ------------- Northwest Airlines Principal Purchase Pass Through Trust Amount Price --------- -------- 1996-1A [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1B [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1C [ _ ]% Refinancing Secured Certificates due [ ] $[ ]
EX-4.K1 87 TRUST AGREEMENT - 1996 G 1 TRUST AGREEMENT [NW 1996 G] This TRUST AGREEMENT [NW 1996 G] dated as of May 29, 1996 between [_________], a [_________] corporation (the "ORIGINAL OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); W I T N E S S E T H : ARTICLE I DEFINITIONS AND TERMS SECTION 1.01. CERTAIN DEFINITIONS. Unless the context shall otherwise require and except as contained in this Section 1.01, the capitalized terms used herein shall have the respective meanings assigned thereto in the Lease (as hereinafter defined) for all purposes hereof. All definitions contained in this Section 1.01 shall be equally applicable to both the singular and plural forms of the terms defined. For all purposes of this Trust Agreement the following terms shall have the following meanings: "Excluded Payments" has the meaning ascribed to such term in the Trust Indenture. "Indenture Event of Default" has the meaning which the term "Event of Default" has in the Trust Indenture. "Lease" means that certain Lease Agreement [NW 1996 G], to be dated as of the date hereof, and to be entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of this Trust Agreement, as said Lease Agreement may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Trust Agreement. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Event of Default" has the meaning which the term "Event of Default" has in the Lease. "Lessee" means Northwest Airlines, Inc., a Minnesota corporation, and its permitted successors and assigns. 2 "Owner Participant" means the Original Owner Participant and each Subsequent Owner Participant to the extent that the same shall, at the relevant time, have an Ownership Interest. "Ownership Interest" means, in the case of each Owner Participant, the percentage of its undivided beneficial interest in the Trust Estate created by this Trust Agreement. "Participation Agreement" has the meaning ascribed to such term in the Lease. "Replacement Airframe" has the meaning ascribed to such term in the Trust Indenture. "Replacement Engine" has the meaning ascribed to such term in the Trust Indenture. "Subsequent Owner Participant" means any Person to which the Original Owner Participant or any transferee from the Original Owner Participant or any Subsequent Owner Participant shall have transferred at any time after the Delivery Date its undivided right, title and interest originally held by the Original Owner Participant in this Trust Agreement, the Trust Estate and the Participation Agreement, to the extent permitted by Section 8.1 of this Trust Agreement and Section 8 of the Participation Agreement; provided that in the event of any such transfer so long as the Lease shall be in effect or any Secured Certificates remain unpaid, such transferee and its transferor shall have complied with all of the terms of Section 8(n) of the Participation Agreement. "Trust Estate" means all estate, right, title and interest of the Owner Trustee in and to the Aircraft, the Lease, any Lease Supplement, the Purchase Agreement, the Purchase Agreement Assignment, the Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of Basic Rent and Supplemental Rent including without limitation insurance proceeds (other than insurance proceeds payable to or for the benefit of the Owner Trustee, for its own account or in its individual capacity, the Owner Participant, the Loan Participant or the Indenture Trustee) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant, to the Indenture Trustee, to the Owner Trustee, in its individual capacity, or to the Loan Participant or any other holder of a Secured Certificate, or to any of their respective directors, officers, employees, servants and agents, pursuant to Section 7 of the Participation Agreement). Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded Payments. "Trust Indenture Estate" has the meaning ascribed to such term in the Trust Indenture. 2 3 "Trust Office" shall mean the principal corporate trust office of the Owner Trustee at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or the principal corporate trust office of any successor Owner Trustee. "Trust Supplement" means a supplement to the Trust Indenture and to this Trust Agreement in substantially the form of Exhibit A to the Trust Indenture which shall particularly describe the Aircraft, and any Replacement Airframe and Replacement Engine included in the property of the Owner Trustee covered by this Trust Agreement. ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE DOCUMENTS; DECLARATION OF TRUST SECTION 2.01. AUTHORITY TO EXECUTE DOCUMENTS. The Owner Participant hereby authorizes and directs the Owner Trustee to execute and the Owner Trustee agrees for the benefit of the Owner Participant that it will on or before the Delivery Date, execute and deliver the Operative Documents and any other agreements, instruments or documents to which the Owner Trustee is a party in the respective forms thereof in which delivered from time to time by the Owner Participant to the Owner Trustee for execution and delivery and, subject to the terms hereof, to perform its duties and, upon instructions from the Owner Participant, exercise its rights under said Operative Documents in accordance with the terms thereof. SECTION 2.02. DECLARATION OF TRUST. The Owner Trustee hereby declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of the Owner Participant, subject, however, to the provisions of and the Lien created by the Trust Indenture and to the provisions of the Lease and the Participation Agreement. ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF SECURED CERTIFICATES SECTION 3.01. ACCEPTANCE OF AIRCRAFT. The Original Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, on the Delivery Date, subject to due compliance with the terms of Section 3.02 hereof: (a) purchase the Aircraft pursuant to the Participation Agreement and the Bill of Sale; 3 4 (b) accept from Lessee the delivery of the Bill of Sale and the FAA Bill of Sale; (c) cause the Aircraft to be leased to Lessee under the Lease, and in furtherance thereof execute and deliver a Lease Supplement covering the Aircraft; (d) execute and deliver the Trust Supplement covering the Aircraft; (e) issue to the Loan Participant Secured Certificates in the amounts and otherwise as provided in Section 1(a) of the Participation Agreement; (f) execute and deliver the financing statements referred to in Section 4(a)(vi) of the Participation Agreement, together with all other agreements, documents and instruments referred to in Section 4 of the Participation Agreement to which the Owner Trustee is a party; (g) effect the registration of the Aircraft in the name of the Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA Bill of Sale; (ii) an application for registration of the Aircraft in the name of the Owner Trustee (including without limitation an affidavit from the Owner Trustee in compliance with the provisions of 14 C.F.R. Section 47.7(c)(2)(ii) (1979)); and (iii) this Trust Agreement; and (h) execute and deliver all such other instruments, documents or certificates and take all such other actions in accordance with the directions of the Owner Participant, as the Owner Participant may deem necessary or advisable in connection with the transactions contemplated hereby. SECTION 3.02. CONDITIONS PRECEDENT. The right and obligation of the Owner Trustee to take the action required by Section 3.01 hereof with respect to the Aircraft shall be subject to the following conditions precedent: (a) the Original Owner Participant shall have made the full amount of its Commitment set forth in Schedule II of the Participation Agreement available to the Owner Trustee, in immediately available funds, in accordance with Section 1 of the Participation Agreement; and (b) the Owner Participant shall have notified the Owner Trustee that the terms and conditions of Section 4 of the Participation Agreement, insofar as they relate to the Aircraft, shall have been 4 5 complied with in a manner satisfactory to the Original Owner Participant. SECTION 3.03. AUTHORIZATION IN RESPECT OF A TERMINATION OF THE LEASE AND ASSUMPTION OF THE SECURED CERTIFICATES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, take the actions specified to be taken by the Owner Trustee in Section 8(x) of the Participation Agreement upon Lessee's purchasing the Aircraft pursuant to Section 19(d) of the Lease and upon Lessee's assuming the indebtedness evidenced by the Secured Certificates in accordance with the provisions of such Section 8(x) provided Lessee shall have paid all amounts required by such Section 19(d) and 8(x). SECTION 3.04. AUTHORIZATION IN RESPECT OF A REPLACEMENT AIRFRAME OR REPLACEMENT ENGINES. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of a Replacement Airframe and Replacement Engines, if any, being substituted pursuant to Section 10(a) of the Lease, or a Replacement Engine being substituted pursuant to Section 10(b) of the Lease, subject to due compliance with the terms of Section 10(a) or 10(b) of the Lease, as the case may be: (a) to the extent not previously accomplished by a prior authorization, authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees of Lessee) to accept delivery of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engines; (b) accept from Lessee or other vendor of the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine a bill of sale or bills of sale (if tendered), and the invoice, if any, with respect to the Replacement Airframe and Replacement Engines, if any, or the Replacement Engine being furnished pursuant to Section 10(a) or (b) of the Lease; (c) in the case of a Replacement Airframe, make application to the Federal Aviation Administration for the registration in the name of the Owner Trustee of the Aircraft of which such Replacement Airframe is a part; (d) execute and deliver a Lease Supplement and a Trust Supplement covering (i) the Aircraft of which such Replacement Airframe is part or (ii) such Replacement Engine, as the case may be; (e) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that 5 6 would be Lessor Liens but for the proviso in the definition of Lessor Liens) the Airframe and Engines (if any) or the Engine being replaced to Lessee; (f) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Airframe and Engines or engines (if any) or the Engine or engine being replaced from the lien created under the Trust Indenture and release the Purchase Agreement and the Purchase Agreement Assignment (solely with respect to such replaced Airframe and Engines, if any, or Engine) from the assignment and pledge under the Trust Indenture; and (g) upon instructions from the Owner Participant, take such further action as may be contemplated by clauses (A) and (B) of the third paragraph of Section 10(a) of the Lease or clauses (ii) and (iii) of Section 10(b) of the Lease, as the case may be. SECTION 3.05. TRUST AGREEMENT REMAINING IN FULL FORCE AND EFFECT. In the event of the substitution of a Replacement Airframe for the Airframe or the substitution of a Replacement Engine for any Engine or engine, all provisions of this Trust Agreement relating to such replaced Airframe or Engine or engine shall be applicable to such Replacement Airframe or Replacement Engine with the same force and effect as if such Replacement Airframe or Replacement Engine were the same airframe or engine as the Airframe or Engine being replaced but for the Event of Loss with respect to such Airframe or Engine. SECTION 3.06. AUTHORIZATION IN RESPECT OF A RETURN OF AN ENGINE. The Owner Participant hereby authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for the benefit of the Owner Participant that it will, in the event of an engine being transferred to the Owner Trustee pursuant to Section 5(b) of the Lease, subject to due compliance with the terms of such Section 5(b): (a) accept from Lessee the bill of sale with respect to such engine contemplated by such Section 5(b) (if tendered); (b) transfer its interest in (without recourse except as to obligations in respect of Lessor Liens, including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) and to an Engine to Lessee as contemplated by such Section 5(b); and (c) request in writing that the Indenture Trustee execute and deliver to Lessee appropriate instruments to release the Engine being transferred to Lessee pursuant to such Section 5(b) from the lien of the Trust Indenture and to release the Purchase Agreement and 6 7 the Purchase Agreement Assignment (solely with respect to such Engine) from the assignment and pledge under the Trust Indenture. ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST ESTATE SECTION 4.01. DISTRIBUTION OF PAYMENTS. (a) Payments to Indenture Trustee. Until the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, all Basic Rent, Supplemental Rent, insurance proceeds and requisition or other payments of any kind included in the Trust Estate (other than Excluded Payments) payable to the Owner Trustee shall be payable directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall upon receipt be paid over to the Indenture Trustee without deduction, set-off or adjustment of any kind) for distribution in accordance with the provisions of Article III of the Trust Indenture. (b) Payments to Owner Trustee; Other Parties. After the Trust Indenture shall have been discharged pursuant to Section 10.01 thereof, any payment of the type referred to in Section 4.01(a) hereof (other than Excluded Payments) received by the Owner Trustee, any payments received from the Indenture Trustee other than as specified in Section 4.01(d) hereof and any other amount received as part of the Trust Estate and for the application or distribution of which no provision is made herein, shall be distributed forthwith upon receipt by the Owner Trustee in the following order of priority: first, so much of such payment as shall be required to reimburse the Owner Trustee for any expenses not otherwise reimbursed as to which the Owner Trustee is entitled to be so reimbursed pursuant to the provisions hereof shall be retained by the Owner Trustee; second, so much of the remainder for which provision as to the application thereof is contained in the Lease or any of the other Operative Documents shall be applied and distributed in accordance with the terms of the Lease or such other Operative Document; and third, the balance, if any, shall be paid to the Owner Participant. (c) Certain Distributions to Owner Participant. All amounts from time to time distributable by the Indenture Trustee to the Owner Participant pursuant to the Trust Indenture shall, if paid to the Owner Trustee, be distributed by the Owner Trustee to the Owner Participant in accordance with the provisions of Article III of the Trust Indenture. (d) Excluded Payments. Any Excluded Payments received by the Owner Trustee shall be paid by the Owner Trustee to the Person to whom such Excluded Payments are payable under the provisions of the Participation Agreement, the Tax Indemnity Agreement, the Lease and the Operative Documents on the day received (or on the next succeeding Business Day if the funds to be so distributed shall not have been received by the Owner Trustee by 12:00 noon, New York City time). 7 8 (e) Multiple Owner Participants. If as a result of a transfer by an Owner Participant under Section 8.01 of this Trust Agreement, there is more than one Owner Participant hereunder, each such Owner Participant shall hold in proportion to its respective beneficial interest in the Trust Estate, an undivided beneficial interest in the entire Trust Estate and is entitled to receive ratably with any other Owner Participant payments distributable by the Owner Trustee hereunder. No Owner Participant shall have legal title to the Aircraft or any other portion of the Trust Estate. SECTION 4.02. METHOD OF PAYMENTS. The Owner Trustee shall make distributions or cause distributions to be made to the Owner Participant pursuant to this Article IV by transferring by wire transfer in immediately available funds on the day received (or the next succeeding Business Day if the funds to be so distributed shall not have been received by the Owner Trustee by 12:00 noon, New York time, the amount to be distributed to such account or accounts of the Owner Participant as the Owner Participant may designate from time to time in writing to the Owner Trustee. Notwithstanding the foregoing, the Owner Trustee will, if so requested by the Owner Participant in writing, pay any or all amounts payable to the Owner Participant pursuant to this Article IV either (i) by crediting such amount or amounts to an account or accounts maintained by the Owner Participant with the Owner Trustee in its individual capacity in immediately available funds, (ii) by payment at the Trust Office of the Owner Trustee, in immediately available funds, or (iii) by mailing an official bank check or checks in such amount or amounts payable to the Owner Participant at such address as the Owner Participant shall have designated in writing to the Owner Trustee. ARTICLE V DUTIES OF THE OWNER TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Owner Trustee shall have knowledge of a Lease Event of Default or Indenture Event of Default (or an event which with the passage of time or the giving of notice or both would constitute a Lease Event of Default or an Indenture Event of Default) the Owner Trustee shall give to the Owner Participant prompt telephonic or telecopy notice thereof followed by prompt confirmation thereof by certified mail, postage prepaid, provided that (i) in the case of an event which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (c) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event and (ii) in the case of a misrepresentation by the Owner Trustee which with the passage of time would constitute an Indenture Event of Default referred to in paragraph (d) of Section 4.02 of the Trust Indenture, such notice shall in no event be furnished later than ten (10) days after the Owner Trustee shall first have knowledge of such event. The notice shall set forth in reasonable detail the facts and circumstances known to it with respect to such Lease Event of Default or Indenture Event of Default. Subject to the terms of Section 5.03 hereof, the Owner Trustee shall take such action or 8 9 shall refrain from taking such action, not inconsistent with the provisions of the Trust Indenture, with respect to such Lease Event of Default, Indenture Event of Default or other event as the Owner Trustee shall be directed in writing by the Owner Participant. If the Owner Trustee shall not have received instructions as above provided within thirty (30) days after the mailing of such notice to the Owner Participant, the Owner Trustee until instructed otherwise in accordance with the preceding sentence may, but shall be under no duty to, take or refrain from taking such action with respect to such Lease Event of Default, Indenture Event of Default or other event, not inconsistent with the provisions of the Trust Indenture, as it shall deem advisable in the best interests of the Owner Participant. For all purposes of this Trust Agreement, the Lease and the other Operative Documents, in the absence of actual knowledge by an officer of FSBU in the Corporate Trust Department, the Owner Trustee shall not be deemed to have knowledge of a Lease Event of Default, Indenture Event of Default or other event referred to in this Section 5.01 unless notified in writing by the Indenture Trustee, the Owner Participant or Lessee. SECTION 5.02. ACTION UPON INSTRUCTIONS. Subject to the terms of Sections 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of the Owner Participant, the Owner Trustee will take such of the following actions, not inconsistent with the provisions of the Trust Indenture, as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder or under any of the Operative Documents to which the Owner Trustee is a party or in respect of all or any part of the Trust Estate as shall be specified in such instructions; (ii) take such action to preserve or protect the Trust Estate (including the discharge of Liens) as may be specified in such instructions; (iii) approve as satisfactory to it all matters required by the terms of the Lease or the other Operative Documents to be satisfactory to the Owner Trustee, it being understood that without written instructions of the Owner Participant, the Owner Trustee shall not approve any such matter as satisfactory to it (it being understood that the provisions of Sections 3.03, 3.04 and 3.06 hereof do not constitute instructions by the Owner Participant for the Owner Trustee to approve of or consent to the matters to be approved of or consented to by the Owner Trustee in the sections of the Lease referred to in Sections 3.03, 3.04 or 3.06 hereof); and (iv) subject to the rights of Lessee under the Operative Documents, after the expiration or earlier termination of the Lease, deliver the Aircraft to the Owner Participant in accordance with such instructions, convey all of the Owner Trustee's right, title and 9 10 interest in and to the Aircraft for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or net lease the Aircraft on such terms and to such lessee or lessees as shall be designated in such instructions. SECTION 5.03. INDEMNIFICATION. The Owner Trustee shall not be required to take any action under Section 5.01 (other than the giving of the notices referred to therein) or 5.02 hereof unless the Owner Trustee shall have been indemnified by the Owner Participant, in manner and form satisfactory to the Owner Trustee, against any liability, cost or expense (including reasonable counsel fees and disbursements) which may be incurred in connection therewith; and, if the Owner Participant shall have directed the Owner Trustee to take any such action or refrain from taking any action, the Owner Participant agrees to furnish such indemnity as shall be required and, in addition, to the extent not otherwise paid pursuant to the provisions of the Lease or of the Participation Agreement, to pay the reasonable compensation of the Owner Trustee for the services performed or to be performed by it pursuant to such direction and any reasonable fees and disbursements of counsel or agents employed by the Owner Trustee in connection therewith. The Owner Trustee shall not be required to take any action under Section 5.01 or 5.02 hereof if the Owner Trustee shall reasonably determine, or shall have been advised by counsel, that such action is contrary to the terms of any of the Operative Documents to which the Owner Trustee is a party, or is otherwise contrary to law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST AGREEMENT OR INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, or to otherwise take or refrain from taking any action under, or in connection with any of the Operative Documents to which the Owner Trustee is a party, except as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, or (to the extent not inconsistent with the provisions of the Trust Indenture) as expressly provided by the terms hereof or in written instructions from the Owner Participant received pursuant to the terms of Section 5.01 or 5.02, and no implied duties or obligations shall be read into this Trust Agreement against the Owner Trustee. FSBU agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under Section 7.01 hereof) promptly take such action as may be necessary to duly discharge and satisfy in full all Lessor Liens attributable to it in its individual capacity which it is required to discharge pursuant to Section 8(h) of the Participation Agreement and otherwise comply with the terms of said Section binding on it. SECTION 5.05. SATISFACTION OF CONDITIONS PRECEDENT. Anything herein to the contrary notwithstanding, the Owner Trustee shall comply with the provisions of Section 3.01 hereof upon the satisfaction, to the satisfaction of special counsel for the Owner Trustee, of all the applicable conditions precedent specified in Section 3.02 hereof and in Section 4 of the Participation Agreement. 10 11 SECTION 5.06. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS. The Owner Trustee shall not have any power, right or authority to, and the Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate except (i) as expressly required by the terms of any of the Operative Documents to which the Owner Trustee is a party, (ii) as expressly provided by the terms hereof, or (iii) as expressly provided in written instructions from the Owner Participant pursuant to Section 5.01 or 5.02 hereof. ARTICLE VI THE OWNER TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. FSBU accepts the trusts hereby created and agrees to perform the same but only upon the terms hereof applicable to it. The Owner Trustee also agrees to receive and disburse all monies received by it constituting part of the Trust Estate upon the terms hereof. FSBU shall not be answerable or accountable under any circumstances, except (a) for its own willful misconduct or gross negligence, (b) for performance of the terms of the last sentence of Section 5.04 hereof and the first sentence of Section 5.01 hereof, (c) for its or the Owner Trustee's failure to use ordinary care to disburse funds, (d) for liabilities that may result from the inaccuracy of any representation or warranty of it (or from the failure by it to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture, in Section 4 of the Lease or in Section 8(c), 8(d) and 8(v) of the Participation Agreement and (e) for any Tax based on or measured by any fees, commissions or compensation received by it for acting as trustee in connection with any of the transactions contemplated by the Operative Documents. SECTION 6.02. ABSENCE OF CERTAIN DUTIES. Except in accordance with written instructions furnished pursuant to Section 5.02 hereof and except as provided in, and without limiting the generality of, Sections 3.01 and 5.04 hereof and the last sentence of Section 9.01(b) hereof, neither the Owner Trustee nor FSBU shall have any duty (i) to see to any recording or filing of any Operative Document or of any supplement to any thereof or to see to the maintenance of any such recording or filing or any other filing of reports with the Federal Aviation Administration or other governmental agencies, except that FSBU, in its individual capacity, shall comply with the reporting requirements set forth in 14 C.F.R. Section 47.45 or any successor provision and the Owner Trustee shall, to the extent that information for that purpose is supplied by Lessee pursuant to any of the Operative Documents, complete and timely submit (and furnish the Owner Participant with a copy of) any and all reports relating to the Aircraft which may from time to time be required by the Federal Aviation Administration or any government or governmental authority having jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, other than to forward to the Owner Participant copies of 11 12 all reports and other written information which the Owner Trustee receives from Lessee pursuant to Section 11(c) of the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against any part of the Trust Indenture Estate or the Trust Estate, except as provided in Section 8 of the Participation Agreement, or (iv) to inspect Lessee's books and records with respect to the Aircraft at any time permitted pursuant to the Lease. Notwithstanding the foregoing, the Owner Trustee will furnish to the Indenture Trustee and the Owner Participant, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates, financial statements and other instruments furnished to the Owner Trustee under the Lease or any other Operative Document. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO CERTAIN MATTERS. NEITHER THE OWNER TRUSTEE NOR FSBU MAKES OR SHALL BE DEEMED TO HAVE MADE (A) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR ANY PART THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that FSBU in its individual capacity warrants that on the Delivery Date the Owner Trustee shall have received whatever title was conveyed to it by Lessee and that the Aircraft shall during the Term be free of Lessor Liens attributable to it, or (b) any representation or warranty as to the validity, legality or enforceability of this Trust Agreement or any Operative Document to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof except to the extent that any such statement is expressly made herein or therein as a representation by FSBU in its individual capacity or by the Owner Trustee and except that FSBU in its individual capacity hereby represents and warrants that this Trust Agreement has been, and (assuming due authorization, execution and delivery by the Original Owner Participant of this Trust Agreement) the Operative Documents to which it or the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by it or the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of itself or the Owner Trustee, as the case may be and that this Trust Agreement constitutes the legal, valid and binding obligation of FSBU or the Owner Trustee, as the case may be, enforceable against FSBU or the Owner Trustee, as the case may be, in accordance with its terms. SECTION 6.04. NO SEGREGATION OF MONIES REQUIRED; NO INTEREST. Except as provided in Section 22 of the Lease, monies received by the Owner Trustee hereunder need not be segregated in any manner except to the extent required by law, and may be deposited under such general conditions as may be prescribed by law, and the Owner Trustee shall not be liable for any interest thereon. 12 13 SECTION 6.05. RELIANCE UPON CERTIFICATES, COUNSEL AND AGENTS. The Owner Trustee shall incur no liability to anyone in acting in reliance upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. Unless other evidence in respect thereof is specifically prescribed herein, any request, direction, order or demand of the Owner Participant or Lessee mentioned herein or in any of the Operative Documents to which the Owner Trustee is a party shall be sufficiently evidenced by written instruments signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director and in the name of the Owner Participant or Lessee, as the case may be. The Owner Trustee may accept a copy of a resolution of the Board of Directors or Executive Committee of Lessee, certified by the secretary or any assistant secretary of Lessee as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted by said Board or Committee and that the same is in full force and effect. As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Owner Trustee may for all purposes hereof rely on a certificate signed by a person purporting to be the chairman of the board, the president, any executive vice president, any senior vice president or any vice president or a managing director of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. In the administration of trusts hereunder, the Owner Trustee may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may, at the expense of the Trust Estate, consult with counsel, accountants and other skilled persons to be selected and employed by it. The Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons and the Owner Trustee shall not be liable for the negligence of any such agent, attorney, counsel, accountant or other skilled person appointed by it with due care hereunder. SECTION 6.06. NOT ACTING IN INDIVIDUAL CAPACITY. In acting hereunder, the Owner Trustee acts solely as trustee and not in its individual capacity except as otherwise expressly provided herein; and, subject to the terms of the Participation Agreement and the Trust Indenture, all persons, other than the Owner Participant, as provided herein, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Trust Estate for payment or satisfaction thereof. SECTION 6.07. FEES; COMPENSATION. Except as provided in Section 5.03 or 7.01 hereof, the Owner Trustee agrees that it shall have no right against the Owner Participant or (subject to the provisions of the Trust Indenture) the Trust Estate for any fee as compensation for its services hereunder; provided, however, that the Owner Trustee shall have a lien upon the Trust Estate (subject, however, to the lien of the Trust Indenture) for any such fee not paid by Lessee as contemplated by the last 13 14 paragraph of Section 7(c) of the Participation Agreement. Pursuant to Section 7(c) of the Participation Agreement and subject to Section 16 thereof, Lessee shall be required to pay the reasonable fees and expenses of the Owner Trustee comprising the compensation and reimbursement of expenses to which the Owner Trustee is entitled under this Section 6.07. SECTION 6.08. TAX RETURNS. The Owner Trustee shall be responsible for the keeping of all appropriate books and records relating to the receipt and disbursement of all monies under this Trust Agreement or any agreement contemplated hereby. The Owner Participant shall be responsible for causing to be prepared and filed all income tax returns required to be filed by the Owner Participant. The Owner Trustee shall be responsible for causing to be prepared, at the request and expense of the Owner Participant, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns. The Owner Participant or the Owner Trustee, as the case may be, upon request, will furnish the Owner Trustee or the Owner Participant, as the case may be, with all such information as may be reasonably required from the Owner Participant or the Owner Trustee, as the case may be, in connection with the preparation of such income tax returns. The Owner Trustee will give to the Owner Participant, upon request, such periodic information concerning receipts and disbursements by it with respect to the Trust Estate as would be helpful to the Owner Participant in preparing its tax returns. SECTION 6.09. FIXED INVESTMENT TRUSTS. Notwithstanding anything herein to the contrary, the Owner Trustee shall not be authorized and shall have no power to "vary the investment" of the Owner Participant within the meaning of Treasury Regulations Section 301.7701-4(c)(1). ARTICLE VII INDEMNIFICATION OF OWNER TRUSTEE BY OWNER PARTICIPANT SECTION 7.01. OWNER PARTICIPANT TO INDEMNIFY OWNER TRUSTEE. The Owner Participant hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and hereby indemnify, protect, save and keep harmless FSBU in its individual capacity and its successors, assigns, legal representatives, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by FSBU in its individual capacity on or measured by any compensation received by FSBU in its individual capacity for its services hereunder or in connection with the transactions contemplated by the Operative Documents or otherwise excluded in subclause (e) below), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of the Owner Trustee, reasonable legal fees and expenses, and including, without limitation, any liability of an owner, any strict liability and any liability without fault) of any kind and nature whatsoever which may be imposed on, incurred by or 14 15 asserted against FSBU in its individual capacity (whether or not also indemnified against by Lessee under the Lease or under the Participation Agreement or also indemnified against by any other person but only to the extent not otherwise paid or reimbursed by Lessee or such other person) in any way relating to or arising out of this Trust Agreement or any of the Operative Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of the Owner Trustee or FSBU in its individual capacity hereunder, except (a) in the case of willful misconduct or gross negligence on the part of the Owner Trustee or FSBU in its individual capacity in the performance or non-performance of its duties hereunder or under any of the other Operative Documents to which the Owner Trustee is a party or (b) those resulting from the inaccuracy of any representation or warranty of FSBU in its individual capacity (or from the failure of FSBU in its individual capacity to perform any covenant) in Section 6.03 hereof, in Section 6.03 of the Trust Indenture or, with respect to representations or warranties of FSBU in its individual capacity only, in Section 4 of the Lease, in Section 8(c), Section 8(d) or Section 8(v) of the Participation Agreement or in any of the other Operative Documents or (c) as may result from a breach by FSBU in its individual capacity of its covenants in the last sentence of Section 5.04 hereof or (d) in the case of the failure to use ordinary care on the part of the Owner Trustee or FSBU in its individual capacity in the disbursement of funds or (e) those claims arising under any circumstances or upon any terms where Lessee would not have been required to indemnify the Owner Trustee in its individual capacity pursuant to Section 7(b) or 7(c) of the Participation Agreement (disregarding, for this purpose, Sections 7(b)(ii)(3) (to the extent that such disposition referred to therein results from the Owner Trustee acting in accordance with written instructions of the Owner Participant), 7(b)(ii)(5)(i) (to the extent that it results from the willful misconduct or gross negligence of the Owner Participant to the extent imposed on the Owner Trustee), 7(b)(ii)(8), 7(c)(B) (to the extent that such failure referred to therein results from the Owner Trustee's acting in accordance with written instructions of the Owner Participant), 7 (c)(D) (to the extent such disposition therein results from the Owner Trustee's acting in accordance with written instructions of the Owner Participant), 7(c)(F),7(c)(H), 7(c)(I) and 7(c)(J) of the Participation Agreement and disregarding, for this purpose, those claims arising or resulting from any action taken by or inaction of the Owner Trustee in accordance with written instructions of the Owner Participant). The indemnities contained in this Section 7.01 extend to FSBU only in its individual capacity and shall not be construed as indemnities of the Trust Indenture Estate or the Trust Estate (except to the extent, if any, that FSBU in its individual capacity has been reimbursed by the Trust Indenture Estate or the Trust Estate for amounts covered by the indemnities contained in this Section 7.01). The indemnities contained in this Section 7.01 shall survive the termination of this Trust Agreement. In addition, if necessary, FSBU in its individual capacity shall be entitled to indemnification from the Trust Estate, subject to the Lien of the Trust Indenture, for any liability, 15 16 obligation, loss, damage, penalty, tax, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee, the Owner Participant or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same FSBU in its individual capacity shall have a Lien on the Trust Estate, subject to the Lien of the Trust Indenture, which shall be prior to any interest therein of the Owner Participant. The payor of any indemnity under this Article VII shall be subrogated to any right of the person indemnified in respect of the matter as to which such indemnity was paid. ARTICLE VIII TRANSFER OF THE OWNER PARTICIPANT'S INTEREST SECTION 8.01. TRANSFER OF INTERESTS. All provisions of Section 8(n) of the Participation Agreement shall (with the same force and effect as if set forth in full, mutatis mutandis, in this Section 8.01) be applicable to any assignment, conveyance or other transfer by any Owner Participant of its right, title or interest in and to the Participation Agreement, the Trust Estate or this Trust Agreement. If there is more than one Owner Participant, no assignment, conveyance or other transfer by an Owner Participant of any of its right, title or interest in and to this Trust Agreement or the Trust Estate shall be valid unless each other Owner Participant's prior written consent (which consent may be withheld in the sole discretion of such other Owner Participants) is given to such assignment, conveyance or other transfer. SECTION 8.02. ACTIONS OF THE OWNER PARTICIPANTS. If at any time prior to the termination of this Trust Agreement there is more than one Owner Participant, then during such time, if any action is required to be taken by all Owner Participants and whenever any direction, authorization, approval, consent, instruction, or other action is permitted to be given or taken by the Owner Participant it shall be given or taken only upon unanimous agreement of all Owner Participants; provided, however, that the termination of this Trust Agreement pursuant to Section 11.01 hereof may be effected upon the election of any Owner Participant. ARTICLE IX SUCCESSOR OWNER TRUSTEES: CO-TRUSTEES SECTION 9.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) Resignation or Removal. The Owner Trustee or any successor Owner Trustee (i) shall resign if required to do so pursuant to Section 8(c) of the Participation Agreement and (ii) may resign at any time without cause by giving at least sixty (60) 16 17 days' prior written notice to the Owner Participant, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such resignation to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In addition, the Owner Participant may at any time remove the Owner Trustee without cause by a notice in writing delivered to the Owner Trustee, the Indenture Trustee (so long as the Lien of the Trust Indenture has not been fully discharged) and Lessee (so long as the Lease is in effect), such removal to be effective upon the acceptance of appointment by the successor Owner Trustee under Section 9.01(b) hereof. In the case of the resignation or removal of the Owner Trustee, the Owner Participant may appoint a successor Owner Trustee by an instrument signed by the Owner Participant. If a successor Owner Trustee shall not have been appointed within thirty (30) days after such notice of resignation or removal, the Owner Trustee, the Owner Participant, Lessee or the Indenture Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor shall have been appointed as above provided. Any successor Owner Trustee so appointed by such court shall immediately and without further act be superseded by any successor Owner Trustee appointed as above provided. (b) Execution and Delivery of Documents, etc. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee and the Owner Participant an instrument accepting such appointment, and thereupon such successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts hereunder with like effect as if originally named the Owner Trustee herein; but nevertheless, upon the written request of such successor Owner Trustee, such predecessor Owner Trustee shall execute and deliver an instrument transferring to such successor Owner Trustee, upon the trusts herein expressed, all the estates, properties, rights, powers and trusts of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to such successor Owner Trustee all monies or other property then held by such predecessor Owner Trustee upon the trusts herein expressed. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will execute such documents as are provided to it by such successor Owner Trustee and will take such further actions as are requested of it by such successor Owner Trustee as are reasonably required to cause registration of the Aircraft included in the Trust Estate to be transferred upon the records of the Federal Aviation Administration, or other governmental authority having jurisdiction, into the name of the successor Owner Trustee. (c) Qualification. Any successor Owner Trustee, however appointed, shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement and shall also be a bank or trust company organized under the laws of the United States or any state thereof having a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Owner Trustee hereunder upon reasonable or customary terms. 17 18 (d) Merger, etc. Any corporation into which the Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee may be transferred, shall, subject to the terms of Section 9.01(c) hereof, be the Owner Trustee hereunder without further act. SECTION 9.02. CO-TRUSTEES AND SEPARATE TRUSTEES. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of the Owner Participant or the Owner Trustee, or the Owner Trustee shall have been directed to do so by the Owner Participant, the Owner Trustee and the Owner Participant shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement) approved by the Owner Trustee and the Owner Participant, either to act as co-trustee, jointly with the Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as an "ADDITIONAL TRUSTEE"). In the event an Indenture Event of Default not arising from a Lease Event of Default shall occur and be continuing, the Owner Trustee may act under the foregoing provisions of this Section 9.02 without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 9.02 in such contingency. Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and the Owner Trustee and its successors shall act, subject to the following provisions and conditions: (A) all powers, duties, obligations and rights conferred upon the Owner Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorized to be delivered hereunder or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and 18 19 obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; (E) the Owner Participant, at any time, by an instrument in writing may remove any such additional trustee unless such additional trustee was appointed by the Owner Trustee without the concurrence of the Owner Participant during the occurrence of an Indenture Event of Default not arising from a Lease Event of Default, in which case the Owner Trustee shall have the power to remove any such additional trustee without the concurrence of the Owner Participant; and the Owner Participant hereby appoints the Owner Trustee its agent and attorney-in-fact for it in such connection in such contingency; and (F) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, the Trust Indenture or affect the interests of the Indenture Trustee or the holders of the Secured Certificates in the Trust Indenture Estate. ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND OTHER DOCUMENTS SECTION 10.01. SUPPLEMENTS AND AMENDMENTS. (a) Supplements and Amendments. This Trust Agreement may not be amended, supplemented or otherwise modified except by an instrument in writing signed by the Owner Trustee and the Owner Participant. Subject to Section 10.02 hereof and the first sentence of Section 10 of the Participation Agreement, the Owner Trustee will execute any amendment, supplement or other modification of this Trust Agreement or of any other Operative Document to which the Owner Trustee is a party which it is requested to execute by the Owner Participant, except that the Owner Trustee shall not execute any such amendment, supplement or other modification which, by the express 19 20 provisions of any of the above documents, requires the consent of any other party unless such consent shall have been obtained. (b) Delivery of Amendments and Supplements to Certain Parties. A signed copy of each amendment or supplement referred to in Section 10.01(a) hereof shall be delivered by the Owner Trustee to the Indenture Trustee and each holder of a Secured Certificate. SECTION 10.02. DISCRETION AS TO EXECUTION OF DOCUMENTS. Prior to executing any document required to be executed by it pursuant to the terms of Section 10.01 hereof, the Owner Trustee shall be entitled to receive an opinion of its counsel to the effect that the execution of such document is authorized hereunder. If in the opinion of the Owner Trustee any such document adversely affects any right, duty, immunity or indemnity in favor of the Owner Trustee hereunder or under any other Operative Document to which the Owner Trustee is a party, the Owner Trustee may in its discretion decline to execute such document. SECTION 10.03. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be necessary for any written request furnished pursuant to Section 10.01 hereof to specify the particular form of the proposed documents to be executed pursuant to such Section, but it shall be sufficient if such request shall indicate the substance thereof. SECTION 10.04. DISTRIBUTION OF DOCUMENTS. Promptly after the execution by the Owner Trustee of any document entered into pursuant to Section 10.01 hereof, the Owner Trustee shall mail, by certified mail, postage prepaid, a conformed copy thereof to the Owner Participant, but the failure of the Owner Trustee to mail such conformed copy shall not impair or affect the validity of such document. SECTION 10.05. NO REQUEST NEEDED AS TO LEASE SUPPLEMENT AND TRUST SUPPLEMENT. No written request pursuant to Section 10.01 hereof shall be required to enable the Owner Trustee to enter into the Lease Supplement covering the Aircraft with Lessee pursuant to the terms of the Lease and Section 3.01 hereof and the Trust Supplement pursuant to the terms of the Trust Indenture and Section 3.01 hereof. ARTICLE XI MISCELLANEOUS SECTION 11.01. TERMINATION OF TRUST AGREEMENT. This Trust Agreement and the trusts created hereby shall be of no further force or effect upon the earlier of (a) both the final discharge of the Trust Indenture pursuant to Section 10.01 thereof and the sale or other final disposition by the Owner Trustee of all property constituting part of the Trust Estate and the final distribution by the Owner Trustee of all monies or other property or proceeds constituting part of the Trust Estate in 20 21 accordance with Article IV hereof, provided that at such time Lessee shall have fully complied with all of the terms of the Lease and the Participation Agreement or (b) twenty-one years less one day after the death of the last survivor of all of the descendants of the grandparents of David Rockefeller living on the date of the earliest execution of this Trust Agreement by any party hereto, but if this Trust Agreement and the trusts created hereby shall be or become authorized under applicable law to be valid for a period commencing on the 21st anniversary of the death of such last survivor (or, without limiting the generality of the foregoing, if legislation shall become effective providing for the validity of this Trust Agreement and the trusts created hereby for a period in gross exceeding the period for which this Trust Agreement and the trusts created hereby are hereinabove stated to extend and be valid), then this Trust Agreement and the trust created hereby shall not terminate under this subsection (b) but shall extend to and continue in effect, but only if such nontermination and extension shall then be valid under applicable law, until the day preceding such date as the same shall, under applicable law, cease to be valid; otherwise this Trust Agreement and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof, subject to the Owner Participant's right to revoke such trusts and cause the Trust Estate (subject to the Lien of the Trust Indenture) to be distributed. SECTION 11.02. OWNER PARTICIPANT HAS NO LEGAL TITLE IN TRUST ESTATE. The Owner Participant shall not have legal title to any part of the Trust Estate. [No transfer, by operation of law or otherwise, of any right, title and interest of the Owner Participant in and to the Trust Estate hereunder shall operate to terminate] this Trust Agreement or the trusts hereunder or entitle any successors or transferees of the Owner Participant to an accounting or to the transfer of legal title to any part of the Trust Estate. SECTION 11.03. ASSIGNMENT, SALE, ETC. OF AIRCRAFT. Any assignment, sale, transfer or other conveyance of its interest in the Aircraft by the Owner Trustee made pursuant to the terms hereof or of the Lease or the Participation Agreement shall bind the Owner Participant and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Owner Participant in and to the Aircraft. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. SECTION 11.04. TRUST AGREEMENT FOR BENEFIT OF CERTAIN PARTIES ONLY. Except for the terms of Section 8(n) of the Participation Agreement incorporated in Article VIII hereof and except as otherwise provided in Articles IX and X hereof, nothing herein, whether expressed or implied, shall be construed to give any Person other than the Owner Trustee and the Owner Participant any legal or equitable right, remedy or claim under or in respect of this Trust Agreement; but this Trust Agreement shall be held to be for the sole and exclusive benefit of the Owner Trustee and the Owner Participant. 21 22 SECTION 11.05. NOTICES; CONSENT TO JURISDICTION. (a) All notices, demands, instructions and other communications required or permitted to be given to or made upon any party hereto shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, or by telecopier, or by prepaid courier service, and shall be deemed to be given for purposes of this Agreement on the day that such writing is delivered or sent to the intended recipient thereof in accordance with the provisions of this Section 11.05(a). Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 11.05(a), notices, demands, instructions and other communications in writing shall be given to or made upon the respective parties hereto at their respective addresses (or to their respective telecopier numbers) as follows: (A) if to Lessee, the Owner Trustee, the Loan Participant, the Indenture Trustee or the Owner Participant, to the respective addresses set forth below the signatures of such parties on the signature page of the Participation Agreement, or (B) if to a Subsequent 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. (b) Each of the parties hereto (A) hereby irrevocably submits itself to the non-exclusive jurisdiction of the United States District Court for the Southern District of New York and to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of this Trust Agreement, the Participation Agreement, 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 the Participation 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. SECTION 11.06. SEVERABILITY. Any provision hereof which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 11.07. WAIVERS, ETC. No term or provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing entered into in compliance with the terms of Article X hereof; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given. 22 23 SECTION 11.08. COUNTERPARTS. This Trust Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.09. BINDING EFFECT, ETC. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII hereof, its assigns. Any request, notice, direction, consent, waiver or other instrument or action by the Owner Participant shall bind its successors and assigns. Any Owner Participant which shall cease to have any Ownership Interest shall thereupon cease to be a party hereto or an Owner Participant for any reason and shall have no further obligations hereunder. SECTION 11.10. HEADINGS; REFERENCES. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11. GOVERNING LAW. THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. SECTION 11.12. PERFORMANCE BY THE OWNER PARTICIPANT. Any obligation of the Owner Trustee in its individual capacity or as Owner Trustee hereunder or under any other Operative Document or other document contemplated herein, may be performed by the Owner Participant and any such performance shall not be construed as a revocation of the trust created hereby. 23 24 IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [___________________] Owner Participant By -------------------------------------- Title: ---------------------------------- FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By -------------------------------------- Title: ------------------------------------ 24 EX-4.K2 88 FIRST AMENDMENT TO TRUST AGREEMENT - 1996 G 1 FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 G] This FIRST AMENDMENT TO TRUST AGREEMENT [NW 1996 G], dated as of June 12, 1996, between [ ], a [ ] corporation (the "OWNER PARTICIPANT"), and FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "FSBU") and otherwise not in its individual capacity but solely as trustee hereunder (herein in such capacity with its permitted successors and assigns called the "OWNER TRUSTEE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Trust Agreement (as defined below); W I T N E S S E T H: WHEREAS, Northwest Airlines, Inc. (the "LESSEE"), the Owner Participant, the Owner Trustee, [ ], as the loan participant (the "ORIGINAL LOAN PARTICIPANT") and State Street Bank and Trust Company, as Indenture Trustee (the "INDENTURE TRUSTEE") entered into the Participation Agreement [NW 1996 G], dated as of May 29, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 G], dated as of May 29, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 G] relating to the Aircraft, dated as of May 29, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 G] dated June 3, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to Lessee, and Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 G], dated as of May 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 G], dated June 3, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participant a secured certificate substantially in the form set forth in Article II 2 thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participant in participating in the payment of Lessor's Cost; WHEREAS, Lessee, Northwest Airlines Corporation, as Guarantor, the Owner Trustee, State Street Bank and Trust Company, as Pass Through Trustee, the Owner Participant, the Indenture Trustee and State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent, have entered into the Refunding Agreement [NW 1996 G], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"), providing for a refinancing operation as contemplated by Section 17 of the Original Participation Agreement; WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 G], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease Agreement [NW 1996 G], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); and WHEREAS, the Owner Participant and the Owner Trustee wish to amend the Original Trust Agreement as set forth herein to give effect to the transactions contemplated by the Refunding Agreement; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Trust Agreement is amended as follows: SECTION 1. AMENDMENT OF SECTION 11.01 OF THE ORIGINAL TRUST AGREEMENT . Section 11.01 of the Original Trust Agreement is hereby amended by adding the following clause to the end thereof after the word "distributed": "provided, however, such right is subject to the provisions of Section 10 of the Participation Agreement." SECTION 2. AMENDMENT OF SECTION 11.05(A) OF THE ORIGINAL TRUST AGREEMENT. Section 11.05(a) of the Original Trust Agreement is hereby amended by deleting the word "Participation" in clause (A) of the second sentence thereof and substituting therefor the word "Refunding". SECTION 3. DIRECTION. Pursuant to and in conformity with Section 10.01(a) of the Trust Agreement, the Owner Participant hereby requests the Owner Trustee to execute this Amendment. SECTION 4. RATIFICATION. Except as hereby modified, the Original Trust Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Trust Agreement, as amended -2- 3 hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Trust Agreement or any word or phrase referring to a section or provision of the Trust Agreement is deemed for all purposes to be a reference to the Trust Agreement or such section or provision as amended pursuant to this Amendment. SECTION 5. MISCELLANEOUS. This Amendment 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. The terms of this Amendment shall be binding upon, and inure to the benefit of, the Owner Trustee and its successors and assigns, and the Owner Participant, its successors and, to the extent permitted by Article VIII of the Original Trust Agreement as amended hereby, its assigns. THIS AMENDMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. -3- 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. [Owner Participant] By: ----------------------------------- Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION By: ----------------------------------- Name: Title: -4- EX-4.K3 89 TRUST INDENTURE -1996 G 1 AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 G] AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 G], dated as of June 12, 1996 ("TRUST INDENTURE") between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as expressly stated herein, but solely as Owner Trustee under the Trust Agreement referred to below (together with its successors under the Trust Agreement, the "OWNER TRUSTEE"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, not in its individual capacity, except as expressly stated herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the "INDENTURE TRUSTEE"). W I T N E S S E T H WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or referred to in Article I hereof; WHEREAS, the Owner Participant and the Owner Trustee have entered into the Trust Agreement whereby, among other things, (i) the Owner Trustee has established a certain trust for the use and benefit of the Owner Participant subject, however, to the Trust Indenture Estate created pursuant hereto for the use and benefit of, and with the priority of payment to, the holders of Secured Certificates issued hereunder, and (ii) the Owner Trustee has been authorized and directed to execute and deliver this Trust Indenture; WHEREAS, (i) the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 G] dated as of May 29, 1996 (the "ORIGINAL INDENTURE"), (ii) the Owner Trustee entered into the Trust Agreement and Indenture Supplement [NW 1996 G] (the "SUPPLEMENT") dated June 3, 1996 to the Original Indenture, (iii) the Original Indenture and the Supplement were recorded by the Federal Aviation Administration on June 11, 1996 and were assigned Conveyance No. TT007325 and (iv) the Lease Agreement [NW 1996 G] dated as of even date with the Original Indenture between the Owner Trustee and Lessee and the Lease Supplement No. 1 [NW 1996 G] were recorded by the Federal Aviation Administration on June 11, 1996 and were assigned Conveyance No. TT007324 and (v) pursuant to the Original Indenture, the Owner Trustee issued and sold to the Loan Participants Secured Certificates (as defined in the Original Indenture); WHEREAS, the parties have agreed that subject to certain conditions, Lessee shall have the right to cause the implementation of the Refinancing Transaction pursuant to which, among other things, the Secured Certificates issued to the Loan Participants pursuant to the Original Indenture shall be redeemed and new Secured Certificates (the "REFINANCING SECURED CERTIFICATES") shall be issued to the Pass Through Trustees (or their designee); WHEREAS, in light of the foregoing and in anticipation of the Refinancing Transaction, the parties desire by this Trust Indenture, among other things, (i) to amend and restate in its entirety the Original Indenture, (ii) to provide for the issuance by the Owner Trustee of the Refinancing Secured Certificates and (iii) to provide for the assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee, as part of the Trust Indenture Estate hereunder, among other things, of all of the Owner Trustee's right, title and interest in and to the Aircraft and, except as hereinafter expressly provided, all of the Owner Trustee's right, title and interest in, to and under the Lease and all payments and other amounts received hereunder or thereunder in accordance with the terms hereof or thereof, as security for, among other things, the Owner Trustee's obligations to the Indenture Trustee, for the ratable benefit and security of the Certificate Holders, subject to Section 2.15 and Article III hereof; 2 WHEREAS, all things have been done to make the Secured Certificates, when executed by the Owner Trustee and authenticated and delivered by the Indenture Trustee hereunder, the valid, binding and enforceable obligations of the Owner Trustee; and WHEREAS, all things necessary to make this Trust Indenture the valid, binding and legal obligation of the Owner Trustee for the uses and purposes herein set forth, in accordance with its terms, have been done and performed and have happened: -2- 3 GRANTING CLAUSE NOW, THEREFORE, THIS AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the prompt payment of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to, all Secured Certificates from time to time outstanding hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions herein and in the Participation Agreement and the Secured Certificates contained, for the benefit of the Certificate Holders and the prompt payment of all amounts from time to time owing under the Participation Agreement to the Certificate Holders by the Owner Trustee and for the uses and purposes and subject to the terms and provisions hereof, and in consideration of the premises and of the covenants herein contained, and of the acceptance of the Secured Certificates by the holders thereof, and for other good and valuable consideration the receipt and adequacy whereof are hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors in trust and assigns, for the security and benefit of the Certificate Holders, a first priority security interest in and mortgage lien on all right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges, other than Excluded Payments (which collectively, excluding Excluded Payments but including all property hereafter specifically subjected to the Lien of this Trust Indenture by the Trust Agreement and Indenture Supplement or any mortgage supplemental hereto, are included within the Trust Indenture Estate), to wit: (1) the Aircraft (including the Airframe and the Engines and all replacements thereof and substitutions therefor to which the Owner Trustee shall from time to time acquire title as provided herein and in the Lease), all as more particularly described in the Trust Agreement and Indenture Supplement executed and delivered with respect to the Aircraft or any such replacements or substitutions therefor, as provided in this Indenture; (2) the Lease and any Lease Supplement and all Rent thereunder (including, without limitation, all amounts of Interim Rent, Basic Rent, Supplemental Rent and payments of any kind thereunder (excluding any Excluded Payments)), and the Guarantee; (3) the Purchase Agreement (to the extent specified in the Purchase Agreement Assignment), the Purchase Agreement Assignment, the Consent and Agreement and the Bill of Sale; (4) all rents, issues, profits, revenues and other income of the property subjected or required to be subjected to the lien of this Indenture; (5) all insurance and requisition proceeds with respect to the Aircraft, including but not limited to the insurance required under Section 11 of the Lease, but excluding insurance proceeds described in clauses (ii) and (iii) of the definition of Excluded Payments; -3- 4 (6) all rights of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under the Participation Agreement and all rights of the Owner Trustee to enforce payments of any such amounts thereunder, but excluding all Excluded Payments; (7) all monies and securities from time to time deposited or required to be deposited with the Indenture Trustee pursuant to any terms of this Indenture or the Lease or required hereby or by the Lease to be held by the Indenture Trustee hereunder (other than Excluded Payments); and (8) all proceeds of the foregoing. Concurrently with the delivery of the Original Indenture, the Owner Trustee has delivered to the Indenture Trustee the original executed counterpart of the Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt is attached), and executed copies of the Participation Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and its successors and assigns, in trust for the benefit and security of the Loan Participants and the Certificate Holders, except as provided in Section 2.15 and Article III hereof without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and in all cases and as to all property specified in paragraphs (1) through (8) inclusive above, subject to the terms and provisions set forth in this Trust Indenture. It is expressly agreed that anything herein contained to the contrary notwithstanding, the Owner Trustee shall remain liable under the Indenture Agreements to perform all of the obligations assumed by it thereunder, except to the extent prohibited or excluded from doing so pursuant to the terms and provisions thereof, and the Indenture Trustee and the Certificate Holders shall have no obligation or liability under the Indenture Agreements, by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee or the Certificate Holders be required or obligated in any manner to perform or fulfill any obligations of the Owner Trustee under or pursuant to the Indenture Agreements, or, except as herein expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. Subject to the terms hereof, the Owner Trustee does hereby constitute the Indenture Trustee the true and lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, and with full power (in the name of the Owner Trustee or otherwise) to ask for, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds but in all cases excluding Excluded Payments) due and to become due under or arising out of the Indenture Agreements, and all other property which now or hereafter constitutes part of the Trust Indenture Estate, to endorse any checks or other instruments or orders in connection therewith and to file any claims or to take any action or to institute any proceedings which the Indenture Trustee may deem to be necessary or advisable in the premises. Without limiting the generality of the foregoing, but subject to the rights of the Owner Trustee and the Owner Participant hereunder, during the continuance of any Event of Default under this Trust Indenture, the Indenture Trustee shall have the right under such power of attorney to accept any offer in connection with the exercise of remedies as set forth herein of any purchaser to purchase the Airframe and Engines and upon such purchase to execute and deliver in the name of and on behalf of the Owner Trustee an appropriate bill of sale and other instruments of transfer relating to the Airframe and Engines, when purchased by such purchaser, and to perform all other necessary or appropriate acts with respect to any such purchase, and in its discretion to file any claim or take any other action or proceedings, either in its own name or in the name of the Owner Trustee or otherwise, which the Indenture Trustee may deem necessary or -4- 5 appropriate to protect and preserve the right, title and interest of the Indenture Trustee in and to such Rents (other than Excluded Payments) and other sums and the security intended to be afforded hereby; provided, however, that no action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or liabilities of the Owner Trustee to any Person beyond those obligations and liabilities specifically set forth in this Trust Indenture and in the other Operative Documents. Under the Lease, Lessee is directed, so long as this Trust Indenture shall not have been fully discharged, to make all payments of Rent (other than Excluded Payments) and all other amounts which are required to be paid to or deposited with the Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to, or as directed by, the Indenture Trustee at such address or addresses as the Indenture Trustee shall specify, for application as provided in this Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it will transfer to the Indenture Trustee any and all monies from time to time received by it constituting part of the Trust Indenture Estate, for distribution by the Indenture Trustee pursuant to this Trust Indenture, except that the Owner Trustee shall accept for distribution pursuant to the Trust Agreement any amounts distributed to it by the Indenture Trustee under this Trust Indenture. The Owner Trustee agrees that at any time and from time to time, upon the written request of the Indenture Trustee, the Owner Trustee will promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents as the Indenture Trustee may reasonably deem necessary or desirable to perfect, preserve or protect the mortgage, security interests and assignments created or intended to be created hereby or to obtain for the Indenture Trustee the full benefits of the assignment hereunder and of the rights and powers herein granted. The parties hereto acknowledge that neither the Owner Trustee nor the Owner Participant shall have any obligation as to any recording, filing, refiling or re-recording of any documents or instruments in regard to maintaining the perfection of the security interests created hereunder, in the Trust Indenture Estate or any security interest that may be claimed to have been created by the Lease or the ownership interest of the Owner Trustee in the Aircraft. The Owner Trustee does hereby warrant and represent that it has not assigned or pledged, and hereby covenants and agrees that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, and the Lien hereof shall not have been released pursuant to Section 10.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that it will not, except as otherwise provided in this Trust Indenture and except with respect to Excluded Payments, (i) accept any payment from Lessee under any Indenture Agreement, (ii) enter into any agreement amending or supplementing any Indenture Agreement, (iii) execute any waiver or modification of, or consent under, the terms of, or exercise any rights, powers or privileges under, any Indenture Agreement, (iv) settle or compromise any claim (other than those relating to an Excluded Payment) arising under any Indenture Agreement or (v) submit or consent to the submission of any dispute, difference or other matter arising under or in respect of any Indenture Agreement to arbitration thereunder. The Owner Trustee does hereby further agree that it will not without the written consent of the Indenture Trustee: (a) except as set forth in Section 8(bb) of the Participation Agreement, collect or agree to the receipt or collection of any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease but excluding any Excluded Payment prior to the due date for the payment thereof provided for by the Lease or assign, transfer or hypothecate (other than to the Indenture Trustee hereunder) any payment of Rent, including Interim Rent, Basic Rent, Stipulated Loss Value, Termination Value or any other payment to be made pursuant to Section 9 or 10 of the Lease but excluding any Excluded Payment, then due or to accrue in the future under the Lease in respect of the Airframe and Engines; or (b) except as contemplated by the Trust Agreement in connection with the appointment of a successor owner trustee, sell, mortgage, transfer, assign or hypothecate (other than to the Indenture Trustee hereunder) its interest in the Airframe and Engines or any part -5- 6 thereof or in any amount to be received by it from the use or disposition of the Airframe and Engines, other than amounts distributed to it pursuant to Article III hereof. It is hereby further agreed that any and all property described or referred to in the granting clauses hereof which is hereafter acquired by the Owner Trustee shall ipso facto, and without any further conveyance, assignment or act on the part of the Owner Trustee or the Indenture Trustee, become and be subject to the Lien herein granted as fully and completely as though specifically described herein, but nothing contained in this paragraph shall be deemed to modify or change the obligations of the Owner Trustee contained in the foregoing paragraphs. Notwithstanding the Granting Clause or any of the foregoing paragraphs, there is hereby excluded from the foregoing sale, transfer, assignment, grant, pledge and security interest all Excluded Payments. IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINITIONS. For all purposes of this Indenture the following terms shall have the following meanings (such definitions to be equally applicable to both the singular and plural forms of the terms defined): "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. "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 hereof. "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 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. "Cash Equivalents" shall mean the investments specified in Section 22(a) of the Lease. "Certificate Holder" shall mean any holder from time to time of one or more Secured Certificates. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Continuous Stay Period" shall have the meaning specified in Section 4.04(a) hereof. -6- 7 "Corporate Trust Department" or "Trust Office" means the principal corporate trust office of the Owner Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, 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 and each Certificate Holder. "Corporate Trust Office" shall mean the principal office of the Indenture Trustee located at Two International Place, 4th Floor, Boston, Massachusetts 02110, 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 and each Certificate Holder. "Debt" shall mean any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or other liabilities evidenced or to be evidenced by bonds, debentures, notes or other similar instruments or for the deferred purchase price of property, goods or services. "Debt 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" means any event or condition that with the giving of notice or the lapse of time or both would become an Event of Default. "Dollars" and "$" shall mean the lawful currency of the United States of America. "Enforcement Date" shall have meaning specified in Section 4.03 hereof. "Event of Default" shall have the meaning specified in Section 4.02 hereof. "Excess Amount" shall have the meaning specified in Section 2.03(b) hereof. "Excluded Payments" shall mean (i)(A) 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) and 7(c) of the Participation Agreement and (B) any other payment to the Owner Participant pursuant to any provision of any Operative Document, (ii) proceeds of public liability insurance (or proceeds of governmental indemnities in lieu thereof) 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) 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) all Indemnity Adjusted Payments, (vi) fees payable to the Owner Trustee or the Indenture Trustee pursuant to the last sentence of Section 7(c) of the Participation Agreement, (vii) provided that the Secured Certificates shall have been duly assumed by Lessee pursuant to Section 2.13 hereof, the amounts payable to the Owner Trustee pursuant to the third sentence of Section 19(d) of the Lease, (viii) any payment of the foregoing under the Guarantee, (ix) interest accrued on any of the above, and (x) any right to enforce the payment of any amount described in clauses (i) through (ix) above. "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 Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements. "Guarantor" shall have the meaning specified in the Lease. -7- 8 "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 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. "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" shall mean that certain Lease Agreement [NW 1996 G], dated as of May 29, 1996, entered into by the Owner Trustee and Lessee concurrently with the execution and delivery of the Original Trust Indenture, as said Lease Agreement has been, or may from time to time be, supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms of this Indenture. The term "Lease" shall also include each Lease Supplement from time to time entered into pursuant to the terms of the Lease. "Lease Default" shall mean any event or condition that with the giving of notice or the lapse of time or both would become a Lease Event of Default. "Lease Event of Default" shall mean an "Event of Default" as defined in the Lease. "Lessee" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Lessee Operative Documents" means the Participation Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity Agreement, the Purchase Agreement Assignment and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date. "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 hereof (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 (plus, in the case of Series C Secured Certificates, 75 basis points) 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, -8- 9 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. "Mortgaged Property" shall have the meaning specified in Section 3.03 hereof. "Owner Indemnitee" shall have the meaning specified in the definition of Excluded Payments herein. "Owner Participant" shall mean [ ], so long as such party shall have any interest in the Trust Estate, and transferees thereof as permitted by Section 8 of the Participation Agreement. "Participants" shall mean and include the Loan Participants and the Owner Participant. "Participation Agreement" shall mean that certain Participation Agreement [NW 1996 G], dated as of May 29, 1996, among the Owner Trustee, the Indenture Trustee, Lessee and the Participants, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "Past Due Rate" shall mean, with respect to the Secured Certificates, the rate per annum equal to 2% over the Debt Rate as in effect from time to time. "Payment Date" shall mean each January 2 and July 2, commencing on January 2, 1997 (or, if any such day is not a Business Day, the immediately succeeding Business Day) until the Secured Certificates have been paid in full. "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. "QIB" shall have the meaning specified in Section 2.08 hereof. "Replacement Airframe" shall mean any airframe substituted for the Airframe pursuant to Section 5.06 hereof. "Replacement Engine" shall mean any engine substituted for an Engine pursuant to Section 5.06 hereof. "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. "Section 1110 Period" shall have the meaning specified in Section 4.04(a) hereof. -9- 10 "Secured Certificates" shall mean and include any Secured Certificates issued hereunder, and issued in exchange therefor or replacement thereof. "Secured Obligations" shall have the meaning specified in Section 2.06 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Holder" shall have the meaning specified in Section 2.15(c) hereof. "Series A" or "Series A Secured Certificates" means Secured Certificates issued and designated as "Series A" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series A." "Series B" or "Series B Secured Certificates" means Secured Certificates issued and designated as "Series B" hereunder, 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" hereunder, in the Principal Amount and maturities and bearing interest as specified in Schedule I to the Trust Indenture under the heading "Series C." "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. "Transactions" means the transactions contemplated by the Participation Agreement and the other Operative Documents. "Trust Agreement and Indenture Supplement" shall mean a supplement to the Trust Agreement and to this Indenture, in substantially the form of Exhibit A hereto, 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. "Trust Indenture", "this Trust Indenture", "the Trust Indenture", "Indenture", "this Indenture", and "the Indenture" shall mean this Amended and Restated Trust Indenture and Security Agreement [NW 1996 G] as it may from time to time be supplemented or amended as herein provided, including supplementing by the Trust Agreement and Indenture Supplement pursuant hereto. "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 this Trust Indenture, excluding Excluded Payments. SECTION 1.02. REFERENCE TO OTHER DOCUMENTS. For all purposes of this Trust Indenture the terms used but not defined herein are used as defined in the Lease. ARTICLE II THE SECURED CERTIFICATES SECTION 2.01. FORM OF SECURED CERTIFICATES. The Secured Certificates shall be substantially in the form set forth below: -10- 11 THIS SECURED CERTIFICATE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS SECURED CERTIFICATE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST AGREEMENT [NW 1996 G] DATED AS OF MAY 29, 1996. SERIES [___] NON-RECOURSE SECURED CERTIFICATE DUE [___] ISSUED IN CONNECTION WITH THE BOEING MODEL 757-251 AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N543US. No. Date: [ , ] ---------- ---------- -- $------------------ INTEREST RATE MATURITY DATE [ ] [ , ] ---------- -------- ------- FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 G], dated as of May 29, 1996, between the Owner Participant named therein and the Owner Trustee (herein as such Trust Agreement may be supplemented or amended from time to time called the "TRUST AGREEMENT"), hereby promises to pay to ___________, or the registered assignee thereof, the principal sum of $_________ (the "PRINCIPAL AMOUNT"), together with interest on the amount of the Principal Amount remaining unpaid from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months) from the date hereof until paid in full at a rate per annum equal to the Interest Rate indicated above. The Principal Amount of this Secured Certificate shall be payable in installments on the dates set forth in Schedule I hereto equal to the corresponding percentage of the Principal Amount of this Secured Certificate set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in semi-annual installments commencing January 2, 1997, and thereafter on July 2 and January 2 of each year, to and including _______, _____. Notwithstanding the foregoing, the final payment made on this Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, this Secured Certificate. Notwithstanding anything to the contrary contained herein, if any date on which a payment under this Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. For purposes hereof, the term "TRUST INDENTURE" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 G], dated as of June 12, 1996, between the Owner Trustee and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), as the same may be amended or supplemented from time to time. All other capitalized terms used in this Secured Certificate and not defined herein shall have the respective meanings assigned in the Trust Indenture. This Secured Certificate shall bear interest, payable on demand, at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest and any other amounts payable hereunder which are overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). All payments of Principal Amount, interest, Make-Whole Amount, if any, and other amounts, if any, to be made by the Owner Trustee hereunder and under the Trust Indenture or the Participation Agreement -11- 12 shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Section 2.03 and Article III of the Trust Indenture and each holder hereof, by its acceptance of this Secured Certificate, agrees that (A) it will look solely to the income and proceeds from the Trust Indenture Estate to the extent available for distribution to the holder hereof as above provided, (B) neither the Owner Trustee nor the Indenture Trustee is personally liable or liable in any manner to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Trust Indenture or in the Participation Agreement, for any liability under the Trust Indenture or the Participation Agreement, and (C) the Owner Participant is not personally liable or liable in any manner to the holder hereof for any amounts payable or any liability under this Secured Certificate or, except as provided in the Participation Agreement, for any liability under the Participation Agreement; provided, however, that nothing herein contained shall limit, restrict or impair the right of the Indenture Trustee, subject always to the terms and provisions of the Trust Indenture, to accelerate the maturity of this Secured Certificate upon occurrence of an Event of Default under the Trust Indenture in accordance with Section 4.04(b) of the Trust Indenture, to bring suit and obtain a judgment against the Owner Trustee on this Secured Certificate for purposes of realizing upon the Trust Indenture Estate and to exercise all rights and remedies provided under the Trust Indenture or otherwise realize upon the Trust Indenture Estate. There shall be maintained a Secured Certificate Register for the purpose of registering transfers and exchanges of Secured Certificates at the Corporate Trust Office of the Indenture Trustee or at the office of any successor in the manner provided in Section 2.07 of the Trust Indenture. The Principal Amount and interest and other amounts due hereunder shall be payable in Dollars in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as otherwise provided in the Trust Indenture. Each such payment shall be made on the date such payment is due and without any presentment or surrender of this Secured Certificate, except that in the case of any final payment with respect to this Secured Certificate, the Secured Certificate shall be surrendered promptly thereafter by the Indenture Trustee to the Owner Trustee for cancellation. The holder hereof, by its acceptance of this Secured Certificate, agrees that, except as provided in the Trust Indenture, each payment received by it hereunder shall be applied, first, to the payment of accrued interest on this Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts hereunder) to the date of such payment, second, to the payment of the Principal Amount of this Secured Certificate then due, third, to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under the Trust Indenture, and fourth, the balance, if any, remaining thereafter, to the payment of Principal Amount of this Secured Certificate remaining unpaid in the inverse order of their normal maturity. This Secured Certificate is one of the Secured Certificates referred to in the Trust Indenture which have been or are to be issued by the Owner Trustee pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held by the Indenture Trustee as security, in part, for the Secured Certificates. The provisions of this Secured Certificate are subject to the Trust Indenture. Reference is hereby made to the Trust Indenture and the Participation Agreement for a complete statement of the rights and obligations of the holder of, and the nature and extent of the security for, this Secured Certificate and the rights and obligations of the holders of, and the nature and extent of the security for, any other Secured Certificates executed and delivered under the Trust Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust Indenture, to all of which terms and conditions in the Trust Indenture and the Participation Agreement each holder hereof agrees by its acceptance of this Secured Certificate. As provided in the Trust Indenture and subject to certain limitations therein set forth, this Secured Certificate is exchangeable for a like aggregate Principal Amount of Secured Certificates of different authorized denominations, as requested by the holder surrendering the same. -12- 13 Prior to due presentment for registration of transfer of this Secured Certificate, the Owner Trustee and the Indenture Trustee shall treat the Person in whose name this Secured Certificate is registered as the owner hereof for all purposes whether or not this Secured Certificate be overdue, and neither of the Owner Trustee nor the Indenture Trustee shall be affected by notice to the contrary. This Secured Certificate is subject to redemption as provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture but not otherwise. This Secured Certificate is also subject to assumption by Lessee as provided in Section 2.13 of the Trust Indenture, to exchange and to purchase by the Owner Participant or the Owner Trustee as provided in Section 2.14 of the Trust Indenture but not otherwise. [The indebtedness evidenced by this Secured Certificate is, to the extent and in the manner provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Trust Indenture) in respect of [Series A Secured Certificates](1) [Series A and Series B Secured Certificates](2) and this Secured Certificate is issued subject to such provisions. The Certificate Holder of this Secured Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee his attorney-in-fact for such purpose.]** Unless the certificate of authentication hereon has been executed by or on behalf of the Indenture Trustee by manual signature, this Secured Certificate shall not be entitled to any benefit under the Trust Indenture or be valid or obligatory for any purpose. THIS SECURED CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. * * * - -------- (1) To be inserted in the case of a Series B Secured Certificate. (2) To be inserted in the case of a Series C Secured Certificate. ** To be inserted for each Secured Certificate other than any Series A Secured Certificate. -13- 14 IN WITNESS WHEREOF, the Owner Trustee has caused this Secured Certificate to be executed in its corporate name by its officer thereunto duly authorized on the date hereof. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity but solely as Owner Trustee By ---------------------------- Name: Title: INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Secured Certificates referred to in the within-mentioned Trust Indenture. STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By ---------------------------- Name: Title: -14- 15 SCHEDULE I SECURED CERTIFICATE AMORTIZATION Percentage of Principal Amount Payment Date to be Paid ------------------------- ------------------------ [SEE SCHEDULE I TO TRUST INDENTURE WHICH IS INSERTED UPON ISSUANCE] * * * SECTION 2.02. ISSUANCE AND TERMS OF SECURED CERTIFICATES. The Secured Certificates shall be dated the date of issuance thereof, shall be issued in three separate series consisting of Series A, Series B and Series C and in the maturities and principal amounts and shall bear interest as specified in Schedule I hereto. On the date of the consummation of the Refinancing Transaction, (i) each Refinancing Secured Certificate shall be issued to the Pass Through Trustees (or their designee) under the Pass Through Agreements as set forth in Schedule II hereto in connection therewith and (ii) the Secured Certificates issued under the Original Indenture shall be concurrently redeemed. The Secured Certificates shall be issued in registered form only. The Secured Certificates shall be issued in denominations of $1,000 and integral multiples thereof, except that one Secured Certificate of each Series may be in an amount that is not an integral multiple of $1,000. Each Secured Certificate shall bear interest at the Debt Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on the unpaid Principal Amount thereof from time to time outstanding, payable in arrears on January 2, 1997, and on each July 2 and January 2 thereafter until maturity. The Principal Amount of each Secured Certificate shall be payable on the dates and in the installments equal to the corresponding percentage of the Principal Amount as set forth in Schedule I hereto which shall be attached as Schedule I to the Secured Certificates. Notwithstanding the foregoing, the final payment made under each Secured Certificate shall be in an amount sufficient to discharge in full the unpaid Principal Amount and all accrued and unpaid interest on, and any other amounts due under, such Secured Certificate. Each Secured Certificate shall bear interest at the Past Due Rate (calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any part of the Principal Amount, Make-Whole Amount, if any, and to the extent permitted by applicable law, interest and any other amounts payable thereunder not paid when due for any period during which the same shall be overdue, in each case for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything to the contrary contained herein, if any date on which a payment under any Secured Certificate 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 and if such payment is made on such next succeeding Business Day, no interest shall accrue on the amount of such payment during such extension. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 3.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Certificate Holders, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case pursuant to Section 7 of the Participation Agreement, (b) the Owner Trustee's pro rata share of all amounts owed to the Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings, Final Drawings and Applied Downgrade Advances (as -15- 16 defined in the Liquidity Facilities) under any Liquidity Facility except to the extent included in Net Interest and Related Charges, and (c) any and all amounts received by the Owner Trustee which are payable by Lessee under clause (c) or (d) of the definition of Supplemental Rent. As used in this Section, "Owner Trustee's pro rata share" means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes, plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Secured Certificate a fraction, the numerator of which is the aggregate principal balance then outstanding of the Secured Certificates and the denominator of which is the aggregate principal balance then outstanding of all Equipment Notes issued under Indentures under which there exists a Payment Default or (y) at all other times, zero; provided, however, neither the numerator nor the denominator of the fractions in paragraphs (A) or (B) shall include any Series D Secured Certificates or Series D Equipment Notes. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to the Liquidity Provider on any Interest Drawing, Final Drawing and/or Applied Downgrade Advance (as defined in the Liquidity Facilities) exceeds the amount which would be payable if such drawings bore interest at the Designated Interest Rate plus (ii) any amounts payable under Section 3.1, Section 3.2, Section 3.3 or Section 7.7 of each Liquidity Facility (or similar provisions of any succeeding Liquidity Facility) which result from any Interest Drawing, Final Drawing or Applied Downgrade Advance (as defined in the Liquidity Facilities). As used in this Section "Designated Interest Rate" means the weighted average Past Due Rate (as defined in the applicable Indentures) except with respect to that portion of any Final Drawing (or Applied Downgrade Advance which becomes a Final Drawing) which remains in a Cash Collateral Account, Designated Interest Rate means the weighted average Investment Earnings of funds in the Cash Collateral Accounts. As used in this Section, a Payment Default when used in connection with a Secured Certificate or Equipment Note means a default in the payment of principal thereof or interest thereon other than a default in the payment of principal or interest on a Series D Equipment Note which has not been cured other than solely because of acceleration. The following terms are used in this Section as defined in the Intercreditor Agreement without regard to any amendment, modification or supplement thereto after the Closing Date: Cash Collateral Account, Equipment Notes, Final Drawing, Indentures, Interest Drawing, Investment Earnings and Series D Equipment Notes. The Secured Certificates shall be executed on behalf of the Owner Trustee by its President or one of its Vice Presidents, Assistant Vice Presidents or Assistant Secretaries or other authorized officer. Secured Certificates bearing the signatures of individuals who were at any time the proper officers of the Owner Trustee shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Secured Certificates or did not hold such offices at the respective dates of such Secured Certificates. The Owner Trustee may from time to time execute and deliver Secured Certificates with respect to the Aircraft to the Indenture Trustee for authentication upon original issue and such Secured Certificates shall thereupon be authenticated and delivered by the Indenture Trustee upon the written request of the Owner Trustee signed by a Vice President or Assistant Vice President or other authorized officer of the Owner Trustee; provided, however, that each such request shall specify the aggregate Principal Amount of all Secured Certificates to be authenticated hereunder on original issue with respect to the Aircraft. No Secured Certificate shall be secured by or entitled to any benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears on such Secured Certificate a certificate of authentication in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized officers and such certificate upon any Secured Certificates shall be conclusive evidence, and the only evidence, that such Secured Certificate has been duly authenticated and delivered hereunder. -16- 17 SECTION 2.03. PAYMENTS FROM TRUST INDENTURE ESTATE ONLY. (a) Without impairing any of the other rights, powers, remedies, privileges, liens or security interests of the Certificate Holders under this Trust Indenture, each Certificate Holder, by its acceptance of a Secured Certificate, agrees that as between it and the Owner Trustee, except as expressly provided in this Trust Indenture, the Participation Agreement or any other Operative Document, (i) the obligation to make all payments of the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to the Secured Certificates, and the performance by the Owner Trustee of every obligation or covenant contained in this Trust Indenture and in the Participation Agreement or any of the other Operative Documents, shall be payable only from the income and proceeds from the Trust Estate to the extent included in the Trust Indenture Estate and only to the extent that the Owner Trustee shall have sufficient income or proceeds from the Trust Estate to the extent included in the Trust Indenture Estate to enable the Indenture Trustee to make such payments in accordance with the terms of Article III hereof, and all of the statements, representations, covenants and agreements made by the Owner Trustee (when made in such capacity) contained in this Trust Indenture and any agreement referred to herein other than the Trust Agreement, unless expressly otherwise stated, are made and intended only for the purpose of binding the Trust Estate and establishing the existence of rights and remedies which can be exercised and enforced against the Trust Estate; therefore, anything contained in this Trust Indenture or such other agreements to the contrary notwithstanding (except for any express provisions or representations that the Owner Trustee is responsible for, or is making, in its individual capacity, for which there would be personal liability of the Owner Trustee), no recourse shall be had with respect to this Trust Indenture 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, and (ii) none of the Owner Trustee, in its individual capacity, the Owner Participant, the Indenture Trustee and any officer, director, trustee, servant, employee, agent or direct or indirect parent or controlling Person or Persons of any of them shall have any personal liability for any amounts payable hereunder, under the Participation Agreement or any of the other Operative Documents or under the Secured Certificates except as expressly provided herein or in the Participation Agreement; provided, however, that nothing contained in this Section 2.03(a) shall be construed to limit the exercise and enforcement in accordance with the terms of this Trust Indenture or such other agreements of rights and remedies against the Trust Estate. These provisions are not intended as any release or discharge of the indebtedness represented by the Secured Certificates and the Trust Indenture, but are intended only as a covenant not to sue the Owner Trustee or the Indenture Trustee in their individual capacities, except as expressly provided herein or in the Participation Agreement, or the Owner Participant, except as expressly provided in the Participation Agreement, for a deficiency with respect to such indebtedness, the indebtedness represented by this Trust Indenture and the Secured Certificates to remain in full force and effect as fully as though these provisions were not contained in this Trust Indenture. The Owner Trustee hereby acknowledges that the Certificate Holders have expressly reserved all their rights and remedies against the Trust Indenture Estate, including the right, in the event of a default in the payment of all or part of the Principal Amount of, interest on, Make-Whole Amount, if any, or any other amount due with respect to any Secured Certificate within the periods provided for in Section 4.02(b) hereof, or upon the occurrence and continuation of any other Event of Default under this Trust Indenture, to foreclose upon this Trust Indenture, and/or to receive the proceeds from the Trust Indenture Estate and otherwise to enforce any other right under this Trust Indenture. Nothing in this Section 2.03(a) shall (x) release the Owner Participant from personal liability, or constitute a covenant not to sue the Owner Participant, for any breach by it of any of its covenants, representations or warranties contained in the Participation Agreement for the benefit of the Indenture Trustee or the Certificate Holders or for any of the payments it has agreed to make to the Indemnitee Trustee or the Certificate Holders pursuant to the Participation Agreement or (y) release the Owner Trustee or constitute a covenant not to sue the Owner Trustee for any breach by it of any representations, warranties or covenants of the Owner Trustee contained in the Operative Documents for the benefit of the Indenture Trustee or the Certificate Holders or (z) release the Owner Trustee in its individual capacity from personal liability, or constitute a covenant not to sue the Owner Trustee in its individual capacity for any breach by it of any representations, warranties or covenants of the Owner Trustee made in its individual capacity in the Operative Documents for the benefit of the Indenture Trustee or the Certificate Holders. (b) If (i) all or any part of the Trust Estate becomes the property of, or the Owner Trustee or Owner Participant becomes, a debtor subject to the reorganization provisions of the Bankruptcy Code, (ii) pursuant -17- 18 to such reorganization provisions, including Section 1111(b) of the Bankruptcy Code, 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 any Certificate Holder or the Indenture Trustee, directly or indirectly (other than the recourse liability of (x) the Owner Trustee (in its individual capacity) under the Participation Agreement or this Trust Indenture or by separate agreement or (y) the recourse liability of the Owner Participant under the Participation Agreement), to make payment on account of any amount payable as principal, Make-Whole Amount, if any, interest or other amounts on the Secured Certificates, (iii) the Certificate Holders shall have or shall have been permitted to foreclose the Lien of this Trust Indenture, and (iv) any Certificate Holder or the Indenture Trustee actually receives any Excess Amount (as hereinafter defined) which reflects any payment by the Owner Trustee (in its individual capacity) or the Owner Participant on account of clause (ii) above, then such Certificate Holder or the Indenture Trustee, as the case may be, shall promptly refund to the Owner Trustee (in its individual capacity) or the Owner Participant (whichever shall have made such payment) such Excess Amount. For purposes of this Section 2.03(b), "EXCESS AMOUNT" means the amount by which such payment exceeds the amount that would have been received by a Certificate Holder 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 clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a Certificate Holder 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 the Participation Agreement or this Trust Indenture (and any exhibits or annexes hereto or thereto) or by separate agreement or from retaining any amount paid by Owner Participant under Section 2.14 or 4.03 hereof. SECTION 2.04. METHOD OF PAYMENT. (a) The Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due under each Secured Certificate or hereunder will be payable in Dollars by wire transfer of immediately available funds not later than 12:00 noon, New York City time, on the due date of payment to the Indenture Trustee at the Corporate Trust Office for distribution among the Certificate Holders in the manner provided herein. The Owner Trustee shall not have any responsibility for the distribution of such payment to any Certificate Holder. Notwithstanding the foregoing or any provision in any Secured Certificate to the contrary, the Indenture Trustee will use reasonable efforts to pay or cause to be paid, if so directed in writing by any Certificate Holder (with a copy to the Owner Trustee), all amounts paid by the Owner Trustee hereunder and under such holder's Secured Certificate or Secured Certificates to such holder or a nominee therefor (including all amounts distributed pursuant to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the due date of payment, to an account maintained by such holder with a bank located in the continental United States the amount to be distributed to such holder, for credit to the account of such holder maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided in the immediately preceding sentence after its receipt of funds at the place and prior to the time specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to compensate such holders for loss of use of funds at the Debt Rate until such payment is made and the Indenture Trustee shall be entitled to any interest earned on such funds until such payment is made. Any payment made hereunder shall be made without any presentment or surrender of any Secured Certificate, except that, in the case of the final payment in respect of any Secured Certificate, such Secured Certificate shall be surrendered to the Indenture Trustee for cancellation promptly after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary, the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to do so in view of the time of day when the funds to be so transferred were received by it if such funds were received after 12:00 noon, New York City time, at the place of payment. Prior to the due presentment for registration of transfer of any Secured Certificate, the Owner Trustee and the Indenture Trustee shall deem and treat the Person in whose name any Secured Certificate is registered on the Secured Certificate Register as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable with respect to such Secured Certificate and for all other purposes, and none of the Owner Trustee or the Indenture Trustee shall be affected by any notice to the contrary. So long as any signatory to the Participation Agreement or nominee thereof shall be a -18- 19 registered Certificate Holder, all payments to it shall be made to the account of such Certificate Holder specified in Schedule I thereto and otherwise in the manner provided in or pursuant to the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) unless it shall have specified some other account or manner of payment by notice to the Indenture Trustee consistent with this Section 2.04. (b) The Indenture Trustee, as agent for the Owner Trustee, shall exclude and withhold at the appropriate rate from each payment of Principal Amount of, interest on, Make-Whole Amount, if any, and other amounts due hereunder or under each Secured Certificate (and such exclusion and withholding shall constitute payment in respect of such Secured Certificate) any and all United States withholding taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such withholding agent and, in connection therewith, whenever any present or future United States taxes or similar charges are required to be withheld with respect to any amounts payable hereunder or in respect of the Secured Certificates, to withhold such amounts and timely pay the same to the appropriate authority in the name of and on behalf of the Certificate Holders, that it will file any necessary United States withholding tax returns or statements when due, and that as promptly as possible after the payment thereof it will deliver to each Certificate Holder (with a copy to the Owner Trustee and Lessee) appropriate receipts showing the payment thereof, together with such additional documentary evidence as any such Certificate Holder may reasonably request from time to time. The Indenture Trustee and each Certificate Holder agree that (i) no such withholding or action with respect thereto shall constitute or give rise to any Event of Default and (ii) in the event of the failure of the Indenture Trustee to withhold and pay over any such taxes to the appropriate taxing authority, no indemnity will be sought from the Owner Trustee, the Owner Participant or the Trust Estate. If a Certificate Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 1001 or W-8 (or such successor form or forms as may be required by the United States Treasury Department) during the calendar year in which the payment hereunder or under the Secured Certificate(s) held by such holder is made (but prior to the making of such payment), or in either of the two preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate), the Indenture Trustee shall withhold only the amount, if any, required by Law (after taking into account any applicable exemptions claimed by the Certificate Holder) to be withheld from payments hereunder or under the Secured Certificates held by such holder in respect of United States federal income tax. If a Certificate Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form 4224 in duplicate (or such successor certificate, form or forms as may be required by the United States Treasury Department as necessary in order to avoid withholding of United States federal income tax), during the calendar year in which the payment is made (but prior to the making of such payment), and has not notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to the date of such payment (and the Indenture Trustee has no reason to know that any information set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture Trustee a properly completed and currently effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a payment hereunder or under the Secured Certificates held by such holder, no amount shall be withheld from payments in respect of United States federal income tax. If any Certificate Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United States withholding tax or if the Code or the regulations thereunder or the administrative interpretation thereof are at any time after the date hereof amended to require such withholding of United States federal income taxes from payments under the Secured Certificates held by such holder, the Indenture Trustee agrees to withhold from each payment due to the relevant Certificate Holder withholding taxes at the appropriate rate under Law and will, on a timely basis as more fully provided above, deposit such amounts with an authorized depository and make such returns, statements, receipts and other documentary evidence in connection therewith as required by applicable law. The Indenture Trustee and each Certificate Holder agree that (i) no such withholding or action with respect thereto shall constitute or give rise to any Event of Default and (ii) in the event of the failure of the Indenture Trustee to withhold and pay over any such taxes to the appropriate taxing authority, no indemnity will be sought from the Owner Trustee, the Owner Participant or the Trust Estate. -19- 20 SECTION 2.05. APPLICATION OF PAYMENTS. In the case of each Secured Certificate, each payment of Principal Amount, Make-Whole Amount, if any, and interest or other amounts due thereon shall be applied: First: to the payment of accrued interest on such Secured Certificate (as well as any interest on any overdue Principal Amount, any overdue Make-Whole Amount, if any, and to the extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to the date of such payment; Second: to the payment of the Principal Amount of such Secured Certificate (or a portion thereof) then due thereunder; Third: to the payment of Make-Whole Amount, if any, and any other amount due hereunder or under such Secured Certificate; and Fourth: the balance, if any, remaining thereafter, to the payment of the Principal Amount of such Secured Certificate remaining unpaid (provided that such Secured Certificate shall not be subject to redemption except as provided in Sections 2.10, 2.11 and 2.12 hereof). The amounts paid pursuant to clause "Fourth" above shall be applied to the installments of Principal Amount of such Secured Certificate in the inverse order of their normal maturity. SECTION 2.06. TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE. A Certificate Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under all Secured Certificates held by such Certificate Holder and all other sums then payable to such Certificate Holder hereunder and under the other Operative Documents by the Owner Trustee (collectively, the "SECURED OBLIGATIONS") shall have been paid in full. SECTION 2.07. REGISTRATION, TRANSFER AND EXCHANGE OF SECURED CERTIFICATES. The Indenture Trustee shall keep a register (the "SECURED CERTIFICATE REGISTER") in which the Indenture Trustee shall provide for the registration of Secured Certificates and the registration of transfers of Secured Certificates. No such transfer shall be given effect unless and until registration hereunder shall have occurred. The Secured Certificate Register shall be kept at the Corporate Trust Office of the Indenture Trustee. The Indenture Trustee is hereby appointed "Secured Certificate Registrar" for the purpose of registering Secured Certificates and transfers of Secured Certificates as herein provided. A holder of any Secured Certificate intending to exchange such Secured Certificate shall surrender such Secured Certificate to the Indenture Trustee at the Corporate Trust Office, together with a written request from the registered holder thereof for the issuance of a new Secured Certificate, specifying, in the case of a surrender for transfer, the name and address of the new holder or holders. Upon surrender for registration of transfer of any Secured Certificate, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Secured Certificates of a like aggregate Principal Amount and of the same series. At the option of the Certificate Holder, Secured Certificates may be exchanged for other Secured Certificates of any authorized denominations of a like aggregate Principal Amount, upon surrender of the Secured Certificates to be exchanged to the Indenture Trustee at the Corporate Trust Office. Whenever any Secured Certificates are so surrendered for exchange, the Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver, the Secured Certificates which the Certificate Holder making the exchange is entitled to receive. All Secured Certificates issued upon any registration of transfer or exchange of Secured Certificates (whether under this Section 2.07 or under Section 2.08 hereof or otherwise under this Trust Indenture) shall be the valid obligations of the Owner Trustee evidencing the same respective obligations, and entitled to the same security and benefits under this Trust Indenture, -20- 21 as the Secured Certificates surrendered upon such registration of transfer or exchange. Every Secured Certificate presented or surrendered for registration of transfer, shall (if so required by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Certificate Holder or such holder's attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of any applicable state. The Indenture Trustee shall make a notation on each new Secured Certificate of the amount of all payments of Principal Amount previously made on the old Secured Certificate or Secured Certificates with respect to which such new Secured Certificate is issued and the date to which interest on such old Secured Certificate or Secured Certificates has been paid. Interest shall be deemed to have been paid on such new Secured Certificate to the date on which interest shall have been paid on such old Secured Certificate, and all payments of the Principal Amount marked on such new Secured Certificate, as provided above, shall be deemed to have been made thereon. The Owner Trustee shall not be required to exchange any surrendered Secured Certificates as provided above during the ten-day period preceding the due date of any payment on such Secured Certificate. The Owner Trustee shall in all cases deem the Person in whose name any Secured Certificate shall have been issued and registered as the absolute owner and holder of such Secured Certificate for the purpose of receiving payment of all amounts payable by the Owner Trustee with respect to such Secured Certificate and for all purposes until a notice stating otherwise is received from the Indenture Trustee and such change is reflected on the Secured Certificate Register. The Indenture Trustee will promptly notify the Owner Trustee and Lessee of each registration of a transfer of a Secured Certificate. Any such transferee of a Secured Certificate, by its acceptance of a Secured Certificate, agrees to the provisions of the Participation Agreement applicable to Certificate Holders, including Sections 5, 6, 8(c), 8(e), 8(j), 8(k), 8(l), 8(q)(A), 8(r), 8(t), 8(ff), 13(b), 13(c), 15(b), 15(c) and 16, and shall be deemed to have represented and warranted (except as provided above), and covenanted, to the parties to the Participation Agreement as to the matters represented, warranted and covenanted by the original Loan Participants in the Participation Agreement. Subject to compliance by the Certificate Holder and its transferee (if any) of the requirements set forth in this Section 2.07, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates upon transfer or exchange within 10 Business Days of the date a Secured Certificate is surrendered for transfer or exchange. SECTION 2.08. MUTILATED, DESTROYED, LOST OR STOLEN SECURED CERTIFICATES. If any Secured Certificate shall become mutilated, destroyed, lost or stolen, the Owner Trustee shall, upon the written request of the holder of such Secured Certificate, execute and the Indenture Trustee shall authenticate and deliver in replacement thereof a new Secured Certificate, payable in the same Principal Amount dated the same date and captioned as issued in connection with the Aircraft. The Indenture Trustee shall authenticate each replacement Secured Certificate on request by the Owner Trustee and shall make a notation on each replacement Secured Certificate of the aggregate amount of all payments of Principal Amount previously made on the mutilated, destroyed, lost or stolen Secured Certificate with respect to which the replacement Secured Certificate is issued and the date to which interest on such mutilated, destroyed, lost or stolen Secured Certificate has been paid. If the Secured Certificate being replaced has become mutilated, such Secured Certificate shall be surrendered to the Indenture Trustee and a photocopy thereof shall be furnished to the Owner Trustee. If the Secured Certificate being replaced has been destroyed, lost or stolen, the holder of such Secured Certificate shall furnish to the Owner Trustee and the Indenture Trustee such security or indemnity as may be required by them to save the Owner Trustee and the Indenture Trustee harmless and evidence satisfactory to the Owner Trustee and the Indenture Trustee of the destruction, loss or theft of such Secured Certificate and of the ownership thereof. If a "qualified institutional buyer" of the type referred to in paragraph (a)(l)(i)(A), (B), (D) or (E) of Rule 144A under the Securities Act (a "QIB") is the holder of any such destroyed, lost or stolen Secured Certificate, then the written indemnity of such QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Lessee, the Owner Trustee and the Indenture Trustee shall be accepted as satisfactory indemnity and security and no further indemnity or security shall be required as a condition to the execution and delivery of such new Secured Certificate. Subject to compliance by the Certificate Holder of the requirements set forth in this Section 2.08, the Indenture Trustee and the Owner Trustee shall use all reasonable efforts to issue new Secured Certificates within 10 Business Days of the date of the written request therefor from the Certificate Holder. -21- 22 SECTION 2.09. PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION. (a) No service charge shall be made to a Certificate Holder for any registration of transfer or exchange of Secured Certificates, but the Indenture Trustee, as Secured Certificate Registrar, may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Secured Certificates; provided, however, that neither the Owner Trustee nor the Owner Participant shall bear any such costs of registration, transfer or exchange including, without limitation, in connection with the consummation of the Refinancing Transaction. (b) The Indenture Trustee shall cancel all Secured Certificates surrendered for replacement, redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Secured Certificates. SECTION 2.10. MANDATORY REDEMPTIONS OF SECURED CERTIFICATES. (a) On the date on which Lessee is required pursuant to Section 10(a)(i) of the Lease to make payment for an Event of Loss with respect to the Aircraft, all of the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with all accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders but without Make-Whole Amount. (b) If the Lease is terminated with respect to the Aircraft by Lessee pursuant to Section 9 or Section 19(d) thereof and Lessee shall not have assumed all of the obligations of the Owner Trustee hereunder pursuant to Section 2.13 hereof and to Section 8(x) of the Participation Agreement, on the date the Lease is so terminated all the Secured Certificates shall be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.11. VOLUNTARY REDEMPTIONS OF SECURED CERTIFICATES. All of the Secured Certificates may be redeemed by the Owner Trustee in connection with a transaction described in, and subject to the terms and conditions of, Section 17 of the Participation Agreement upon at least 30 days' revocable prior written notice to the Indenture Trustee and the Certificate Holders, and the Secured Certificates shall, as provided in Section 17 of the Participation Agreement, be redeemed in whole at a redemption price equal to 100% of the unpaid Principal Amount thereof, together with accrued interest thereon to the date of redemption and all other amounts payable hereunder or under the Participation Agreement to the Certificate Holders plus Make-Whole Amount, if any. SECTION 2.12. REDEMPTIONS; NOTICE OF REDEMPTION. (a) Neither any redemption of any Secured Certificate nor any purchase by the Owner Trustee of any Secured Certificate may be made except to the extent and in the manner expressly permitted by this Trust Indenture. No purchase of any Secured Certificate may be made by the Indenture Trustee. (b) Notice of redemption or purchase with respect to the Secured Certificates shall be given by the Indenture Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more than 60 days prior to the applicable redemption date, to each Certificate Holder of such Secured Certificates to be redeemed or purchased, at such Certificate Holder's address appearing in the Secured Certificate Register; provided that, in the case of a redemption to be made pursuant to Section 2.10(b) or Section 2.11, such notice shall be revocable and shall be deemed revoked in the event that the Lease does not in fact terminate on the specified termination date or if notice of such redemption shall have been given in connection with a refinancing of Secured Certificates and the Indenture Trustee receives written notice of such revocation from Lessee or the Owner Trustee not later than three days prior to the redemption date. All notices of redemption shall state: (1) the redemption date, (2) the applicable basis for determining the redemption price, (3) that on the redemption date, the redemption price will become due and -22- 23 payable upon each such Secured Certificate, and that, if any such Secured Certificates are then outstanding, interest on such Secured Certificates shall cease to accrue on and after such redemption date, and (4) the place or places where such Secured Certificates are to be surrendered for payment of the redemption price. (c) On or before the redemption date, the Owner Trustee (or any person on behalf of the Owner Trustee) shall, to the extent an amount equal to the redemption price for the Secured Certificates to be redeemed or purchased on the redemption date shall not then be held in the Trust Indenture Estate, deposit or cause to be deposited with the Indenture Trustee by 12:00 noon on the redemption date in immediately available funds the redemption price of the Secured Certificates to be redeemed or purchased. (d) Notice of redemption or purchase having been given as aforesaid (and not deemed revoked as contemplated in the proviso to Section 2.12(b)), the Secured Certificates to be redeemed or purchased shall, on the redemption date, become due and payable at the Corporate Trust Office of the Indenture Trustee or at any office or agency maintained for such purposes pursuant to Section 2.07, and from and after such redemption date (unless there shall be a default in the payment of the redemption price) any such Secured Certificates then outstanding shall cease to bear interest. Upon surrender of any such Secured Certificate for redemption or purchase in accordance with said notice, such Secured Certificate shall be redeemed at the redemption price. If any Secured Certificate called for redemption or purchase shall not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until paid, continue to bear interest from the applicable redemption date at the interest rate in effect for such Secured Certificate as of such redemption date. SECTION 2.13. ASSUMPTION OF SECURED CERTIFICATES BY LESSEE. If, in accordance with Section 8(x) of the Participation Agreement, and subject to the provisions of Section 8(o) thereof, Lessee shall assume (on a full recourse basis) all of the obligations of the Owner Trustee hereunder, under the Secured Certificates and all other Operative Documents by supplemental indenture satisfactory to the Indenture Trustee (which shall contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11 and 12 of the Lease and (ii) other provisions necessary or advisable to effectuate such assumption), then upon delivery of such supplemental indenture, payment by Lessee of all expenses (including reasonable fees and expenses of counsel) for the Owner Trustee and the Owner Participant, delivery by the Guarantor of a guarantee of the Secured Certificates and other amounts owing to the Certificate Holders substantially in the form of the Guarantee, and delivery of an opinion of counsel for Lessee that such assumption has been duly and validly effected, the Owner Trustee shall be released and discharged from any further obligations hereunder and under the Secured Certificates and all other Operative Documents and the Owner Participant shall be released and discharged from any further obligations under the Participation Agreement and any other Operative Document to which it is a party, except with respect to any such obligations that accrued prior thereto. SECTION 2.14. OPTION TO PURCHASE SECURED CERTIFICATES. The Owner Trustee and the Owner Participant may, upon the events and subject to the terms and conditions and for the price set forth in this Section 2.14, purchase all but not less than all of the Secured Certificates outstanding hereunder, and each Certificate Holder agrees that it will, upon such events and subject to such terms and conditions and upon receipt of such price, sell, assign, transfer and convey to such purchaser or its nominee (without recourse or warranty of any kind other than (i) of title to the Secured Certificates so conveyed and (ii) against Liens on such Secured Certificates arising by, through or under such holder), all of the right, title and interest of such Certificate Holder in and to the Secured Certificates held by it, and such purchaser or its nominee shall assume all of such holder's obligations under the Participation Agreement and hereunder. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant upon any of the following events, and, in any such event, the purchase price thereof shall equal for each Secured Certificate the aggregate unpaid Principal Amount thereof, plus accrued and unpaid interest thereon to the date of purchase and all other amounts (other than the Make-Whole Amount, except as provided in the next sentence) then payable hereunder or under the Participation Agreement to the holder thereof. Such option to purchase the Secured Certificates may be exercised: (i) upon an Indenture Trustee Event or (ii) in the event there -23- 24 shall have occurred and be continuing a Lease Event of Default, provided that if such option is exercised pursuant to this clause (ii) at a time when there shall have occurred and be continuing for less than 120 days a Lease Event of Default, the purchase price thereof shall equal the price provided in the preceding sentence plus the Make-Whole Amount, if any. Such option to purchase the Secured Certificates may be exercised by the Owner Trustee or the Owner Participant giving written notice of its election of such option to the Indenture Trustee, which notice shall specify a date for such purchase not more than 30 days or less than 15 days after the date of such notice. The Indenture Trustee shall not exercise any of the remedies hereunder or, without the consent of the Owner Trustee or the Owner Participant, under the Lease, during the period from the time that a notice of exercise by the Owner Trustee or the Owner Participant of such option to purchase becomes irrevocable until the date on which such purchase is required to occur pursuant to the terms of the preceding sentence. Such election to purchase the Secured Certificates shall become irrevocable upon the sixteenth day preceding the date specified in the written notice described in the first sentence of this paragraph. If the Owner Trustee or the Owner Participant on or before the date of such purchase shall so request, the Certificate Holders will comply with all the provisions of Section 2.07 to enable new Secured Certificates to be issued to the Owner Trustee or the Owner Participant or its nominee in such denominations as the Owner Trustee or the Owner Participant shall request. All taxes, charges and expenses required pursuant to Section 2.09 in connection with the issuance of such new Secured Certificate shall be borne by the Owner Participant. SECTION 2.15. SUBORDINATION. (a) The Owner Trustee and, by acceptance of its Secured Certificates of any Series, each Certificate Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in Section 4.02(g) hereof, except as expressly provided in Article III hereof. (b) By the acceptance of its Secured Certificates of any Series (other than Series A), each Certificate Holder of such Series agrees that in the event that such Certificate Holder, in its capacity as a Certificate Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to receive under this Section 2.15 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.15(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article III hereof. (c) As used in this Section 2.15, the term "SENIOR HOLDER" shall mean, (i) the Certificate Holders of Series A until the Secured Obligations in respect of Series A Secured Certificates have been paid in full and (ii) after the Secured Obligations in respect of Series A Secured Certificates have been paid in full, the Certificate Holders of Series B until the Secured Obligations in respect of Series B Secured Certificates have been paid in full. SECTION 2.16. DEFEASANCE. (a) The Owner Trustee will be deemed to have paid and will be discharged from any and all obligations in respect of the Secured Certificates on the 90th day (or such other period as may be specified in the relevant provision of the United States Bankruptcy Code) (such period being the "Preference Period") after the date of the deposit referred to in clause (i) of this Section 2.16(a) if: (i) with reference to this Section 2.16(a), the Owner Trustee has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee (or another trustee satisfying the requirements of Section 8.02) and conveyed all right, title and interest for the benefit of the Certificate Holders, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Indenture Trustee, which provides irrevocable instructions therein to apply such money or the proceeds of -24- 25 such U.S. Government Obligations to the payment of such principal and interest with respect to the Secured Certificates, as trust funds in trust, specifically entrusted to the Indenture Trustee for the benefit of the Certificate Holders for payment of the principal of and interest, if any, on the Secured Certificates, and dedicated solely to, the benefit of the Certificate Holders, in and to (A) money in an amount, (B) U.S. Government Obligations that, through the payment of interest, and principal in respect thereof in accordance with their terms, will provide, not later than one day before the due date of any payment referred to in this clause (i), money in an amount or (C) a combination thereof in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Indenture Trustee, to pay and discharge, without consideration of the reinvestment of such interest and after payment of all federal, state and local withholding taxes or other similar charges and assessments in respect thereof payable by the Indenture Trustee with respect to the amounts deposited pursuant to clause (A), (B) or (C), the principal of and accrued interest on the outstanding Secured Certificates at the maturity of such principal or interest; (ii) the Owner Trustee shall have delivered to the Indenture Trustee (A) either (1) a ruling directed to the Indenture Trustee received from the Internal Revenue Service to the effect that the Certificate Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Owner Trustee's exercise of its option under this Section 2.16(a) and will be subject to federal income tax on that same amount and in the same manner and at the same times as would have been the case if such option had not been exercised or (2) an Opinion of Counsel to the same effect as the ruling described in clause (1) above accompanied by a ruling to that effect published by the Internal Revenue Service, unless there has been a change in the applicable federal income tax law since the date of this Indenture such that a ruling from the Internal Revenue Service is no longer required and (B) an Opinion of Counsel to the effect that (1) the creation of the defeasance trust does not violate the Investment Company Act of 1940 and (2) after the passage of the Preference Period, the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code (or any successor or replacement provision) in a case commenced by or against the Owner Trustee or Lessee under either such statute, and either (I) the trust funds will no longer remain the property of the Owner Trustee or Lessee (and therefore will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally) or (II) if a court were to rule under any such law in any case or proceeding that the trust funds remained the property of the Owner Trustee or Lessee (y) assuming such funds remained in the possession of the Indenture Trustee prior to such court ruling to the extent not paid to the Certificate Holders, the Indenture Trustee will hold, for the benefit of the Certificate Holders, a valid and perfected security interest in such trust funds that is not avoidable in bankruptcy or otherwise except for the effect of Section 552(b) of the United States Bankruptcy Code (or any successor or replacement provision) on interest on the trust funds accruing after the commencement of a case under such statute and (z) the Certificate Holders will be entitled to receive adequate protection of their interests in such trust funds if such trust funds are used in such case or proceeding; and (iii) the Owner Trustee shall have made arrangements reasonably satisfactory to the Indenture Trustee for payment or satisfaction of all amounts due under the third paragraph of Section 2.02. After any such irrevocable deposit and satisfaction of the condition precedent provided in clause (ii) of this Section 2.16(a), the Indenture Trustee upon request shall execute and deliver appropriate instruments to release the Lien of this Trust Indenture in accordance with Section 10.01 and shall acknowledge in writing the discharge of the Owner Trustee's obligations under the Secured Certificates and this Trust Indenture except for those surviving obligations in the immediately succeeding paragraph. Notwithstanding the foregoing, prior to the end of the Preference Period, none of the Owner Trustee's obligations under this Trust Indenture shall be discharged. Subsequent to the end of the Preference Period, the Owner Trustee's obligations in Sections 2.07 and 2.08 shall survive until the Secured Certificates are no longer outstanding. -25- 26 (b) In lieu of satisfying its obligations set forth in Section 2.16(a), the Owner Trustee may elect, in its sole discretion, to satisfy the conditions specified in clauses (i) and (ii) of Section 2.16(a) without regard to the requirement described in Section 2.16(a)(ii)(A) and may, in lieu of satisfying the requirements set forth in Section 2.16(a)(ii)(A), provide only an Opinion of Counsel to the effect that the Certificate Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Owner Trustee's providing of the deposit referred to in Section 2.16(a)(i) and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit had not been made. If the Owner Trustee elects such option, then the Indenture Trustee upon request shall execute and deliver appropriate instruments to release the Lien of this Trust Indenture in accordance with Section 10.01 and the Owner Trustee shall be released from its obligations set forth in Section 4.01 (other than Section 4.01(a)). All other obligations of the Owner Trustee hereunder shall remain in full force and effect. For the avoidance of doubt, the effect of the Owner Trustee's exercise of its option set forth in this subsection (b) shall be to create an economic defeasance rather than the legal defeasance that would result if the option set forth in subsection (a) above were to be exercised. ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE SECTION 3.01. BASIC RENT DISTRIBUTION. Except as otherwise provided in Section 3.03 hereof, each installment of Basic Rent or Interim Rent, any payment of interest on overdue installments of Basic Rent and any payment received by the Indenture Trustee pursuant to Section 4.03 hereof shall be promptly distributed in the following order of priority: FIRST, (i) so much of such installment or payment as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Secured Certificates shall be distributed to the Certificate Holders of Series A ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Secured Certificate bears to the aggregate amount of the payments then due under all Series A Secured Certificates; (ii) after giving effect to paragraph (i) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Secured Certificates shall be distributed to the Certificate Holders of Series B ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Secured Certificate bears to the aggregate amount of the payments then due under all Series B Secured Certificates; and (iii) after giving effect to paragraph (ii) above, so much of such installment or payment remaining as shall be required to pay in full the aggregate amount of the payment or payments of Principal Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series C Secured Certificates shall be distributed to the Certificate Holders of Series C ratably, -26- 27 such investment earnings) shall be released to Lessee at Lessee's written request upon the release of such damaged Airframe or Engine and the replacement thereof as provided in the Lease. SECTION 3.03. PAYMENTS AFTER EVENT OF DEFAULT. Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the exercise of any remedies pursuant to Section 15 of the Lease or Article IV hereof) after an Event of Default shall have occurred and be continuing and after the occurrence of an Indenture Trustee Event, as well as all payments or amounts then held by the Indenture Trustee as part of the Trust Indenture Estate, shall be promptly distributed by the Indenture Trustee in the following order of priority: FIRST, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate (all such property being herein called the "MORTGAGED PROPERTY") pursuant to Section 4.05(b) hereof) , but other than income tax on, or measured by, fees payable to the Indenture Trustee in its individual capacity pursuant to the Operative Documents to which it is a party incurred by the Indenture Trustee (to the extent not previously reimbursed), the expenses of any sale, taking or other proceeding, reasonable attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Certificate Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or any Certificate Holder, liquidated or otherwise, upon such Event of Default shall be applied by the Indenture Trustee as between itself and the Certificate Holders in reimbursement of such expenses and any other expenses for which the Indenture Trustee or the Certificate Holders are entitled to reimbursement under any Operative Document and in the case the aggregate amount to be so distributed is insufficient to pay as aforesaid, then ratably, without priority of one over the other, in proportion to the amounts owed each hereunder; SECOND, so much of such payments or amounts remaining as shall be required to reimburse the then existing or prior Certificate Holders for payments made pursuant to Section 5.03 hereof (to the extent not previously reimbursed) shall be distributed to such then existing or prior Certificate Holders ratably, without priority of one over the other, in accordance with the amount of the payment or payments made by each such then existing or prior Certificate Holder pursuant to said Section 5.03 hereof; THIRD, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series A Secured Certificates (other than Make-Whole Amount) to the date of distribution, shall be distributed to the Certificate Holders of Series A, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount) to the date of distribution; -28- 28 (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series B Secured Certificates [(other than Make-Whole Amount)] to the date of distribution, shall be distributed to the Certificate Holders of Series B, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than the Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than the Make-Whole Amount) to the date of distribution; and (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Secured Certificates, and the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Amount which shall not be due and payable) and all other Secured Obligations in respect of the Series C Secured Certificates (other than Make-Whole Amount) to the date of distribution, shall be distributed to the Certificate Holders of Series C, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Secured Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than the Make-Whole Amount, if any) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Secured Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than the Make-Whole Amount) to the date of distribution; and FOURTH, the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee. No Make-Whole Amount shall be due and payable on the Secured Certificates as a consequence of the acceleration of the Secured Certificates. SECTION 3.04. CERTAIN PAYMENTS. (a) Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in this Trust Indenture and for which such provision is made in the Lease, the Participation Agreement or any other Operative Document shall be applied forthwith to the purpose for which such payment was made in accordance with the terms of the Lease, the Participation Agreement or such other Operative Document, as the case may be. (b) The Indenture Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner Trustee or Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) any Certificate Holder, (iii) the Subordination Agent, (iv) the Liquidity Provider, and (v) the Pass Through Trustees, in each case whether pursuant to Section 7 of the Participation Agreement or as Supplemental Rent, directly to the Person entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the third paragraph of Section 2.02 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the -29- 29 Intercreditor Agreement, and any payment received by the Indenture Trustee under clause (c) of the third paragraph of Section 2.02 shall be distributed directly to the Persons entitled thereto. (c) [Intentionally Omitted] (d) Notwithstanding anything to the contrary contained in this Trust Indenture, any amounts received by the Indenture Trustee which constitute Excluded Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. (e) Notwithstanding any provision of this Trust Indenture to the contrary, any amounts held by the Indenture Trustee that would, but for the provisions of Section 3.03 hereof, otherwise be distributed to Lessee shall, notwithstanding the provisions of said Section, be distributed to Lessee unless and until a Lease Event of Default shall have occurred and be continuing. SECTION 3.05. OTHER PAYMENTS. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made in the Lease, the Participation Agreement, elsewhere in this Trust Indenture or in any other Operative Document shall be distributed by the Indenture Trustee to the extent received or realized at any time (i) prior to the payment in full of all Secured Obligations due the Certificate Holders, in the order of priority specified in Section 3.01 hereof subject to the proviso thereto, and (ii) after payment in full of all Secured Obligations due the Certificate Holders, in the following order of priority: FIRST, to the extent payments or amounts described in clause "First" of Section 3.03 hereof are otherwise obligations of Lessee under the Operative Documents or for which Lessee is obligated to indemnify against thereunder, in the manner provided in clause "First" of Section 3.03 hereof, and SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof. Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04 hereof, all payments received and amounts realized by the Indenture Trustee under the Lease or otherwise with respect to the Aircraft (including, without limitation, all amounts realized upon the sale or release of the Aircraft after the termination of the Lease with respect thereto), to the extent received or realized at any time after payment in full of all Secured Obligations due the Certificate Holders, shall be distributed by the Indenture Trustee in the order of priority specified in clause (ii) of the immediately preceding sentence of this Section 3.05. SECTION 3.06. PAYMENTS TO OWNER TRUSTEE. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee (within the time limits contemplated by Section 2.04(a)) by wire transfer of funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee pursuant to clause "Second" of Section 3.01 hereof shall be distributed by wire transfer of funds of the type received by the Indenture Trustee to the Owner Participant's account (within the time limits contemplated by Section 2.04(a)) specified in Schedule I to the Participation Agreement. SECTION 3.07 APPLICATION OF PAYMENTS UNDER GUARANTEE. -30- 30 All payments received by the Indenture Trustee pursuant to the Guarantee shall be distributed forthwith by the Indenture Trustee in the same order of priority, and in the same manner, as it would have distributed the payment in respect of which such payment under the Guarantee was received. ARTICLE IV COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE SECTION 4.01. COVENANTS OF OWNER TRUSTEE. The Owner Trustee hereby covenants and agrees (the covenants and agreements only in clause (b) below being made by the Owner Trustee in its individual capacity) as follows: (a) the Owner Trustee will duly and punctually pay the Principal Amount of, Make-Whole Amount, if any, and interest on and other amounts due under the Secured Certificates and hereunder in accordance with the terms of the Secured Certificates and this Trust Indenture and all amounts, if any, payable by it to the Certificate Holders under the Participation Agreement; (b) the Owner Trustee in its individual capacity covenants and agrees that it shall not, directly or indirectly, cause or permit to exist a Lessor Lien attributable to it in its individual capacity with respect to the Aircraft or any other portion of the Trust Estate; that it will promptly, at its own expense, take such action as may be necessary to duly discharge such Lessor Lien attributable to it in its individual capacity; and that it will make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from such Lessor Liens attributable to it in its individual capacity; (c) in the event the Owner Trustee shall have Actual Knowledge of an Event of Default or an Event of Loss, the Owner Trustee will give prompt written notice of such Event of Default or Event of Loss to the Indenture Trustee, each Certificate Holder, Lessee and the Owner Participant; (d) the Owner Trustee will furnish to the Certificate Holders and the Indenture Trustee, promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Owner Trustee under the Lease, including, without limitation, a copy of any Termination Notice and a copy of each report or notice received pursuant to Section 9(a) and 11(c) of the Lease to the extent that the same shall not have been furnished to the Certificate Holders or the Indenture Trustee pursuant to the Lease; (e) except with the consent of the Indenture Trustee (acting pursuant to instructions given in accordance with Section 9.01 hereof), the Owner Trustee will not contract for, create, incur, assume or suffer to exist any Debt (other than the Secured Certificates), and will not guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing, or otherwise), endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the Debt of any other person; and (f) the Owner Trustee will not enter into any business or other activity other than the business of owning the Aircraft, the leasing thereof to Lessee and the carrying out of the transactions contemplated hereby and by the Lease, the Participation Agreement, the Trust Agreement and the other Operative Documents. SECTION 4.02. EVENT OF DEFAULT. "EVENT OF DEFAULT" means any of the following events (whatever the reason for such Event of Default and whether such event shall be voluntary or involuntary or come about or be effected by operation of Law -31- 31 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): (a) any Lease Event of Default (provided that any such Lease Event of Default caused solely by a failure of Lessee to pay to the Owner Trustee or the Owner Participant when due any amount that is included in the definition of Excluded Payments shall not constitute an Event of Default unless notice is given by the Owner Trustee to the Indenture Trustee that such failure shall constitute an Event of Default); or (b) the failure of the Owner Trustee to pay when due any payment of Principal Amount of, interest on, Make-Whole Amount, if any, or other amount due and payable under any Secured Certificate or hereunder (other than any such failure arising by virtue of a tax withheld pursuant to Section 2.04(b) hereof or as a result of a Lease Event of Default or a Lease Default) and such failure shall have continued unremedied for ten Business Days in the case of any payment of Principal Amount or interest or Make-Whole Amount, if any, thereon and, in the case of any other amount, for ten Business Days after the Owner Trustee or the Owner Participant receives written demand from the Indenture Trustee or any Certificate Holder; or (c) any Lien required to be discharged by the Owner Trustee, in its individual capacity pursuant to Section 4.01(b) hereof or in its individual or trust capacity pursuant to Section 8(h) of the Participation Agreement, or by the Owner Participant pursuant to Section 8(h) of the Participation Agreement shall remain undischarged for a period of 30 days after the Owner Trustee or the Owner Participant, as the case may be, shall have received written notice from the Indenture Trustee or any Certificate Holder of such Lien; or (d) any representation or warranty made by the Owner Participant or the Owner Trustee herein, in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in any certificate furnished by the Owner Participant or the Owner Trustee to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents shall prove to have been false or incorrect when made in any material respect and continues to be material; and if such misrepresentation is capable of being corrected and if such correction is being sought diligently, such misrepresentation shall not have been corrected within 60 days (or, without affecting Section 4.02(f) hereof, in the case of the representations made in Section 8(c) of the Participation Agreement as to the citizenship of the Owner Trustee in its individual capacity or of the Owner Participant, respectively, as soon as is reasonably practicable but in any event within 60 days) following notice thereof from the Indenture Trustee or any Certificate Holder to the Owner Trustee or the Owner Participant, as the case may be; or (e) other than as provided in (c) above or (f) below, any failure by the Owner Trustee or Owner Participant to observe or perform in any material respect any other covenant or obligation of the Owner Trustee or Owner Participant, as the case may be, for the benefit of the Indenture Trustee or the Certificate Holders contained in the Participation Agreement, Section 4.01(a) of the Trust Agreement, the Secured Certificates or this Trust Indenture which is not remedied within a period of 60 days after notice thereof has been given to the Owner Trustee and the Owner Participant (or, if such failure cannot be remedied during such 60-day period and the Owner Trustee and/or the Owner Participant have been and are diligently proceeding to remedy such failure, such additional period not in excess of 120 days, if such failure is capable of being remedied during such additional period, as may be necessary to remedy such failure); or (f) if at any time when the Aircraft is registered under the laws of the United States, the Owner Participant shall not be a Citizen of the United States, and as the result thereof the registration of the Aircraft under the Federal Aviation Act, and regulations then applicable thereunder, shall cease to be effective; provided that no Event of Default shall be deemed to have occurred under this paragraph (f) -32- 32 unless such circumstances continue unremedied for more than 60 days after the Owner Participant has Actual Knowledge of the state of facts that resulted in such ineffectiveness and of such loss of citizenship; or (g) at any time either (i) the commencement of an involuntary case or other proceeding in respect of the Owner Participant, the Owner Trustee or the Trust Estate 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 seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs and the continuation of any such case or other proceeding undismissed and unstayed for a period of 90 consecutive days; or (ii) the commencement by the Owner Participant, the Owner Trustee or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee or the Trust Estate to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Owner Participant, the Owner Trustee or the Trust Estate or for all or substantially all of its property, or the making by the Owner Participant, the Owner Trustee or the Trust Estate of any assignment for the benefit of creditors or the Owner Participant or the Owner Trustee shall take any action to authorize any of the foregoing; provided, however, that an event referred to in this Section 4.02(g) with respect to the Owner Participant shall not constitute an Event of Default if within 30 days of the commencement of the case or proceeding (A) a final non-appealable order, judgment or decree shall be entered in such case or proceeding by a court or a trustee, custodian, receiver or liquidator, or (B) an opinion of counsel, reasonably satisfactory to the Indenture Trustee, shall be provided by the Owner Participant, in each case to the effect that, no part of the Trust Estate (except for the Owner Participant's beneficial interest therein) and no right, title or interest under the Trust Indenture Estate shall be included in, or be subject to, any declaration or adjudication of, or proceedings with respect to, the bankruptcy, insolvency or liquidation of the Owner Participant referred to in this Section 4.02(g); provided further that an event referred to in this Section 4.02(f) with respect to the Owner Participant shall not constitute an Event of Default if, not later than 90 days following such event, the Owner Participant has been replaced with an entity eligible to act as Owner Participant in accordance with Section 8(n) of the Participation Agreement. SECTION 4.03. CERTAIN RIGHTS. The Indenture Trustee shall give the Certificate Holders, the Owner Trustee and the Owner Participant prompt written notice of any Event of Default of which the Indenture Trustee has Actual Knowledge and, if any such Event of Default results from a Lease Event of Default that can be cured by the payment of money (it being understood that defaults requiring action such as the obtaining of insurance and the procuring of maintenance services can be so remedied), shall give the Certificate Holders, the Owner Trustee and the Owner Participant not less than ten Business Days' prior written notice of the date (the "ENFORCEMENT DATE") on or after which the Indenture Trustee may commence and consummate the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06 hereof, or the exercise of any remedy or remedies pursuant to the provisions of Section 15 of the Lease. If an Event of Default shall have occurred and be continuing, the Owner Trustee shall have the following rights hereunder, any of which may be exercised directly by the Owner Participant. If as a result of the occurrence of an Event of Default in respect of the nonpayment by Lessee of Interim Rent or Basic Rent due under the Lease, the Indenture Trustee shall have insufficient funds to make any payment of Principal Amount and interest on any Secured Certificate on the day it becomes due and payable, the Owner Trustee may, without the consent or concurrence of any Certificate Holder, but shall not be obligated to, pay the Indenture Trustee prior to the Enforcement Date, in the manner provided in Section 2.04 hereof, for application in accordance with Section 3.01 hereof, an amount equal to the portion of the Principal Amount and interest (including interest, if any, on any overdue payments of such portion of Principal Amount and interest) then due and payable on the Secured Certificates, and, unless the Owner Trustee has cured Events of Default in respect of -33- 33 payments of Basic Rent on each of the three immediately preceding Basic Rent payment dates, or the Owner Trustee has cured six previous Events of Default in respect of payments of Interim Rent and/or Basic Rent, such payment by the Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to cure any Event of Default which would otherwise have arisen on account of the nonpayment by Lessee of such installment of Interim Rent or Basic Rent (but not any other Default or Event of Default which shall have occurred and be continuing). If any Event of Default (other than in respect of the nonpayment of Interim Rent or Basic Rent by Lessee) which can be cured by the payment of money (it being understood that defaults requiring action such as the obtaining of insurance and the procuring of maintenance services can be so remedied) has occurred, the Owner Trustee may, without the consent or concurrence of any Certificate Holder, but shall not be obligated to, cure such Event of Default by making such payment prior to the Enforcement Date as is necessary to accomplish the observance or performance of the defaulted covenant, condition or agreement to the party entitled to the same. Except as hereinafter in this Section 4.03 provided, the Owner Trustee shall not, as a result of exercising the right to cure any such Event of Default, obtain any Lien on any of the Mortgaged Property or any Rent payable under the Lease for or on account of costs or expenses incurred in connection with the exercise of such right, nor shall any claim of the Owner Trustee against Lessee or any other party for the repayment of such costs or expenses impair the prior right and security interest of the Indenture Trustee in and to the Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the first or second preceding paragraphs of this Section 4.03, the Owner Trustee shall be subrogated to the rights of the Indenture Trustee and the Certificate Holders in respect of the Interim Rent or Basic Rent which was overdue at the time of such payment and interest payable by Lessee on account of its being overdue and any Supplemental Rent in respect of the reimbursement of amounts paid by Owner Trustee pursuant to the immediately preceding paragraph (but in either case shall have no rights as a secured party hereunder), and thereafter, the Owner Trustee shall be entitled to receive such overdue Interim Rent or Basic Rent or Supplemental Rent, as the case may be, and interest thereon upon receipt thereof by the Indenture Trustee; provided, however, that (i) if the Principal Amount and interest on the Secured Certificates shall have become due and payable pursuant to Section 4.04(b) hereof, such subrogation shall, until the Principal Amount of, interest on, Make-Whole Amount, if any, and all other amounts due with respect to all Secured Certificates shall have been paid in full, be subordinate to the rights of the Indenture Trustee and the Certificate Holders in respect of such payment of overdue Interim Rent, Basic Rent, Supplemental Rent and such interest and (ii) the Owner Trustee shall not be entitled to seek to recover any such payment (or any payment in lieu thereof) except pursuant to the foregoing right of subrogation until payment of the Principal Amount and interest that has become due in accordance with Section 4.04(b) hereof. SECTION 4.04. REMEDIES. (a) If an Event of Default shall have occurred and be continuing and so long as the same shall continue unremedied, then and in every such case the Indenture Trustee may, subject to the second paragraph of this Section 4.04(a), exercise any or all of the rights and powers and pursue any and all of the remedies pursuant to this Article IV and shall have and may exercise all of the rights and remedies of a secured party under the Uniform Commercial Code and, in the event such Event of Default is also a Lease Event of Default, any and all of the remedies pursuant to Section 15 of the Lease and may take possession of all or any part of the properties covered or intended to be covered by the Lien created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee and Lessee and all persons claiming under any of them wholly or partly therefrom, provided, that the Indenture Trustee shall give the Owner Trustee and the Owner Participant twenty days' prior written notice of its intention to sell the Aircraft or foreclose the Lien of this Trust Indenture. Unless an Event of Default not resulting from or relating to a Lease Event of Default has occurred and is continuing, the Owner Participant may bid at any public sale and become the purchaser. Without limiting any of the foregoing but subject to the immediately succeeding paragraph, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Anything in this Trust Indenture to the contrary notwithstanding, the Indenture Trustee shall not be entitled to exercise any remedy hereunder as a result of an Event of Default which arises solely by reason of one -34- 34 or more events or circumstances which constitute a Lease Event of Default unless the Indenture Trustee as security assignee of the Owner Trustee shall have exercised or concurrently be exercising one or more of the remedies provided for in Section 15 of the Lease to terminate the Lease (so long as the Aircraft is not subsequently re-leased to Lessee or an Affiliate thereof) or take possession and/or sell the Aircraft with respect to the Aircraft; provided, however, that such requirement to exercise one or more of such remedies under the Lease shall not apply in circumstances where the Indenture Trustee is, and has been, for a continuous period in excess of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of the Bankruptcy Code (such 60-day or other period being the "SECTION 1110 PERIOD"), involuntarily stayed or prohibited by applicable law or court order from exercising such remedies under the Lease (a "CONTINUOUS STAY PERIOD"); provided further, however, that the requirement to exercise one or more of such remedies under the Lease shall nonetheless be applicable during a Continuous Stay Period subsequent to the expiration of the Section 1110 Period to the extent that the continuation of such Continuous Stay Period subsequent to the expiration of the Section 1110 Period (A) results from an agreement by the trustee or the debtor-in-possession in such proceeding during the Section 1110 Period with the approval of the relevant court to perform the Lease in accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an extension of the Section 1110 Period with the consent of the Indenture Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from Lessee's assumption during the Section 1110 Period with the approval of the relevant court of the Lease pursuant to Section 365 of the Bankruptcy Code or (D) is the consequence of the Indenture Trustee's own failure to give any requisite notice to any person. In the event that the applicability of Section 1110 of the Bankruptcy Code to the Aircraft is being contested by Lessee in judicial proceedings, so long as the Indenture Trustee fails to participate in such proceedings, the Owner Trustee shall have the right (without affecting in any way any rights or remedy of the Indenture Trustee hereunder) to participate in such proceedings. It is expressly understood and agreed that, subject only to the immediately preceding paragraph, the inability, described in such paragraphs, of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising any or all of its rights, powers and remedies under this Trust Indenture, including, without limitation, this Article IV. (b) If an Event of Default shall have occurred and be continuing, then and in every such case the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in Interest of Certificate Holders), subject to Section 4.03 hereof, at any time, by delivery of written notice or notices to the Owner Trustee and the Owner Participant, declare all the Secured Certificates to be due and payable, whereupon the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued but unpaid interest thereon (without Make-Whole Amount) and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. This Section 4.04(b), however, is subject to the condition that, if at any time after the Principal Amount of the Secured Certificates shall have become so due and payable, and before any judgment or decree for the payment of the money so due, or any thereof, shall be entered, all overdue payments of interest upon the Secured Certificates and all other amounts payable under the Secured Certificates (except the Principal Amount of the Secured Certificates which by such declaration shall have become payable) shall have been duly paid, and every other Default and Event of Default with respect to any covenant or provision of this Trust Indenture shall have been cured, then and in every such case a Majority in Interest of Certificate Holders may (but shall not be obligated to), by written instrument filed with the Indenture Trustee, rescind and annul the Indenture Trustee's declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. (c) The Certificate Holders shall be entitled, at any sale pursuant to Section 15 of the Lease or this Section 4.04, to credit against any purchase price bid at such sale by such holder all or any part of the unpaid obligations owing to such Certificate Holder and secured by the Lien of this Trust Indenture (but only to the extent that such purchase price would have been paid to such Certificate Holder pursuant to Article III hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c) were not given effect). -35- 35 (d) In the event of any sale of the Trust Indenture Estate, or any part thereof, pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Trust Indenture, the unpaid Principal Amount of all Secured Certificates then outstanding, together with accrued interest thereon (without Make-Whole Amount), and other amounts due thereunder, shall immediately become due and payable without presentment, demand, protest or notice, all of which are hereby waived. (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any Pass Through Trust Agreement (or its designee) is a Certificate Holder, the Indenture Trustee will not be authorized or empowered to acquire title to any Mortgaged Property or take any action with respect to any Mortgaged Property so acquired by it if such acquisition or action would cause any Trust to fail to qualify as a "grantor trust" for federal income tax purposes. SECTION 4.05. RETURN OF AIRCRAFT, ETC. (a) If an Event of Default shall have occurred and be continuing and the Indenture Trustee shall have foreclosed, or shall concurrently be foreclosing, the Lien of this Trust Indenture and shall be taking steps for the sale or repossession of the Aircraft, subject to Section 4.03 hereof, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such instruments of title and other documents as the Indenture Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or representative designated by the Indenture Trustee, at such time or times and place or places as the Indenture Trustee may specify, to obtain possession of all or any part of the Mortgaged Property included in the Trust Indenture Estate to which the Indenture Trustee shall at the time be entitled hereunder. If the Owner Trustee shall for any reason fail to execute and deliver such instruments and documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee the right to immediate possession and requiring the Owner Trustee to execute and deliver such instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents to the fullest extent permitted by applicable law, and (ii) pursue all or part of such Mortgaged Property wherever it may be found and, in the event that a Lease Event of Default has occurred and is continuing, may enter any of the premises of Lessee wherever such Mortgaged Property may be or be supposed to be and search for such Mortgaged Property and take possession of and remove such Mortgaged Property. All expenses of obtaining such judgment or of pursuing, searching for and taking such property shall, until paid, be secured by the Lien of this Trust Indenture. (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Mortgaged Property, make all such expenditures for maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modifications or alterations to and of the Mortgaged Property, as it may deem proper. In each such case, the Indenture Trustee shall have the right to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the Mortgaged Property and to carry on the business and to exercise all rights and powers of the Owner Participant and the Owner Trustee relating to the Mortgaged Property, as the Indenture Trustee shall deem best, including the right to enter into any and all such agreements with respect to the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, modification or alteration of the Mortgaged Property or any part thereof as the Indenture Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Mortgaged Property and every part thereof, except Excluded Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Trust Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee hereunder. Such tolls, rents (including Rent), revenues, issues, income, products and profits shall be applied to pay the expenses of the maintenance, use, operation, storage, insurance, leasing, control, management, disposition, improvement, modification or alteration of the Mortgaged Property and of conducting the business thereof, and to make all payments which the Indenture Trustee may be required or may elect to make, if any, for taxes, assessments, insurance or other proper charges upon the Mortgaged Property or any part thereof (including the employment of engineers and accountants to examine, inspect and make reports upon the properties and books and records of the Owner Trustee), and all other payments which the Indenture Trustee may be required or authorized to make under any provision of this Trust Indenture, as well as just and reasonable compensation for the services of the Indenture Trustee, and of all persons properly engaged and employed by the Indenture Trustee with respect hereto. -36- 36 SECTION 4.06. REMEDIES CUMULATIVE. Subject to the other provisions of Article IV hereof, each and every right, power and remedy given to the Indenture Trustee specifically or otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any default on the part of the Owner Trustee or Lessee or to be an acquiescence therein. SECTION 4.07. DISCONTINUANCE OF PROCEEDINGS. In case the Indenture Trustee shall have instituted any proceeding to enforce any right, power or remedy under this Trust Indenture by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee, then and in every such case the Owner Trustee, the Owner Participant, the Indenture Trustee and Lessee shall, subject to any determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Mortgaged Property, and all rights, remedies and powers of the Owner Trustee, the Owner Participant, the Indenture Trustee or Lessee shall continue as if no such proceedings had been instituted. SECTION 4.08. WAIVER OF PAST DEFAULTS. Upon written instruction from a Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Default or Event of Default hereunder and its consequences and upon any such waiver such Default or Event of Default shall cease to exist and any Event of Default arising from any such Default shall be deemed to have been cured for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon; provided, that in the absence of written instructions from all the Certificate Holders, the Indenture Trustee shall not waive any Default or Event of Default (i) in the payment of the Principal Amount, Make-Whole Amount, if any, and interest and other amounts due under any Secured Certificate then outstanding, or (ii) in respect of a covenant or provision hereof which, under Article IX hereof, cannot be modified or amended without the consent of each Certificate Holder. SECTION 4.09. APPOINTMENT OF RECEIVER. The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee thereof) for all or any part of the Mortgaged Property, whether such receivership be incidental to a proposed sale of the Mortgaged Property or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such a receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Mortgaged Property shall be entitled to exercise all the rights and powers of the Indenture Trustee with respect to the Mortgaged Property. SECTION 4.10. INDENTURE TRUSTEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC. The Owner Trustee irrevocably appoints the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture, whether pursuant to foreclosure or power of sale, assignments and other instruments as may be necessary or appropriate, with full power of substitution, the Owner Trustee hereby ratifying and confirming all that such attorney or any substitute shall do by virtue hereof in accordance with applicable law. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing -37- 37 and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. SECTION 4.11. RIGHTS OF CERTIFICATE HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Trust Indenture, the right of any Certificate Holder to receive payment of principal of, and premium, if any, and interest on a Secured Certificate on or after the respective due dates expressed in such Secured Certificate, or to bring suit for the enforcement of any such payment on or after such respective dates in accordance with the terms hereof, shall not be impaired or affected without the consent of such Certificate Holder. ARTICLE V DUTIES OF THE INDENTURE TRUSTEE SECTION 5.01. NOTICE OF EVENT OF DEFAULT. If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default arising from a failure to pay Rent, the Indenture Trustee shall give prompt written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and each Certificate Holder. Subject to the terms of Sections 4.08, 5.02 and 5.03 hereof, the Indenture Trustee shall take such action, or refrain from taking such action, with respect to such Event of Default or Default (including with respect to the exercise of any rights or remedies hereunder) as the Indenture Trustee shall be instructed in writing by a Majority in Interest of Certificate Holders. Subject to the provisions of Section 5.03, if the Indenture Trustee shall not have received instructions as above provided within 20 days after mailing notice of such Event of Default to the Certificate Holders, the Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding provisions of this Section 5.01, take such action, or refrain from taking such action, but shall be under no duty to take or refrain from taking any action, with respect to such Event of Default or Default as it shall determine advisable in the best interests of the Certificate Holders. If the Indenture Trustee shall at any time declare the Lease to be in default pursuant to Section 15 thereof or shall elect to foreclose or otherwise enforce this Trust Indenture, the Indenture Trustee shall forthwith notify the Owner Participant, the Certificate Holders, the Owner Trustee and Lessee. For all purposes of this Trust Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the Owner Trustee or the Owner Participant, the Indenture Trustee, the Owner Trustee or the Owner Participant, as the case may be, shall not be deemed to have knowledge of a Default or an Event of Default (except, in the case of the Indenture Trustee, the failure of Lessee to pay any installment of Interim Rent or Basic Rent within one Business Day after the same shall become due, if any portion of such installment was then required to be paid to the Indenture Trustee, which failure shall constitute knowledge of a Default) unless notified in writing by Lessee, the Owner Trustee, the Owner Participant or one or more Certificate Holders. SECTION 5.02. ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND LIMITATIONS. (a) Subject to the terms of Sections 2.14, 4.03, 4.04(a), 4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and from time to time of a Majority in Interest of Certificate Holders, the Indenture Trustee shall, subject to the terms of this Section 5.02, take such of the following actions as may be specified in such instructions: (i) give such notice or direction or exercise such right, remedy or power hereunder as shall be specified in such instructions; (ii) give such notice or direction or exercise such right, remedy or power under the Lease, the Participation Agreement, the Purchase Agreement, or any other part of the Trust Indenture Estate as shall be specified in such instructions; and (iii) after the occurrence and during the continuance of an Event of Default, approve as satisfactory to the Indenture Trustee all matters required by the terms of the Lease to be satisfactory to the Owner Trustee, it being understood that without the written instructions of a Majority in Interest of Certificate Holders, the Indenture Trustee shall not approve any such matter as satisfactory to the Indenture Trustee; provided, that anything contained in this Trust Indenture, the Lease or the other Operative Documents to the contrary notwithstanding: -38- 38 (1) the Owner Trustee or the Owner Participant may, at all times without the consent of the Indenture Trustee, (A) to the exclusion of the Indenture Trustee demand, collect, sue for or otherwise obtain all amounts included in Excluded Payments from Lessee, (B) unless the Lien of this Trust Indenture shall have been foreclosed upon, grant or withhold its consent to amendments or supplements to Indenture Agreements required in accordance with Article IX hereof and (C) seek legal or equitable remedies to require Lessee to maintain the insurance coverage referred to in Section 11 of the Lease; provided, that the rights referred to in this clause (1) shall not be deemed to include the exercise of any remedies provided for in Section 15 of the Lease other than the right to proceed by appropriate court action, either at law or in equity, to enforce payment by Lessee of such amounts included in Excluded Payments or performance by Lessee of such insurance covenant or to recover damages for the breach thereof; (2) at all times prior to the foreclosure of the Lien of this Trust Indenture, the Indenture Trustee shall not, without the consent of the Owner Trustee, which consent shall not be unreasonably withheld if no right or interest of the Owner Trustee or the Owner Participant shall be diminished or impaired thereby, (i) enter into, execute and deliver amendments, modifications, waivers or consents in respect of any of the provisions of the Lease, or (ii) approve any accountants, engineers, appraisers or counsel as satisfactory to render services for or issue opinions to the Owner Trustee pursuant to the Operative Documents; (3) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, each of the Owner Trustee, the Owner Participant and, except with respect to clauses (iii) and (iv), the Indenture Trustee shall have the right (i) to receive from Lessee all notices, certificates, reports, filings, opinions of counsel and other documents and all information which any thereof is permitted or required to give or furnish to the Owner Trustee or Lessor pursuant to any Operative Document (including pursuant to Section 7(b) of the Participation Agreement), (ii) to exercise inspection rights pursuant to Section 12 of the Lease, (iii) to retain all rights with respect to insurance maintained for its own account which Section 11(e) of the Lease specifically confers on Lessor, and (iv) to exercise, to the extent necessary to enable it to exercise its rights under Section 4.03 hereof, the rights of Lessor under Section 21 of the Lease; (4) whether or not a Default or Event of Default under the Trust Indenture has occurred and is continuing, the Owner Trustee shall at all times, to the exclusion of the Indenture Trustee, have the right to adjust Rent, Stipulated Loss Values and Termination Values as provided in Section 3(d) of the Lease; (5) unless an Indenture Trustee Event shall have occurred, to exercise all of the rights of Lessor under Section 7(b) of the Lease; (6) whether or not a Default or Event of Default shall have occurred and is continuing, the Owner Trustee may, without the consent of the Indenture Trustee, (i) solicit and make bids with respect to the Aircraft under Section 9 of the Lease in respect of a termination of the Lease by Lessee pursuant to Section 9 thereof, (ii) determine "fair market sales value" and "fair market rental value" under Section 19 of the Lease for all purposes except following an Event of Default pursuant to Section 15 of the Lease, and (iii) make an election pursuant to and in accordance with the provisions of Section 9(c) of the Lease; and (7) so long as no Event of Default shall have occurred and be continuing, all other rights of the "Lessor" under the Lease shall be exercised by the Owner Trustee to the exclusion of the Indenture Trustee including, without limitation, the right to (i) exercise all rights with respect to Lessee's use and operation, modification or maintenance of the Aircraft and any Engine which the Lease specifically confers on Lessor, (ii) consent to and approve any assignment pursuant to Section 13 of the Lease and (iii) request further assurances pursuant to Section 16 of the Lease; provided that the foregoing shall not limit (A) any -39- 39 rights separately granted to the Indenture Trustee under the Operative Agreements or (B) the right of the Indenture Trustee to receive any funds to be delivered to the "Lessor" under the Lease (except with respect to Excluded Payments) and under the Purchase Agreement. Notwithstanding anything to the contrary contained herein (including this Section 5.02), the Indenture Trustee shall have the right, to the exclusion of the Owner Trustee and the Owner Participant (other than with respect to Excluded Payments), to (A) declare the Lease to be in default under Section 15 thereof and (B) subject only to the provisions of Sections 4.03, 4.04(a) and 2.14 hereof, exercise the remedies set forth in such Section 15 (other than in connection with Excluded Payments) at any time that a Lease Event of Default shall have occurred and be continuing. The Indenture Trustee will execute and the Owner Trustee will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as specified by Lessee pursuant to Section 8(e) of the Participation Agreement or as may be specified from time to time in written instructions of a Majority in Interest of Certificate Holders (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the form of such continuation statement so to be filed). The Indenture Trustee will furnish to each Certificate Holder (and, during the continuation of an Indenture Trustee Event, to the Owner Trustee and Owner Participant), promptly upon receipt thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other instruments furnished to the Indenture Trustee under the Lease or hereunder, including, without limitation, a copy of any Termination Notice (as defined in the Lease) and a copy of each report or notice received pursuant to Sections 9(a) and 11(c) of the Lease, respectively, to the extent that the same shall not have been furnished to such Certificate Holder pursuant hereto or to the Lease. (b) If any Lease Event of Default shall have occurred and be continuing and the Owner Trustee shall not have cured fully such Lease Event of Default under and in accordance with Section 4.03 hereof, on request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall declare the Lease to be in default pursuant to Section 15 thereof and exercise those remedies specified by such Certificate Holders. The Indenture Trustee agrees to provide to the Certificate Holders, the Owner Trustee, the Owner Participant and Lessee concurrently with such declaration by the Indenture Trustee, notice of such declaration by the Indenture Trustee. SECTION 5.03. INDEMNIFICATION. The Indenture Trustee shall not be under any obligation to take any action under this Trust Indenture or any other Operative Document and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds or otherwise incur the risk of any financial liability in the performance of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it (the written indemnity of any Certificate Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory to Indenture Trustee shall be accepted as reasonable assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV hereof, nor shall any other provision of this Trust Indenture or any other Operative Document be deemed to impose a duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised by counsel that such action is contrary to the terms hereof or of the Lease or is otherwise contrary to Law. SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR INSTRUCTIONS. The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate, or to otherwise take or refrain from taking any action under, or in connection with, this Trust Indenture or any part of the Trust Indenture Estate, except as expressly provided by the terms of this Trust Indenture or as expressly provided in written instructions from Certificate Holders as provided in this Trust Indenture; and no implied duties or obligations shall be read into this Trust Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its individual capacity and at its own cost and expense (but without any right of indemnity in respect of any -40- 40 such cost or expense under Section 7.01 hereof), promptly take such action as may be necessary duly to discharge all liens and encumbrances on any part of the Trust Indenture Estate which result from claims against it in its individual capacity not related to the ownership of the Aircraft or the administration of the Trust Indenture Estate or any other transaction pursuant to this Trust Indenture or any document included in the Trust Indenture Estate. SECTION 5.05. NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR INSTRUCTIONS. The Owner Trustee and the Indenture Trustee agree that they will not use, operate, store, lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or any other part of the Trust Indenture Estate except (i) as required by the terms of the Lease or (ii) in accordance with the powers granted to, or the authority conferred upon, the Owner Trustee and the Indenture Trustee pursuant to this Trust Indenture and in accordance with the express terms hereof. SECTION 5.06. REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES. At any time an Airframe or Engine is to be replaced under or pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no Lease Event of Default is continuing, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid, but only upon compliance by Lessee with the applicable provisions of Section 10 of the Lease and upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee, requesting such release specifically describing the Airframe and/or Engine(s) so to be released. (2) A certificate signed by a duly authorized officer of Lessee stating the following: A. With respect to any Replacement Airframe: (i) a description of the Airframe which shall be identified by manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe to be received (including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number) as consideration for the Airframe to be released; (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of such Replacement Airframe free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Airframe will on such date be in good working order and condition, and that such Replacement Airframe has been or, substantially concurrently with such withdrawal, will be duly registered in the name of the Owner -41- 41 Trustee under the Federal Aviation Act or under the law then applicable to the registration of the Airframe and that an airworthiness certificate has been duly issued under the Federal Aviation Act (or such other applicable law) with respect to such Replacement Airframe, and that such registration and certificate is in full force and effect, and that Lessee will have the full right and authority to use such Replacement Airframe; (iv) the existence of the insurance required by Section 11 of the Lease with respect to such Replacement Airframe and the payment of all premiums then due thereon; (v) that the Replacement Airframe is of the same or an improved model as the Airframe requested to be released from this Indenture; (vi) the fair market value of the Replacement Airframe as of the date of such certificate (which in the judgment of Lessee shall be not less than the then fair market value of the Airframe requested to be released (assuming such Airframe was in the condition and repair required to be maintained under the Lease)); (vii) the fair market value of the Airframe immediately prior to the date the Airframe suffered an Event of Loss (assuming that such Airframe was in the condition and repair required under the Lease); (viii) that no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default, has occurred which has not been remedied or waived, and that Lessee will not be in default, by the making and granting of the request for release and the addition of a Replacement Airframe, in the performance of any of the terms and covenants of the Lease; and (ix) that the release of the Airframe so to be released will not be in contravention of any of the provisions of this Indenture; or B. with respect to the replacement of any Engine: (i) a description of the Engine which shall be identified by manufacturer's serial number; (ii) a description of the Replacement Engine (including the manufacturer's name and serial number) as consideration for the Engine to be released; -42- 42 (iii) that on the date of the Trust Agreement and Indenture Supplement relating to the Replacement Engine the Owner Trustee will be the legal owner of such Replacement Engine free and clear of all Liens except as are permitted by Section 6 of the Lease, that such Replacement Engine will on such date be in good working order and condition and that such Replacement Engine is substantially the same as the Engine to be released (or as improved model); (iv) the fair market value of the Replacement Engine as of the date of such certificate (which value shall not be less than the then fair market value of the Engine to be released (assuming such Engine was in the condition and repair required to be maintained under the Lease)); (v) the fair market value of the Engine to be released (immediately prior to any Event of Loss suffered by such Engine and assuming that such Engine was in the condition and repair required under the Lease); (vi) that each of the conditions specified in Section 10(b) of the Lease with respect to such Replacement Engine have been satisfied and that Lessee will not be in default, by the making and granting of the request for release and the addition of the Replacement Engine, in the performance of any of the terms and covenants of the Lease; (vii) that, with respect to the replacement of an Engine pursuant to Section 9(d) of the Lease, no Lease Event of Default and no event which, with lapse of time or notice, or both, would become a Lease Event of Default has occurred which has not been remedied or waived; and (viii) that the release of the Engine so to be released will not be in contravention of any of the provisions of this Indenture. (3) (a) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties generally available with respect to such Replacement Airframe or Replacement Engine, and a Trust Agreement and Indenture Supplement subjecting such Replacement Airframe or Replacement Engine and any related warranty rights to the lien of this Indenture. (b) With respect to the replacement of any Engine, such Uniform Commercial Code financing statements covering the lien created by this Indenture as deemed -43- 43 necessary or desirable by counsel for the Indenture Trustee to protect the lien under the Indenture in the Replacement Engine. (4) A certificate from either an aircraft engineer (who may be an employee of Lessee) or a firm of independent aircraft appraisers selected by Lessee confirming the accuracy of the information set forth in clause (2)A(vi) of this Section 5.06. (5) The opinion of in-house counsel to Lessee, or other counsel satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Trust Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be lawfully released from the lien of this Trust Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Trust Indenture, as the case may be, have been duly filed for recordation pursuant to the Federal Aviation Act or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the right, title, estate and interest of the Owner Trustee to and the lien of this Trust Indenture on such Replacement Aircraft or Replacement Engine. SECTION 5.07. INDENTURE SUPPLEMENTS FOR REPLACEMENTS. If a Replacement Airframe or Replacement Engine is being substituted as contemplated by Section 10 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Certificate Holders and Lessee, subject to fulfillment of the conditions precedent and compliance by Lessee with its obligations set forth in Section 10 of the Lease and the requirements of Section 5.06 hereof with respect to such Replacement Airframe or Replacement Engine, to execute and deliver a Lease Supplement and a Trust Agreement and Indenture Supplement, as applicable, as contemplated by Section 10 of the Lease. SECTION 5.08. EFFECT OF REPLACEMENT. In the event of the substitution of an Airframe or of a Replacement Engine pursuant to Section 10 of the Lease, (a) all provisions of this Trust Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced and (b) the provisions of this Trust Indenture shall no longer be -44- 44 applicable to the Airframe or Engine or Engines being replaced, which shall be released from the Lien of this Indenture. SECTION 5.09. INVESTMENT OF AMOUNTS HELD BY INDENTURE TRUSTEE. Any amounts held by the Indenture Trustee as assignee of the Owner Trustee's rights to hold monies for security pursuant to Section 22(a) of the Lease shall be held in accordance with the terms of such Section and the Indenture Trustee agrees, for the benefit of Lessee, to perform the duties of the Owner Trustee under such Section. Any amounts held by the Indenture Trustee pursuant to the proviso to the first sentence of Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any other Operative Document providing for amounts to be held by the Indenture Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be invested by the Indenture Trustee from time to time in Cash Equivalents as directed by Lessee so long as the Indenture Trustee may acquire the same using its best efforts. Unless otherwise expressly provided in this Trust Indenture, any income realized as a result of any such investment, net of the Indenture Trustee's reasonable fees and expenses in making such investment, shall be held and applied by the Indenture Trustee in the same manner as the principal amount of such investment is to be applied and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from any investment required to be made by it under this Trust Indenture other than by reason of its willful misconduct or gross negligence, and any such investment may be sold (without regard to its maturity) by the Indenture Trustee without instructions whenever such sale is necessary to make a distribution required by this Trust Indenture. ARTICLE VI THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse all monies constituting part of the Trust Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its individual capacity, and the Indenture Trustee, in its individual capacity, shall not be answerable or accountable under any circumstances, except (i) for their own willful misconduct or gross negligence (other than for the handling of funds, for which the standard of accountability shall be willful misconduct or negligence), (ii) in the case of the Indenture Trustee, as provided in the fourth sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof, and (iii) for liabilities that may result, in the case of the Owner Trustee, from the inaccuracy of any representation or warranty of the Owner Trustee expressly made in its individual capacity in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Indenture Trustee or any Certificate Holder in connection with the transactions contemplated by the Operative Documents) or, in the case of the Indenture Trustee (in its individual capacity), from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement) or expressly made hereunder. Neither the Owner Trustee nor the Indenture Trustee shall be liable for any action or inaction of the other or of the Owner Participant. The Owner Trustee shall not be deemed to be a trustee for the Certificate Holders for any purpose. SECTION 6.02. ABSENCE OF DUTIES. In the case of the Indenture Trustee, except in accordance with written instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as provided in, and without limiting the generality of, Sections 5.03 and 5.04 hereof and, in the case of the Owner Trustee, except as provided in Section 4.01(b) hereof, the Owner Trustee and the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft or any recording or filing of the Lease or of this Trust Indenture or any other document, or to see to the maintenance of any such -45- 45 registration, recording or filing, (ii) to see to any insurance on the Aircraft or to effect or maintain any such insurance, whether or not Lessee shall be in default with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any kind against any part of the Trust Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into the failure to receive any financial statements from Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of Lessee's covenants under the Lease with respect to the Aircraft. The Owner Participant shall not have any duty or responsibility hereunder, including, without limitation, any of the duties mentioned in clauses (i) through (v) above; provided, that nothing contained in this sentence shall limit any obligations of the Owner Participant under the Participation Agreement or relieve the Owner Participant from any restriction under Section 4.03 hereof. SECTION 6.03. NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR DOCUMENTS. NEITHER THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, 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, except the Owner Trustee in its individual capacity warrants that (i) the Owner Trustee has received on the Delivery Date whatever title was conveyed to it by Lessee, and (ii) the Aircraft is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Trustee in its individual capacity. Neither the Owner Trustee, in its individual capacity or as Owner Trustee under the Trust Agreement, nor the Indenture Trustee, in its individual or trust capacities, makes or shall be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Trust Indenture, the Trust Agreement, the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement), the Secured Certificates, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or as to the correctness of any statement contained in any thereof, except for the representations and warranties of the Owner Trustee made in its individual capacity and the representations and warranties of the Indenture Trustee in its individual capacity, in each case expressly made in this Trust Indenture or in the Participation Agreement (or, upon consummation of the Refinancing Transaction, the Refunding Agreement). The Loan Participants, the Certificate Holders and the Owner Participant make no representation or warranty hereunder whatsoever. SECTION 6.04. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid to or retained by the Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the Certificate Holders, Lessee or the Owner Trustee as provided in Article III hereof need not be segregated in any manner except to the extent required by Law or Section 10(f) or 11(g) of the Lease and Section 5.09 hereof, and may be deposited under such general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for any interest thereon (except that the Indenture Trustee shall invest all monies held as directed by Lessee so long as no Lease Event of Default or Lease Default has occurred and is continuing (or in the absence of such direction, by the Majority In Interest of Certificate Holders) in Cash Equivalents; provided, however, that any payments received, or applied hereunder, by the Indenture Trustee shall be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant hereto shall be identifiable as to the source thereof. SECTION 6.05. RELIANCE; AGREEMENTS; ADVICE OF COUNSEL. Neither the Owner Trustee nor the Indenture Trustee shall incur any liability to anyone in acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other -46- 46 document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties. The Owner Trustee and the Indenture Trustee may accept a copy of a resolution of the Board of Directors (or Executive Committee thereof) of any party to the Participation Agreement, certified by the Secretary or an Assistant Secretary thereof as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect. As to the aggregate unpaid Principal Amount of Secured Certificates outstanding as of any date, the Owner Trustee may for all purposes hereof rely on a certificate signed by any Vice President or other authorized corporate trust officer of the Indenture Trustee. As to any fact or matter relating to Lessee the manner of ascertainment of which is not specifically described herein, the Owner Trustee and the Indenture Trustee may for all purposes hereof rely on a certificate, signed by a duly authorized officer of Lessee, as to such fact or matter, and such certificate shall constitute full protection to the Owner Trustee and the Indenture Trustee for any action taken or omitted to be taken by them in good faith in reliance thereon. The Indenture Trustee shall assume, and shall be fully protected in assuming, that the Owner Trustee is authorized by the Trust Agreement to enter into this Trust Indenture and to take all action to be taken by it pursuant to the provisions hereof, and shall not inquire into the authorization of the Owner Trustee with respect thereto. In the administration of the trusts hereunder, the Owner Trustee and the Indenture Trustee each may execute any of the trusts or powers hereof and perform its powers and duties hereunder directly or through agents or attorneys and may at the expense of the Trust Indenture Estate, consult with counsel, accountants and other skilled persons to be selected and retained by it, and the Owner Trustee and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by them in accordance with the written advice or written opinion of any such counsel, accountants or other skilled persons. SECTION 6.06. CAPACITY IN WHICH ACTING. The Owner Trustee acts hereunder solely as trustee as herein and in the Trust Agreement provided, and not in its individual capacity, except as otherwise expressly provided herein, in the Trust Agreement and in the Participation Agreement. SECTION 6.07. COMPENSATION. The Indenture Trustee shall be entitled to reasonable compensation, including expenses and disbursements (including the reasonable fees and expenses of counsel), for all services rendered hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on the Trust Indenture Estate for the payment of such compensation, to the extent that such compensation shall not be paid by Lessee, and shall have the right, on and subsequent to an Event of Default hereunder, to use or apply any monies held by it hereunder in the Trust Indenture Estate toward such payments. The Indenture Trustee agrees that it shall have no right against the Loan Participants, the Certificate Holders, the Owner Trustee or the Owner Participant for any fee as compensation for its services as trustee under this Trust Indenture. SECTION 6.08. INSTRUCTIONS FROM CERTIFICATE HOLDERS. In the administration of the trusts created hereunder, the Indenture Trustee shall have the right to seek instructions from a Majority in Interest of Certificate Holders should any provision of this Trust Indenture appear to conflict with any other provision herein or should the Indenture Trustee's duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no liability in refraining from acting until it receives such instructions. The Indenture Trustee shall be fully protected for acting in accordance with any instructions received under this Section 6.08. -47- 47 ARTICLE VII INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE SECTION 7.01. SCOPE OF INDEMNIFICATION. The Owner Trustee, not in its individual capacity, but solely as Owner Trustee, hereby agrees, except as otherwise provided in Section 2.03 hereof, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee (in its individual and trust capacities), and its successors, assigns, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Trust Indenture), claims, actions, suits, costs, expenses or disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever, which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also indemnified against by any other Person under any other document) in any way relating to or arising out of this Trust Indenture or any other Operative Document to which it is a party or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent or other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder except only in the case of willful misconduct or gross negligence (or negligence in the case of handling funds) of the Indenture Trustee in the performance of its duties hereunder or resulting from the inaccuracy of any representation or warranty of the Indenture Trustee (in its individual capacity) in Section 8 of the Participation Agreement or Section 6.03 hereof, or as provided in Section 6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise excluded by the terms of Sections 7(b) and 7(c) of the Participation Agreement from Lessee's indemnities under such Sections; provided that, so long as the Lease is in effect, the Indenture Trustee, unless otherwise prohibited by law, shall not make any claim under this Section 7.01 for any claim or expense without first making demand on Lessee for the payment on behalf of Lessor of such claim or expense pursuant to the Lease or the Participation Agreement, including, without limitation, Section 7(b) or 7(c) of the Participation Agreement. In addition, if necessary, the Indenture Trustee shall be entitled to indemnification from the Trust Indenture Estate for any liability, obligation, loss, damage, penalty, claim, action, suit, cost, expense or disbursement indemnified against pursuant to this Section 7.01 to the extent not reimbursed by Lessee or others, but without releasing any of them from their respective agreements of reimbursement; and to secure the same the Indenture Trustee shall have a prior Lien on the Trust Indenture Estate. ARTICLE VIII SUCCESSOR AND SEPARATE TRUSTEES SECTION 8.01. NOTICE OF SUCCESSOR OWNER TRUSTEE. In the case of any appointment of a successor to the Owner Trustee pursuant to the Trust Agreement including upon any merger, conversion, consolidation or sale of substantially all of the corporate trust business of the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee shall give prompt written notice thereof to the Indenture Trustee, Lessee and the Certificate Holders. SECTION 8.02. RESIGNATION OF INDENTURE TRUSTEE; APPOINTMENT OF SUCCESSOR. (a) The Indenture Trustee or any successor thereto may resign at any time without cause by giving at least 30 days' prior written notice to Lessee, the Owner Trustee, the Owner Participant and each Certificate Holder, such resignation to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In addition, a Majority in Interest of Certificate Holders may at any time (but only with the consent of Lessee, which consent shall not be unreasonably withheld, except that such consent shall not be necessary if a Lease Event of Default is continuing) remove the Indenture Trustee without cause by an instrument in writing delivered to the -48- 48 Owner Trustee, Lessee, the Owner Participant and the Indenture Trustee, and the Indenture Trustee shall promptly notify each Certificate Holder thereof in writing, such removal to be effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of the resignation or removal of the Indenture Trustee, a Majority in Interest of Certificate Holders may appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so long as no Lease Event of Default shall have occurred and be continuing, shall be subject to Lessee's reasonable approval. If a successor Indenture Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Indenture Trustee, the Owner Trustee, the Owner Participant or any Certificate Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to act until such time, if any, as a successor shall have been appointed as above provided. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as above provided. (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner Trustee, the predecessor Indenture Trustee and Lessee an instrument accepting such appointment and assuming the obligations of the Indenture Trustee under the Participation Agreement arising from and after the time of such appointment, and thereupon such successor Indenture Trustee, without further act, shall become vested with all the estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee herein; but nevertheless upon the written request of such successor Indenture Trustee, such predecessor Indenture Trustee shall execute and deliver an instrument transferring to such successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates, properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all monies or other property then held by such predecessor Indenture Trustee hereunder. (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company having its principal place of business in the Borough of Manhattan, City and State of New York; Minneapolis, Minnesota; Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having (or whose obligations under the Operative Documents are guaranteed by an affiliated entity having) a combined capital and surplus of at least $100,000,000, if there be such an institution willing, able and legally qualified to perform the duties of the Indenture Trustee hereunder upon reasonable or customary terms. (d) Any corporation into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation to which substantially all the corporate trust business of the Indenture Trustee may be transferred, shall, subject to the terms of paragraph (c) of this Section 8.02, be a successor Indenture Trustee and the Indenture Trustee under this Trust Indenture without further act, except that such Person shall give prompt subsequent notice of such transaction to the Owner Trustee and the Owner Participant. SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES. (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to conform to any law of any jurisdiction in which all or any part of the Trust Indenture Estate shall be situated or to make any claim or bring any suit with respect to or in connection with the Trust Indenture Estate, this Trust Indenture, any other Indenture Agreement, the Secured Certificates or any of the transactions contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel satisfactory to it that it is so necessary or prudent in the interests of the Certificate Holders (and the Indenture Trustee shall so advise the Owner Trustee and Lessee), or (iii) the Indenture Trustee shall have been requested to do so by a Majority in Interest of Certificate Holders, then in any such case, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and such other instruments as may from time to time be necessary or advisable either (1) to constitute one or more bank or trust companies or one or more persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as additional trustee or trustees of all or any part of the Trust Indenture Estate, or to act as separate trustee or trustees of all or any part of the Trust Indenture Estate, in each case with such rights, powers, duties and obligations consistent with this -49- 49 Trust Indenture as may be provided in such supplemental indenture or other instruments as the Indenture Trustee or a Majority in Interest of Certificate Holders may deem necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and obligations theretofore granted any such additional and separate trustee, subject in each case to the remaining provisions of this Section 8.03. If the Owner Trustee shall not have taken any action requested of it under this Section 8.03(a) that is permitted or required by its terms within 15 days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing provisions of this Section 8.03(a) without the concurrence of the Owner Trustee; and the Owner Trustee hereby irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.03(a) in either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and perform any such supplemental indenture, or any such instrument, as may be required for the appointment of any such additional or separate trustee or for the clarification of, addition to or subtraction from the rights, powers, duties or obligations theretofore granted to any such additional or separate trustee. In case any additional or separate trustee appointed under this Section 8.03(a) shall die, become incapable of acting, resign or be removed, all the assets, property, rights, powers, trusts, duties and obligations of such additional or separate trustee shall revert to the Indenture Trustee until a successor additional or separate trustee is appointed as provided in this Section 8.03(a). (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers, duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment and payment of monies and all monies received by any such additional or separate trustee from or constituting part of the Trust Indenture Estate or otherwise payable under any Operative Document to the Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights, powers, duties and obligations conferred or imposed upon any additional or separate trustee shall be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly except to the extent that applicable Law of any jurisdiction in which any particular act is to be performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations (including the holding of title to all or part of the Trust Indenture Estate in any such jurisdiction) shall be exercised and performed by such additional or separate trustee. No additional or separate trustee shall take any discretionary action except on the instructions of the Indenture Trustee or a Majority in Interest of Certificate Holders. No trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of reasonable care in selecting, and Indenture Trustee's own actions in acting with, any additional or separate trustee. Each additional or separate trustee appointed pursuant to this Section 8.03 shall be subject to, and shall have the benefit of Articles IV through VIII and Article X hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate trustee appointed pursuant to this Section 8.03 shall not in any case exceed those of the Indenture Trustee hereunder. (c) If at any time the Indenture Trustee shall deem it no longer necessary or desirable in order to conform to any such law or take any such action or shall be advised by such counsel that it is no longer so necessary or desirable in the interest of the Certificate Holders, or in the event that the Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Certificate Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner Trustee, shall execute and deliver an indenture supplemental hereto and all other instruments and agreements necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on behalf of the Owner Trustee under this Section 8.03(c) when and to the extent it could so act under Section 8.03(a) hereof. -50- 50 ARTICLE IX SUPPLEMENT AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS. (a) Except as provided in Section 5.02 hereof, the Owner Trustee agrees it shall not enter into any amendment of or supplement to the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, or execute and deliver any written waiver or modification of, or consent under, the terms of the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the Guarantee, unless such supplement, amendment, waiver, modification or consent is consented to in writing by the Indenture Trustee and a Majority in Interest of Certificate Holders. Anything to the contrary contained herein notwithstanding, without the necessity of the consent of any of the Certificate Holders or the Indenture Trustee, (i) any Excluded Payments payable to the Owner Participant may be modified, amended, changed or waived in such manner as shall be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and Lessee may enter into amendments of or additions to the Lease to modify Section 5 (except to the extent that such amendment would affect the rights or exercise of remedies under Section 15 of the Lease), Section 9 or Section 19 of the Lease so long as such amendments, modifications and changes do not and would not affect the time of, or reduce the amount of, Rent payments (other than Excluded Payments) until after the payment in full of all Secured Obligations or otherwise adversely affect the Certificate Holders. (b) Without limiting the provisions of Section 9.01(a) hereof, the Indenture Trustee agrees with the Certificate Holders that it shall not enter into any amendment, waiver or modification of, supplement or consent to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement, or any other agreement included in the Trust Indenture Estate, unless such supplement, amendment, waiver, modification or consent is consented to in writing by a Majority in Interest of Certificate Holders, or does not adversely effect the Certificate Holders, but upon the written request of a Majority in Interest of Certificate Holders, the Indenture Trustee shall from time to time enter into any such supplement or amendment, or execute and deliver any such waiver, modification or consent, as may be specified in such request and as may be (in the case of any such amendment, supplement or modification), to the extent such agreement is required, agreed to by the Owner Trustee and Lessee or, as may be appropriate, the Manufacturer; provided, however, that, without the consent of each holder of an affected Secured Certificate then outstanding, no such amendment of or supplement to this Trust Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the Guarantee or the Participation Agreement or waiver or modification of the terms of, or consent under, any thereof, shall (i) modify any of the provisions of this Section 9.01, or of Sections 2.02, 2.10, 2.11 or 2.15 or Article III or Section 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 14 (except to add an Event of Default) of the Lease, the definitions of "Event of Default", "Default", "Lease Event of Default", "Lease Default", "Majority in Interest of Certificate Holders", "Make-Whole Amount" or "Certificate Holder", or the percentage of Certificate Holders required to take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or method of calculation of any amount, of Principal Amount, Make-Whole Amount, if any, or interest with respect to any Secured Certificate, or alter or modify the provisions of Article III hereof with respect to the order of priorities in which distribution thereunder shall be made as among the Certificate Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any indemnities in favor of the Owner Trustee, the Indenture Trustee or the Certificate Holders (except that the Owner Trustee (in its individual capacity) or the Indenture Trustee, as the case may be, may consent to any waiver or reduction of an indemnity payable to it), (iv) consent to any change in the Trust Indenture or the Lease which would permit redemption of Secured Certificates earlier than permitted under Section 2.10 or 2.11 hereof or the purchase of the Secured Certificates other than as permitted by Section 2.14 hereof, (v) except as contemplated by the Lease or the Participation Agreement, reduce the amount or extend the time of payment of Interim Rent, Basic Rent, Stipulated Loss Value, or Termination Value for the Aircraft in each case as set forth in the Lease, or modify, amend or supplement the Lease or consent to any assignment of the Lease, in either case releasing Lessee from its obligations in respect of the payment of Interim Rent, Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or altering the absolute and unconditional character of the obligations of Lessee to pay Rent as set forth in Sections -51- 51 3 and 18 of the Lease or (vi) permit the creation of any Lien on the Trust Indenture Estate or any part thereof other than Permitted Liens or deprive any Certificate Holder of the benefit of the Lien of this Trust Indenture on the Trust Indenture Estate, except as provided in connection with the exercise of remedies under Article IV hereof. So long as no Lease Event of Default has occurred and is continuing, without the consent of Lessee no amendment or supplement to this Trust Indenture or waiver or modification of the terms hereof shall adversely affect Lessee. (c) At any time after the date of the consummation of the Refinancing Transaction, the Owner Trustee and the Indenture Trustee may enter into one or more agreements supplemental hereto without the consent of any Certificate Holder for any of the following purposes: (i) (a) to cure any defect or inconsistency herein or in the Secured Certificates, or to make any change not inconsistent with the provisions hereof (provided that such change does not adversely affect the interests of any Certificate Holder in its capacity solely as Certificate Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner Trustee in accordance with the terms of the Trust Agreement or to evidence the succession of a new trustee hereunder pursuant hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any property to or with the Indenture Trustee or to make any other provisions with respect to matters or questions arising hereunder so long as such action shall not adversely affect the interests of the Certificate Holders in its capacity solely as Certificate Holder; (iv) to correct or amplify the description of any property at any time subject to the Lien of this Trust Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee for the benefit of the Certificate Holders, or to surrender any rights or power herein conferred upon the Owner Trustee, the Owner Participant or Lessee; (vi) to add to the rights of the Certificate Holders; and (vii) to include on the Secured Certificates any legend as may be required by law. SECTION 9.02. TRUSTEES PROTECTED. If, in the opinion of the institution acting as Owner Trustee under the Trust Agreement or the institution acting as Indenture Trustee hereunder, any document required to be executed by it pursuant to the terms of Section 9.01 hereof adversely affects any right, duty, immunity or indemnity with respect to such institution under this Trust Indenture or the Lease, such institution may in its discretion decline to execute such document. SECTION 9.03. DOCUMENTS MAILED TO CERTIFICATE HOLDERS. Promptly after the execution by the Owner Trustee or the Indenture Trustee of any document entered into pursuant to Section 9.01 hereof, the Indenture Trustee shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and to each Certificate Holder at its address last set forth in the Secured Certificate Register, but the failure of the Indenture Trustee to mail such copies shall not impair or affect the validity of such document. SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST AGREEMENT AND INDENTURE SUPPLEMENT. No written request or consent of the Indenture Trustee, the Certificate Holders or the Owner Participant pursuant to Section 9.01 hereof shall be required to enable the Owner Trustee to enter into any Lease Supplement specifically required by the terms of the Lease or to execute and deliver a Trust Agreement and Indenture Supplement specifically required by the terms hereof. -52- 52 ARTICLE X MISCELLANEOUS SECTION 10.01. TERMINATION OF TRUST INDENTURE. Upon (or at any time after) payment in full of the Principal Amount of, Make-Whole Amount, if any, and interest on and all other amounts due under all Secured Certificates and provided that there shall then be no other Secured Obligations due to the Certificate Holders and the Indenture Trustee hereunder or under the Participation Agreement, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft and the Engines from the Lien of this Trust Indenture and releasing the Lease, the Bill of Sale, the Guarantee, the Purchase Agreement, and the Purchase Agreement Assignment with the Consent and Agreement attached thereto from the assignment and pledge thereof hereunder and the Indenture Trustee shall execute and deliver such instrument as aforesaid and give written notice thereof to Lessee; provided, however, that this Trust Indenture and the trusts created hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property constituting part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all monies or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. SECTION 10.02. NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN CERTIFICATE HOLDERS. No holder of a Secured Certificate shall have legal title to any part of the Trust Indenture Estate. No transfer, by operation of law or otherwise, of any Secured Certificate or other right, title and interest of any Certificate Holder in and to the Trust Indenture Estate or hereunder shall operate to terminate this Trust Indenture or entitle such holder or any successor or transferee of such holder to an accounting or to the transfer to it of any legal title to any part of the Trust Indenture Estate. SECTION 10.03. SALE OF AIRCRAFT BY INDENTURE TRUSTEE IS BINDING. Any sale or other conveyance of the Trust Indenture Estate, or any part thereof (including any part thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust Indenture shall bind the Certificate Holders and shall be effective to transfer or convey all right, title and interest of the Indenture Trustee, the Owner Trustee, the Owner Participant and such holders in and to such Trust Indenture Estate or part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with respect thereto by the Indenture Trustee. SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE, INDENTURE TRUSTEE, OWNER PARTICIPANT, LESSEE AND CERTIFICATE HOLDERS. Nothing in this Trust Indenture, whether express or implied, shall be construed to give any person other than the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Certificate Holders, any legal or equitable right, remedy or claim under or in respect of this Trust Indenture. SECTION 10.05. NOTICES. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner Trustee, addressed to it at its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), with a copy to the Owner Participant addressed as provided in clause (iii) below, (ii) if to the Indenture Trustee, -53- 53 addressed to it at its office at Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department (Telecopy No. (617) 664-5371), (iii) if to any Participant, Lessee or any Certificate Holder, addressed to such party at such address as such party shall have furnished by notice to the Owner Trustee and the Indenture Trustee, or, until an address is so furnished, addressed to the address of such party (if any) set forth on the signature pages to the Refunding Agreement or in the Secured Certificate Register. Whenever any notice in writing is required to be given by the Owner Trustee, any Participant or the Indenture Trustee or any Certificate Holder or Lessee to any of the other of them, such notice shall be deemed given and such requirement satisfied when such notice is received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after being mailed, addressed as provided above. Any party hereto may change the address to which notices to such party will be sent by giving notice of such change to the other parties to this Trust Indenture. SECTION 10.06. SEVERABILITY. Any provision of this Trust Indenture 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. Any such prohibition or unenforceability in any particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 10.07. NO ORAL MODIFICATION OR CONTINUING WAIVERS. No term or provision of this Trust Indenture or the Secured Certificates may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Owner Trustee and the Indenture Trustee, in compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any Secured Certificate shall be effective only in the specific instance and for the specific purpose given. SECTION 10.08. SUCCESSORS AND ASSIGNS. All covenants and agreements contained herein shall be binding upon, and inure to the benefit of, each of the parties hereto and the permitted successors and assigns of each, all as herein provided. Any request, notice, direction, consent, waiver or other instrument or action by any Certificate Holder shall bind the successors and assigns of such holder. This Trust Indenture and the Trust Indenture Estate shall not be affected by any amendment or supplement to the Trust Agreement or by any other action taken under or in respect of the Trust Agreement, except that each reference in this Trust Indenture to the Trust Agreement shall mean the Trust Agreement as amended and supplemented from time to time to the extent permitted hereby, thereby and by the Participation Agreement. Each Certificate Holder by its acceptance of a Secured Certificate agrees to be bound by this Trust Indenture and all provisions of the Participation Agreement applicable to a Loan Participant or a Certificate Holder. SECTION 10.09. HEADINGS. The headings of the various Articles and sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 10.10. NORMAL COMMERCIAL RELATIONS. Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner Trustee, the Indenture Trustee, any Participant or any bank or other Affiliate of such Participant may conduct any banking or other financial transactions, and have banking or other commercial relationships, with Lessee, fully to the same extent as if this Trust Indenture were not in effect, including without limitation the making of loans or other extensions of credit to Lessee for any purpose whatsoever, whether related to any of the transactions contemplated hereby or otherwise. -54- 54 SECTION 10.11. GOVERNING LAW; COUNTERPART FORM. THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be executed by the parties hereto in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 10.12. VOTING BY CERTIFICATE HOLDERS. All votes of the Certificate Holders shall be governed by a vote of a Majority in Interest of Certificate Holders, except as otherwise provided herein. SECTION 10.13. BANKRUPTCY. It is the intention of the parties that the Owner Trustee, as lessor under the Lease (and the Indenture Trustee as assignee of the Owner Trustee hereunder), shall be entitled to the benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor, and in any instance where more than one construction is possible of the terms and conditions hereof or any other pertinent Operative Document, each such party agrees that a construction which would preserve such benefits shall control over any construction which would not preserve such benefits. SECTION 10.14 NO ACTION CONTRARY TO LESSEE'S RIGHTS UNDER THE LEASE. Notwithstanding any of the provisions of this Trust Indenture or the Trust Agreement to the contrary, neither the Indenture Trustee nor the Owner Trustee will take any action contrary to Lessee's rights under the Lease, including the right to possession and use of, and the quiet enjoyment of, the Aircraft, except in accordance with provisions of the Lease. -55- 55 IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture to be duly executed by their respective officers thereof duly authorized as of the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, as Owner Trustee By: --------------------------- Name: ------------------------- Title: ------------------------ STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee By: --------------------------- Name: ------------------------- Title: ------------------------ -56- 56 ---------------------------- EXHIBIT A TO TRUST INDENTURE AND MORTGAGE ---------------------------- TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 G] This TRUST AGREEMENT AND INDENTURE SUPPLEMENT [NW 1996 G], dated _______ __, _____ (herein called this "TRUST INDENTURE SUPPLEMENT") of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee (herein called the "OWNER TRUSTEE") under that certain Trust Agreement [NW 1996 G] dated as of May 29, 1996 (the "TRUST AGREEMENT"), between the Owner Trustee and the Owner Participant named therein. W I T N E S S E T H: WHEREAS, the AMENDED AND RESTATED TRUST INDENTURE AND SECURITY AGREEMENT [NW 1996 G], dated as of June 12, 1996 (as amended and supplemented to the date hereof, the "TRUST INDENTURE") between the Owner Trustee and STATE STREET BANK AND TRUST COMPANY, as Indenture Trustee (the "INDENTURE TRUSTEE"), provides for the execution and delivery of a supplement thereto substantially in the form hereof, which shall particularly describe the Aircraft (such term and other terms used but not defined herein having the respective meanings ascribed thereto in the Trust Indenture), and shall specifically mortgage such Aircraft to the Indenture Trustee; and WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for recordation on the date hereof with the FAA as one document; NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust Indenture Estate covers all of Owner Trustee's right, title and interest in and to the following described property: 57 AIRFRAME One airframe identified as follows: FAA Registration Manufacturer's Manufacturer Model Number Serial Number - ------------ ----- ------------ -------------- together with all of the Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereinafter acquired and which are from time to time incorporated or installed in or attached to said airframe. AIRCRAFT ENGINES Two aircraft engines, each such engine having 750 or more rated take-off horsepower or the equivalent thereof, identified as follows: Manufacturer Manufacturer's Model Serial Number ------------ -------------------- ------------- together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, whether now owned or hereafter acquired and which are from time to time incorporated or installed in or attached to any of such engines. Together with all of Owner Trustee's right, title and interest in and to all Parts of whatever nature, which from time to time are included within the definition of "Airframe" or "Engine", whether now owned or hereafter acquired, including all substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to the Airframe and Engines (other than additions, improvements, accessions and accumulations which constitute appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment excluded from the definition of Parts). As further security for the obligations referred to above and secured by the Trust Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Loan Participants and of the Certificate Holders, in the trust created by the Trust Indenture, all of the right, title and interest of the Owner Trustee in, to and under the Lease Supplement [of even date herewith] covering the property described above subject, however, to all of the terms of the Trust Indenture including, without limitation, the rights of the Owner Trustee and the Owner Participant under Section 5.02 of the Trust Indenture. Notwithstanding any provision hereof, no Excluded Payment shall constitute security for any of the aforementioned obligations. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, in trust for the equal and proportionate benefit and security of the Certificate Holders, except EXHIBIT A-2 58 as provided in Section 2.15 and Article III of the Trust Indenture without any preference, distinction or priority of any one Secured Certificate over any other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and provisions set forth in the Trust Indenture. This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Trust Indenture Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee covered by all the terms and conditions of the Trust Agreement, subject to the pledge and mortgage thereof under the Trust Indenture. EXHIBIT A-3 59 IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture Supplement to be duly executed by one of its officers, thereunto duly authorized, on the day and year first above written. FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee, Owner Trustee By: --------------------------- Name: Title: EXHIBIT A-4 60 SCHEDULE I
PRINCIPAL AMOUNT INTEREST RATE ---------------- ------------- Series A $25,379,566 7.67% Series B $ 8,341,728 8.07% Series C $ 6,278,706 8.97%
61 SECURED CERTIFICATES AMORTIZATION SERIES A AIRCRAFT: N543US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 2.04091748% Jul 2, 1998 0.00000000% Jan 2, 1999 2.04081504% Jul 2, 1999 0.00000000% Jan 2, 2000 2.04081110% Jul 2, 2000 0.00000000% Jan 2, 2001 2.04081504% Jul 2, 2001 0.00000000% Jan 2, 2002 2.04081110% Jul 2, 2002 0.00000000% Jan 2, 2003 2.04081110% Jul 2, 2003 0.00000000% Jan 2, 2004 2.04081110% Jul 2, 2004 0.00000000% Jan 2, 2005 2.04081110% Jul 2, 2005 0.00000000% Jan 2, 2006 2.04081110% Jul 2, 2006 0.00000000% Jan 2, 2007 2.04081504% Jul 2, 2007 0.00000000% Jan 2, 2008 2.04081110% Jul 2, 2008 0.00000000% Jan 2, 2009 2.04081110% Jul 2, 2009 0.00000000% Jan 2, 2010 10.29700035% Jul 2, 2010 0.00000000% Jan 2, 2011 12.71911033% Jul 2, 2011 0.00000000% Jan 2, 2012 13.69466680% Jul 2, 2012 16.99425829% Jan 2, 2013 15.72164394% Jul 2, 2013 0.92978737% Jan 2, 2014 5.15368151%
62 SERIES B AIRCRAFT: N543US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.65378540% Jul 2, 1998 0.00000000% Jan 2, 1999 2.06971505% Jul 2, 1999 0.00000000% Jan 2, 2000 2.06970306% Jul 2, 2000 0.00000000% Jan 2, 2001 2.06971505% Jul 2, 2001 0.00000000% Jan 2, 2002 2.06970306% Jul 2, 2002 0.00000000% Jan 2, 2003 2.06970306% Jul 2, 2003 0.00000000% Jan 2, 2004 2.06971505% Jul 2, 2004 0.00000000% Jan 2, 2005 2.06970306% Jul 2, 2005 0.00000000% Jan 2, 2006 2.06970306% Jul 2, 2006 0.00000000% Jan 2, 2007 2.06970306% Jul 2, 2007 0.00000000% Jan 2, 2008 9.76273741% Jul 2, 2008 0.00000000% Jan 2, 2009 23.84046807% Jul 2, 2009 0.00000000% Jan 2, 2010 4.59547470% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 34.09571734% Jul 2, 2014 4.91443739% Jan 2, 2015 3.51001615%
63 SERIES C AIRCRAFT: N543US
PERCENTAGE OF ORIGINAL PAYMENT DATE AMOUNT TO BE PAID ------------ ---------------------- Jan 2, 1997 0.00000000% Jul 2, 1997 0.00000000% Jan 2, 1998 0.00000000% Jul 2, 1998 0.00000000% Jan 2, 1999 2.65137434% Jul 2, 1999 0.00000000% Jan 2, 2000 3.74382874% Jul 2, 2000 0.00000000% Jan 2, 2001 4.93428104% Jul 2, 2001 0.00000000% Jan 2, 2002 6.23152286% Jul 2, 2002 0.00000000% Jan 2, 2003 7.64512624% Jul 2, 2003 0.00000000% Jan 2, 2004 9.18552326% Jul 2, 2004 0.00000000% Jan 2, 2005 10.86408569% Jul 2, 2005 0.00000000% Jan 2, 2006 6.24362727% Jul 2, 2006 0.00000000% Jan 2, 2007 22.67317501% Jul 2, 2007 0.00000000% Jan 2, 2008 8.04132253% Jul 2, 2008 0.00000000% Jan 2, 2009 0.00000000% Jul 2, 2009 0.00000000% Jan 2, 2010 0.00000000% Jul 2, 2010 0.00000000% Jan 2, 2011 0.00000000% Jul 2, 2011 0.00000000% Jan 2, 2012 0.00000000% Jul 2, 2012 0.00000000% Jan 2, 2013 0.00000000% Jul 2, 2013 0.00000000% Jan 2, 2014 0.00000000% Jul 2, 2014 0.00000000% Jan 2, 2015 17.78613300%
64 SCHEDULE II 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. EX-4.K4 90 LEASE AGREEMENT - 1996 G 1 LEASE AGREEMENT [NW 1996 G] This LEASE AGREEMENT [NW 1996 G], dated as of May 29, 1996, between FIRST SECURITY BANK OF UTAH, 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. The following terms shall have the following meanings for all purposes of this Lease Agreement [NW 1996 G] and shall be equally applicable to both the singular and the plural forms of the terms herein defined: "Administrative Agent" means [__________________], a bank organized under the laws of [_______________], as administrative agent pursuant to the Participation Agreement, and any successor acting as administrative agent. "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. "After-Tax Basis" means an additional amount which when added to the amount of payment otherwise required to be made on an After-Tax Basis, after deduction of all Federal, state, local and foreign taxes required to be paid by or on behalf of a Person in respect of the receipt or realization of any such amounts, results in a sum equal to the payment required under the provisions of the Operative Documents to be made on an After-Tax Basis. Any payment under the Operative Documents which does not actually result in an increase (or a decrease in a refund) of the Owner Participant's Federal, state, local or foreign income tax liability for the year of the accrual or receipt of such payment but which reduces any net operating loss or business credit or foreign tax credit carryover of the recipient shall be treated as giving rise to an actual increase in (or a decrease in a refund of) tax liability for the year in which such tax attribute if not reduced thereby would have given rise to a reduction in such recipient's tax liability (or such recipient's allowable refund in respect of any 2 such taxes). With respect to the Owner Participant, for purposes of this definition, it shall be assumed that United States federal, state, local and foreign income taxes are payable at the Highest Marginal Rate (as defined in the Tax Indemnity Agreement) then applicable to the Owner Participant. "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 two 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 Boeing 757-251 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. "Assumed Interest Rate" has the meaning set forth in Section 3(c) hereof. "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) - 2 - 3 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 Commencement Date and ending on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. "Bill of Sale" means a full warranty bill 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 Bill of Sale shall contain, among other things, a statement that such Bill of Sale thereby conveys to the Owner Trustee good title to the Airframe and each Engine described in such Bill 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 New York, New York; Boston, Massachusetts; Salt Lake City, Utah; or Minneapolis, Minnesota and, in connection with any payment of Rent and so long as any Secured Certificate is a Eurodollar Loan (as defined in the Trust Indenture), such day is also a day for trading by and between banks in the interbank Eurodollar market. "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. "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. - 3 - 4 "Commencement Date" means January 2, 1997. "Commitment" means the commitment of a Loan Participant 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 1996 G], 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. "Debt Rate" has the meaning set forth in the Trust Indenture. "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, 2003, provided, however, that if the chief legal officer or chief tax officer of Lessee has actual knowledge that the Depreciation Period is other than the period specified in the Tax Assumptions as a result of an "Operative Event" (as defined in the Tax Indemnity Agreement), then ending on the last day of the Owner Participant's taxable year in which a depreciation or cost recovery deduction is allowed or allowable with respect to the Aircraft. "Dollars" and "$" means the lawful currency of the United States of America. "Engine" means (i) each of the two Pratt & Whitney Model PW2037 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 two 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 hereunder. The term "Engines" means, as of any date of determination, all Engines then leased hereunder. - 4 - 5 "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 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government) 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 for a period in excess of 180 consecutive days or, if earlier, until the end of the Term or, in the case of a requisition of title by the United States Government or any other government of registry of the Aircraft which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government, as the case may be, the requisition of title shall not have been reversed within 90 days from the date of such requisition of title or, if earlier, at the end of the Term (it being understood that a requisition of title by any government other than as expressly provided above shall constitute an immediate Event of Loss); (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, prior to the expiration of such 180 day period, shall have undertaken and shall be diligently carrying forward in a manner that does not discriminate against the Aircraft all steps which are necessary or desirable to permit the normal use of such property by Lessee, and, within one year of such prohibition, Lessee 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, provided, notwithstanding any of the foregoing, such prohibition shall constitute an Event of Loss if such use shall have been prohibited for a period of two years or such use shall be prohibited at the expiration of the Term; (v) the requisition for use by the United States - 5 - 6 Government or any other government of registry of the Aircraft which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any instrumentality or agency of any thereof whose obligations are backed by the full faith and credit of such government, which shall have occurred during the Basic Term (or the Interim 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; (vi) any divestiture of title to or interest in an Engine treated as an Event of Loss pursuant to Section 7(b) hereof; and (vii) the operation of or location of the Aircraft, while under requisition for use by any government, in an area excluded from coverage by any insurance policy in effect with respect to the Aircraft required by this Agreement, unless in the case of a requisition by the United States Government or any other government of registry of the Aircraft which is listed on Exhibit C to the Participation Agreement and is designated a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government, Lessee shall have obtained an indemnity in lieu thereof from such government or such agency or instrumentality. 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 the Transition 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 the Transition Date; provided, however, that, to the extent that the aggregate amount of interest due and payable on the Transition Date on the Secured Certificates for the period from and including the Delivery Date to but excluding the Transition Date is less than the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Transition Date if such Secured Certificates had borne interest at the Assumed Interest Rate for such period, the corresponding percentage set forth in Exhibit B shall be decreased by the amount which when multiplied by Lessor's Cost will equal such differential. "Expenses" has the meaning specified in Section 7(c) of the Participation Agreement. "FAA Bill of Sale" means a bill 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 - 6 - 7 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. "Funding Loss Amount" has the meaning assigned to that term in the Trust Indenture. "Guarantee" means the Guarantee [NW 1996 G], dated as of the date hereof, made by the Guarantor in favor of the Parties, 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 the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Administrative Agent, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents. "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 - 7 - 8 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. "Interest Period" means Interest Period as defined in the Trust Indenture. "Interim Rent" means the rent payable for the Aircraft for the Interim Term pursuant to Section 3(b) hereof. "Interim Term" means the period commencing on the Delivery Date and ending on and including the day immediately preceding the Commencement Date unless earlier terminated in accordance with the provisions hereof. "Lease Agreement", "this Lease Agreement", "this Lease", "this Agreement", "herein", "hereof", "hereunder", "hereby" or other like words mean this Lease Agreement [NW 1996 G] 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 semi-annual periods throughout the Basic Term and any Renewal Term ending on a Lease Period Date, the first such period commencing on and including the Commencement Date and each succeeding period commencing on the date immediately following the preceding Lease Period Date. "Lease Period Date" means July 2, 1997 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 Bill of Sale, the Bill 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 of Utah, 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 of Utah, - 8 - 9 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 of Utah, 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 of Utah, 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 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 of Utah, 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 of Utah, 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 risk of interference with the payment of Rent (other than Excluded Payments in favor of First Security Bank of Utah, 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. "Loan Participant" means each institution executing the Participation Agreement as a Loan Participant, and its respective successors and assigns, and any Certificate Holder; at any time when there is only one Certificate Holder, "each Loan Participant" shall mean such 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. - 9 - 10 "Majority in Interest of Certificate Holders" has the meaning assigned to that term in the Trust Indenture. "Manufacturer" means The Boeing Company, a Delaware corporation. "Manufacturer Documents" means the Purchase Agreement and the Consent and Agreement. "Moody's" means Moody's Investors Service, Inc. "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 after-tax present value, as of the Delivery Date, of Basic Rent set forth in Exhibit B hereto through and including the date on which the Special Purchase Price is payable pursuant to Section 19(d) hereof, and the Special Purchase Price payable as of such date, computed on the basis of the same methodology, constraints and assumptions as were utilized in determining Basic Rent, the Special Purchase Price, Stipulated Loss Value and Termination Value percentages as of the Delivery Date. "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 Bill of Sale, the FAA Bill of Sale, the Purchase Agreement (insofar as it relates to the Aircraft), the Guarantee, the Owner Participant Guaranty, the Purchase Agreement Assignment and the Consent and Agreement. "Overall Transaction" means all the transactions contemplated by the Operative Documents. "Owner Participant" means the corporation executing the Participation Agreement as the Owner Participant and 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 Participant Guarantor" means the entity executing the Owner Participant Guaranty as guarantor thereunder. - 10 - 11 "Owner Participant Guaranty" means the Owner Participant Guaranty [NW 1996 G], dated as of the date hereof, made by the Owner Participant Guarantor in favor of Lessee, Lessor, the Loan Participants and the Indenture Trustee, as such Owner Participant Guaranty may be amended or supplemented from time to time pursuant to the applicable provisions thereof. "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 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 1996 G], dated as of the date hereof, among Lessee, the Loan Participants, the Indenture Trustee, the 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. "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 (calculated based on the actual number of days elapsed in a year consisting of 365 days or 366 days, as the case may be) equal - 11 - 12 to (x) 1% over the Base Rate for the first 5 Business Days from the date such payment became due, and (y) 3% over the Base Rate thereafter. "Permitted Carrier" means an air carrier domiciled and principally based in a country set forth on Exhibit C to the Participation Agreement and designated therein as a "Specified Country". "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 C to the Participation Agreement. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Prepaid Rent" has the meaning assigned in Section 3(g) hereof. "Purchase Agreement" means the Purchase Agreement No. 1631, dated December 1, 1989, between the Manufacturer and Lessee relating to the purchase by Lessee of the Aircraft, 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 1996 G], 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. "Reimbursement Amount" has the meaning set forth in Section 3(g) hereof. "Renewal Term" means any Fixed Renewal Term or Fair Market Renewal Term as those terms are defined in Section 19 hereof. "Rent" means Interim Rent, Basic Rent and Supplemental Rent, collectively. "Rent Differential Amount" has the meaning set forth in Section 3(c) hereof. "Restricted Country" has the meaning set forth on Exhibit C to the Participation Agreement. - 12 - 13 "Return Site" means a major airport on Lessee's route system located within the forty-eight contiguous states of the United States. "S&P" means Standard & Poor's Corporation. "Secured Certificates" has the meaning assigned to that term in the Trust Indenture. "Special Purchase Price" shall mean the amount denominated as such in Exhibit B hereto. "Specified Country" has the meaning set forth on Exhibit C to the Participation Agreement. "Stipulated Loss Value" with respect to the Aircraft as of any date through and including January 2, 2019, 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). To the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Interim Term or the Lease Period in which such Stipulated Loss Value Date occurs up to and including such Stipulated Loss Value Date is greater or less than the amount included in calculating the percentage set forth in Exhibit C with respect to such Stipulated Loss Value Date on account of such interest, the corresponding percentage set forth in Exhibit C shall be adjusted appropriately to compensate for such differential. "Stipulated Loss Value" as of any date after January 2, 2019 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 Interim Term, 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. "Supplemental Rent" means all amounts, liabilities and obligations (other than Interim Rent and Basic Rent) which Lessee assumes or agrees to pay to Lessor or others hereunder, under the Participation Agreement, under the Tax Indemnity Agreement or under any of the other Operative Documents. The parties acknowledge that Supplemental Rent is a general category and, - 13 - 14 accordingly, agree that any provision of any Operative Document which calls for the payment of Supplemental Rent and also calls for the payment of specific items which are includable in Supplemental Rent is not to be interpreted as requiring any double payment. "Tax Indemnitee" means the Owner Participant, the Owner Trustee, in its individual capacity and as trustee under the Trust Agreement, the Trust Estate, the Indenture Trustee, the Loan Participants and each other Certificate Holder, and each of their respective Affiliates, successors and permitted assigns. "Tax Indemnity Agreement" means that certain Tax Indemnity Agreement [NW 1996 G], dated as of the date hereof, 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, 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 Interim Term, 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 January 2, 2019, 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). In the event that the Termination Date with respect to which Termination Value is determined is a date on which Basic Rent is payable in advance as indicated on Exhibit B, to the extent that the actual amount of interest paid and to be paid on the Secured Certificates during the Lease Period ending on such Termination Date is greater or less than the amount included in calculating the corresponding percentage set forth in Exhibit D with respect to such Termination Date on account of such interest, the corresponding percentage set forth in Exhibit D shall be adjusted appropriately to compensate for such differential. - 14 - 15 "Transaction Expenses" means: (i) the reasonable and actual fees, expenses and disbursements of (1) Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, such information to be furnished by the Indenture Trustee, (2) Ray, Quinney & Nebeker, special counsel for the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, (3) Vedder, Price, Kaufman & Kammholz, special counsel to the Loan Participants, such information to be furnished by the Administrative Agent, (4) Cadwalader, Wickersham & Taft, special counsel to Lessee and Guarantor, such information to be furnished by Lessee, and (5) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, such information to be furnished by Lessee, (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements (but excluding any sales, use and other transfer taxes which apply to the Aircraft), such information to be furnished by Lessee, (iii) the initial fee and reasonable and actual disbursements of the Owner Trustee under the Trust Agreement, such information to be furnished by the Owner Trustee, and the reasonable out-of-pocket expenses of the Owner Participant, such information to be furnished by the Owner Participant, (iv) the initial fee and reasonable and actual disbursements of the Indenture Trustee under the Trust Indenture, such information to be furnished by the Indenture Trustee, (v) the fees of Aeroeconomics, Inc. and BK Associates, Inc. with respect to the appraisals of the Aircraft pursuant to Sections 4(a)(xx) and 4(a)(xxix), respectively, of the Participation Agreement, such information to be furnished by the Owner Participant in the case of Aeroeconomics, Inc. and by the Administrative Agent in the case of BK Associates, Inc., (vi) the reasonable and actual fees, expenses and disbursements of Dewey Ballantine, special counsel to the Owner Participant, such information to be furnished by the Owner Participant, (vii) the fee and reasonable disbursements of Babcock and Brown Financial Corporation, such information to be furnished by Lessee, and (viii) the fee payable to the Loan Participants on the Delivery Date. "Transition Date" means the date designated as such in Exhibit B hereto. "Trust Agreement" means that certain Trust Agreement [NW 1996 G], dated as of the date hereof, between the Owner Participant and First Security Bank of Utah, 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 Estate" means the Trust Estate as that term is defined in the Trust Agreement. - 15 - 16 "Trust Indenture" means that certain Trust Indenture and Security Agreement [NW 1996 G], dated as of the date hereof, between Lessor and the Indenture Trustee, as originally executed or as modified, amended or supplemented in accordance with the provisions thereof. "Trust Supplement" means a supplement to the Trust Agreement and the Trust Indenture, substantially in the form of Exhibit A to the Trust Indenture. "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 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. SECTION 2. ACCEPTANCE AND LEASE. Lessor hereby agrees (subject to satisfaction of the conditions set forth in Section 4(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 Section 4(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) Interim Term and Basic Term. The Interim Term shall commence on the Delivery Date and end on and include the day immediately preceding the Commencement Date unless earlier terminated pursuant to the provisions hereof. The Basic Term shall commence on the Commencement Date and end on January 2, 2019, or such earlier date as this Lease may be terminated in accordance with the provisions hereof. - 16 - 17 (b) Interim Rent. Lessee shall pay Interim Rent on the Commencement Date in an amount equal to Lessor's Cost multiplied by the percentage specified in Exhibit B hereto for Interim Rent on the Commencement Date. Although the Interim Rent percentage set forth in Exhibit B hereto has been computed on the assumption that the rate of interest on the Secured Certificates will be the Assumed Interest Rate, Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, the Interim Rent payable on the Commencement Date shall be increased or decreased (but not below zero) by the difference between (i) the aggregate amount of interest due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to but excluding the Commencement Date and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on the Secured Certificates on the Commencement Date relating to the period from the Transition Date to the Commencement Date if such Secured Certificates had borne interest at the Assumed Interest Rate. If the amount determined in accordance with clause (i) of the preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be increased by such difference. If the amount determined in accordance with clause (i) of the preceding sentence shall be less than the amount determined in accordance with clause (ii) of such sentence, the amount of Interim Rent payable on the Commencement Date shall be decreased (but not below zero) by such difference. (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 applicable Lease Period Date specified in Exhibit B hereto. Although the Basic Rent percentages set forth in Exhibit B hereto have been computed on the assumption that the rate of interest on the Secured Certificates throughout the Term will be 6.5% per annum, computed on the basis of a 360-day year of twelve 30-day months (the "ASSUMED INTEREST RATE"), Lessor and Lessee recognize that the actual rate of interest on the Secured Certificates may be a rate from time to time which may be greater or less than the Assumed Interest Rate and that the related basis upon which interest on the Secured Certificates will be computed will be as provided in the Trust Indenture. Accordingly, each installment of Basic Rent shall be increased or decreased (but not below zero), as the case may be, by the Rent Differential Amount (as defined herein). For purposes hereof, "RENT DIFFERENTIAL AMOUNT" shall mean, as of any Lease Period Date with respect to the Basic Term, the difference between (i) the aggregate amount of interest due and payable on such Lease Period Date on the Secured Certificates, and (ii) the aggregate amount of interest on the Secured Certificates that would have been due and payable on such Lease Period Date if - 17 - 18 such Secured Certificates had borne interest at the Assumed Interest Rate, in each case for the period from and including the Lease Period Date (or the Commencement Date in the case of the first Lease Period) next preceding such Lease Period Date to but excluding such Lease Period Date. If, as of any Lease Period Date, the amount determined in accordance with clause (i) of the immediately preceding sentence shall be greater than the amount determined in accordance with clause (ii) of such sentence, the amount of Basic Rent payable on such Lease Period Date shall be increased by the Rent Differential Amount. If, as of any Lease Period Date, the amount determined in accordance with such clause (ii) shall exceed the amount determined in accordance with such clause (i), the amount of Basic Rent due on such Lease Period Date shall be decreased (but not below zero) by the Rent Differential Amount. (d) Adjustments to Basic Rent. (i) In the event that (A) the Delivery Date occurs other than on June 3, 1996, or (B) Transaction Expenses paid by Lessor pursuant to Section 16 of the Participation Agreement are determined to be other than 1.0% 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, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated on or prior to November 30, 1996 using the same methods and assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and Special Purchase Price, 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. (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, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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, subject to the Owner Participant's consent, which the Owner Participant may withhold in its sole discretion, 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, the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price 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 - 18 - 19 Stipulated Loss Value percentages and the Termination Value percentages and the Special Purchase Price 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 Amount set forth in Exhibit B in a manner consistent with such recalculation. In addition, (X) any recalculation of Basic Rent, Stipulated Loss Value or Termination Value percentages made pursuant to this Section 3(d) shall take into account any decrease in the Excess Amount with respect to the Transition Date required by the proviso to the definition of "Excess Amount", (Y) after January 31, 1997 but prior to July 2, 1997, the Basic Rent percentages set forth in Exhibit B, the Stipulated Loss Value percentages set forth in Exhibit C and the Termination Value percentages set forth in Exhibit D shall be recalculated to take into account any decrease in Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) of this sentence, and (Z) at the time of any payment of Stipulated Loss Value or Termination Value, the Stipulated Loss Value percentage set forth in Exhibit C or the Termination Value percentage set forth in Exhibit D, by reference to which the amount of such payment is determined shall be recalculated to take into account any decrease in the Excess Amount with respect to the Transition Date that has not theretofore been taken into account in accordance with clause (X) or clause (Y) of this sentence. (iv) Any recalculation of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price 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. In addition, notwithstanding any other provisions herein, in no event shall the Special Purchase Price be adjusted to an amount that is less than the greater of (A) the Termination Value as of July 2, 2012, (B) the estimated fair market value of the Aircraft on July 2, 2012, determined as of the Delivery Date and set forth in the opinion received from Aeroeconomics, Inc. pursuant to Section 4(a)(xx) of the Participation Agreement (the "APPRAISAL"), and (C) 101% multiplied by the present value as of July 2, 2012 of (x) the remaining scheduled Basic Rent through the end of the Basic Term plus (y) 42.2% of Lessor's Cost (i.e., the fair market value of the Aircraft as of the end of the Basic Term as set forth in the Appraisal) (the present value calculation described in this clause (C) shall utilize a semi-annual compounded discount rate no lower than that utilized by the Owner Participant in determining the Special Purchase Price as of the Delivery Date, but in no event shall such discount rate be less than 11.8% per annum). Such recalculated Basic Rent, Excess Amount and Stipulated Loss Value and Termination Value percentages and the Special - 19 - 20 Purchase Price 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 Interim Rent and 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 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), 4.07 and 4.08(1) of Rev. Proc. 75-28 and with Section 467 of the Internal Revenue Code of 1986, as amended, as each is then in effect as long as the Schedule of Basic Rent was in compliance with Section 467 of the Code as in effect on the Closing Date, it being understood that, to the extent that any grandfather, effective date, or similar provisions in any regulations under Section 467 or other administrative pronouncement interpreting Section 467 promulgated or issued after the Closing Date causes such regulations or pronouncement not to be applicable to the Schedule of Basic Rent in effect on the Closing Date, such Schedule shall be deemed to be in compliance with Section 467 as in effect on the Closing Date (provided that the test of Rev. Proc. 75-28 Section 4.08(1) and Section 467 shall be applied on a prospective basis from the date of such adjustment if and to the extent permitted by applicable law, as then in effect) 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 - 20 - 21 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, on behalf of Lessor, as Supplemental Rent when due any amount of premium payable when due under the Trust Indenture and shall pay on behalf of Lessor amounts equal to the amounts payable pursuant to Section 2.16 and Section 11.02 of the Trust Indenture, as and when the same shall become due and payable. 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 Interim Rent and 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 of Utah, National Association, 79 South Main Street, Salt Lake City, Utah 84111, ABA No. 124-0000-12, Account No. 051-0922115, Attention: Corporate Trust Department, Credit Northwest/NW 1996 G (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, 225 Franklin Street, Boston, Massachusetts 02110, ABA No. 011-00-0028, Account No. 9903-943-0, Attention: Corporate Trust Department, Reference: Northwest/NW 1996 G (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 10 Business Days prior to the date such payment of Rent is due). 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). - 21 - 22 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 the Transition Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall on the Transition Date, prepay on the Transition 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 shall, under all circumstances and whether or not an Event of Default shall be continuing on the Transition Date, pay as Basic Rent (and not as Prepaid Rent) on the Transition Date an amount equal to the excess, if any, of the interest on the Secured Certificates relating to the period from and including the Delivery Date to but excluding the Transition Date over the Excess Amount payable on the Transition Date; provided, further, 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 equal to the Base Rate as in effect from time to time plus 5% per annum 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 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 Interim Rent or Basic Rent to an amount insufficient, together with the Excess Amount and all other amounts payable simultaneously by Lessee, to pay in - 22 - 23 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 of Utah, 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 that 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, 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. - 23 - 24 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 Return Site then being serviced by Lessee's 757-200 aircraft, which Return Site shall be chosen by Lessor and reasonably acceptable to Lessee (provided, that at Lessor's request, Lessee will consider in good faith a Return Site not then being serviced by Lessee's 757-200 aircraft, provided, further, that, in the case of a return to a Return Site not then being serviced by Lessee's 757-200 aircraft, Lessee is able to return the Airframe immediately following a revenue passenger flight with the Airframe to such Return Site), and Lessor will give Lessee at least ten (10) days' prior written notice of the Return Site; 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 and not due to any act or failure to act on the part of Lessee; the Airframe will be fully equipped with the Engines (or other Pratt & Whitney Model PW2037 engines or two engines of the same or another manufacturer of not less than equivalent utility, fair market sales 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 both 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 without the necessity of any further expense being incurred by Lessor, (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 Exhibit F. Lessor agrees to pay Lessee those amounts specified in Exhibit F to be for the cost, expense or account of Lessor. 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 - 24 - 25 limitation, permitting prospective purchasers or lessees to inspect fully the Aircraft and the records relating 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) bill 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 bill 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 bill 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 that 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) Lessee shall invoice Lessor, and 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 thirty (30) 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 incurred by Lessee in connection with such storage 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 - 25 - 26 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 that 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 Sublessee) either not yet due or being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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, the 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 forty-five (45) days or are being contested in good faith by appropriate proceedings so long as such proceedings do not involve any material risk 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 Boeing 757-200 aircraft - 26 - 27 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 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 or such manner as shall have been approved by the Owner Participant pursuant to Section 7(b)(x) and without in any way discriminating against the Aircraft, by reason of its leased status, including, without limitation, the termination of airworthiness directives; 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 (which records, logs and other materials, as between Lessor and Lessee and all parties claiming through Lessee, shall be the property of Lessor but shall be maintained by Lessee during the Term and shall become the property of Lessee upon Lessee's purchase of the Aircraft pursuant to the terms of this Lease or upon the occurrence of an Event of Loss and Lessee's compliance with Section 10 hereof); 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 the Owner Participant 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 case - 27 - 28 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 Lessee (or any Sublessee) shall comply with the provisions of Sections 7(a) and 11 hereof, Lessee 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 any 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 Permitted 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 - 28 - 29 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; (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 - 29 - 30 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 (which, if entered into with tax-exempt entities during the Depreciation Period, may not exceed three years) 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 (the term of which, during the Depreciation Period, may not exceed three years), 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 the Owner Participant and the Indenture Trustee in their sole discretion, 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 the Sublessee under such sublease is a foreign air carrier (other than a foreign air carrier principally based and domiciled in Taiwan), the United States maintains diplomatic relations with the country in which such proposed Sublessee is principally based and domiciled 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 domiciled and principally based in a country listed on Exhibit C to the Participation Agreement and designated therein as a "Restricted Country", 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 and domiciled, (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 - 30 - 31 Dollars for the loss of use of the Aircraft in the event of the requisition by such government of such use, (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 Lessor (or Lessee, as "lessee", or the proposed Sublessee, as "sublessee", as appropriate) and to the Lien of the Trustee Indenture, (V) such Sublease will not result in a risk of unindemnified Taxes to Lessor or the Owner Participant (it being agreed that in the event such opinion cannot be given in a form reasonably satisfactory to the Owner Participant, such opinion will be waived if (A) the Owner Participant has received assurances satisfactory to it to the effect that such Sublease will not result in any such risk, or (B) Lessee shall have entered into a binding agreement to indemnify in a manner satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant for such unindemnified Taxes; provided, however, that if (a) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (b) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such subleasing or (c) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee), (VI) none of the Owner Trustee, the Owner Participant or the Indenture Trustee will be required to register to do business in such country as a result of such sublease, after (A) taking into account any other contacts of the Owner Trustee and the Owner Participant with such jurisdiction (provided, that upon request by Lessee (such request having been acknowledged by the Owner Participant's general counsel), the Owner Trustee and the Owner Participant must respond within fourteen (14) Business Days after receipt of such request describing its contacts in such jurisdiction, or else such party shall be deemed for purposes of this clause (VI) to have no such contacts) and (B) assuming that the Indenture Trustee has no other contacts with such jurisdiction, and (VII) there is no tort liability for owners not in possession of aircraft in such country more onerous than under the laws of the United States or any state thereof (it being agreed that in the event such opinion cannot be given in a form reasonably satisfactory to the Owner Participant, such opinion will be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover the risk of such tort liability), provided, however, that no sublease entered into pursuant to this - 31 - 32 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; provided, further, that in the event the Sublessee's maintenance program for the Airframe will be a block overhaul program, a sublease entered into pursuant to this clause (x) to such Sublessee shall not extend beyond the date which is six months prior to the expiration of the Basic Term or any Renewal Term then in effect (and Lessee, if the last Sublessee was not a U.S. Air Carrier, shall upon expiration of the sublease to such Sublessee (1) incorporate the Aircraft into Lessee's approved maintenance program for aircraft of the same make and model and in active commercial service and (2) place the Aircraft into active passenger service or, in lieu thereof, upon the return of the Aircraft to Lessor pursuant to Section 5, Lessee shall comply with those return conditions that would have been applicable had Lessee adopted a block overhaul program) unless either the Owner Participant shall have previously approved in writing the maintenance procedures of the Sublessee or Lessee shall have irrevocably committed to purchase the Aircraft at, or extend the Term of this Lease by a period of at least six months from, the end of the Basic Term or such Renewal Term, as the case may be. 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 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 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 - 32 - 33 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 (A) fifteen (15) days prior to entering into any Sublease with a term of more than one (1) year, (B) five (5) Business Days prior to entering into any Sublease with a term equal to or less than one (1) year with a Permitted Sublessee and (C) five (5) days prior to entering into any Sublease with a term equal to or less than one (1) year with any proposed Sublessee other than a Permitted Sublessee, 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 of Utah, 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 in or attached to the Airframe or any Engine and which may from time to time - 33 - 34 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 - 34 - 35 Permitted Liens (other than pooling arrangements) 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, the Owner Participant, 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 diminish the value, utility or remaining useful life of the Airframe or such Engine, or materially impair the condition or airworthiness thereof, below the value, utility, remaining useful life, condition or airworthiness 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 original cost of all Obsolete Parts which shall have been removed and not replaced shall not exceed $500,000. 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, remaining useful life, condition or airworthiness 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. - 35 - 36 SECTION 9. VOLUNTARY TERMINATION. (a) Termination Event. (1) [Intentionally Omitted]. (2) Lessee shall have the right to elect to terminate this Lease on any Lease Period Date occurring on or after January 2, 2003 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 its best efforts to obtain bids in Dollars 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, lease or ownership 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 cash bid therefor (net of any brokerage commissions) 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 - 36 - 37 Indenture and shall, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 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 sale price of the Aircraft sold by Lessor after deducting the reasonable expenses incurred by Lessor, the Owner Participant or the Indenture Trustee 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) on behalf of Lessor, the premium and Funding Loss 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 that 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. 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 premium and Funding Loss 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 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, if Lessee revokes its Termination Notice or, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that payment by Lessee of the amount specified in clause (3)(A) above in connection with a termination where Lessor has not elected to retain title will not constitute a preference under applicable U.S. bankruptcy laws, a Default or an Event of Default of the type referred to in Section 14(e) hereof shall exist on such - 37 - 38 Termination Date (unless, in the case of any such Default or Event of Default, Lessee has obtained an order from the applicable bankruptcy court approving the payment of any such amount), 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, the Indenture Trustee 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, in which case Lessee shall pay only the reasonable costs and expenses of the Indenture Trustee), 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, Basic Rent or any other amounts hereunder arising subsequent to such date of sale or retention shall cease to accrue, Lessee shall have no further obligation in this respect 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 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 and a Termination Notice may be given not more than once during any 365-day period. If (x) there is a sale of the Aircraft pursuant to this Section 9(c), (y) an Event of Default of the type described in Section 14(c) relating to Section 7(a) or Section 8 shall have occurred and be continuing on the date of such sale and (z) the fair market sales value of the Aircraft on the date of such sale is lower than it would have been had no such Event of Default occurred, Lessee shall pay to Lessor, in addition to any other amounts due hereunder, the amount in excess of Termination Value that Lessor would have received had no such Event of Default occurred. Lessor and Lessee shall confer in good faith with a view to reaching agreement on what the fair market sales value of the Aircraft would have been in the absence of such Event of Default. If Lessor and Lessee have not so agreed within 10 days after notice by Lessor or the Owner Participant of the occurrence of such Event of Default, the question shall be determined by an appraisal in accordance with the procedures described in Section 19(c). (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 Interim Rent or Basic Rent. - 38 - 39 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) the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier than thirty (30) days after such occurrence) (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 the Commencement Date or 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 Interim Rent or Basic Rent that would have been due on the Commencement Date or such Lease Period Date as if such Event of Loss had not occurred, or (ii) 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, 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. 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, if Basic Rent is payable in arrears on the date of such payment as indicated on Exhibit B hereto, Basic Rent due on such payment date, and all Supplemental Rent), under the Participation Agreement and under the Tax Indemnity Agreement, (1) Basic Rent, Supplemental Rent, Stipulated Loss Value, Termination Value or any other amount due hereunder shall cease to accrue, and Lessee shall have no further obligation in any such respect, provided, that the obligations of Lessee under the other Operative Documents which, by their express terms, are stated to survive shall not be terminated, (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 -39- 40 recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 bill 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. Notwithstanding anything to the contrary contained in the foregoing, in the event that any payment of Stipulated Loss Value is to be made pursuant to this Section 10(a) on a date that is subsequent to the scheduled expiration of the Term, then Lessee shall, in addition to any other amounts payable pursuant to this Section 10(a), pay on the relevant Loss Payment Date such additional amount as is necessary to preserve the Owner Participant's Net Economic Return. Any calculation of any such additional amount shall be made by the Owner Participant and shall be subject to the verification procedures set forth in Exhibit E hereto. 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 (Lessee shall in connection therewith provide the certificate or the appraisal described in Section 5.06(4) of the Trust Indenture) 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 any airframe so substituted hereunder shall have a year of manufacture after December 31, 1994 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 bill of sale and a Federal Aviation Administration bill 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 that would be Lessor Liens but for the proviso in the definition of Lessor -40- 41 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 bill of sale in form and substance reasonably satisfactory to Lessee (or any Sublessee), evidencing such transfer, (6) furnish Lessor with an opinion of counsel (which shall be Cadwalader, Wickersham & Taft 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, (7)(x) furnish Lessor with an opinion of tax counsel chosen by the Owner Participant and reasonably acceptable to Lessee to the effect that such substitution will not result in any adverse tax consequences to the Owner Participant or (y) indemnify the Owner Participant as to such tax consequences in a manner reasonably satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (a) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB+/Baa1" or better from either S&P or Moody's so long as the rating by the other agency is not less than "BBB" or "Baa2", as the case may be, or (b) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such substitution or (c) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee, and (8) 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 Interim Rent or 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 -41- 42 Lessor, as replacement for the Engine with respect to which such Event of Loss occurred, title to another Pratt & Whitney Model PW2037 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, and Lessee shall in connection therewith provide the certificate or appraisal described in Section 5.06(2)(B)(iv) of the Trust Indenture; provided that both 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) bill 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 that 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 bill 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 Interim Rent or 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) and the Owner Participant 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 -42- 43 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 to Lessor and Lessee, as their interests may appear; 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) and the Owner Participant 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 which is a Specified Country. 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any instrumentality or agency of any thereof whose obligations are backed by the full faith and credit of such government, 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, instrumentality or agency, as the case may be, 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, instrumentality or agency. 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 Exhibit F) 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) bill 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 -43- 44 full warranty bill 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 that would be Lessor Liens but for the proviso in the definition of Lessor Liens), against receipt from Lessor of a bill of sale evidencing the transfer, without recourse or warranty (except as to the absence of Lessor Liens, including for this purpose Liens that 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 which is a Specified Country. 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 which is listed on Exhibit C to the Participation Agreement and designated therein as a "Specified Country" or any agency or instrumentality of any thereof whose obligations are backed by the full faith and credit of such government (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. (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 or a Default of the type referred to in Section 14(a) or 14(e) 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 or 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 any 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 -44- 45 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 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 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 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 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). -45- 46 (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 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 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, any 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 by Lessee 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 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 -46- 47 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 or a Default of the type referred to in Section 14(a) or 14(e) 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 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 -47- 48 remaining, after reimbursement of Lessor (as provided in Section 7.01 of the Trust Agreement) and the Owner Participant 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) and the Owner Participant 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). (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 by Lessee 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, 1996, a report, signed by Marsh & McLennan, Incorporated or any other independent firm of insurance brokers -48- 49 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. (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, -49- 50 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. (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 or a Default of the type referred to in Section 14(a) or 14(e) 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 or 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 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 unless an Event of Default shall have occurred and be continuing) 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 -50- 51 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; 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 Interim Rent, Basic Rent or Stipulated Loss Value within ten (10) 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 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 and in clauses (i)(B) and (ii) of the first sentence of second paragraph of Exhibit F) to be -51- 52 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 one hundred eighty (180) 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) 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 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 -52- 53 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 Section 14(c) or (d) hereof, 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, if any, 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 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 -53- 54 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 Stipulated Loss Value Date not earlier than ten days from the date of such notice, may demand that the 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 Interim Rent or Basic Rent for the Aircraft due on or after the payment date specified in such notice), any unpaid Interim Rent or Basic Rent due on the payment date so specified (unless Basic Rent is payable in advance on such date but 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 Stipulated Loss Value 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 Stipulated Loss Value Date specified as the payment date in such notice at an annual rate equal to the Base Rate plus 3%; or (ii) an amount equal to the excess, if any, of the Stipulated Loss Value for such Aircraft, computed as of the Stipulated Loss Value Date specified as the payment date in such notice over the fair market sales value of such Aircraft (computed as hereafter in this Section provided) as of the Stipulated Loss Value 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 Interim Rent or Basic Rent for the Aircraft due on or after such date), any unpaid Interim Rent or Basic Rent with respect to the Aircraft due prior to such date (including, without limitation, any -54- 55 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 and an all cash, contemporaneous sale, 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 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. -55- 56 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 will endeavor 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 and any such public sale shall be conducted in general so as to afford Lessee (and any Sublessee) a commercially reasonable opportunity to bid (it being understood that Lessor shall incur no liability for its failure to provide any such notice). 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 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 at its expense 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 -56- 57 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 1997, 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 telecopy 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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President- Finance and Treasurer (Telecopy No. (612) 726-0665), or to such other address -57- 58 or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246- 5053), 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. This Lease is a net lease. 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. -58- 59 SECTION 19. RENEWAL OPTIONS; PURCHASE OPTIONS; VALUATION. (a) Renewal Options. (1) Fixed Renewal Term. Lessee shall have the right, upon compliance with the notice provisions set forth in Section 19(e) hereof, to renew this Lease for up to three 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"). 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. At the expiration of the third Fixed Renewal Term or any Fair Market Renewal Term, Lessee shall have the option, upon compliance with the notice provisions set forth in Section 19(e) hereof, to renew this Lease for a renewal term of not less than one year and not more than three 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"). The aggregate length of all Fair Market Renewal Terms pursuant to this Section 19(a)(2) may not exceed five years. (3) If no written notice is delivered by Lessee to Lessor pursuant to Section 19(e) 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), 14(e) or 14(f) 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 any portion of Basic Rent during the Basic Term was payable in advance, in which case the same proportion of Basic Rent (i.e., the total Basic Rent payable during the Basic Term divided into the total Basic Rent payable in advance during the Basic Term) shall be payable in advance during such Renewal Term, 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) -59- 60 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 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 compliance with the notice provisions set forth in Section 19(e) hereof, to purchase the Aircraft on the last Business Day of the Basic Term or any Renewal Term for a purchase price equal to the fair market sales value of the Aircraft; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the purchase price by Lessee will not constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled to purchase the Aircraft if there shall exist on such last Business Day of the Basic Term or any Renewal Term, as the case may be, a Default of the type referred to in Section 14(e) hereof. 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 that 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. 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 this Lease, including the purchase and renewal options of 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 a notice from Lessee pursuant to Section 19(e) hereof, 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 -60- 61 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, 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 July 2, 2012 (or, if July 2, 2012 is not a Business Day, the Business Day immediately succeeding July 2, 2012), 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; provided that, unless Lessee shall have provided Lessor with an opinion of counsel selected by Lessee and reasonably acceptable to Lessor to the effect that the payment of the Special Purchase Price by Lessee will not constitute a preference under applicable U.S. bankruptcy laws, Lessee shall not be entitled to purchase the Aircraft if there shall exist on July 2, 2012 (or, if July 2, 2012 is not a Business Day, on the Business Day immediately succeeding July 2, 2012) a Default of the type referred to in Section 14(e) hereof. 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 2.15 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 -61- 62 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 that 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. (e) In order to exercise any right pursuant to Sections 19(a) or 19(b) hereof, Lessee shall, no earlier than 540 days and no later than 270 days prior to the expiration of the Basic Term or any Renewal Term, as the case may be, deliver to Lessor a notice in writing stating that it intends to exercise one of the options set forth in Sections 19(a) or 19(b) hereof. Any such notice shall be revocable until the date that is 270 days prior to the expiration of the Basic Term or such Renewal Term, as the case may be. Failure to revoke any such notice prior to such 270th day prior to the end of the Basic Term or such Renewal Term, as the case may be, shall constitute a binding and irrevocable election by Lessee to exercise one of the options set forth in Sections 19(a) or 19(b) hereof. In the event that any such notice has so been provided to Lessor, Lessee shall, no earlier than the 270th day and no later than the 90th day prior to the expiration of the Basic Term or such Renewal Term, as the case may be, specify which of the options in Sections 19(a) or 19(b) Lessee intends to elect. For the avoidance of doubt, the parties agree and acknowledge that Lessee may not specify which of the options in Sections 19(a) or 19(b) it intends to elect prior to the date that is 270 days earlier than the expiration of the Basic Term or such Renewal Term, as the case may be. 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 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. -62- 63 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 Moody's or AA or better by 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 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 a Default of the type referred to in Section 14(a) or 14(e) or an Event of Default shall have occurred and be continuing. If a Default of the type referred to in Section 14(a) or 14(e) or an Event of Default shall have occurred and be continuing, Lessor, or if the Trust Indenture shall not have been discharged, the Indenture Trustee as assignee of Lessor, shall hold any such gain as security for the obligations of Lessee under this Lease and apply it against such obligations as and when due, and once all such Defaults and Events of Default have been remedied, any gain not so applied shall be remitted to Lessee. 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. -63- 64 (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. 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 -64- 65 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 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. SECTION 27. HOLDOVER RENT. In the event that Lessee shall fail to return the Aircraft in accordance with Section 5 hereof at the scheduled expiration of the Term, then, unless such failure shall occur as a result of (x) the Aircraft having suffered an Event of Loss or (y) Lessee having purchased the Aircraft pursuant to Section 19 hereof and, in the case of either clauses (x) or (y) above, Lessee shall have made all payments required to be made pursuant to such Sections, Lessee shall pay to Lessor, for each such day beyond the scheduled expiration of the Term during which the Aircraft is not returned to Lessor in accordance with Section 5 hereof, an amount equal to the higher of (A) the daily fair market rental value of the Aircraft during such period, computed in accordance with Section 19(c) hereof, and (B) the average daily Basic Rent payable by Lessee during the Term. -65- 66 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 OF UTAH, 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: Senior Vice President-Finance and Treasurer 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 - 67 EXHIBIT A TO LEASE AGREEMENT [NW 1996 G] LEASE SUPPLEMENT NO. [NW 1996 G] LEASE SUPPLEMENT NO. __, dated _________, 19___, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement [NW 1996 G], dated as of May 29, 1996, between NCC KEY COMPANY, 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 1996 G], dated as of May 29, 1996, relating to one Boeing 757-251 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 Boeing 757-251 aircraft (the "AIRCRAFT"), which Aircraft as of the date hereof consists of the following components: _____________________ (1) This language for Lease Supplement No 1. (2) This language for other Lease Supplements. 68 (i) Airframe: FAA Registration No. ______; manufacturer's serial no. _____; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P______ and P______ (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 January 2, 2019. 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 The Boeing Company, or any subcontractor or supplier of The Boeing Company, 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 69 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 OF UTAH, 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 70 EXHIBIT B TO LEASE AGREEMENT [NW 1996 G] INTERIM RENT, 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. Interim Rent, Basic Rent and Excess Amount:
Excess Amount Transition (Percentage of Date Lessor's Cost) ------------------------------------- ---------------------------------------------- December 2, 1996 2.62888889
Interim Rent Commencement (Percentage of Date Lessor's Cost) ------------------------------------- ---------------------------------------------- January 2, 1997 0.70612742
* Denotes payment in arrears from preceding Lease Period Date (or Commencement 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. 71 INTERIM RENT, 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 (Percentage of Lease Period Date Lessor's Cost) ---------------------------- -------------------------------- * Denotes payment in arrears from preceding Lease Period Date (or Commencement 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 5 of 5 72 Lessor's Cost for the Aircraft: $50,000,000.00. Special Purchase Price: 70.911000% of Lessor's Cost. Transition Date: December 2, 1996. EXHIBIT B - Page 5 of 5 73 EXHIBIT C TO LEASE AGREEMENT [NW 1996 G] 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 ------------------------- -------------------- 74 EXHIBIT D TO LEASE AGREEMENT [NW 1996 G] 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 ------------------- -------------------- EX-4.K5 91 FIRST AMENDMENT TO LEASE AGREEMENT - 1996 G 1 FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 G] This FIRST AMENDMENT TO LEASE AGREEMENT [NW 1996 G], dated as of June 3, 1996, between FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee under the Trust Agreement [NW 1996 G], dated as of May 29, 1996 (in such capacity, "LESSOR"), and NORTHWEST AIRLINES, INC., a corporation organized and existing pursuant to the laws of the State of Minnesota ("LESSEE"), to a certain Lease Agreement [NW 1996 G], dated as of May 29, 1996 (the "ORIGINAL LEASE"), between Lessee and Lessor (the Original Lease, as supplemented by Lease Supplement No. 1 [NW 1996 G] ("LEASE SUPPLEMENT NO. 1") between Lessor and Lessee, dated June 3, 1996, herein called the "LEASE"); Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; WITNESSETH: WHEREAS, pursuant to the Lease, Lessee has leased from Lessor the Aircraft, which consists of the following components: (i) Airframe: FAA Registration No. N543US; manufacturer's serial No. 26490; and (ii) Engines: two (2) Pratt & Whitney Model PW2037 engines bearing, respectively, manufacturer's serial nos. P727177 and P727178; WHEREAS, Section 17 of the Participation Agreement [NW 1996 G], dated as of May 29, 1996 (the "PARTICIPATION AGREEMENT"), among Lessee, [ ] (the "OWNER PARTICIPANT"), the loan participants named therein, as Loan Participants (the "ORIGINAL LOAN PARTICIPANTS"), Lessor and State Street Bank and Trust Company (the "INDENTURE TRUSTEE"), contemplates that the Secured Certificates issued by the Owner Trustee under the Trust Indenture and Security Agreement [NW 1996 G], dated as of May 29, 1996, between Lessor (not in its individual capacity except as expressly provided therein but as trustee) and the Indenture Trustee may be refinanced under certain circumstances; WHEREAS, Lessor and Lessee have entered into a Refunding Agreement [NW 1996 G], dated as of the date hereof (the "REFUNDING AGREEMENT"), with State Street Bank and Trust Company, as Pass Through Trustee under the Pass Through Trust Agreements (the "PURCHASERS"), State Street Bank and Trust Company of Connecticut, National Association, as Subordination Agent (the "SUBORDINATION AGENT"), the Owner Participant, the Indenture Trustee and Northwest Airlines Corporation (the "GUARANTOR"); WHEREAS, Lessor and Lessee desire to recalculate the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price in order to reflect, among other things, the interest rate of the refinanced Secured Certificates; 2 WHEREAS, in connection with the recalculation of the Excess Amounts, Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, Lessor and Lessee desire to amend the Lease; WHEREAS, a counterpart of the Original Lease, to which were attached and made a part thereof counterparts of Lease Supplement No. 1, the Trust Indenture and Security Agreement [NW 1996 G], dated as of May 29, 1996, and the Trust Agreement and Indenture Supplement [NW 1996 G], dated June 3, 1996, was recorded by the Federal Aviation Administration (the "FAA") on [ ], 1996, and assigned Conveyance No.[ ]; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: SECTION 1. AMENDMENT OF SECTION 1 OF THE LEASE. (a) The definitions of "Business Day", "Excess Amount", "Indemnitee", "Loan Participant", "Operative Documents", "Stipulated Loss Value", "Supplemental Rent", "Tax Indemnitee", and "Termination Value" in Section 1 of the Lease are hereby amended applicable on and after the Closing Date, to read as follows: "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. "EXCESS AMOUNT" for the Closing Date or the Commencement 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 the Closing Date or the Commencement Date. "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) 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). "LOAN PARTICIPANT" means for any period prior to the Closing, the Original Loan Participants and their successors and assigns, and from and after the Closing, the Purchasers and their successors and registered assigns, including any Certificate Holder. -2- 3 "OPERATIVE DOCUMENTS" means each of the Participation Agreement, the documents referred to in Section 4(a)(v) of the Participation Agreement (including any amendments, modifications or supplements thereto), the Refunding Agreement, the Trust Indenture Amendment and the Refinancing Secured Certificates, collectively, and "Operative Document" shall mean each of the Operative Documents, individually. "STIPULATED LOSS VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v) hereof, the amount determined by multiplying Lessor's Cost 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 January 2, 2019 shall be the amount determined as provided in Section 19(a) hereof. "SUPPLEMENTAL RENT" means, without duplication, (a) all amounts, liabilities, indemnities and obligations (other than Interim Rent or 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 the Other Pass Through Trust Agreement, 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 and 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. "TERMINATION VALUE" with respect to the Aircraft as of any date through and including January 2, 2019, means, but subject always to the provisions of Section 3(d)(v), the amount determined by multiplying Lessor's Cost by the percentage specified in Exhibit D hereto opposite the Termination Date with -3- 4 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). (b) The following definitions are hereby inserted in Section 1 of the Lease in alphabetical order to be applicable on and after the Closing Date: "CLOSING" means the consummation of the refinancing operation contemplated by Section 1 of the Refunding Agreement. "CLOSING DATE" means the date on which the Closing shall occur. "INDEMNITY ADJUSTED PAYMENT" means any indemnity payment made pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among the Pass Through Trustees, the Liquidity Provider and the Subordination Agent. "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 Westdeutsche Landesbank Girozentrale, acting through its New York branch, as Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider under the Liquidity Facilities, or any successor thereto. "MAKE-WHOLE AMOUNT" has the meaning assigned to that term in the Trust Indenture. "ORIGINAL LOAN PARTICIPANTS" means each institution executing the Participation Agreement as a Loan Participant. "ORIGINAL TRUST INDENTURE" means the Trust Indenture and Security Agreement [NW 1996 G], dated as of May 29, 1996, between the Owner Trustee and State Street Bank and Trust Company, as amended, modified and supplemented prior to the Closing Date. "OTHER PASS THROUGH TRUST AGREEMENT" means the pass through trust agreement and supplement pursuant to which the Class D pass through trust certificates are issued. -4- 5 "PASS THROUGH CERTIFICATES" means the pass through certificates to be issued by the Pass Through Trustee in connection with the Refinancing 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 Refunding Agreement to be entered into by and between Lessee and the Pass Through Trustee in connection with the Refinancing Transaction. "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. "PURCHASERS" means the Pass Through Trustees under each Pass Through Trust Agreement. "REFINANCING CERTIFICATE" means a certificate of an authorized representative of the Owner Participant delivered pursuant to Section 17(a)(1) of the Participation Agreement, setting forth, among other things, the Refinancing Date, the principal amount of debt to be issued by the Owner Trustee on the Refinancing Date, and the proposed revised schedules of Excess Amount, Basic Rent, Stipulated Loss Value and Termination Value percentages, and the proposed Amortization Schedules. "REFINANCING DATE" means the proposed date on which the outstanding Secured Certificates will be redeemed and refinanced pursuant to Section 17 of the Participation Agreement. "REFINANCING EXPENSES" means the costs, fees, commissions and other expenses payable by the Owner Participant pursuant to Section 11(a) of the Refunding Agreement. "REFINANCING SECURED CERTIFICATES" means the Secured Certificates to be issued by Lessor to the Purchasers pursuant to the Trust Indenture Amendment and the Refunding Agreement on the Closing Date. "REFINANCING TRANSACTION" means a refinancing transaction pursuant to Section 17 of the Participation Agreement involving, among other things, (i) the redemption of the Secured Certificates issued on the Refinancing Date and the concurrent issuance and sale of the Refinancing Secured Certificates to the Pass Through Trustees (or their designee) and (ii) the issuance and sale of the Pass Through Certificates by the Pass Through Trustees. -5- 6 "REFUNDING AGREEMENT" means that certain Refunding Agreement [NW 1996 G], dated as of June 3, 1996, among Lessor, Lessee, the Owner Participant, the Purchasers, the Indenture Trustee, the Subordination Agent, and the Guarantor, as the same may from time to time be supplemented or amended, or the terms thereof waived or modified, to the extent permitted by, and in accordance with, the terms thereof. "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. "TRUST INDENTURE AMENDMENT" means the Amended and Restated Trust Indenture and Security Agreement [NW 1996 G], dated as of the Closing Date, 1996, between Lessor and State Street Bank and Trust Company, as Indenture Trustee. "TRUST INDENTURE ESTATE" has the meaning assigned to that term in the Trust Indenture. (c) The definitions of "Administrative Agent", "Assumed Interest Rate", "Commitment", "Debt Rate", "Documentation Agent", "Funding Loss Amount", "Interest Period", "Rent Differential Amount" and "Transition Date" in Section 1 of the Lease are hereby deleted on and after the Closing Date. SECTION 2. AMENDMENT OF SECTION 3 OF THE LEASE. (a) Section 3(b) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (b) Section 3(c) of the Lease is hereby amended by deleting on and after the Closing Date the second paragraph thereof. (c) Section 3(d)(i) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (i) In the event that (A) the Closing Date occurs other than on June 12, 1996, (B) Transaction Expenses paid by Lessor pursuant to Section 16 of the Participation Agreement are determined to be other than 1.0% of Lessor's Cost, or (C) Refinancing Expenses paid by Lessor or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement are determined to be other than 1.3281% of Lessor's Cost, then in each case, the Basic Rent percentages set forth in Exhibit B and the Stipulated Loss Value percentages set forth in Exhibit C, the Termination Value percentages set forth in Exhibit D and the Special Purchase Price shall be recalculated by the Owner Participant, on or prior to November 15, 1996 using the same methods and -6- 7 assumptions used to calculate original Basic Rent, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price, 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. (d) Section 3(d)(ii) of the Lease is hereby amended by (i) deleting on and after the Closing Date "(A)" at the beginning thereof, (ii) deleting on and after the Closing Date the word "and" at the end of clause (A) thereof and substituting a period therefor, and (iii) deleting on and after the Closing Date clause (B) thereof in its entirety. (e) Section 3(d)(iii) of the Lease is hereby amended by deleting on and after the Closing Date the second sentence thereof. (f) The second sentence of Section 3(e) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "Lessee shall pay, on behalf of Lessor, 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 such Section 2.10(b) or Section 2.11." (g) Section 3(g) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: (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 the Commencement Date from Lessor an amount equal to the Excess Amount for such date, Lessee shall, on the Commencement Date, prepay on the Commencement 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 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 the Base Rate as in effect from time to time plus 5% per annum 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 -7- 8 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 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 to 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 Interim Rent or 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 Make-Whole Amount, if any, due with respect to) the Secured Certificates then outstanding. (h) The following new Section 3(h) shall be added to the end of Section 3 of the Lease to be applicable on and after the Closing Date: (h) In the event that Lessee exercises its option to satisfy any indemnity obligation under the Tax Indemnity Agreement pursuant to Section 4(d)(ii) of the Tax Indemnity Agreement, Lessee shall pay, in addition to any other payments due hereunder, (i) on each Lease Period Date, the portion of the Indemnity Adjusted Payments then due and payable on such date as set forth in an appropriate schedule to the Tax Indemnity Agreement and (ii) on the date that Stipulated Loss Value, Termination Value or the Special Purchase Price becomes due and payable, as the case may be, the Indemnity Adjusted Payment then due and payable by reference to the date as of which such Stipulated Loss Value, Termination Value or Special Purchase Price is payable as set forth in an appropriate schedule to the Tax Indemnity Agreement. SECTION 3. AMENDMENT OF SECTION 7 OF THE LEASE. Section 7(b)(x)(2) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the Owner Participant and the Indenture Trustee" and substituting therefor the word "Lessor", and (ii) deleting on and after the Closing Date the word "their" and substituting therefor the word "its". -8- 9 SECTION 4. AMENDMENT OF SECTION 9 OF THE LEASE. Section 9(c) of the Lease is hereby amended by deleting on and after the Closing Date the word "premium" each time it appears therein and substituting therefor the words "Make-Whole Amount" and by deleting on and after the Closing Date the words "and Funding Loss Amount" and ", Funding Loss Amount" each time such words and such words and punctuation appear. SECTION 5. AMENDMENT OF SECTION 10(a) OF THE LEASE. Section 10(a) of the Lease is hereby amended by (i) deleting on and after the Closing Date the words "the third Business Day following the receipt of insurance proceeds in respect of such occurrence (but not earlier that thirty (30) days after such occurrence)" in clause (i)(y) thereof and substituting therefor the words "an earlier Business Day irrevocably specified fifteen days in advance by notice from Lessee to Lessor and the Indenture Trustee" and (ii) inserting on and after the Closing Date the words and punctuation ", which appraisal shall be from a firm of independent aircraft appraisers satisfactory to the Owner Participant," after the words "the certificate or the appraisal" in the third parenthetical phrase of clause (A) of the third paragraph thereof. SECTION 6. AMENDMENT OF SECTION 14(d) OF THE LEASE. Section 14(d) of the Lease is hereby amended by (i) adding on and after the Closing Date the words and punctuation ", the Refunding Agreement" after the words "Participation Agreement" and (ii) adding on and after the Closing Date the words "and except for representations or warranties contained in the Pass Through Trust Agreement or the Underwriting Agreement (as defined in the Refunding Agreement) or any document or instrument furnished pursuant to either thereof" after the word "purpose" at the end of the first parenthetical phrase therein. SECTION 7. AMENDMENT OF SECTION 17 OF THE LEASE. Section 17 of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: "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 5101 Northwest Drive (A4010), St. Paul, Minnesota 55111-3034, and for overnight courier at 2700 Lone Oak Parkway (A4010), Eagan, Minnesota 55121, Attention: Senior Vice President - Finance and Treasurer, (Telecopy No. (612) 726-0665), or to such other address, telex -9- 10 number or telecopy number as Lessee shall from time to time designate in writing to Lessor, (ii) if to Lessor, at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department (Telecopy No. (801) 246-5053), 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 on the signature pages of the Refunding Agreement." SECTION 8. AMENDMENT OF SECTION 19(d) OF THE LEASE. The second sentence of Section 19(d) of the Lease is hereby amended to read in its entirety on and after the Closing Date as follows: 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. SECTION 9. AMENDMENT OF SECTION 26 OF THE LEASE. Section 26 of the Lease is hereby amended by (i) deleting on and after the Closing Date the word "or" between the words "Trust Agreement" and the words "the Trust Indenture" and substituting a comma therefor and (ii) inserting on and after the Closing Date the words "or the Refunding Agreement" after the words "Trust Indenture". SECTION 10. AMENDMENT OF EXHIBITS. (a) Exhibits B, C and D to the Lease attached hereto are applicable on and after the Closing Date. Exhibits B, C and D to the Lease are applicable until the Closing Date. (b) The parties hereto agree that Exhibits B, C and D attached hereto reflect the recalculation of Basic Rent, Excess Amounts, Stipulated Loss Value and Termination Value percentages and the Special Purchase Price to take into account the interest rates borne by the Secured Certificates as of the Closing Date. -10- 11 SECTION 11. EFFECTIVENESS OF AMENDMENTS. The amendments to the Lease set forth in Sections 1 through 10 hereof shall be effective as of the date hereof. SECTION 12. RATIFICATION. Except as amended hereby, the Lease as heretofore supplemented continues and shall remain in full force and effect in all respects. SECTION 13. MISCELLANEOUS. Any provision of this Amendment 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 Amendment 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. Nothing contained herein shall be construed as conveying to Lessee any right, title or interest in the Aircraft except as a lessee. The section and paragraph headings in this Amendment 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 Amendment. THIS AMENDMENT 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 Amendment 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. To the extent, if any, that this Amendment 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 Amendment 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 as mortgagee under the Trust Indenture on the signature page thereof. -11- 12 IN WITNESS WHEREOF, Lessor and Lessee have each caused this Amendment to be duly executed on the day and year first above written. FIRST SECURITY BANK OF UTAH, 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: (1) Receipt of this original counterpart of the foregoing Amendment is hereby acknowledged this _____ day of ______________, 1996. STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By: ----------------------------------------------- Title: - ----------- (1) This language contained in the original counterpart only. EX-4.K6 92 GUARANTEE-1996 G 1 GUARANTEE [NW 1996 G] This GUARANTEE [NW 1996 G], dated as of May 29, 1996 (as amended, modified or supplemented from time to time, this "GUARANTEE"), from NORTHWEST AIRLINES CORPORATION, a Delaware corporation (together with its permitted successors and assigns, the "GUARANTOR"), to the parties listed in Schedule I hereto (collectively, together with their successors and permitted assigns, the "PARTIES", and, individually, a "PARTY"). WHEREAS, Northwest Airlines, Inc., a Minnesota corporation (the "LESSEE"), an indirect wholly-owned subsidiary of the Guarantor, wishes to enter into a Lease Agreement [NW 1996 G], dated as of the date hereof (as amended, modified or supplemented from time to time, the "LEASE"), between the Lessee and First Security Bank of Utah, National Association, not in its individual capacity but solely as Owner Trustee (as defined therein), except as expressly provided therein (the "LESSOR"), initially relating to one (1) Boeing 757-251 aircraft, together with two (2) Pratt & Whitney Model PW2037 engines (such aircraft and engines, and any substitute Airframe and Engines under the Lease, being collectively referred to herein as the "AIRCRAFT"), pursuant to a Participation Agreement [NW 1996 G], dated as of the date hereof (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), among the Lessee and the Parties; and WHEREAS, it is a condition precedent to the obligations of the Parties to consummate the transactions contemplated by the Participation Agreement that the Guarantor execute and deliver this Guarantee; and WHEREAS, the Lessor will assign by way of collateral security certain of its right, title and interest in and to this Guarantee to the Indenture Trustee (as defined in the Lease), pursuant to a Trust Indenture and Security Agreement [NW 1996 G], dated as of the date hereof, between the Lessor and the Indenture Trustee (as amended, modified or supplemented from time to time, the "TRUST INDENTURE"), as security for the obligations of the Lessor referred to therein; and WHEREAS, the capitalized terms used herein that are not defined herein are used herein as defined in the Lease; NOW, THEREFORE, in order to induce the Lessor to enter into the Lease and to induce the other Parties referred to above to enter into the Participation Agreement and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. GUARANTEE. (a) The Guarantor does hereby acknowledge that it is fully aware of the terms and conditions of the Lease, the Participation Agreement and the other Operative 2 Documents and the transactions and the other documents contemplated thereby, and does hereby irrevocably and fully and unconditionally guarantee, as primary obligor and not as surety merely, to the Parties, as their respective interests may appear, the payment by the Lessee of all payment obligations when due under the Lease (including, without limitation, Basic Rent and Supplemental Rent), the Participation Agreement, the Tax Indemnity Agreement and the other Operative Documents to which the Lessee is a party (such obligations of the Lessee guaranteed hereby being hereafter referred to, individually, as a "FINANCIAL OBLIGATION" and, collectively, as the "FINANCIAL OBLIGATIONS") in accordance with the terms of the Operative Documents, and the timely performance of all other obligations of the Lessee thereunder (individually, a "NONFINANCIAL OBLIGATION" and, collectively, the "NONFINANCIAL OBLIGATIONS" or, collectively with the Financial Obligations, the "OBLIGATIONS"). The Guarantor does hereby agree that in the event that the Lessee fails to pay any Financial Obligation when due for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within five days after the date on which such Financial Obligation became due and payable and the applicable grace period has expired, the Guarantor shall pay or cause to be paid forthwith, upon the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Financial Obligation was not paid when due and for five days after the applicable grace period has expired, the amount of such Financial Obligation. The Guarantor hereby agrees that in the event the Lessee fails to perform any Nonfinancial Obligation for any reason (including, without limitation, the liquidation, dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar proceedings affecting the status, existence, assets or obligations of, the Lessee, or the disaffirmance with respect to the Lessee of the Lease or the Operative Documents to which the Lessee is a party in any such proceeding) within 10 Business Days after the date on which such Nonfinancial Obligation is required to be performed (for avoidance of doubt, to include any applicable grace period), the Guarantor shall cause such Nonfinancial Obligation to be performed within 10 Business Days following the receipt of notice from any Party (such notice to be sent to the Lessee (to the extent such Party is not stayed or prevented from doing so by operation of law) and the Guarantor) stating that such Nonfinancial Obligation was not performed when so required and that any applicable grace period has expired. (b) The obligations of the Guarantor hereunder shall not be, to the fullest extent permitted by law, affected by: the genuineness, validity, regularity or enforceability (or lack thereof) of any of the Lessee's obligations under the Lease or any other Operative Document to which the Lessee is a party, any amendment, waiver or other modification of the Lease or such other Operative Document (except that any such amendment or other modification in writing shall be given effect in determining the obligations of the Guarantor hereunder), or by any substitution, release or exchange of collateral for or other guaranty of any of the Obligations (except to the extent that such substitution, release or exchange is -2- 3 undertaken in accordance with the terms of the Operative Documents) without the consent of the Guarantor, or by any priority or preference to which any other obligations of the Lessee may be entitled over the Lessee's obligations under the Lease and the other Operative Documents to which the Lessee is a party, or by any other circumstance that might otherwise constitute a legal or equitable defense to or discharge of the obligations of a surety or guarantor including, without limitation, any defense arising out of any laws of the United States of America or any State thereof which would excuse, discharge, exempt, modify or delay the due or punctual payment and performance of the obligations of the Guarantor hereunder. Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not, to the fullest extent permitted by law, affect the liability of the Guarantor hereunder: (a) the extension of the time for or waiver of, at any time or from time to time, without notice to the Guarantor, the Lessee's performance of or compliance with any of its obligations under the Operative Documents (except that such extension or waiver in writing shall be given effect in determining the obligations of the Guarantor hereunder)), (b) any assignment, transfer, sublease or other arrangement by which the Lessee transfers possession or loses control of the use of the Aircraft, (c) any defect in the title, condition, design, operation or fitness for use of, or damage to or loss or destruction of, the Aircraft, whether or not due to the fault of the Lessee, (d) any merger or consolidation of the Lessee or the Guarantor into or with any other Person, or any sale, transfer, lease or disposal of any of its assets or (e) any change in the ownership of any shares of capital stock of the Lessee. (c) This Guarantee is an absolute, present and continuing guaranty of payment and performance and not of collectability and is in no way conditional or contingent upon any attempt to collect from the Lessee any unpaid amounts due or otherwise to enforce performance by the Lessee. The Guarantor specifically agrees, to the fullest extent permitted by law, that it shall not be necessary or required, and that the Guarantor shall not be entitled to require, that any Party (i) file suit or proceed to obtain or assert a claim for personal judgment against the Lessee for the Obligations, or (ii) make any effort at collection of the Obligations from the Lessee, or (iii) foreclose against or seek to realize upon any security now or hereafter existing for the Obligations, including the Trust Estate or the Trust Indenture Estate (as such term is defined in the Trust Indenture), or (iv) file suit or proceed to obtain or assert a claim for personal judgment against any other Person liable for the Obligations, or make any effort at collection of the Obligations from any such other Person, or exercise or assert any other right or remedy to which any Party is or may be entitled in connection with the Obligations or any security or other guaranty therefor, or (v) assert or file any claim against the assets of the Lessee or any other guarantor or other Person liable for the Obligations, or any part thereof, before or as a condition of enforcing the liability of the Guarantor under this Guarantee or requiring payment of said Obligations by the Guarantor hereunder, or at any time thereafter. (d) The Guarantor agrees, to the fullest extent permitted by law, that, without limiting the generality of this Guarantee, if an Event of Default shall have occurred and be continuing and the Lessor (or any assignee thereof including, without limitation, the Indenture Trustee) shall be prevented by applicable law from exercising its remedies (or any of -3- 4 them) under Section 15 of the Lease, the Lessor (or any assignee thereof, including, without limitation, the Indenture Trustee) shall be, nevertheless, entitled to receive hereunder from the Guarantor, upon demand therefor the sums that would otherwise have been due from the Lessee under the Lease had such remedies been able to be exercised. The Guarantor hereby unconditionally waives, to the fullest extent permitted by law, any requirement that, as a condition precedent to the enforcement of the obligations of the Guarantor hereunder, the Lessee or all or any one or more of any other guarantors of any of the Obligations be joined as parties to any proceedings for the enforcement of any provision of this Guarantee. 2. NO IMPLIED THIRD PARTY BENEFICIARIES. This Guarantee shall not be deemed to create any right in any Person except a Party and shall not be construed in any respect to be a contract in whole or in part for the benefit of any other Person. 3. WAIVER; NO SET-OFF; REINSTATEMENT; SUBROGATION. The Guarantor waives notice of the acceptance of this Guarantee and of the performance or nonperformance by the Lessee, demand for payment from the Lessee or any other Person, notice of nonpayment or failure to perform on the part of the Lessee, diligence, presentment, protest, dishonor and, to the fullest extent permitted by law, all other demands or notices whatsoever, other than the request for payment hereunder and notice provided for in Section 1 hereof. The obligations of the Guarantor shall be absolute and unconditional and shall remain in full force and effect until satisfaction of all Obligations hereunder and, without limiting the generality of the foregoing, to the extent not prohibited by applicable law, shall not be released, discharged or otherwise affected by the existence of any claims, set-off, defense or other rights that the Guarantor may have at any time and from time to time against any Party, whether in connection herewith or any unrelated transactions. This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any Financial Obligation is rescinded or must otherwise be returned by any Party upon the insolvency, bankruptcy, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding with respect to the Lessee or otherwise, all as though such payment had not been made. The Guarantor, by virtue of any payment or performance hereunder to a Party, shall be subrogated to such Party's claim against the Lessee or any other Person relating thereto; provided, however, that the Guarantor shall not be entitled to receive payment from the Lessee in respect of any claim against the Lessee arising from a payment by the Guarantor: (a) while an Event of Default shall have occurred and be continuing, in which case no such payment in respect of such a claim by the Guarantor may be made by the Lessee; or (b) in the event of any insolvency, bankruptcy, liquidation, reorganization or other similar proceedings relating to the Lessee, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Lessee, whether or not involving insolvency or bankruptcy proceedings, in which case the Obligations shall be paid and performed in full before any payment in respect of a claim by the Guarantor shall be made by or on behalf of the Lessee. -4- 5 4. AMENDMENTS, ETC. No amendment of or supplement to this Guarantee, or waiver or modification of, or consent under, the terms hereof, shall be effective unless evidenced by an instrument in writing signed by the Guarantor and each Party against whom such amendment, supplement, waiver, modification or consent is to be enforced. 5. PAYMENTS. All payments by the Guarantor hereunder in respect of any Obligation shall be made in Dollars and otherwise as provided in the Lease, the Participation Agreement or any other Operative Document in which such Obligation is contained; provided that the Guarantor consents to all the terms of the Trust Indenture and agrees to make all payments hereunder directly to the Indenture Trustee until such time as the Indenture Trustee shall give notice to the Guarantor that the Lien of the Trust Indenture has been fully discharged and thereafter to the Owner Trustee; provided, further, that the Guarantor shall pay directly to the Lessor, in its individual capacity, or to the Owner Participant or another Party, as the case may be, any amount owing to such Person as Supplemental Rent for indemnities provided in Section 7 of the Participation Agreement or the Tax Indemnity Agreement or otherwise not constituting part of the Trust Indenture Estate (as such term is defined in the Trust Indenture). 6. ASSIGNMENT OF GUARANTEE. As and to the extent provided in the Trust Indenture, the Lessor will assign, and create a security interest in, certain of its rights hereunder to and for the benefit of the Indenture Trustee. From and after the execution and delivery of the Trust Indenture, and until receipt by the Guarantor of a written notice from the Indenture Trustee to the effect that the Trust Indenture has been fully satisfied and discharged, no remedy or election hereunder may be exercised by the Lessor or consent given by the Lessor, except by or with the prior written consent of the Indenture Trustee, and the Guarantor will make payment of all amounts hereunder that are assigned to the Indenture Trustee directly to the Indenture Trustee, and such payments shall discharge the obligations of the Guarantor to the Lessor to the extent of such payments. 7. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants to the Parties as follows: (a) It is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware. It has all requisite corporate power and authority to own and operate its properties, to carry on its business as presently conducted and to enter into and perform its obligations under this Guarantee. (b) No order, license, consent, authorization or approval of, or exemption by, or the giving of notice to, or the registration with or the taking of any other action in respect of, any Federal, state, municipal or other governmental department, bureau, agency or instrumentality, and no filing, recording, publication or registration in any public office or any other place, is now, or under existing law in the future will be, required or necessary on its behalf to authorize the execution, delivery and performance (other than as contemplated by the Operative Documents in the case of the -5- 6 performance of the Non-Financial Obligations) by it of this Guarantee, or for the legality, validity, binding effect or enforceability hereof. (c) Neither the execution and delivery of this Guarantee, the performance of its obligations hereunder, nor its consummation of the transactions contemplated hereby, will conflict with or result in any breach of, or constitute a default under, or result in any creation or imposition of any Lien upon any of its property or assets under, any applicable laws or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it may be bound or to which any of its property or assets may be subject, or its Articles of Incorporation or by-laws. (d) The execution, delivery and performance by it of this Guarantee have been duly authorized by all necessary corporate action. This Guarantee has been duly executed and delivered by it and constitutes its legal, valid and binding obligation enforceable in accordance with its terms except as enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 8. JURISDICTIONAL MATTERS. The Guarantor (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 Guarantee brought by any party, 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 Guarantee may not be enforced in or by such courts. The Guarantor hereby generally consents to service of process at Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of the Guarantor in New York City as from time to time may be designated by the Guarantor in writing to the Parties. 9. INTEGRATION; COUNTERPARTS; SUCCESSORS AND ASSIGNS; HEADINGS. This Guarantee (a) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the Guarantor and the Parties, with respect to the subject matter hereof, (b) may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and (c) shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of, and shall be enforceable by, each of the Parties to the fullest extent permitted by applicable laws. The headings in this Guarantee are for purposes of reference only, and shall not limit or otherwise affect the meanings hereof. -6- 7 10. NOTICES. All requests, notices or other communications hereunder shall be in writing, addressed as follows: If to the Guarantor: Northwest Airlines Corporation for U.S. Mail: 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 for Overnight courier: 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President -- Finance and Treasurer Telecopy No.: (612) 726-0665 If to a Party: to the address or telecopy number set forth in the Participation Agreement All requests, notices or other communications shall be given in the manner, and shall be effective at the times and under the terms, set forth in Section 13(b) of the Participation Agreement. 11. NO WAIVERS. No failure on the part of any Party to exercise, no delay in exercising, and no course of dealing with respect to, any right or remedy hereunder or under the Lease, the Participation Agreement or the other Operative Documents, and any other agreement or instrument relating thereto will operate as a waiver thereof; nor will any single or partial exercise of any right or remedy hereunder preclude any other or further exercise of such right or remedy or the exercise of any other right or remedy or under the Lease, the Participation Agreement or the other Operative Documents, and any other agreement or instrument relating thereto. 12. SURVIVAL. All representations and warranties contained herein or made in writing by the Guarantor in connection herewith shall survive the execution and delivery of this Guarantee regardless of any investigation made by any Party or any other Person. 13. SEVERABILITY. To the fullest extent permitted by applicable law, any provision of this Guarantee that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or any provision in any other Operative Document, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. -7- 8 14. GOVERNING LAW. THIS GUARANTEE IS DELIVERED IN, AND SHALL (AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND THE PARTIES 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 GUARANTEE SHALL BE DEEMED MADE WHEN DELIVERED IN NEW YORK, NEW YORK. 15. ENFORCEMENT EXPENSES. The Guarantor agrees to pay to any Party any and all reasonable costs and expenses (including reasonable legal fees and expenses) incurred by such Party in enforcing, or collecting under, this Guarantee. 16. TERMINATION. Subject to the provisions of Section 3 hereof, this Guarantee shall terminate upon the indefeasible payment and performance in full of all of the Obligations. 17. NO GUARANTEE OF SECURED CERTIFICATES. This Guarantee relates only to the Obligations described in Section 1 and nothing in this Guarantee shall be deemed to constitute a guarantee of payment of any of the Secured Certificates or shall give rise to any inference that the Lessee or the Guarantor has so guaranteed such payment. -8- 9 IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed as of the date first hereinabove set forth. NORTHWEST AIRLINES CORPORATION By: ____________________________________ Name: Joseph E. Francht, Jr. Title: Senior Vice President-Finance and Treasurer Accepted as of the above date: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION in its individual capacity and as Owner Trustee By: ____________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY in its individual capacity and as Indenture Trustee By: ____________________________________ Name: Title: -9- 10 SCHEDULE I TO GUARANTEE [NW 1996 G] PARTIES First Security Bank of Utah, National Association, in its individual capacity and as Owner Trustee State Street Bank and Trust Company, as Indenture Trustee [Owner Participant] [Bridge Lender] EX-4.K7 93 PARTICIPATION AGREEMENT - 1996 G 1 PARTICIPATION AGREEMENT [NW 1996 G] THIS PARTICIPATION AGREEMENT [NW 1996 G] dated as of May 29, 1996, among (i) Northwest Airlines, Inc., a corporation existing pursuant to the laws of the State of Minnesota (herein called "LESSEE"), (ii) the institution listed on Schedule I hereto and identified therein as the "OWNER PARTICIPANT" which executes and delivers a counterpart of this Agreement and of the Trust Agreement (as hereinafter defined) on or prior to the Delivery Date referred to below, (iii) the institutions listed on Schedule I and identified therein as "LOAN PARTICIPANTS", (iv) First Security Bank of Utah, 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"), and (v) State Street Bank and Trust Company, a Massachusetts trust company, in its individual capacity and as Indenture Trustee under the Trust Indenture (as hereinafter defined) (herein, in such latter capacity together with any successor indenture trustee, called the "INDENTURE TRUSTEE"); W I T N E S S E T H: WHEREAS, pursuant to the Purchase Agreement (as such term is defined in the Lease hereinafter referred to) between Lessee and the Manufacturer, the Manufacturer has agreed to sell to Lessee, among other things, certain Boeing 757-251 aircraft, including the Aircraft which has been delivered by the Manufacturer to Lessee and is the subject of this Agreement; WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Lessee and the Owner Trustee are entering into a Purchase Agreement Assignment [NW 1996 G], dated as of the date hereof (herein called the "PURCHASE AGREEMENT ASSIGNMENT"), whereby Lessee assigns to the Owner Trustee certain rights and interests of Lessee under the Purchase Agreement with respect to the Aircraft; and (ii) the Manufacturer has executed the Consent and Agreement [NW 1996 G] (herein called the "CONSENT AND AGREEMENT"), substantially in the form attached to the Purchase Agreement Assignment (herein called the "CONSENT AND AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Participant is entering into a Trust Agreement [NW 1996 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 2 Trust Estate defined in Section 1.01 thereof (herein called the "TRUST ESTATE") for the use and benefit of the Owner Participant; WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with the execution and delivery of this Agreement are entering into the Trust Indenture and Security Agreement [NW 1996 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 issues to each of the Loan Participants one or more secured certificates (herein called collectively, the "SECURED CERTIFICATES", and individually, a "SECURED CERTIFICATE") as evidence of the Owner Trustee's indebtedness to the Loan Participants arising from the Loan Participants' making secured loans to the Owner Trustee to finance a portion of the Owner Trustee's purchase of the Aircraft, which Secured Certificates are to be secured by the mortgage and security interests created by the Owner Trustee in favor of the Indenture Trustee, and 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; WHEREAS, concurrently with the execution and delivery of this Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement [NW 1996 G], dated as of the date hereof (such Lease Agreement, as the same may be amended or supplemented from time to time to the extent permitted by the terms thereof and this Agreement, herein called the "LEASE", such term to include, unless the context otherwise requires, the Lease Supplement referred to below), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the Owner Trustee the Aircraft on the date (the "DELIVERY DATE") that the Aircraft is sold and delivered by Lessee to the Owner Trustee under the Bill 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; WHEREAS, certain terms are used herein as defined in Section 13(a) hereof; NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: SECTION 1. PARTICIPATIONS IN LESSOR'S COST OF THE AIRCRAFT. (a) Participation by Loan Participants. Subject to the terms and conditions of this Agreement, each Loan Participant agrees to finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner Trustee (herein called a "LOAN") in the amount set forth on Schedule II opposite the name of such Loan Participant. Each Loan Participant shall make such Loan to the Owner Trustee on a date to be designated pursuant to Section 2 hereof, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not -2- 3 later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite such Loan Participant's name in Schedule II hereto. Upon the occurrence of the above transfers by the Loan Participants to the Owner Trustee, to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon, the Owner Trustee shall issue and the Indenture Trustee shall authenticate Secured Certificates which shall be delivered simultaneously to the Loan Participants under the Trust Indenture to evidence the obligation of the Owner Trustee to repay the Loans together with interest thereon. The Owner Trustee agrees to pay the Secured Certificates in installments in the amounts and on the dates provided in the Trust Indenture together with interest thereon and all other amounts payable with respect thereto, all as more fully provided in the Trust Indenture. (b) Participation by Owner Participant. Subject to the terms and conditions of this Agreement, the Owner Participant hereby agrees to participate in the payment of Lessor's Cost for the Aircraft by making an equity investment in the beneficial ownership of the Aircraft on a date to be designated pursuant to Section 2 hereof, by transferring to the account of the Owner Trustee at Bankers Trust Company, New York, New York, Acct. No. 01014789, ABA No. 02-100-1033, not later than 9:30 a.m., New York City time, on the Delivery Date in immediately available funds in Dollars, the amount set forth opposite the Owner Participant's name in Schedule II hereto. (c) General Provisions. The amount of the participation of each of the Loan Participants and the Owner Participant to be made as provided above in the payment of Lessor's Cost for the Aircraft is hereinafter called such party's "COMMITMENT" for the Aircraft. In case any of the Loan Participants or the Owner Participant shall default in its obligation under the provisions of this Section 1, no other such party shall have any obligation to make any portion of such defaulted amount available or to increase the amount of its Commitment and the obligation of such nondefaulting party shall remain subject to the terms and conditions set forth in this Agreement. Upon receipt by the Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant to this Section 1 and the satisfaction of the conditions set forth in Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner Trustee, and the Owner Trustee shall purchase and take title to and accept delivery of the Aircraft. In consideration of the transfer of title to and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall, simultaneously with such transfer of title and delivery, pay to Lessee from the amounts so furnished it by the Participants, the Lessor's Cost. (d) Determination of Interest Period. The length of each Interest Period shall be determined by Lessee on behalf of the Owner Trustee in accordance with Section 2.02 of the Trust Indenture. SECTION 2. LESSEE'S NOTICE OF DELIVERY DATE. Lessee agrees to give each Participant, the Owner Trustee and the Indenture Trustee at least two Business Days' telecopy -3- 4 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 and the amount of each Participant's Commitment for the Aircraft. As to each Participant, the making of its Commitment for the Aircraft available in the manner required by Section 1 shall constitute a waiver of such notice. SECTION 3. INSTRUCTIONS TO THE OWNER TRUSTEE. The Owner Participant agrees that its releasing the amount of its Commitment for the Aircraft to the account of the Owner Trustee in accordance with the terms of Section 1 shall constitute, subject to satisfaction or waiver of the conditions set forth in Section 4(a), without further act, authorization and direction by the Owner Participant to the Owner Trustee: (i) to pay to Lessee the Lessor's Cost for the Aircraft; (ii) to the extent not previously accomplished by a prior authorization, to authorize a representative or representatives of the Owner Trustee (who shall be an employee or employees, or an agent or agents, of Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant to the Acceptance Certificate; (iii) to accept from Lessee the Bill of Sale and the FAA Bill of Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9); (iv) to execute an Aircraft Registration Application, the Lease Supplement and the Trust Supplement, in each case covering the Aircraft; (v) to borrow from the Loan Participants to finance a portion of the Lessor's Cost for the Aircraft and to issue to the Loan Participants Secured Certificates in aggregate principal amount equal to the amount borrowed, pursuant hereto and to the Trust Indenture; and (vi) to take such other action as may be required to be taken by the Owner Trustee on the Delivery Date by the terms of any Operative Document. SECTION 4. CONDITIONS. (a) Conditions Precedent to the Participations in the Aircraft. It is agreed that the obligations of each of the Loan Participants and the Owner Participant to participate in the payment of Lessor's Cost and to make available the amount of its respective Commitment are subject to the satisfaction prior to or on the Delivery Date of the following conditions precedent, except that paragraphs (iii), (v)(5), (x) (insofar as it relates to representations and warranties only contained in the Tax Indemnity Agreement), (xx), (xxv) (insofar as it relates to the Loan Participants), (xxvi) and (xxvii) shall not be a condition precedent to the obligations of the Loan Participants, and paragraphs (iv), (x) (insofar as it relates to the Owner Participant), (xiv), (xvii) and (xxix) shall not be a condition precedent to the obligations of the Owner Participant: -4- 5 (i) The Loan Participants 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 applicable law or regulations or guidelines or interpretations thereof by appropriate regulatory authorities shall be in effect which, in the opinion of such Loan Participant or the Owner Participant, as the case may be, or their respective counsel, would make it a violation of law or regulations or guidelines for such Loan Participant or the Owner Participant to make its Commitment available in accordance with Section 1 hereof or, in the case of such Loan Participant, to acquire a Secured Certificate or to realize the benefits of the security afforded by the Trust Indenture. (iii) In the case of the Owner Participant, the Loan Participants shall have made available the amount of their Commitments for the Aircraft in accordance with Section 1 hereof. (iv) In the case of the Loan Participants, 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 Administrative Agent and the Owner Participant and shall be in full force and effect and executed counterparts shall have been delivered to the Loan Participants and the Owner Participant, or their respective counsel, provided that only each Loan Participant shall receive an executed original of its respective Secured Certificate and provided, further, that an excerpted copy of the Purchase Agreement shall only be delivered to and retained by the Owner Trustee and the Owner Participant (but the Indenture Trustee shall also retain an excerpted copy of the Purchase Agreement which may be inspected by the Administrative Agent and its counsel before the Delivery Date and subsequent to the Delivery Date may be inspected and reviewed by the Indenture Trustee, any Loan Participant and their respective counsel if and only if there shall occur and be continuing an Event of Default), 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 shall only be delivered to Lessee and the Owner Participant and their respective counsel: (1) an excerpted copy of the Purchase Agreement (insofar as it relates to the Aircraft); (2) the Purchase Agreement Assignment; (3) the Lease; -5- 6 (4) a Lease Supplement covering the Aircraft dated the Delivery Date; (5) the Tax Indemnity Agreement; (6) the Trust Agreement; (7) a Trust Supplement covering the Aircraft dated the Delivery Date; (8) the Bill of Sale; (9) the FAA Bill of Sale; (10) an acceptance certificate covering the Aircraft in the form agreed to by the Administrative Agent, 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; (12) the Secured Certificates; (13) the Consent and Agreement; (14) the Guarantee; and (15) the Owner Participant Guaranty. All of the foregoing documents, together with this Agreement, are sometimes referred to herein, collectively, as the "OPERATIVE DOCUMENTS" and, individually, as an "OPERATIVE DOCUMENT". (vi) A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the Granting Clause of the Trust Indenture that are not covered by the recording system established by the Federal Aviation Act shall have been executed and delivered by the Owner 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 Owner Participant or the Administrative Agent shall have been executed and delivered by Lessee or the Owner Trustee and duly filed. (vii) The Loan Participants and the Owner Participant shall have received the following, in each case in form and substance satisfactory to the Administrative Agent and the Owner Participant: -6- 7 (1) a certified copy of the Certificate of Incorporation and By-Laws of Lessee and a copy of resolutions of the board of directors of Lessee, certified by a Vice President, the Secretary or an Assistant Secretary of Lessee, duly authorizing the sale of the Aircraft and the lease by Lessee of the Aircraft under the Lease and the execution, delivery and performance by Lessee of this Agreement, the Bill of Sale, the FAA Bill of Sale, the Lease, the Lease Supplement covering the Aircraft, the Purchase Agreement Assignment, the Tax Indemnity Agreement and each other document required to be executed and delivered by Lessee on or before the Delivery Date in accordance with the provisions hereof and thereof, and a certified copy of the Certificate of Incorporation and By-Laws of the Guarantor and a copy of resolutions of the Board of Directors of the Guarantor, certified by a Vice President, the Secretary or an Assistant Secretary of the Guarantor, duly authorizing the execution, delivery and performance by the Guarantor of the Guarantee; (2) such other documents and evidence with respect to Lessee, the Guarantor, the Manufacturer, the Owner Trustee, the Owner Participant, the Owner Participant Guarantor, the Indenture Trustee, and the Loan Participants as the Loan Participants or the Owner Participant, or the respective counsel for the Loan Participants or the Owner Participant, may reasonably request in order to establish the authority of such parties to consummate the transactions contemplated by this Agreement and the taking of all corporate proceedings in connection therewith; and (3) a certificate of Lessee as to the person or persons authorized to execute and deliver this Agreement, the Purchase Agreement Assignment, the Lease, the Lease Supplement covering the Aircraft and any other documents to be executed on behalf of Lessee in connection with the transactions contemplated hereby and as to the signatures of such person or persons, and a certificate of the Guarantor as to the person or persons authorized to execute and deliver the Guarantee and as to the signatures of such person or persons. (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 following statements shall be true, and the Administrative Agent and the Owner Participant shall have received evidence satisfactory to it to the effect that: -7- 8 (1) the Owner Trustee has good title (subject to filing and recording the FAA Bill of Sale with the Federal Aviation Administration) to the Aircraft on such Delivery Date, free and clear of Liens other than the rights of Lessee under the Lease and Lease Supplement covering the Aircraft, the mortgage and security interests created by the Trust Indenture, the rights of the Owner Participant under the Trust Agreement and the Trust Supplement, and Liens permitted by clause (v) of Section 6 of the Lease; (2) the Aircraft has been duly certified by the Federal Aviation Administration (or there shall have been received adequate assurances from the Federal Aviation Administration that the certification will be issued as soon as the registration of the Aircraft is complete) as to type and airworthiness in accordance with the terms of the Lease; (3) the FAA Bill of Sale, the Lease, the Lease Supplement, the Trust Indenture and the Trust Supplement covering the Aircraft shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the Federal Aviation Administration, and the Trust Agreement shall have been filed (or shall be in the process of being so filed) with the Federal Aviation Administration; and (4) application for registration of the Aircraft in the name of the Owner Trustee has been duly made with the Federal Aviation Administration. (x) On the Delivery Date, (A) the representations and warranties of Lessee, the Owner Participant and the Owner Trustee contained in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement shall be true and accurate as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing, or would result from the purchase, sale, lease or mortgage of the Aircraft, which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default. (xi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, and reasonably satisfactory as to scope and substance to the Administrative Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for Lessee and the Guarantor, as to New York and certain federal law matters, and Lessee's and the Guarantor's in-house or other counsel, as to Minnesota and certain federal law matters and the Delaware General Corporation Law, to the collective effect that: (1) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota and has the corporate power and authority to carry on its business as now conducted and to enter into and -8- 9 perform its obligations under the Lessee Documents. Lessee is a Certificated Air Carrier. The Guarantor is a corporation duly organized and validly existing pursuant to the laws of the State of Delaware and has the corporate power and authority to enter into and perform its obligations under the Guarantee; (2) the execution, delivery and performance of the Lessee Documents by Lessee and of the Guarantee by the Guarantor have been duly authorized by all necessary corporate action on the part of Lessee and the Guarantor, as the case may be, do not require any approval of stockholders of Lessee or the Guarantor, as the case may be, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of Lessee or the Guarantor, as the case may be (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of any thereof by Lessee or the Guarantor, as the case may be, nor the performance by Lessee or the Guarantor, as the case may be, of its respective obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on Lessee or the Guarantor, as the case may be, or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Permitted Liens) upon any property of Lessee or the Guarantor, as the case may be, under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter, by-law or permit issued by any Minnesota or United States governmental authority to which Lessee or the Guarantor, as the case may be, is a party or by which Lessee or the Guarantor, as the case may be, or its properties may be bound or affected; (3) neither the execution and delivery by Lessee of the Lessee Documents or by the Guarantor of the Guarantee nor the performance by Lessee or the Guarantor of their respective 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, except for (A) the registration of the Aircraft (including the placement on board of the owner's copy of the application for registration of the Aircraft and, if necessary, a flying time wire), recordations and other actions referred to in paragraph 5 below and (B) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents or the Guarantee after the Delivery Date; (4) the Guarantee has been duly entered into and delivered by the Guarantor, the Purchase Agreement (insofar as it relates to the Aircraft) has been duly entered into and delivered by Lessee, and each of the other Lessee Documents has been duly entered into and delivered by Lessee and each of such -9- 10 other Lessee Documents and the Guarantee constitutes 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 its respective terms, except as limited by (A) general principles of equity, (B) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors or lessors generally, (C) applicable laws which may affect the remedies provided in the Lease, which laws, however, do not in the opinion of such counsel make the remedies provided in the Lease inadequate for the practical realization of the benefits provided thereby, but no opinion is expressed as to the amount or priority of any recovery under any particular circumstances and, in particular, no opinion is expressed as to the effect on such remedies of Section 1-201(37) of the Uniform Commercial Code, as in effect in any jurisdiction, and (D) in the case of indemnity provisions contained in such documents, as limited by public policy considerations; (5) subject to the registration of the Aircraft with the Federal Aviation Administration in the name of the Owner Trustee, and assuming the due and timely filing for recordation in accordance with the provisions of the Federal Aviation Act of (A) the FAA Bill of Sale, (B) the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and made a part thereof and (C) the Trust Indenture with the Trust Supplement attached thereto and made a part thereof, with respect to such portion of the Aircraft as is covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code by virtue of the same constituting an "aircraft" or an "aircraft engine" as defined in the Federal Aviation Act, no further filing or recording of any document (including any financing statement with respect to the Lease under Article 9 of the Uniform Commercial Code of Minnesota or Utah), is necessary in any applicable jurisdiction within the United States in order (x) to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee or any third parties or (y) to create and perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee or any third parties. With respect to such portion of the Aircraft, if any, as may not be deemed to constitute an "aircraft" or "aircraft engine" as defined in the Federal Aviation Act, except for the filing of financing statements in appropriate filing offices in the States of Minnesota and Utah and such other states as may be specified in such counsel's opinion, and for the filings of periodic continuation statements with respect to such filings as and when required, (x) under the federal laws of the United States and the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary under Article 9 of the Uniform Commercial Code in order to establish the Owner Trustee's title to such portion of the Aircraft as against Lessee and any third parties in any applicable jurisdiction within the United States, and (y) under the federal laws of the United States and -10- 11 the laws of the State of New York no filing or recording of any document (including any financing statement) is necessary or advisable under Article 9 of the Uniform Commercial Code in order to create or perfect the Indenture Trustee's security interest in such portion of the Aircraft as against the Owner Trustee and any third parties in any applicable jurisdiction within the United States; and (6) there are no legal or governmental proceedings pending or, to the best knowledge of such in-house counsel, threatened to which Lessee or Guarantor or any of their respective subsidiaries is a party or to which any of the properties of Lessee or Guarantor or any of their respective subsidiaries is subject other than those proceedings summarized in the Guarantor's publicly filed annual, quarterly and other reports filed with the Securities and Exchange Commission, and proceedings which such in-house counsel believes would not reasonably be expected to have a material adverse effect on Lessee and its subsidiaries, taken as a whole, or on the power or ability of Lessee to perform its obligations under the Lessee Documents. The opinion contemplated by this paragraph (xi) shall be to such further effect with respect to such other matters as the Administrative Agent or the Owner Participant may reasonably request. Such opinion with respect to the matters specified in this paragraph (xi) may rely exclusively (A) upon the opinion of special counsel in Oklahoma City, Oklahoma, referred to in paragraph (xv) of this Section 4(a) with respect to the matters stated therein, and (B) upon the opinion of Ray, Quinney & Nebeker with respect to the opinion in paragraph (5) above insofar as it relates to the laws of the State of Utah and (C) upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, with respect to matters of fact, and may state that no opinion is expressed as to laws other than laws of the State of New York (in the case of such special counsel's opinion), the State of Minnesota and the Delaware General Corporation Law (in the case of Lessee's in-house or other counsel's opinion) and the Federal laws of the United States. Such counsel may assume that, except for the filings and recordations contemplated herein, there are no filings or recordations with respect to the Aircraft, the Lease, the Lease Supplement covering the Aircraft, the Trust Agreement, the Trust Supplement or the Trust Indenture with the Federal Aviation Administration, or of Uniform Commercial Code financing statements naming the Owner Trustee as a debtor in the filing offices of the Secretary of State of Minnesota, the Secretary of State of Utah or in any other filing office in the States of Minnesota or Utah, or in such other filing offices in such other jurisdictions as shall be identified in such counsel's opinion. (xii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee and reasonably satisfactory as to scope and substance to the Administrative Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from a counsel to the Manufacturer, with respect to the -11- 12 Manufacturer Documents and such other matters as such parties may reasonably request. (xiii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Administrative Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, to the effect that: (1) First Security Bank of Utah, National Association is a national banking association duly organized, validly existing and in good standing under the laws of the United States, is a Citizen of the United States and has under the laws of the State of Utah and federal banking law the power, authority and legal right to execute, deliver and carry out in its capacity as Owner Trustee or in its individual capacity, as the case may be, the terms of the Owner Trustee Documents, including the Secured Certificates; (2) each of the Owner Trustee Documents has been duly authorized, executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, and each of the Owner Trustee Documents constitutes the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations, and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (3) the execution, delivery and performance by the Owner Trustee and by First Security Bank of Utah, National Association, in its individual capacity, or both, as the case may be, of the Owner Trustee Documents and the consummation of the transactions by the Owner Trustee and by First Security Bank of Utah, National Association in its individual capacity contemplated thereby are not and will not be in violation of the articles of association or ByLaws of First Security Bank of Utah, National Association or of any indenture, mortgage, credit agreement, license or other agreement or instrument known to -12- 13 such counsel after due inquiry to which First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee is a party or by which it is bound, or of any Federal or Utah law, governmental rule or regulation applicable to First Security Bank of Utah, National Association in its individual capacity or as the Owner Trustee or any judgment or order applicable to it and known to such counsel after due inquiry; (4) neither the execution and delivery by the Owner Trustee and, where appropriate, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, of the Owner Trustee's Documents nor the consummation of any of the transactions by the Owner Trustee, by First Security Bank of Utah, National Association in its individual capacity, or both, as the case may be, contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency under any existing Federal law governing the banking and trust powers of First Security Bank of Utah, National Association or Utah law (except for filings pursuant to the Uniform Commercial Code, and except for compliance with requirements of the Federal Aviation Act as to which such counsel may express no opinion); (5) the Trust Agreement, as supplemented by the Trust Supplement, duly creates for the benefit of the Owner Participant the trust interest in the Trust Estate which the Trust Agreement by its terms purports to create; (6) assuming that Utah law were to govern the perfection of the security interests in the Trust Indenture Estate under the Trust Indenture, except for (i) the Indenture Trustee's taking of possession of the original counterparts of the Lease and the Lease Supplement covering the Aircraft (insofar as the Lease and the Lease Supplement covering the Aircraft may constitute chattel paper (as such term is defined in the Uniform Commercial Code as in effect in Utah)) and all monies and securities (including instruments) required to be deposited with the Indenture Trustee, and (ii) the filing of Uniform Commercial Code financing statements with the office of the Division of Corporations and Commercial Code of the State of Utah with respect to the security interests created in the Trust Indenture Estate under the Trust Indenture, naming the Owner Trustee as debtor and the Indenture Trustee as secured party, which filing has been duly effected, no other filing or recording or refiling or rerecording is necessary in the State of Utah to create, perfect or maintain the perfected status of such security interest (except for the timely filing of continuation statements in respect of such financing statements); (7) assuming that the Operative Documents were negotiated to a substantial degree in the State of New York and that the closing of a substantial portion of the transactions contemplated by the Operative Documents occurred -13- 14 in the State of New York, the choice of New York law to govern the Participation Agreement, the Lease, and each other Operative Document (other than the Trust Agreement) to which the Owner Trustee or First Security Bank of Utah, National Association in its individual capacity, or both, is a party is, under the laws of the State of Utah, a valid choice of law and should, in a properly presented case, be honored by the courts of the State of Utah; (8) the Owner Trustee has received from Lessee such title to the Aircraft as Lessee had immediately prior to the conveyance to the Owner Trustee, subject to the rights of the Owner Trustee and Lessee under the Lease and the security interest created pursuant to the Trust Indenture and the Trust Supplement; (9) no taxes, fees or other charges, except taxes imposed on fees payable to the Owner Trustee, will be imposed by Salt Lake City or the State of Utah or any political subdivision or taxing authority thereof on or with respect to the execution, delivery or performance of any of the Operative Documents and the trust created pursuant to the Trust Agreement will not be subject to any such taxes, fees or other charges on, based on or measured by the net income of the Trust Estate (as distinguished from the net income of the Owner Participant) solely by reason of the Owner Trustee's location in Salt Lake City or the State of Utah (assuming for purposes of this opinion that the Owner Participant, the Owner Trustee and the Trust Estate would not be subject to any such tax, fee or other charge if the Owner Trustee performed its duties under the Trust Agreement and the Trust Indenture from an office located outside Utah); and (10) there are no pending or, to the knowledge of such counsel after due inquiry, threatened proceedings against or affecting the Owner Trustee before any court or administrative agency, individually or in the aggregate, which, if determined adversely to it, would materially adversely affect the power or ability of the Owner Trustee to perform its obligations under the Owner Trustee Documents. Such opinion shall be to such further effect with respect to such other matters incident to the matters covered thereby as the Administrative Agent, the Owner Participant, the Indenture Trustee or Lessee may reasonably request. Such opinion may state that (A) no opinion is expressed as to laws other than the laws of the State of Utah, the Federal laws of the United States governing the banking and trust powers of First Security Bank of Utah, National Association, and the Federal Aviation Act as it relates to paragraph (1) and (B) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. Such opinion may assume (M) the due authentication of the Secured Certificates by the Indenture Trustee, (N) that the Operative Documents (other than the Trust Agreement) are legal, valid and binding under the laws of the State of New York and (O) the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and of the other Operative -14- 15 Documents by each of the parties thereto other than First Security Bank of Utah, National Association in its individual capacity and as the Owner Trustee. (xiv) The Loan Participants shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Administrative Agent, the Indenture Trustee, the Owner Trustee and Lessee, from Dewey Ballantine, special counsel for the Owner Participant and the Owner Participant Guarantor, and the Owner Participant's in-house counsel, to the collective effect that: (1) the Owner Participant is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Documents; the Owner Participant Guarantor is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has the corporate power and authority to execute, deliver and carry out the terms of the Owner Participant Guaranty; (2) the Owner Participant Documents have been duly authorized, executed and delivered by the Owner Participant and, assuming the due authorization, execution and delivery thereof by the other parties thereto, constitute legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and, in the case of indemnity provisions contained herein and therein, as limited by public policy considerations; the Owner Participant Guaranty has been duly authorized, executed and delivered by the Owner Participant Guarantor and constitutes the legal, valid and binding obligation of the Owner Participant Guarantor, enforceable against the Owner Participant Guarantor in accordance with its terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally; (3) neither the execution and delivery by the Owner Participant of the Owner Participant Documents or by the Owner Participant Guarantor of the Owner Participant Guaranty nor the consummation of any of the transactions by the Owner Participant or the Owner Participant Guarantor contemplated thereby requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to, any governmental authority or agency of the United States, the State of Delaware or the State in -15- 16 which the principal office of the Owner Participant or the Owner Participant Guarantor is located (or any governmental subdivision of any thereof) (except as shall have been duly obtained or given, specifying the same); (4) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the other parties, if any, thereto (other than the Owner Participant in the case of this Agreement), and the due authentication of the Secured Certificates by the Indenture Trustee, the Owner Trustee Documents (other than the Trust Agreement) constitute legal, valid and binding obligations of the Owner Trustee, enforceable against the Owner Trustee in accordance with their respective terms, except as limited by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting the rights of creditors generally and except that certain of the remedial provisions in the Lease and the Trust Indenture may be limited or rendered unenforceable by applicable laws, which laws, however, do not in the opinion of such counsel make the remedies provided in such document inadequate for the practical realization of the benefits provided thereby; (5) assuming the due authorization, execution and delivery thereof by the Owner Trustee and the Indenture Trustee as aforesaid, the Trust Indenture duly creates for the benefit of the Indenture Trustee the security interests which the Trust Indenture purports to create and the Indenture Trustee is entitled to the benefits and security afforded by the Trust Indenture; (6) the execution, delivery and performance of the Owner Participant Documents by the Owner Participant does not require any approval of stockholders of the Owner Participant, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Documents by the Owner Participant nor the performance by the Owner Participant of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on the Owner Participant or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any New York, Delaware or United States governmental authority to which the Owner Participant is a party or by which it or its properties may be bound or affected; the execution, -16- 17 delivery and performance of the Owner Participant Guaranty by the Owner Participant Guarantor does not require any approval of stockholders of the Owner Participant Guarantor, or, to the knowledge of such counsel after due inquiry, any approval or consent of any trustee or holders of any indebtedness or obligations of the Owner Participant Guarantor (or that any such approval or consent as is required has been obtained), and neither the execution and delivery of the Owner Participant Guaranty by the Owner Participant Guarantor, nor the performance by the Owner Participant Guarantor of its obligations thereunder (A) contravenes any law, governmental rule or regulation or, to the knowledge of such counsel after due inquiry, judgment or order applicable to or binding on the Owner Participant Guarantor or (B) to the knowledge of such counsel after due inquiry, contravenes or results in any breach of, or constitutes any default under, or results in the creation of any Lien (other than Liens provided for in the Operative Documents) upon any property of the Owner Participant Guarantor under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, or any other agreement or instrument, corporate charter or by-law or permit issued by any New York, Delaware or United States governmental authority to which the Owner Participant Guarantor is a party or by which it or its properties may be bound or affected; and (7) there are no pending or, to the best knowledge of such counsel, threatened actions or proceedings against or affecting the Owner Participant before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant, would have a material adverse effect on the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; there are no pending or, to the best knowledge of such counsel, threatened actions or proceedings against or affecting the Owner Participant Guarantor before any court or administrative agency individually or in the aggregate which, if determined adversely to the Owner Participant Guarantor, would have a material adverse effect on the Owner Participant Guarantor or the ability of the Owner Participant Guarantor to perform its obligations under the Owner Participant Guaranty; and to such further effect with respect to such other matters or documents relating to the Owner Participant's or the Owner Participant Guarantor's obligations in connection with this Agreement as the Administrative Agent, the Indenture Trustee, the Owner Trustee or Lessee may reasonably request. Such opinion may rely upon the representations and warranties set forth herein, including, without limitation, in Section 8 hereof, as to matters of fact. Such opinion may state that (M) no opinion is expressed as to laws other than the General Corporation Law of the State of Delaware, the laws of the State of New York and the Federal laws of the United States, and (N) no opinion is expressed as to the priority of security interests or as to title to any part of the Trust Estate. -17- 18 (xv) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Administrative Agent, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee, from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to the effect that: (1) the FAA Bill of Sale, the Lease with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached thereto and the Trust Indenture with the Trust Supplement attached thereto are in due form for recording by and have been duly filed for recordation with the Federal Aviation Administration in accordance with the provisions of Section 44107 of Title 49 of the United States Code; (2) proper application for registration of the Aircraft in the name of the Owner Trustee together with the affidavits of the Owner Trustee and the Owner Participant required by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations and the Trust Agreement have been duly filed with the Federal Aviation Administration in accordance with the Federal Aviation Act, and such counsel is of the opinion that the Federal Aviation Administration will issue a Certificate of Aircraft Registration (AC Form 8050-3) in response to said application; (3) the Owner Trustee is the owner of the legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interests created by the Trust Indenture and such other Liens as are permitted by the Lease or this Agreement; (4) the Aircraft is eligible for registration in the name of the Owner Trustee and will be duly registered in due course in the name of the Owner Trustee pursuant to and in accordance with the provisions of Sections 44102 and 44103 of Title 49 of the United States Code; (5) the Trust Indenture as supplemented by the Trust Supplement creates a duly and validly perfected first priority security interest in the Aircraft and a duly perfected assignment of all the right, title and interest of the Owner Trustee in, to and under the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), subject only to the Lease and to Liens permitted by the Lease and the Trust Indenture, it being understood that no opinion need be expressed as to the validity or enforceability of such security interest under local law or as against third parties in respect of the Aircraft when the same is outside the United States; -18- 19 (6) none of the Trust Indenture, the Trust Agreement, the Trust Supplement, the Lease or the Lease Supplement is required to be filed or recorded in any other place within the United States in order to perfect the security interest in the Aircraft and the Lease as supplemented by the Lease Supplement (insofar as such security interest affects an interest covered by the recording system established by the Federal Aviation Administration pursuant to Section 44107 of Title 49 of the United States Code), under the applicable laws of any jurisdiction within the United States; (7) no authorization, approval, consent, license or order of, or registration with, or giving of notice to, the FAA Aircraft Registry is required for the valid authorization, delivery or performance of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture and the Trust Supplement except for such authorizations, approvals, consents, licenses, orders, registrations, and notices as have been effected; and (8) no other registration of the Aircraft and no filings or recordings (other than the filings and recordings with the FAA referred to above) are necessary to provide constructive notice to third parties in any jurisdiction within the United States of the Owner Trustee's title to the Aircraft or the beneficial interest of the Owner Participant in the Aircraft. Such opinion may state that no opinion is expressed as to laws other than the Federal laws of the United States. Said opinion may also contain a statement to the effect that such opinion is limited to the records maintained by the Federal Aviation Administration Aircraft Registry and does not cover liens that are perfected without the filing of notice thereof with the Federal Aviation Administration, such as Federal tax liens, liens arising under Section 1368(a) of Title 29 of the United States Code and possessory artisans' liens, and is subject to the accuracy of FAA personnel in the filing, indexing and recording of instruments filed with the FAA and in the search for encumbrance cross-reference index cards for the Engines. Said opinion may also rely on the opinion obtained by such counsel from counsel for the Aeronautical Center of the FAA, satisfactory in form and scope to such counsel, and on past practice of the FAA which is consistent with such Aeronautical Center counsel's opinion. (xvi) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants, the Owner Participant, the Owner Trustee and Lessee, and reasonably satisfactory as to scope and substance to the Administrative Agent, the Owner Participant, the Owner Trustee and Lessee, from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, to the effect that: (1) State Street Bank and Trust Company is a Massachusetts trust company, duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the full corporate power, -19- 20 authority and legal right to enter into and perform its obligations under the Indenture Trustee Documents and, in its capacity as Indenture Trustee, to authenticate the Secured Certificates to be delivered on the Delivery Date; (2) the execution, delivery and performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the Indenture Trustee Documents and the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby and compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with the terms thereof including, without limitation, the authentication of the Secured Certificates to be delivered on the Delivery Date, have been duly authorized by all necessary corporate action on the part of State Street Bank and Trust Company, and neither the execution and delivery thereof nor the consummation by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of the transactions contemplated thereby nor compliance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, with any of the terms and provisions thereof (i) does or will contravene any law or governmental rule or regulation of the United States governing the banking or trust powers of State Street Bank and Trust Company or the Commonwealth of Massachusetts or any order or judgment known to such counsel and applicable to or binding on State Street Bank and Trust Company, or (ii) does or will contravene or result in any breach of, or constitute any default under, the charter documents or By-Laws of State Street Bank and Trust Company or the provisions of any indenture, mortgage, contract or other agreement, in each case known to such counsel, to which State Street Bank and Trust Company is a party or by which it or any of its properties is or may be bound or affected; (3) neither the execution and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, of the Indenture Trustee Documents or the certificates of authentication on the Secured Certificates to be delivered on the Delivery Date, nor the performance by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the transactions contemplated thereby requires or required the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or Massachusetts governmental authority or agency governing the banking or trust powers of State Street Bank and Trust Company or under any Massachusetts law; (4) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each -20- 21 such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; (5) the Secured Certificates to be issued and dated the Delivery Date have been duly authenticated and delivered by the Indenture Trustee pursuant to the terms of the Indenture Trustee Documents; (6) to the best knowledge of such counsel, there are no pending or threatened actions or proceedings against or affecting State Street Bank and Trust Company before any court or administrative agency or arbitration board or tribunal which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of State Street Bank and Trust Company to perform its obligations under the Indenture Trustee Documents; and (7) there are no taxes, fees or other governmental charges ("TAXES") payable under the laws of the Commonwealth of Massachusetts with respect to the execution of and delivery by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, of any of the Indenture Trustee Documents (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts. Neither State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, the Owner Participant, the Owner Trustee, nor the trust created by the Trust Agreement will, as a result of the transactions contemplated thereby, be subject to any taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) which would have not been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts, and there are no taxes under the laws of the Commonwealth of Massachusetts or any political subdivision thereof (except for taxes on any fees payable to State Street Bank and Trust Company in its individual capacity) upon or with respect to the Aircraft or any Engine or any part of any interest therein, or the purchase, ownership, delivery, lease, sublease, possession, presence, use, operation, condition, storage, maintenance, -21- 22 modification, alteration, repair, sale, return, transfer or other disposition of the Aircraft or any Engine which would not have been imposed if State Street Bank and Trust Company did not have its principal place of business in Massachusetts or did not perform its administrative duties under the Indenture Trustee Documents in Massachusetts; and to such further effect with respect to such other matters incident to the matters covered thereby as the Administrative Agent, the Owner Participant, the Owner Trustee and Lessee may reasonably request. Such opinion may state that no opinion is expressed as to laws other than the internal substantive laws of the Commonwealth of Massachusetts and the Federal laws of the United States. Such opinion may further state that with respect to paragraph (4) in connection with the opinion relating to legality, validity and binding effect of the documents there referred to, such counsel has assumed that the laws of the jurisdictions whose laws govern such documents are not materially different from the internal substantive laws of the Commonwealth of Massachusetts. (xvii) The Loan Participants shall have received from Vedder, Price, Kaufman & Kammholz, special counsel for the Loan Participants, a favorable opinion satisfactory in substance and form to the Administrative Agent, as to such matters incident to the transactions contemplated hereby as the Administrative Agent may reasonably request. (xviii) The Loan Participants and the Owner Participant shall have received a certificate signed by the President, any Executive Vice President, any Senior Vice President or any Vice President of Lessee, dated the Delivery Date, addressed to the Loan Participants and the Owner Participant and certifying as to the matters stated in paragraphs (viii), (x) (A) (insofar as it relates to Lessee) and (xxii) of this Section 4(a). Copies of the orders, permits, waivers, authorizations, exemptions and approvals referred to in Section 4(a)(viii) shall have been furnished to the Loan Participants and the Owner Participant. (xix) The Owner Participant and the Loan Participants shall, by making their Commitments available as provided in Section 1(b) of this Agreement, be deemed to have reaffirmed the representations and warranties made by them in Section 8 of this Agreement. (xx) The Owner Participant shall have received an opinion, in form and substance satisfactory to the Owner Participant, from Aeroeconomics, Inc., independent aircraft appraisers, or such other recognized aircraft appraiser, to the effect, among other relevant matters, that (A) the Aircraft will have, at the end of the third Fixed Renewal Term, (i) at least 20% of its original economic life remaining and (ii) a fair market value of at least 20% of Lessor's Cost (without taking into account any increase or decrease for inflation or deflation during the Interim Term, the Basic Term and the Fixed Renewal Terms or the terms of any purchase option provided in -22- 23 the Lease) and taking into account any costs to the Owner Trustee or the Owner Participant of removal and delivery of the Aircraft to the Owner Trustee at the end of the third Fixed Renewal Term; (B) the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost; and (C) it will be commercially feasible for a third party to utilize the Aircraft at the end of the third Fixed Renewal Term. (xxi) The Loan Participants and Owner Participant shall have received an independent insurance broker's report, in form and substance satisfactory to the Administrative Agent 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. (xxii) On the Delivery Date it shall be true that no Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to the Airframe or any Engine has occurred. (xxiii) Lessor's Cost for the Aircraft shall be $50,000,000. (xxiv) 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. (xxv) The representations and warranties of the Indenture Trustee and the Loan Participants contained in Section 8 shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and each Participant shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President of the Indenture Trustee addressed to such Participant and certifying as to the foregoing matters with respect to the Indenture Trustee. (xxvi) The Owner Participant shall have received from Dewey Ballantine, special counsel to the Owner Participant, 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. (xxvii) In the opinion of the Owner Participant and its special counsel, there shall have been, since the date hereof, 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 -23- 24 hereof, 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. (xxviii) The Loan Participants and the Owner Participant shall have received a favorable opinion addressed to the Loan Participants and the Owner Participant, and reasonably satisfactory as to scope and substance to the Administrative Agent and the Owner Participant, from Cadwalader, Wickersham & Taft, special counsel for 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. (xxix) The Loan Participants shall have received an opinion, in form and substance reasonably satisfactory to the Administrative Agent, from BK Associates, Inc., independent aircraft appraisers, to the effect that the fair market value of the Aircraft on the Delivery Date is equal to Lessor's Cost. (xxx) Lessee shall have executed and delivered to the Owner Participant a letter from the Owner Participant to Lessee relating to Lessee's weighted average cost of capital. 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 Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Loan Participants, the Indenture Trustee, the Owner Participant, the Owner Trustee and Lessee an opinion as to the due and valid registration of the Aircraft in the name of the Owner Trustee, the due recording of the FAA Bill of Sale, the Trust Indenture, such Lease Supplement, such Trust Supplement, the Lease and 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. It is agreed that the obligations of Lessee (A) to sell the Aircraft to the Owner Trustee and (B) to accept delivery of the Aircraft under the Lease, are all subject to the fulfillment to the satisfaction of Lessee 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, -24- 25 exemptions, authorizations and approvals shall be in full force and effect on the Delivery Date. (ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii) and 4(a)(iv) hereof shall have been satisfied. (iii) Those documents described in Section 4(a)(v) shall have been duly authorized, executed and delivered by the respective party or parties thereto (other than Lessee and the Guarantor) in the manner specified in Section 4(a)(v), shall each be satisfactory in form and substance to Lessee, shall be in full force and effect on the Delivery Date, and an executed counterpart of each thereof (other than the Secured Certificates) shall have been delivered to Lessee or its special counsel. (iv) Lessee shall have received a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant, or other evidence of authority satisfactory to Lessee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Owner Participant, duly authorizing or evidencing authority for the execution, delivery and performance by the Owner Participant of all of the Owner Participant Documents, a copy of the resolutions or other instruments satisfactory to Lessee of the Board of Directors of the Owner Participant Guarantor, certified as of the Delivery Date by the Secretary or Assistant Secretary of the Owner Participant Guarantor, duly authorizing the execution, delivery and performance by the Owner Participant Guarantor of the Owner Participant Guaranty, and a copy of the general authorizing resolutions of the boards of directors of the Indenture Trustee and the Owner Trustee, certified as of the Delivery Date by the Secretary or an Assistant Secretary of the Indenture Trustee and the Owner Trustee, respectively, which authorize the execution, delivery and performance by the Indenture Trustee of the Indenture Trustee Documents and the Secured Certificates and by the Owner Trustee of the Owner Trustee Documents, together with such other documents and evidence with respect to the Indenture Trustee, the Owner Participant, the Owner Participant Guarantor and the Owner Trustee as Lessee or its special counsel may reasonably request in order to establish the 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) The representations and warranties of the Loan Participants, the Indenture Trustee, the Owner Participant and the Owner Trustee, contained in Section 8 hereof shall be true and accurate as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date) and Lessee shall have received a certificate signed by the Chairman of the Board, the President, any Vice President or any Assistant Vice President or other authorized representative of the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively, addressed to Lessee and -25- 26 certifying as to the foregoing matters with respect to the Indenture Trustee, the Owner Participant and the Owner Trustee, respectively. (vi) Lessee shall have received the opinions set forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each case addressed to Lessee and dated the Delivery Date and in each case in scope and substance reasonably satisfactory to Lessee and Lessee's special counsel. (vii) 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. (viii) No applicable law or regulations or guidelines or interpretations by appropriate regulatory authorities shall be in effect which, in the opinion of Lessee or its special counsel, would make it a violation of law or regulations or guidelines for Lessee to enter into any transaction contemplated by the Operative Documents. (ix) 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. (x) Lessee shall have been paid Lessor's Cost for the Aircraft. SECTION 5. PUBLICITY. Each party hereto agrees that it will use its best efforts not to disclose, or permit any of its employees or agents to disclose, the identity of the Owner Participant or the terms of the Operative Documents in connection with the issuance or release for external publication of any article or advertising or publicity matter relating to the terms and conditions of any of the Operative Documents or the transactions contemplated thereby without the prior written consent of the Owner Participant and Lessee, provided that nothing in this Section 5 shall prevent the Loan Participants from publishing a tombstone which may include the initial principal amount of the Secured Certificates, provided, further, that no such tombstone shall disclose the identity of the Owner Participant without the prior written consent of the Owner Participant. SECTION 6. EXTENT OF INTEREST OF CERTIFICATE HOLDERS. No Certificate Holder (as defined in the Trust Indenture) shall have any further interest in, or other right with respect to, the mortgage and security interests created by the Trust Indenture when and if the principal of and interest on all Secured Certificates held by such holder and all other sums -26- 27 payable to such holder hereunder, under the Trust Indenture and under such Secured Certificates shall have been paid in full. Each of the Loan Participants 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 Loan Participants 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. LESSEE'S REPRESENTATIONS, WARRANTIES AND INDEMNITIES. (a) In General. Lessee represents, warrants and covenants to each of the Loan Participants, the Owner Trustee, the Indenture Trustee, and the Owner Participant that as of the Delivery Date: (i) Lessee is a corporation duly organized and validly existing pursuant to the laws of the State of Minnesota; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires, other than failures to qualify which would not have a material adverse effect on the consolidated business, assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents; is a Certificated Air Carrier; has its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) located at Eagan, Minnesota; holds all licenses, certificates, permits and franchises from the appropriate agencies of the United States and/or all other governmental authorities having jurisdiction necessary to authorize Lessee to engage in air transport and to carry on scheduled passenger service as presently conducted (other than those licenses, certificates, permits and franchises which, if not obtained, would not have a material adverse effect on the consolidated business assets, properties or condition (financial or otherwise) of Lessee and its subsidiaries taken as a whole or on the ability of Lessee to perform its obligations under the Lessee Documents); and has the corporate power and authority to own or hold under lease its properties wherever located or used and to enter into and perform its obligations under the Lessee Documents; (ii) the execution, delivery and performance by Lessee of the Lessee Documents will, on the Delivery Date, have been duly authorized by all necessary corporate action on the part of Lessee, do not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Lessee except such as have been duly obtained or by the Delivery Date will have been duly obtained, and none of such agreements contravenes any law, judgment, government rule, regulation or order binding on Lessee or the certificate of incorporation or By-Laws of Lessee or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Permitted Liens) upon the property of Lessee under, any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it or its properties may be bound or affected; -27- 28 (iii) neither the execution and delivery by Lessee of the Lessee Documents nor the performance by Lessee of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, any Federal, State or foreign government authority or agency, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Aircraft by Lessee 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 will on the Delivery Date 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), (B) the registration of the Aircraft referred to in Section 4(a)(ix)(4) and (C) such consents, approvals, notices, registrations and other actions required by the terms of the Lessee Documents to the extent required to be given or obtained only after the Delivery Date; (iv) on the Delivery Date the Lessee Documents will each constitute legal, valid and binding obligations of Lessee enforceable against Lessee in accordance with the terms thereof (subject to the qualifications set forth in clause (4) of the form of opinion of counsel to Lessee in Section 4(a)(xi)); (v) there are no pending or, to the best of Lessee's knowledge, threatened actions, suits or proceedings before any court or administrative agency which might materially adversely affect the business, condition (financial or otherwise), operations or properties of Lessee and its subsidiaries taken as a whole or Lessee's ability to perform its obligations under the Operative Documents; (vi) except for (A) the registration of the Aircraft pursuant to the Federal Aviation Act, (B) the filing for recording pursuant to said 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 Bill of Sale, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the security and other interests created by such documents under the Uniform Commercial Code of Minnesota and Utah and such other states as may be specified in the opinion furnished pursuant to Section 4(a)(xi) hereof, and (D) the taking of possession by the Indenture Trustee of the original counterpart of each of the Lease and the Lease Supplement covering the Aircraft, no further action, including any 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 in order to establish and perfect the Owner Trustee's title to and the Indenture Trustee's security interest in the Aircraft as against Lessee and any third parties in any applicable jurisdictions in the United States; (vii) there has not occurred any event which constitutes an Event of Default under the Lease (or any event which with the giving of notice or the passage of time or -28- 29 both would constitute an Event of Default under the Lease) which is presently continuing; (viii) 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; (ix)(a) The consolidated balance sheets of the Guarantor and its consolidated subsidiaries as of December 31, 1995 and the related consolidated statements of operations, cash flows and common stockholders' equity of the Guarantor and its consolidated subsidiaries for the year then ended, which have been audited by independent certified public accountants, copies of which have been furnished to the Owner Participant and each Loan Participant, fairly present the consolidated financial condition of the Guarantor and its consolidated subsidiaries as at such date and the results of operations and cash flow of the Guarantor and its consolidated subsidiaries for the period ended on such date, all in accordance with generally accepted accounting principles consistently applied and since December 31, 1995 there has been no material adverse change in the consolidated financial condition, cash flow or results of operations of the Guarantor and its consolidated subsidiaries; (x) on the Delivery Date, the Owner Trustee will receive good title to the Aircraft free and clear of all Liens, except Liens permitted by clause (v) of Section 6 of the Lease, the rights of Lessee under the Lease and the Lease Supplement covering the Aircraft, the Lien of the Trust Indenture and the beneficial interest of the Owner Participant in the Aircraft; (xi) 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 or U of the Board of Governors of the Federal Reserve System; (xii) Lessee is not in default in the performance of any term or condition of the Purchase Agreement which materially adversely impairs the transactions contemplated hereby; (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 or any interest therein; -29- 30 (xiv) On the Delivery Date, the Aircraft will be duly certified by the FAA as to type and airworthiness, will be insured by Lessee in accordance with the terms of the Lease and will be in the condition and state of repair required under the terms of the Lease; and (xv) neither Lessee nor any subsidiary of Lessee is an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended. (b) General Tax Indemnity. [Reserved] -30- 31 (c) General Indemnity. [Reserved] -31- 32 (d) Income Tax. For purposes of this Section 7, the term "INCOME TAX" means any Tax based on or measured by gross or net income or receipts (other than taxes in the nature of sales, use, license, property or value added Taxes (except value added taxes in the nature of any income, franchise, capital, doing business, excess profits or net worth tax) (including, without limitation, capital gains taxes, minimum taxes, income taxes collected by withholding and taxes on tax preference items), and Taxes which are capital, doing business, excess profits or net worth taxes and interest, additions to tax, penalties, or other charges in respect thereof. SECTION 8. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The Owner Participant represents that it is acquiring its interest in the Trust Estate for investment and not with a present intent as to any resale or distribution thereof (subject nonetheless to any requirement of law that the disposition of its properties shall at all times be and remain within its control) and that neither it nor anyone acting on its behalf has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended, or the securities laws, rules and regulations of any state. (b) Lessee represents and warrants that neither Lessee nor anyone acting on behalf of Lessee has directly or indirectly offered any interest in the Trust Estate or any Secured Certificates for sale to, or solicited any offer to acquire any of the same from, anyone in a manner which would result in a violation of the Securities Act of 1933, as amended, or the securities laws, rules and regulations of any state. (c) Each of the Owner Participant and First Security Bank of Utah, National Association, in its individual capacity, represents and warrants to the other parties to this Agreement that it is, and on the Delivery Date will be, a Citizen of the United States without making use of any voting trust, voting powers agreement or similar arrangement. The Owner Participant agrees, solely for the benefit of Lessee and the Loan Participants, that if (i) it shall -32- 33 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 hereto 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 in the first sentence of this Section 8(c) 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 Participants as a result of the Owner Participant's failure to comply with its obligations pursuant to the second sentence of this Section 8(c). Each party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in complying with its obligations under the provisions of the second sentence of this Section 8(c). First Security Bank of Utah, 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 of Utah, National Association, shall obtain actual knowledge that First Security Bank of Utah, National Association, has ceased to be a Citizen of the United States without making use of a voting trust, voting powers agreement or similar arrangement, it will promptly resign as Owner Trustee (if and so long as such citizenship is necessary under the Federal Aviation Act as in effect at such time or, if it is not necessary, if and so long as the Owner Trustee's citizenship would have any material adverse effect on the Loan Participants, Lessee or the Owner Participant), effective upon the appointment of a successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement. If the Owner Participant or First Security Bank of Utah, National Association, in its individual capacity, does not comply with the requirements of this Section 8(c), the Owner Trustee, the Indenture Trustee and the Participants hereby agree that an Event of Default (or an event which would constitute an Event of Default but for lapse of time or the giving of notice or both) shall not have occurred and be continuing under the Lease due to non-compliance by Lessee with the registration requirements in the Lease. (d) First Security Bank of Utah, 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 of Utah, 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 of Utah, 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 -33- 34 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 of Utah, National Association, in its individual capacity, represents that it has not offered any interest in the Trust Estate or any Secured Certificates or any similar securities for sale to, or solicited any offer to acquire the same from, anyone, and that no officer or responsible employee of the Corporate Trust Department of First Security Bank of Utah, 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 or any similar securities related to the Aircraft 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 or the securities laws, rules and regulations of any state. (f) The Owner Participant and each of the Loan Participants agree that, at any time after the Depreciation Period, as long as no Event of Default or a Default of the type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and be continuing, Lessee may elect to effect a change in registration of the Aircraft, at Lessee's cost and expense, so long as (a) the country of registry of the Aircraft is a country listed on Exhibit A hereto (or such other country as the Owner Participant 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 qualified in the laws of the relevant jurisdiction and reasonably satisfactory to the Owner Participant, 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, -34- 35 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) none of the Owner Trustee, the Owner Participant or the Indenture Trustee will be required to register to do business in the country in which the Aircraft is to be registered as a result of such reregistration, after (1) taking into account any other contacts of the Owner Trustee and the Owner Participant with such jurisdiction (provided, that upon request by Lessee (such request having been acknowledged by the Owner Participant's general counsel), the Owner Trustee and the Owner Participant must respond within fourteen (14) Business Days after receipt of such request describing its contacts in the jurisdiction of reregistration, or else such party shall be deemed for purposes of this clause (D) to have no such contacts) and (2) assuming that the Indenture Trustee has no other contacts with such jurisdiction, (E) there is no tort liability of the owner of an aircraft not in possession thereof under the laws of such jurisdiction (it being agreed that, in the event such latter opinion cannot be given in a form satisfactory to the Owner Participant, such opinion shall be waived if insurance reasonably satisfactory to the Owner Participant is provided to cover such risk), and (F) (unless Lessee shall have agreed to provide insurance covering the risk of requisition of use of such Aircraft by the government of such jurisdiction so long as such Aircraft is registered under the laws of such jurisdiction) the laws of such jurisdiction require fair compensation by the government of such jurisdiction payable in currency freely convertible into Dollars for the loss of use of such Aircraft in the event of the requisition by such government of such use. In addition, as a condition precedent to any such change in registration, (a) Lessee shall furnish to the Owner Trustee and the Indenture Trustee an Officer's Certificate to the effect that the insurance required by Section 11 of the Lease shall be in full force and effect at the time of such change in registration after giving effect to such change in registration and that the new country of registry imposes aircraft maintenance standards not materially different from those of the United States, France, Germany, Japan, the Netherlands or the United Kingdom and (b) the Owner Participant shall have received assurances satisfactory to it that (i) the original indemnities in favor of it under this Agreement afford it substantially the same protection as provided prior to such change in registry, and (ii) such change will not result in the risk of, or the imposition of, or increase the amount of, any Tax for which Lessee is not required to indemnify under the Operative Documents, or is not then willing to enter into a binding agreement to indemnify in a manner satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (A) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (B) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional -35- 36 adverse tax consequences resulting from such reregistration or (C) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee. Lessee shall pay all costs, expenses, fees, recording and registration taxes, including the reasonable fees and expenses of counsel to the Owner Trustee, the Owner Participant and the Indenture Trustee, and other charges in connection with any such change in registration. (g) The Owner Participant represents and warrants to Lessee, the Indenture Trustee, the Loan Participants and the Owner Trustee, in its capacity as such and in its individual capacity, as follows: (i) the Owner Participant is a corporation duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the corporate power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations under the Owner Participant Documents; (ii) the Owner Participant Documents have been duly authorized by all necessary corporate action on the part of the Owner Participant, do not require any approval not already obtained of stockholders of the Owner Participant or any approval or consent not already obtained of any trustee or holders of any indebtedness or obligations of the Owner Participant, and have been duly executed and delivered by the Owner Participant, and, subject to and in reliance upon the representations made by the Loan Participants and Lessee in Section 8(q) hereof, neither the execution and delivery thereof, nor the consummation of the transactions contemplated thereby, nor compliance by the Owner Participant with any of the terms and provisions thereof will contravene any United States Federal or state law, judgment, governmental rule, regulation or order 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 financing or the citizenship requirements of the Owner Participant under applicable aviation law) or contravene or result in any breach of or constitute any 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, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Owner Participant is a party or by which it or its properties may be bound or affected provided, that no representation or warranty as to ERISA (as hereinafter defined) is made by the Owner Participant except as set forth in Section 8(q)(A); (iii) each of the Owner Participant Documents constitutes a legal, valid and binding obligation of the Owner Participant enforceable against the Owner Participant -36- 37 in accordance with the terms thereof (subject to the qualifications set forth in clause (2) of the opinion of counsel to the Owner Participant in Section 4(a)(xiv)); (iv) there are no pending or, to the knowledge of the Owner Participant, threatened actions or proceedings against the Owner Participant before any court or administrative agency which, if determined adversely to the Owner Participant, would materially adversely affect the financial condition of the Owner Participant or the ability of the Owner Participant to perform its obligations under the Owner Participant Documents; (v) upon the execution and delivery of the Trust Indenture, the Trust Indenture Estate will be free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Owner Participant; (vi) neither the execution and delivery of the Owner Participant Documents nor the performance by the Owner Participant of its obligations thereunder require the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of any Federal, state or foreign government authority or agency except for those exceptions referred to in Section 7(a)(iii) which may be applicable to the Owner Participant and the Owner Participant Documents (it being understood that no representation or warranty is made with respect to the 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 aviation law); and (vii) the Owner Participant is not an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended. (h) Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant covenants and agrees that it shall not cause or permit to exist a Lessor Lien attributable to it with respect to the Aircraft or any other portion of the Trust Estate. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees that it will promptly, at its own expense, take such action as may be necessary duly to discharge such Lessor Lien attributable to it. Each of First Security Bank of Utah, National Association, in its individual capacity, and the Owner Participant agrees to make restitution to the Trust Estate for any actual diminution of the assets of the Trust Estate resulting from Lessor Liens (including for this purpose Liens that 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. -37- 38 (i) State Street Bank and Trust Company, in its individual capacity, covenants and agrees that it shall not cause or permit to exist any Lien, arising as a result of (A) claims against the Indenture Trustee not related to its interest in the Aircraft or the administration of the Trust Indenture Estate pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not permitted by, or failure of the Indenture Trustee to take any action required by, the Operative Documents to the extent such acts arise or such failure arises from or constitutes gross negligence or willful misconduct, (C) claims against the Indenture Trustee relating to Taxes or Expenses which are excluded from the indemnification provided by Section 7 pursuant to said Section 7, or (D) claims against the Indenture Trustee arising out of the transfer by the Indenture Trustee of all or any portion of its interest in the Aircraft, the Trust Estate, the Trust Indenture Estate or the Operative Documents other than a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the Trust Indenture, any borrowing pursuant to Section 9 hereof or a transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of Default is continuing and prior to the time that the Indenture Trustee has received all amounts due pursuant to the Trust Indenture. (j) Each Loan Participant represents, warrants, covenants and agrees as to itself: (i) that this Agreement has been duly authorized, executed and delivered by such Loan Participant and this Agreement constitutes a legal, valid and binding obligation of such Loan Participant enforceable against such Loan Participant in accordance with its terms except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law); (ii) that such Loan Participant is duly organized and validly existing under the laws of its jurisdiction of organization; and (iii) that such Loan Participant has full power, authority and legal right to execute, deliver and carry out the terms of this Agreement. (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 -38- 39 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) under this Agreement or the Trust Indenture (and any exhibits or annexes thereto) or the Owner Participant under this Agreement. (m) State Street Bank and Trust Company represents and warrants, in its individual capacity, to Lessee, the Owner Trustee and each Participant as follows: (i) it is a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other 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 trust agreement or other similar arrangement, is likely to change and that it will resign as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if it should cease to be a Citizen of the United States without making use of any voting trust, voting powers trust agreement or other similar arrangement; (ii) it is a Massachusetts trust company duly organized and validly existing in good standing under the laws of the Commonwealth of Massachusetts and has the requisite corporate power and authority to enter into and perform its obligations under the Trust Indenture and this Agreement and to authenticate the Secured Certificates to be delivered on the Delivery Date; (iii) the Indenture Trustee Documents and the authentication of the Secured Certificates to be delivered on the Delivery Date have been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal -39- 40 or state law or governmental rule or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its charter or By-Laws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; and (iv) each of the Indenture Trustee Documents has been duly executed and delivered by State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, enforceable against State Street Bank and Trust Company, in its individual capacity or as Indenture Trustee, as the case may be, in accordance with its terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights. (n) So long as the Aircraft shall be subject to the Lease and at all times prior to the release of the Lien of the Trust Indenture, the Owner Participant will not, directly or indirectly, sell, assign, convey or otherwise transfer any of its right, title or interest in and to the Aircraft, this Agreement, the Trust Estate, the Tax Indemnity Agreement, or the Trust Agreement or any proceeds therefrom to any person or entity, unless the proposed transferee is a "Transferee" (as defined below), and such sale, assignment, conveyance or transfer is with respect to all, but not less than all, of such Transferee's right, title and interest to a single entity (except that the Owner Participant may transfer to one or more Transferees all or any portion of its interest, if any, in the residual value of the Aircraft (which interest shall not include any of the Owner Participant's right, title or interest in any of the Operative Documents); provided that such transfer of residual value shall result in no increase, decrease or change in any of Lessee's, any Loan Participant's, or the Indenture Trustee's obligations, rights or responsibilities under the Operative Documents and that such Transferee or Transferees of residual value shall have no right to consent or object to any matter or decision under, or relating to, the Aircraft or any of the Operative Documents and provided, further, that no Lien shall result from such transfer). A "TRANSFEREE" shall mean either (A) a bank or other financial institution or insurance company with a combined capital, surplus and undivided profits of at least $50,000,000 or a corporation whose tangible net worth is at least $50,000,000, 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, insurance company, or corporation, provided that such bank, financial institution, insurance company, or corporation furnishes to the Owner Trustee, the Loan Participants, 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 Loan Participants, 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 the form attached as Exhibit D hereto; provided, however, that any Transferee shall not be (i) an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or (ii) other similar person or a corporation or other entity -40- 41 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 (unless such entity is General Electric Company, International Lease Finance Corporation, any similar entity or any of their respective Affiliates, provided, that (I) such entity is not included within the immediately preceding clause (i) of this subsection (n) and (II) no such entity has, through ownership of common or preferred stock, effective voting control of an entity described in such immediately preceding clause (I)). 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 (or has effected a voting trust agreement, voting powers agreement or other similar arrangement so as not to affect the then continued (if applicable) United States registration of the Aircraft), and has full power and authority to enter into the transactions contemplated hereby, (N) the Transferee has the requisite power and authority to enter into and carry out the transactions contemplated hereby and such Transferee shall have delivered to Lessee, the Owner Trustee, the Indenture Trustee and the Loan Participants an opinion of counsel in the form attached as Exhibit E hereto, (O) the Transferee enters into (i) an agreement in the form attached as Exhibit B hereto or (ii) such other form approved by 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 each other Operative Document to which the Owner Participant is a party 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 and makes the representations and warranties comparable to those made by the Owner Participant thereunder provided that with respect to ERISA, the Transferee makes the representations and warranties contained in Section 7(h) of the agreement in the form attached as Exhibit B hereto, (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 (provided that the term "applicable Federal law" shall not include ERISA), (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 unless such transfer is effected in connection with the exercise of remedies as a result of and during the continuance of an Event of Default in which case any expenses incurred by Lessee in connection with such transfer shall not be reimbursed, 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 -41- 42 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 20 days' prior written notice thereof to the Loan Participants, the Indenture Trustee, the Owner Trustee and Lessee, specifying the name and address of the proposed Transferee. Upon any such transfer, Lessee shall, at the Transferee's expense, use its reasonable efforts promptly to cause to be obtained new insurance certificates (consistent with the provisions of Section 11 of the Lease) that reflect the interest of the Transferee in the Aircraft. (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 of Utah, 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)(A) Each Participant represents and warrants that it is not acquiring its interest in the Trust Estate, any Secured Certificate or any interests represented thereby with the assets of any "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or of any "plan" within the meaning of Section 4975(e)(1) of the Code or of any entity the assets of which constitute "plan" assets under ERISA. 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 as set forth in the preceding sentence and a covenant as set forth in this sentence. (B) Lessee represents and warrants that: none of (i) the execution and delivery of this Agreement and the other Operative Documents, (ii) the initial purchase by the Loan Participants of the Secured Certificates, and (iii) the initial acquisition by the Owner Participant of its beneficial interest in the Trust Estate will involve any non-exempt prohibited transaction within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the Code (such representation being made in reliance upon and subject to the accuracy of the representations contained in subparagraph (A) of this Section 8(q)). (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 -42- 43 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 and not specifically reserved to Lessee under Section 1 thereof, 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 Loan Participants 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. (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. Each Loan Participant agrees that Lessee may, on behalf of the Owner Trustee and upon notice to the affected Certificate Holder, arrange for another institution (which may be a Certificate Holder) to purchase the Secured Certificates of the affected Certificate Holder by paying the affected Certificate Holder an amount equal to the unpaid principal amount of the Secured Certificates held by the affected Certificate Holder plus accrued but unpaid interest thereon to the date of payment of such principal amount plus all other amounts owed to such affected Certificate Holder under the Operative Documents (including any Funding Loss Amount payable as a result of the applicable purchase occurring on a day other than the last day of an Interest Period). For purposes of this Section 8(t), "AFFECTED CERTIFICATE HOLDER" shall mean a Certificate Holder which has asserted claims against the Owner Trustee or Lessee under or sought rights or remedies provided by Section 7(b) hereof or Section 11.01 or 11.02 of the Trust Indenture. -43- 44 (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) First Security Bank of Utah, National Association, in its individual capacity, represents and warrants that: (i) the Trust Agreement and, assuming due authorization, execution and delivery of the Trust Agreement by the Owner Participant, each of the other Owner Trustee Documents has been duly executed and delivered by one of its officers who is duly authorized to execute and deliver such instruments on behalf of First Security Bank of Utah, National Association or the Owner Trustee, as the case may be; (ii) the Trust Estate is free and clear of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to First Security Bank of Utah, National Association, in its individual capacity, and there are no Liens affecting the title of the Owner Trustee to the Aircraft or any part of the Trust Estate or the Trust Indenture Estate resulting from any act or claim against First Security Bank of Utah, National Association, in its individual capacity, arising out of any event or condition not related to the ownership, leasing, use or operation of the Aircraft or to any other transaction contemplated by this Agreement or any of the Operative Documents, including any such Lien resulting from the nonpayment by First Security Bank of Utah, National Association, in its individual capacity, of any Taxes imposed or measured by its net income; (iii) there has not occurred any event which constitutes (or to the best of its knowledge would, with the passage 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 First Security Bank of Utah, National Association, in its individual capacity, and which is presently continuing; (iv) it is a national banking association duly organized, validly existing and in good standing under the laws of the United States and has the full corporate power, authority and legal right to enter into and perform its obligations under each of the Owner Trustee Documents; (v) each of the Owner Trustee Documents has been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal law governing the banking and trust powers of First Security Bank of Utah, National Association, or Utah law or regulation or contravene or result in any breach of the -44- 45 provisions of its articles of association or By-Laws or any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (vi) each of the Owner Trustee Documents has been duly executed and delivered by First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, each thereof is the legal, valid and binding obligation of First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, enforceable against First Security Bank of Utah, National Association, in its individual capacity, as Owner Trustee, or both, as the case may be, in accordance with its respective terms except as limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights; and (vii) there are no Taxes payable by it (either in its individual capacity or as Owner Trustee), the Trust Estate, the Owner Participant, Lessee, the Indenture Trustee or the Loan Participants to the State of Utah in connection with the execution, delivery and performance of the Operative Documents solely because First Security Bank of Utah, National Association is a national banking association with its principal office in the State of Utah and will perform its obligations under the Operative Documents in the State of Utah, other than franchise or other taxes based on or measured by any fees or compensation received or accrued by First Security Bank of Utah, National Association for services rendered in connection with the transactions contemplated by the Operative Documents. (w) The Owner Participant covenants and agrees that if (i) Lessee has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by causing the Aircraft to be sold pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has, pursuant to Section 9(c) of the Lease, given to Lessee written notice of Lessor's election to retain title to the Aircraft and (iii) the Owner Trustee has failed to make, on or before the Termination Date, any payment required to be made by the Owner Trustee pursuant to Section 9(c) in connection with its retention of title to the Aircraft, the Owner Participant will indemnify Lessee for any losses, damages, costs or expenses of any kind (including any additional rents paid by Lessee and any fees and expenses of lawyers, appraisers, brokers or accountants) incurred as a consequence of such failure by the Owner Trustee. The Owner Participant further covenants and agrees to pay those costs and expenses specified to be paid by the Owner Participant pursuant to Exhibit E to the Lease. (x) Each of the Owner Participant, the Owner Trustee, the Indenture Trustee, each Loan Participant 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 -45- 46 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. (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 each Participant an agreement in form and substance reasonably satisfactory to such 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; (iv) Lessee shall have delivered to the Owner Trustee, the Indenture Trustee and each 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 Participants, 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; and (v) 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, shall make such filings and recordings with the FAA pursuant to the Federal Aviation Act, as shall be necessary or desirable to evidence such consolidation, merger, conveyance, transfer or lease with or to such entity. -46- 47 Upon any such consolidation or merger or any such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety in accordance with this subparagraph (A) of Section 8(y), the successor corporation or Person formed by such consolidation or into which Lessee is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, Lessee under this Agreement with the same effect as if such successor corporation or Person had been named as Lessee herein. No such conveyance, transfer or lease of substantially all of the assets of Lessee as an entirety shall have the effect of releasing Lessee or any successor corporation or Person which shall theretofore have become such in the manner prescribed in this subparagraph (A) of Section 8(y) from its liability in respect of any Operative Document to which it is a party. (B) Lessee shall at all times maintain its corporate existence except as permitted by subparagraph (A) of this Section 8(y). (z) Lessee, at its expense, will take, or cause to be taken, such action with respect to the recording, filing, re-recording and refiling of the Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust Supplement and any financing statements or other instruments as are necessary to maintain, so long as the Trust Indenture or the Lease is in effect, the perfection of the security interests created by the Trust Indenture and any security interest that may be claimed to have been created by the Lease and the interest of the Owner Trustee in the Aircraft or will furnish to the Owner Trustee and the Indenture Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable them to take such action. Lessee will notify the Owner Trustee, the Owner Participant and the Indenture Trustee of any change in the location of its chief executive office (as such term is used in Article 9 of the Uniform Commercial Code) promptly after making such change or in any event within the period of time necessary under applicable law to prevent the lapse of perfection (absent refiling) of financing statements filed under the Operative Documents. (aa) Section 3 of the Lease contemplates that, under certain circumstances, the Owner Participant will make certain recalculations of Basic Rent, Excess Amount, Stipulated Loss Value and Termination Value, and the Owner Participant hereby agrees to make such recalculations as and when contemplated by the Lease and subject to all the terms and conditions of the Lease and promptly to take such further actions as may be necessary or desirable to give effect to and to cause the Owner Trustee to give effect to the provisions of Section 3 of the Lease. (bb) To the extent that any Excess Amount is due on the Commencement Date, the Owner Participant shall have the right to prepay to the Indenture Trustee all or a portion of such Excess Amount on the last Business Day occurring in 1996, and the Indenture Trustee agrees that it shall invest such amount in accordance with the terms set forth in the Trust Indenture. The Owner Participant hereby agrees with Lessee, and only with Lessee, and not for the benefit of any other party to this Participation Agreement, that it will pay in full to -47- 48 Lessee upon termination of the Lease the Reimbursement Amount for which Lessee has not previously received an offset pursuant to Section 3(g) of the Lease. (cc) The Owner Participant hereby agrees to notify Lessee or cause Lessee to be notified by telecopier not later than 10:00 a.m. New York time on the third Business Day prior to the day for which an Excess Amount is indicated stating whether or not the Owner Participant intends to pay such Excess Amount in full by 10:30 A.M. (New York time) on the due date. (dd) [________________] agrees to act as Administrative Agent hereunder. The Administrative Agent agrees to notify each of the Indenture Trustee, the Owner Trustee, the Owner Participant and Lessee of the actual interest expected to accrue on the Secured Certificates during each Interest Period promptly after the commencement of such Interest Period and after the occurrence of any event that would cause such actual interest expected to accrue during such Interest Period to change from the amount previously notified. The Administrative Agent further agrees to perform all of the functions that are required to be performed by the Administrative Agent hereunder and pursuant to the terms of the Trust Indenture. (ee) The Owner Participant hereby agrees with Lessee that it will pay, or cause to be paid, all costs and expenses that are for the account of the Owner Trustee pursuant to Sections 5(a) and 5(d) of the Lease. The Owner Participant further agrees with Lessee that it will provide the information contemplated to be provided by it pursuant to clause (VI) of Section 7(b)(x) of the Lease within the time period contemplated therein. (ff) 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(j), 8(k), 8(l), 8(q)(A), and 8(t) hereof and this Section 8(ff) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture). (gg) Lessee agrees and covenants that it shall not purchase or guarantee or acquire any interest in any Secured Certificate or any other certificate for which a Secured Certificate is security except as provided in Section 8(x). SECTION 9. CERTAIN COVENANTS OF OWNER PARTICIPANT, LOAN PARTICIPANTS AND OWNER TRUSTEE CONCERNING REOPTIMIZATION. (a) In the event of an adjustment to Basic Rent pursuant to Section 3(d) of the Lease, the Owner Participant shall, pursuant to this Section 9 and in accordance with the requirements of Section 3(d) of the Lease and Section 2.13 of the Trust Indenture, reoptimize the debt payment structures. Within forty-five Business Days after the need for an adjustment to Rent has been established pursuant to Section 3 of the Lease, the Owner Participant shall deliver to Lessee a certificate of an -48- 49 authorized representative of the Owner Participant (the "REOPTIMIZATION CERTIFICATE") setting forth the proposed revised schedules of debt amortization and Basic Rent, Excess Amounts, Special Purchase Price, Stipulated Loss Value and Termination Value percentages. Within forty-five days of its receipt of the Reoptimization Certificate, Lessee may demand a verification, pursuant to Exhibit E of the Lease, of the information set forth in the Reoptimization Certificate. Upon the acceptance by Lessee of the accuracy of the information set forth in the Reoptimization Certificate or the determination pursuant to such verification procedures of such information, the Owner Participant will cause the Owner Trustee (M) to execute a Lease Supplement setting forth the reoptimized Basic Rent, Excess Amounts, Special Purchase Price, Stipulated Loss Value and Termination Value percentages, and (N) to exchange new Secured Certificates containing reoptimized amortization schedules for the Secured Certificates outstanding immediately prior to such reoptimization. (b) In connection with reoptimization adjustments of Basic Rent, Stipulated Loss Value and Termination Value percentages pursuant to this Section 9 and Section 3(d) of the Lease, (M) each Loan Participant will agree to changes in the amortization schedule of the Secured Certificates, and (N) each Loan Participant will exchange the Secured Certificates held by it immediately prior to such reoptimization for new Secured Certificates containing reoptimized amortization schedules; provided that such changes do not (X) change the final maturity of any Secured Certificates to beyond twenty years from the Delivery Date or (Y) increase the weighted average lives of the Secured Certificates as of the Delivery Date to more than 15 years. SECTION 10. OTHER DOCUMENTS. Each of the Owner Participant and the Owner Trustee hereby (A) agrees with Lessee, the Loan Participants 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 (B) agrees with Lessee and the Loan Participants not to revoke the Trust Agreement without the prior written consent of Lessee and the Loan Participants so long as the Lease or the Lien of the Trust Indenture remain in effect. 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 10.05 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. -49- 50 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 Bill 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 Bill of Sale, second, the Lease, with the Lease Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the Trust Indenture, with the Trust Supplement attached. SECTION 12. OWNER FOR FEDERAL TAX PURPOSES. It is hereby agreed among Lessee, the Owner Participant and the Owner Trustee that for Federal income tax purposes the Owner Participant will be the owner of the Aircraft to be delivered under the Lease and Lessee will be the lessee thereof, and each party hereto agrees to characterize the Lease as a lease for Federal income tax purposes. SECTION 13. CERTAIN DEFINITIONS; NOTICES; CONSENT TO JURISDICTION. (a) Except as otherwise defined in this Agreement, terms used herein in capitalized form shall have the meanings attributed thereto in the Lease. The term "TRUST OFFICE" shall have the meaning set forth in the Trust Agreement and the term "TRUST INDENTURE ESTATE" shall have the meaning set forth in the Trust Indenture. Unless the context otherwise requires, any reference herein to any of the Operative Documents refers to such document as it may be amended from time to time. -50- 51 (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 (only if such communication is also given or made by an additional method herein permitted), 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 Owner Trustee, the Loan Participants, the Administrative 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, or (D) if to the Guarantor, addressed to the Guarantor at such address as the Guarantor shall have furnished by notice to the parties hereto. (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, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038, Attention: Managing Attorney, or such office of Lessee in New York City as from time to time may be designated by Lessee in writing to the Owner Participant, the Owner Trustee and the Indenture Trustee. SECTION 14. CHANGE OF SITUS OF OWNER TRUST. The Owner Participant agrees that if, at any time, the Trust Estate becomes subject to any Taxes for which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence thereof, Lessee should request that the situs of the trust be moved to another state in the United States from the state in which it is then located, the situs of the trust may be moved with the written consent of the Owner Participant (which consent shall not be unreasonably withheld) and the Owner Participant will take whatever action may be reasonably necessary to accomplish such -51- 52 removal; provided that (A) Lessee shall provide such additional tax indemnification as the Owner Participant and the Loan Participants may reasonably request in form and substance satisfactory to such parties, (B) the rights and obligations under the Operative Documents of the Owner Participant and the Loan Participants 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 Loan Participants shall have received an opinion or opinions of counsel (satisfactory to the Owner Participant and the Loan Participants), in scope, form and substance satisfactory to the Owner Participant and the Loan Participants 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 Loan Participants, 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 Loan Participants and to the Owner Participant covering the matters described in Section 4(a)(xiii) hereof and such other matters as the Loan Participants and the Owner Participant may reasonably request, and (E) Lessee shall indemnify and hold harmless the Owner Participant, the Indenture Trustee and the Loan Participants on an 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, the Indenture Trustee and the Loan Participants in connection with such change of situs. SECTION 15. MISCELLANEOUS. (a) Each of the Loan Participants and the Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, or the Indenture Trustee under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor, or the Indenture Trustee. (b) The representations, warranties, indemnities and agreements of Lessee, the Owner Trustee, the Loan Participants, the Indenture Trustee, the Administrative Agent and the Owner Participant provided for in this Agreement, and Lessee's, the Owner Trustee's, the Loan Participants', the Indenture Trustee's, the Administrative Agent's and the Owner Participant's obligations under any and all thereof, shall survive the making available of the respective Commitments by the Loan Participants and 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 -52- 53 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, and shall be enforceable by, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and assigns, each Certificate Holder and its successors and registered assigns, the Indenture Trustee and its successors as Indenture Trustee under the Trust Indenture, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement and the Administrative Agent. 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 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. -53- 54 SECTION 16. EXPENSES. Each of the Owner Trustee, the Indenture Trustee, the Owner Participant, Lessee and the Loan Participants shall promptly submit to the Owner Trustee and Lessee for their review 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 August 15, 1996). The Owner Participant agrees to transfer to the Owner Trustee promptly but in any event no later than September 15, 1996 such amount as shall be necessary in order to enable the Owner Trustee to pay Transaction Expenses. To the extent of funds received by it, the Owner Trustee agrees to pay all invoices of Transaction Expenses that have been approved by it and Lessee promptly upon receipt thereof. Notwithstanding the foregoing, to the extent that Transaction Expenses exceed 1% of Lessor's Cost, Lessee at its sole option shall have the right to pay directly its special counsel fees and the fee and reasonable disbursements of Babcock and Brown Financial Corporation. SECTION 17. REFINANCINGS. (a) So long as no Event of Default or a Default of the type referred to in Section 14(a) or 14(e) of the Lease shall have occurred and be continuing, Lessee shall have the right to refinance all (but not less than all) of the Secured Certificates with Dollar denominated debt 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 (including the terms of any debt to be issued in connection with such refinancing); provided that no such refinancing shall subject the Owner Participant to any adverse, or the risk of any adverse, tax consequence unless Lessee agrees to indemnify the Owner Participant for such unindemnified adverse tax consequence (any such indemnity to be satisfactory in form and substance, which may include consideration of the creditworthiness of Lessee, to the Owner Participant; provided, however, that if (1) Lessee (or, so long as the Guarantee remains in full force and effect, the Guarantor) has outstanding publicly issued or privately placed unsecured indebtedness (excluding any short-term commercial paper) with a rating of "BBB" or better from S&P and "Baa2" or better from Moody's, or (2) Lessee provides the Owner Participant with cash collateral or a letter of credit reasonably satisfactory in form and substance to Lessor, the amount of which is sufficient (as determined by the Owner Participant in its reasonable judgment) to cover any anticipated adverse tax consequences for which the Owner Participant has been indemnified by Lessee under the Operative Documents in addition to any additional adverse tax consequences resulting from such refinancing or (3) the anticipated indemnified amount (as determined by the Owner Participant in its reasonable judgment) is less than $50,000, then, in determining whether the indemnity to be provided by Lessee is satisfactory in form and substance to the Owner Participant, the Owner Participant will not take into account the creditworthiness of Lessee); provided further that (x) the Owner Participant agrees that it will not be entitled to any indemnity from Lessee for any failure of the debt in such refinancing to constitute "qualified nonrecourse indebtedness" within the meaning of Treasury Regulation Section 1.861-10T(b) with respect to the first refinancing described in the next paragraph, provided it is satisfactory to, or has no adverse tax consequences for, -54- 55 the Owner Participant and (y) no offering material related to any public refinancing shall disclose the identity of the Owner Participant. The Owner Participant has been informed by Lessee that the debt to be issued in connection with such refinancing may be issued in several classes, each of which may have a different interest rate, final maturity date and priority of payment. The Owner Participant acknowledges that it has been informed that one or more of such classes may be entitled to the benefit of a liquidity facility which shall not be provided by Lessee or a Person who is an Affiliate of Lessee, and which will entitle the Indenture Trustee (or a collateral agent therefor) to make drawings thereunder to pay interest on a current basis on the enhanced classes of debt for up to three semi-annual interest payments following a payment default with respect to such enhanced classes. The Owner Participant acknowledges being informed that under such a structure drawings of the entire amount available under the liquidity facility for any class (and the deposit of the proceeds thereof into a cash collateral account) will be required in the event of a ratings decline with respect to the related liquidity provider or in the event that the liquidity facility is not extended or replaced prior to its scheduled expiration and that amounts owed to the liquidity facility provider for both drawings and interest thereon will generally be senior to all Loan Participant claims. The Owner Participant agrees that in any refinancing operation it will consider in good faith these and any other conditions which do not impair the customary rights of an owner participant in a leveraged lease transaction. In the event that any such agreement is concluded: (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 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 proposed date on which the outstanding Secured Certificates will be redeemed (such date, 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 increased or 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; -55- 56 (2) the appropriate parties will enter into appropriate documentation (which may involve an underwriting agreement in connection with such sale 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 (such debt securities, the "NEW DEBT") except that the principal amount of New Debt may exceed by no more than 105% 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; (5) the Owner Participant shall pay all of the expenses of the first refinancing (including, but not limited to, the fees, expenses and disbursements of counsel and any placement or underwriting fees) and such expenses shall be treated as Transaction Expenses; 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 and constraints 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 and constraints 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), 4.07 and 4.08(1) of Rev. Proc. 75-28 (provided that the test of Rev. Proc. 75-28 Section 4.08(1) shall be applied on a prospective basis from the date of such adjustment) and Section 467 of the Code as then in effect as long as the Schedule of Basic Rent was in compliance with Section 467 of the Code as in effect on the Closing Date, it being understood that, to the extent that any grandfather, effective date, or similar provisions in any regulations under Section 467 or other administrative pronouncement interpreting Section 467 promulgated or issued after the Closing Date causes such regulations or pronouncement not to be applicable to the Schedule of Basic Rent in effect on the Closing -56- 57 Date, such Schedule shall be deemed to be in compliance with Section 467 as in effect on the Closing Date. (b) The final maturity and weighted average life of the New Debt on an aggregate basis shall not exceed by more than six months those of the Secured Certificates. (c) 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. (d) The Owner Participant, at the time of the closing of the second or third refinancing pursuant to this Section 17, if any, shall be paid a fee of $25,000 in respect of each such refinancing provided, that in the event that a similar refinancing is concurrently being effected on identical terms under any of the other transactions entered into in 1996 by the Owner Participant and Lessee for the lease of Boeing 757-251 aircraft pursuant to which a fee is payable pursuant to the corresponding provisions of the applicable participation agreement, Lessee shall not be required to pay a separate fee of $25,000 for each such refinancing, it being the intent of the parties that a total fee of $50,000 shall be paid by Lessee for all such concurrent refinancings on identical terms for which a fee is otherwise payable pursuant to the corresponding provisions of the applicable participation agreement. SECTION 18. AGENTS. (a) Each Loan Participant hereby appoints and authorizes the Administrative Agent (the "AGENT") to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Operative Documents as are delegated to the Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto. The Agent shall have no duties or responsibilities except those expressly set forth in the Operative Documents. As to any matters not expressly provided for hereby or by the Trust Indenture, the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority in Interest of Certificate Holders (as defined in the Trust Indenture), and such instructions shall be binding upon all Loan Participants and all Certificate Holders; provided, however, that the Agent shall not be required to take any action that exposes the Agent to personal liability or that is contrary to the Operative Documents or applicable law. The Agent agrees to give to each Loan Participant prompt notice of each notice given to it by the Owner Trustee pursuant to the terms of the Operative Documents with respect to which such Loan Participant has not otherwise received such notice. (b) Neither the Agent nor the Agent's directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the Trust Indenture, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may consult with legal counsel, independent public accountants and other experts -57- 58 selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes no warranty or representation to any Loan Participant and shall not be responsible to any Loan Participant for any statements, warranties or representations (whether written or oral) made in or in connection with the Operative Documents; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Operative Documents on the part of any party thereto or to inspect the property (including the books and records) of any such party; (iv) shall not be responsible to any Loan Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, the Operative Documents or any other instrument or document furnished pursuant thereto; and (v) shall incur no liability under or in respect of the Operative Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. (c) With respect to its Loans and any Secured Certificates issued to it, [__________] shall have the same rights and powers under the Operative Documents as any other Loan Participant and may exercise the same as though it was not the Agent and the term "Loan Participant" or "Certificate Holder" shall, unless otherwise expressly indicated, include [__________] in its individual capacity. [__________] and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Owner Trustee, the Owner Participant, Lessee, any of Lessee's Subsidiaries and any Person who may do business with or own securities of any of such Persons, all as if [__________] were not the Agent and without any duty to account therefor to the Loan Participants. (d) Each Loan Participant acknowledges that it has, independently and without reliance upon the Agent or any other Loan Participant and based on the financial statements referred to in Section 7(a)(ix) of this Agreement and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Loan Participant also acknowledges that it will, independently and without reliance upon the Agent or any other Loan Participant and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. (e) Subject to the appointment and acceptance of a successor agent as provided below, the Agent may resign at any time by giving written notice thereof to the Loan Participants, the Owner Trustee and Lessee and may be removed at any time with or without cause by the Majority in Interest of Certificate Holders (as defined in the Trust Indenture). Upon any such resignation or removal, the Majority in Interest of Certificate Holders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority in Interest of Certificate Holders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or removal of the retiring Agent by the Majority in Interest of Certificate Holders, then the -58- 59 retiring Agent may, on behalf of the Loan Participants, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $50,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement and the Trust Indenture. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section 18 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the Trust Indenture. -59- 60 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:____________________________________________ Title: Sr. Vice President-Finance and Treasurer Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 [__________], Owner Participant By:____________________________________________ Title: Address: Attn: Telecopy No.: -Signature Page- 61 STATE STREET BANK AND TRUST COMPANY, Indenture Trustee By:_______________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By:_______________________________________ Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 - Signature Page - 62 [_____________________________], as agent Loan Participant and Administrative Agent By:________________________________________ Title: By:________________________________________ Title: Address: Attn: Telecopy No.: - Signature Page - 63 SCHEDULE I NAMES AND ADDRESSES Lessee: Northwest Airlines, Inc. U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attn: Senior Vice President-Finance and Treasurer Telecopy No.: (612) 726-0665 Wire Transfer First Bank, N.A., Minneapolis ABA No. 091000022 Acct. No. 150250099440 Owner Participant: 64 Indenture Trustee: State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Telecopy No.: (617) 664-5371 Wire Transfer State Street Bank and Trust Company ABA No. 011-00-0028 for credit to State Street Bank and Trust Company Acct. No. 9903-943-0 Attn: Corporate Trust Department Reference: Northwest/NW 1996 G Owner Trustee: First Security Bank of Utah, National Association 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Telecopy No.: (801) 246-5053 Payments made to the Owner Trustee as provided in Section 3(f) of the Lease shall be made to: First Security Bank of Utah, National Association ABA No. 124-0000-12 Acct. No. 051-0922115 Attn: Corporate Trust Department Credit: Northwest/NW 1996 G SCHEDULE I - PAGE 2 65 Loan Participants: 66 SCHEDULE II COMMITMENTS
Percentage of Loan Participants: Lessor's Cost - ------------------ ------------- Owner Participant: - ------------------ --- Total Commitments: 100%
67 EXHIBIT A TO PARTICIPATION AGREEMENT [NW 1996 G] SCHEDULE OF COUNTRIES FOR REREGISTRATION Argentina Japan Australia Luxembourg Austria Malaysia Belgium Mexico Brazil Netherlands Canada New Zealand Chile Norway Denmark People's Republic of China Finland Portugal France Republic of China (Taiwan) Germany Singapore Greece South Africa Hungary South Korea Iceland Spain India Sweden Indonesia Switzerland Ireland Thailand Italy United Kingdom 68 EXHIBIT B TO PARTICIPATION AGREEMENT [NW 1996 G] ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 G] ASSIGNMENT AND ASSUMPTION AGREEMENT [NW 1996 G], dated as of __________, ____, between ____________________________________, a _____________ corporation (the "ASSIGNOR"), and __________________________, a __________ corporation (the "ASSIGNEE"). W I T N E S S E T H: WHEREAS, the parties hereto desire to effect (a) the transfer by the Assignor to the Assignee of all of the right, title and interest of the Assignor (except as reserved below) in, under and with respect to, among other things, (i) the Participation Agreement [NW 1996 G], dated as of May 29, 1996, among Northwest Airlines, Inc., the Assignor, each Loan Participant named therein, First Security Bank of Utah, National Association, and State Street Bank and Trust Company (as amended, modified or supplemented from time to time, the "PARTICIPATION AGREEMENT"), including, without limitation, any indemnity payments payable to the Assignee directly or indirectly thereunder, (ii) the Trust Agreement identified in the Participation Agreement (the "TRUST AGREEMENT"), (iii) the Trust Estate (as defined in the Trust Agreement), (iv) the Tax Indemnity Agreement identified in the Participation Agreement, and (v) the proceeds therefrom and (b) the assumption by the Assignee of the obligations of the Assignor accruing from and after the Effective Time; and WHEREAS, such documents permit such transfer upon satisfaction of certain conditions heretofore or concurrently herewith being complied with; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties hereto do hereby agree as follows (capitalized terms used herein without definition having the meaning ascribed thereto in the Participation Agreement): 1. ASSIGNMENT. The Assignor has sold, assigned, conveyed, transferred and set over, and does hereby sell, assign, convey, transfer and set over, unto the Assignee as of the date hereof all of its present and future right, title and interest in, under and with respect to the Trust Estate, the Aircraft, the Participation Agreement, the Trust Agreement, the Tax Indemnity Agreement and all other Operative Documents to which the Assignor is a party or any other contract, agreement, document or instrument relating to the Trust Estate by which the Assignor is bound, and any proceeds therefrom, together with all other documents and 69 instruments evidencing any of such right, title and interest, except such rights of the Assignor as have accrued to the Assignor prior to the Effective Time (as subsequently defined) (including specifically, but without limitation, the right to receive any amounts due or accrued to the Assignor under the Trust Agreement prior to the Effective Time and the right to receive any indemnity payment pursuant to the Participation Agreement or the Tax Indemnity Agreement with respect to events occurring prior to the Effective Time). 2. ASSUMPTION. The Assignee hereby undertakes all of the duties and obligations of the "Owner Participant" accruing on or subsequent for the Effective Time (for the avoidance of doubt, excluding any duties, obligations and liabilities of the Assignor required to be performed by it on or prior to the date hereof under the Participation Agreement, the Trust Agreement, any of the other Operative Documents to which the Assignor is a party or by which it is bound or any other contract, agreement, document or other instrument relating to the Trust Estate to which the Assignor is a party or by which the Assignor is bound), pursuant to the Participation Agreement, the Trust Agreement, and each other Operative Document to which the Assignor is a party, each contract, agreement, document or instrument hereby assigned and each other contract, agreement, document or instrument relating to the Trust Estate by which the Assignor is bound, and hereby confirms that it shall be deemed a party to the Participation Agreement, the Trust Agreement and each other Operative Document to which the Assignor is a party or by which it is bound and each such other contract, agreement, document and instrument, and shall be bound by all the terms thereof (including the agreements and obligations of the Assignor set forth therein) as if therein named as the Owner Participant. The assignment and assumption contemplated hereby shall not release the Assignor from its obligations under the Participation Agreement or the Trust Agreement except to the extent expressly assumed by the Assignee pursuant to this Section 2, provided, that Assignor's rights under Section 7 of the Participation Agreement and under the Tax Indemnity Agreement to the extent relating to acts, conditions or events occurring or existing prior to the date hereof shall be retained in full by Assignor. 3. APPOINTMENT AS ATTORNEY-IN-FACT. In furtherance of the within assignment, the Assignor hereby constitutes and appoints the Assignee, and its successors and assigns, the true and lawful attorneys of the Assignor, with full power of substitution, in the name of the Assignee or in the name of the Assignor but on behalf of and for the benefit of and at the expense of the Assignee, to collect for the account of the Assignee all items sold, transferred or assigned to the Assignee pursuant hereto; to institute and prosecute, in the name of the Assignor or otherwise, but at the expense of the Assignee, all proceedings that the Assignee may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the items sold, transferred or assigned; to defend and compromise at the expense of the Assignee any and all actions, suits or proceedings as to title to or interest in any of the property acquired by the Assignee; and to do all such acts and things in relation thereto at the expense of the Assignee as the Assignee shall reasonably deem advisable. The Assignor hereby acknowledges that this appointment is coupled with an interest and is irrevocable by the Assignor in any manner or for any reason or by virtue of any dissolution of the Assignor. EXHIBIT B - PAGE 2 70 4. PAYMENTS. The Assignor hereby covenants and agrees to pay over to the Assignee, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignor that, under Section 1 hereof, belong to the Assignee, and the Assignee hereby covenants and agrees to pay over to the Assignor, if and when received following the date hereof, any amounts (including any sums payable as interest in respect thereof) paid to or for the benefit of the Assignee that, under Section 1 hereof, belong to the Assignor. 5. FURTHER ASSURANCES. Each party hereto shall, at any time and from time to time, upon the request of any other party hereto, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as the other party may reasonably request to obtain the full benefits of this Assignment and of the right and powers herein granted. 6. INVESTMENT PURPOSE. The Assignee hereby represents that it is acquiring the trust and other interests hereby assigned to it for its own account for the purpose of investment and not with a view to the distribution or resale of either thereof. 7. REPRESENTATIONS AND WARRANTIES. The Assignee represents and warrants that: (a) it is duly organized and validly existing in good standing under the laws of its jurisdiction of organization, and has the power and authority to carry on its business as now conducted, to own or hold under lease its properties and to enter into and perform its obligations and the obligations of the Owner Participant under the Operative Documents to which it is or will be a party; (b) this Assignment and Assumption Agreement has been duly authorized by all necessary action on its part, does not require any approval not already obtained of its stockholders or any approval or consent not already obtained of any trustee or holders of any of its indebtedness or obligations, and has been duly executed and delivered by the Assignee, and neither the execution and delivery thereof, nor the consummation of the transactions contemplated hereby, nor compliance by the Assignee with any of the terms and provisions hereof or of any of the Operative Documents to which it will become a party or by which it will be bound, will contravene any United States Federal or state law, judgment, governmental rule, regulation or order applicable to or binding on the Assignee (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA (except as set forth in subsection 7(h) below) or aviation or to the nature of the equipment to be owned by the Owner Trustee, other than such laws, rules, or regulations relating to lease transactions generally or to the citizenship requirements of the Assignee under the Federal Aviation Act) or contravene or result in any breach of or constitute any default under, or result in the creation of any Lien (other EXHIBIT B - PAGE 3 71 than Liens provided for in the Operative Documents) upon any property of the Assignee or, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, corporate charter, by-law or other agreement or instrument to which the Assignee is a party or by which it or its properties may be bound or affected; (c) each of the Operative Documents to which it will become a party, assuming such document is the legal, valid and binding obligation of each other party thereto, will constitute the legal, valid and binding obligation of the Assignee, enforceable in accordance with its terms; (d) there are no pending or, to the knowledge of the Assignee, threatened actions or proceedings against the Assignee before any court or administrative agency which, if determined adversely to the Assignee, would materially adversely affect the ability of the Assignee to perform its obligations under any Operative Document to which it will become a party; (e) upon the execution and delivery of this Assignment and Assumption Agreement, the Trust Estate and the Trust Indenture Estate will be free and clear of Lessor Liens (including for the this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to the Assignee; (f) neither the execution and delivery by the Assignee of this Assignment and Assumption Agreement, nor the consummation by it of any of the transactions contemplated hereby, requires the consent or approval of, the giving of notice to, the registration with, the recording or filing of any document with, or the taking of any other action in respect of, any Federal or other governmental authority or agency (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 lease transactions generally or to the citizenship requirements of the Assignee under applicable aviation law); (g) the Assignee is not an "investment company" or a company controlled by an "investment company" required to register as such under the Investment Company Act of 1940, as amended; (h) either (x) no part of the funds to be used by it to acquire any right, title or interest in the Trust Estate, or in this Agreement, the Trust Agreement, the Tax Indemnity Agreement or any other of the Operative Documents to which the Assignee is a party or by which the Owner Participant is bound, directly or indirectly constitutes, or may be deemed under the Code, ERISA or any applicable state law or any rulings or regulations thereunder to be, the assets of any "employee benefit plan" as defined in Section 3(3) of EXHIBIT B - PAGE 4 72 ERISA or of any "plan" within the meaning of Section 4975(e)(1) of the Code or of any entity the assets of which constitute "plan" assets under ERISA, or (y) the transfer to and ownership of such right, title and interest by the Assignee is and will continue to be covered by Prohibited Transaction Class Exemption 91-38 or 95-60. (i) on the date hereof [it is a Citizen of the United States (without use of a voting trust agreement or voting powers agreement)] [it has entered into a voting powers or voting trust agreement which has been approved by the FAA (to the extent required by the Federal Aviation Act or the FAA)]; (j) the transfer to it of all of the Assignor's right, title and interest as Owner Participant will not adversely affect the continued registration of the Aircraft in the name of the Owner Trustee or violate any provision of the Federal Aviation Act or any rules or regulations promulgated thereunder, or violate any provisions of the Securities Act of 1933, as amended, or any other applicable Federal or state law (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA (except as set forth in subsection 7(h) above)); and (k) [it is a "Transferee" satisfying the conditions set forth in Section 8(n) of the Participation Agreement] [alternatively, guaranty meeting the requirements of Section 8(n) of the Participation Agreement to be provided]; and (l) such Transferee is not (i) an airline, a commercial air carrier, an air freight forwarder, an entity engaged in the business of parcel transport by air or (ii) 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 (unless such entity is General Electric Company, International Lease Finance Corporation, any similar entity or any of their respective Affiliates, provided, that (I) such entity is not included within the immediately preceding clause (i) of this subsection (l) and (II) no such entity has, through ownership of common or preferred stock, effective voting control of an entity described in such immediately preceding clause (i). 8. REPRESENTATIONS AND WARRANTIES OF ASSIGNOR. Assignor represents and warrants that: (a) it is a corporation duly organized and validly existing in good standing under the laws of the State of ____________ and has the requisite power, authority and legal right to enter into and carry out the transactions contemplated hereby; EXHIBIT B - PAGE 5 73 (b) this Agreement has been duly authorized, executed and delivered by it and constitutes the legal, valid and binding obligation of Assignor, enforceable against it in accordance with its terms; (c) no action or proceeding is pending, has been instituted or, to the knowledge of Assignor, is threatened, before any court or governmental agency, nor has any order, judgment or decree been issued or, to the knowledge of Assignor, is threatened, by any court or governmental agency which would materially adversely affect the ability of Assignor to complete and consummate its obligations contemplated hereby; (d) the Trust Estate is free of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to it; (e) it has fully performed all of its obligations under the Participation Agreement and under each other Operative Document to which it is a party or by which it is bound, which obligations by their terms are required to be satisfied or performed prior to the Effective Time or prior to the consummation of the transactions contemplated hereby; (f) neither the execution, delivery and performance by it of this Agreement, nor compliance by it with any of the provisions thereof requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness obligations of it or contravenes or will contravene any law or any order of any court or governmental authority of agency applicable to or binding on it (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA) or contravenes or will contravene the provisions of, or constitute a default under, its [Certificate of Incorporation] or [By-Laws] or any indenture, mortgage, contract or any agreement or instrument to which it is a party or by which it or any of its property may be bound or affected; (g) the transfer to Assignee of all of the Assignor's right, title and interest as Owner Participant will not violate, or affect registration of the Aircraft under, any provision of the Federal Aviation Act (or any rules or regulations promulgated thereunder), violate the Securities Act of 1933, as amended (and no registration pursuant to such Act or the rules and regulations thereunder shall be required in connection with such transfer), or violate any other applicable Federal or state law (it being understood that no representation or warranty is made with respect to laws, rules or regulations relating to ERISA); and (h) Assignor has assumed the risk of any loss of Interest Deductions, Amortization Deductions and MACRS Deductions and the risk of any Inclusion EXHIBIT B - PAGE 6 74 Event (each as defined in the Tax Indemnity Agreement) resulting from the transfer to Assignee pursuant to the Assignment. 9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO ANY PROVISION OF NEW YORK LAW THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER STATE. 10. COUNTERPARTS. This Assignment may be executed in any number of counterparts, all of which together shall constitute a single instrument. It shall not be necessary that any counterpart be signed by both parties so long as each party shall sign at least one counterpart. 11. THIRD PARTY BENEFICIARIES. Each party hereto agrees, for the benefit of the Owner Trustee, each Loan Participant, each Certificate Holder, the Indenture Trustee and Lessee (collectively, the "BENEFICIARIES"), that the representations, warranties and covenants of such party contained herein are also intended to be for the benefit of each Beneficiary, and each Beneficiary shall be deemed to be an express third party beneficiary with respect thereto, entitled to enforce directly and in its own name any rights or claims it may have against such party as such beneficiary. 12. EFFECTIVENESS. This Agreement shall be effective upon its execution and delivery by each of Assignor and Assignee, the exact time of occurrence of which (the "EFFECTIVE TIME") shall be agreed in a writing signed by Assignor and Assignee addressed to Lessee, the Owner Trustee and the Indenture Trustee. EXHIBIT B - PAGE 7 75 IN WITNESS WHEREOF, the parties hereto, through their respective officers thereunto duly authorized, have duly executed this Assignment as of the day and year first above written. [ASSIGNOR] By ___________________________________ Title [ASSIGNEE] By ___________________________________ Title EXHIBIT B - PAGE 8 76 EXHIBIT C TO PARTICIPATION AGREEMENT [NW 1996 G] SCHEDULE OF DOMICILES OF PERMITTED SUBLESSEES ** Argentina * Japan * Australia * Luxembourg * Austria ** Malaysia * Belgium ** Mexico ** Brazil * Netherlands * Canada * New Zealand ** Chile * Norway * Denmark ** People's Republic of China * Finland Portugal * France ** Republic of China (Taiwan)*** * Germany Singapore ** Greece ** South Africa ** Hungary South Korea * Iceland Spain ** India * Sweden ** Indonesia * Switzerland * Ireland ** Thailand * Italy * United Kingdom _________________ * Designates "Specified Country". ** Designates "Restricted Country". *** 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 C - PAGE 1 77 EXHIBIT D TO PARTICIPATION AGREEMENT FORM OF GUARANTY [LETTERHEAD OF GUARANTOR] PARENT GUARANTY Dated as of ________ ____, ______ [Lessee] [Trust Company] [Indenture Trustee] [Loan Participants] One Boeing Model 757-251 Aircraft Manufacturer's Serial Number [ ] Ladies and Gentlemen: Reference is hereby made to the Participation Agreement [NW 1996 G] (as from time to time amended or supplemented, the "Participation Agreement"), dated as of May 29, 1996, among Northwest Airlines, Inc. ("Lessee"), [_____________] (the "Owner Participant"), First Security Bank of Utah, National Association, not in its individual capacity, except as expressly provided therein, but solely as trustee (the "Owner Trustee" and "Lessor") under the Trust Agreement, dated as of May 29, 1996, between the Trustee and the Owner Participant (the "Trust Agreement"), State Street Bank and Trust Company (the "Indenture Trustee") and the Loan Participants listed on Schedule I thereto. Capitalized terms used herein without definition have the respective meanings ascribed thereto in the Participation Agreement. Pursuant to Section 8 of the Participation Agreement and in connection with the transfer of the Interest (as defined in the Assignment and Assumption Agreement dated as of the date hereof between [Transferor], a ____________ corporation ("Transferor") and [Transferee], a ____________ corporation ("Transferee") (the "Assumption Agreement")) to be consummated as of the date hereof from Transferor to Transferee, the wholly-owned subsidiary of _________________________ ("Guarantor"), and the execution by Guarantor of the guaranty of Transferee's obligations as contemplated by the Assumption Agreement (this "Guaranty"), Guarantor represents and warrants to, and covenants with, Lessee, First Security Bank of Utah, National Association, in its individual capacity ("Trust Company"), Indenture Trustee and Loan Participants, as follows: EXHIBIT D - PAGE 1 78 1. Ownership of Transferee. Guarantor directly or indirectly owns and holds all of the issued and outstanding shares of capital stock of Transferee. 2. Additional Representations and Warranties. (i) Guarantor is a corporation duly organized and validly existing pursuant to the laws of ___________________, and has the corporate power and authority to enter into and perform this Guaranty. (ii) The execution, delivery and performance by Guarantor of this Guaranty has been duly authorized by all necessary corporate action on the part of Guarantor, does not require any stockholder approval, or approval or consent of any trustee or holders of any indebtedness or obligations of Guarantor except such as have been duly obtained, and this Guaranty will not contravene any applicable law or corporate charter or by-law, or contravene the provisions of, or constitute a default under, or result in the creation of any Lien upon the property of Guarantor under, any indenture, mortgage, contract or other agreement to which Guarantor is a party or by which it may be bound or affected. (iii) Neither the execution and delivery by Guarantor of this Guaranty, nor the consummation of the transactions by Guarantor contemplated hereby, nor the performance of the obligations hereunder or under any other documents contemplated hereby or thereby by Guarantor requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, United States Federal, state, or foreign governmental authority or agency. (iv) This Guaranty has been duly executed and validly delivered by Guarantor and constitutes the legal, valid and binding obligation of Guarantor enforceable against Guarantor in accordance with its terms except as the enforcement of this Guaranty may be affected by applicable bankruptcy, insolvency, moratorium and other similar laws affecting creditors' rights generally. (v) There are no pending or, to Guarantor's knowledge, threatened actions or proceedings before any court or administrative agency which might materially adversely affect the consolidated financial condition, business or operations of Guarantor, or the ability of Guarantor to perform its obligations under this Guaranty. (vi) No broker's or finder's fees or commissions or advisory fees are or may become payable in connection with this Guaranty or the Assumption Agreement or, if any such fee is payable, such fee will be the responsibility of Guarantor. (vii) On the date hereof the Trust Estate will be free of Lessor Liens (including for this purpose Liens that would be Lessor Liens but for the proviso in the definition of Lessor Liens) attributable to Guarantor. (viii) Guarantor is (A) a Citizen of the United States (or has effected a voting trust agreement, voting powers agreement or other similar arrangement) and (B) a bank, EXHIBIT D - PAGE 2 79 insurance company, financial institution or domestic corporation the net worth of which is at least $50,000,000. 3. Guaranty. (a) Guarantor hereby unconditionally and irrevocably guarantees, not merely as surety but as obligor: (i) the due and punctual payment of any and all sums which are payable by Transferee pursuant to any provision of the Assumption Agreement (and in particular, Section 4 thereof) and the Participation Agreement, the Tax Indemnity Agreement and any other Operative Document assumed by Transferee pursuant to the Assumption Agreement (collectively, the "Guaranteed Agreements"), and (ii) the due and punctual performance of and compliance with and observance of all other obligations, covenants, warranties and undertakings of or conditions contained in or arising under the Guaranteed Agreements binding upon or made by Transferor and assumed by Transferee under the Assumption Agreement, in each case, whether or not Guarantor shall have contributed funds to Lessor or Transferee, as the case may be, for such payment or performance by Lessor or Transferee (such payments and other obligations guaranteed hereunder hereinafter referred to as the "Obligations"). (b) Guarantor agrees that this Guaranty is an unconditional and absolute guaranty of payment and performance (not merely enforceability) and that its undertakings hereunder are not contingent upon your bringing any action against Transferee or resorting to any security and hereby expressly waives any claim that its undertakings hereunder are so contingent. (c) Guarantor hereby waives promptness, diligence, demand and all notices whatsoever as to the obligations and covenants guaranteed hereby and acceptance of this Guaranty, and waives any other circumstance which might otherwise constitute a defense available to, or a discharge of, the undersigned, and agrees that it shall not be required to consent to, or receive any notice of, any amendment or modification of, or waiver, consent or extension with respect to, the Guaranteed Agreements that may be made or given as provided therein. (d) Guarantor agrees to pay any costs and expenses (including reasonable fees and disbursements of counsel) that may be paid or incurred by the beneficiaries hereof in enforcing any rights with respect to, or collecting, any or all of the Obligations and/or enforcing any rights with respect to, or collecting against, Guarantor under this Guaranty. (e) Guarantor understands and agrees that its obligations hereunder shall be construed as continuing, absolute and unconditional without regard to (i) the validity, regularity or enforceability of any Operative Document, any of the Obligations or any collateral security therefor or guaranty or right of offset with respect thereto at any time or EXHIBIT D - PAGE 3 80 from time to time held by any beneficiary hereof, (ii) any defense, set-off or counterclaim (other than a defense of payment or performance) that may at any time be available to or be asserted by Transferee against any beneficiary hereof or (iii) any other circumstances whatsoever (with or without notice to or knowledge of Transferee or Guarantor) that constitutes, or might be construed to constitute, an equitable or legal discharge of Transferee for the Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any other instance. 4. Quiet Enjoyment. So long as no Event of Default shall have occurred and be continuing, Guarantor will not permit Transferee or Lessor to take or cause to be taken any action contrary to Lessee's rights under the Lease, including, without limitation, Lessee's rights to possession and use of the Aircraft. 5. No Discharge. The obligations of Guarantor hereunder are absolute, unconditional and irrevocable and will not be discharged by, and this Guaranty shall remain in full force and effect notwithstanding: (a) the assignment, conveyance or other transfer by Guarantor of any or all of its interest in or capital stock of Transferee, unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer); (b) the assignment, conveyance or other transfer by Transferee of any or all of its interest in the Trust Estate (as defined in the Trust Agreement), unless such assignment, conveyance or transfer of all of its interest is to a transferee meeting the requirements set forth in Section 8(n) of the Participation Agreement and otherwise complies with the requirements for a transfer as set forth in Section 8(n) of the Participation Agreement, in which event Guarantor shall be discharged from any and all liabilities arising hereunder (to the extent such liabilities arise after such transfer) unless Guarantor guarantees the obligations of the transferee under Section 8(n) of the Participation Agreement; (c) the assignment, conveyance or other transfer by Lessor of any or all of its interest in the Aircraft; (d) any extension or renewal with respect to any obligation of Transferee or Lessor under the Guaranteed Agreements; (e) any modification of, or amendment or supplement to, any of the Guaranteed Agreements; (f) any furnishing or acceptance of additional security or any release of any security; (g) any waiver, consent or other action or inaction or any exercise or non-exercise of any right, remedy or power with respect to Transferee or Lessor, or any change in the structure of Transferee or Lessor; or (h) any insolvency, bankruptcy, reorganization, arrangement, composition, liquidation, dissolution, or similar proceedings with respect to the Trustee or Transferee; or any other occurrence whatsoever, except payment in full of all amounts payable by Transferee under the Guaranteed Agreements and performance in full of all Obligations of Transferee in accordance with the terms and conditions of the Guaranteed Agreements. 6. Reinstatement. Guarantor agrees that this Guaranty shall be automatically reinstated with respect to any payment made prior to any termination of the Guaranty by or on behalf of Transferee pursuant to the Participation Agreement or the other EXHIBIT D - PAGE 4 81 Operative Documents to which Transferee is a party if and to the extent that such payment is rescinded or must be otherwise restored, whether as a result of any proceedings in bankruptcy or reorganization or otherwise. 7. No Subrogation. Notwithstanding any payment or payments made by Guarantor hereunder or any set-off or application of funds of Guarantor by any beneficiary hereof, Guarantor shall not be entitled to be subrogated to any of the rights of any beneficiary hereof against Transferee or any collateral, security or guarantee or right of set-off held by any beneficiary hereof for the payment of the Obligations, nor shall Guarantor seek or be entitled to seek any reimbursement from Transferee in respect of payment made by Guarantor hereunder, until all amounts and performance owing to the beneficiaries hereof by Transferee on account of the Obligations are paid and performed in full. 8. Severability. Any provision of this Guaranty Agreement that 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. 9. Miscellaneous. This Guaranty shall: (a) be binding upon Guarantor, its successors and assigns; (b) inure to the benefit of, and be enforceable by, Lessee, Trust Company, Indenture Trustee, and Loan Participants, and their respective successors and assigns and each other holder from time to time of any interest in the Aircraft or the Operative Documents, but shall not, and is not intended to, create rights in any other third parties; (c) not be waived, amended or modified without the written consent of Lessee, Trust Company, Indenture Trustee, and Loan Participants; (d) BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; and (e) subject to Section 6 hereof, remain in full force and effect until, and shall be terminated upon (1) the payment in full of all sums payable by Transferee, as the case may be, under the Guaranteed Agreements, and by Guarantor hereunder, and performance in full of Transferee, in accordance with the terms and provisions of the Guaranteed Agreements and Guarantor in accordance with the terms of this Guaranty or (2) the date on which Transferee shall meet the requirements set forth in Section 8 of the Participation Agreement without benefit of this Guaranty; provided that Guarantor hereby covenants and agrees that if Transferee shall at any time thereafter (while Transferee shall be Owner Participant under the Participation Agreement) fail to meet such requirements, Guarantor shall immediately reinstate this Guaranty or execute and deliver to the addressees of this Guaranty a guaranty substantially identical hereto. All notices to, or requests of, demands on and other communications with Guarantor shall be made as set forth in the Participation Agreement. [rest of page intentionally left blank] EXHIBIT D - PAGE 5 82 Very truly yours, [GUARANTOR] By: _______________________________ Name: Title: [SIGNATURE PAGE] EXHIBIT D - PAGE 6 83 EXHIBIT E TO PARTICIPATION AGREEMENT FORM OF OPINION OF TRANSFEREE COUNSEL _____________ ___, _______ To Each of the Persons Named on Schedule A Attached Hereto Re: Transfer of Interest in one Boeing Model 757-251 Aircraft, and Operative Documents related to Acquisition Thereof on _________ ____, ______ Ladies and Gentlemen: We have acted as [special][internal] counsel to [Transferee], a _____________ corporation (the "Transferee"), in connection with the transfer by [Transferor], a __________________ corporation (the "Transferor") to Transferee, of all of its right, title and interest in and to the Aircraft and the Operative Documents to which the Transferor is a party or by which it is bound (collectively, the "Transferee Documents") and the assumption by the Transferee of the Transferor's obligations thereunder. The transfer is being accomplished by an Assignment and Assumption Agreement, dated as of ____________ ____, _____ made by the Transferee and agreed to and acknowledged by the Transferor (the "Assumption Agreement"). Capitalized terms used but not otherwise defined herein are defined as set forth in or by reference in the Participation Agreement referred to in the Assumption Agreement. In connection with the opinions expressed herein, we have examined executed counterparts of the Transferee Documents. We have also examined and relied upon the accuracy of the originals or certified, conformed, photocopied or telecopied copies of such corporate records, certificates, instruments and other documents as we have deemed necessary or appropriate to enable us to render the opinions expressed herein. In all such examinations, we have assumed the genuineness of signatures (other than those of the Transferee) on original documents and the conformity to such original documents of all copies submitted to us as certified, conformed, photocopied or telecopied copies, and as to certificates and telegraphic and telephonic confirmations given by public officials, we have assumed the same to have been properly given and to be accurate. As to all matters of fact material to our opinions, we have, when relevant facts were not independently established, relied upon representations and warranties contained in the Operative Documents and upon the statements and certificates furnished to us. Based upon and subject to the foregoing and the matters hereinafter set forth, we are of the opinion that: EXHIBIT E - PAGE 1 84 1. The Transferee is a corporation duly organized, validly existing and in good standing under the laws of the State of ______________. 2. The Transferee has full corporate power, authority and legal right to carry on its business as now conducted and is duly authorized and empowered to [execute and deliver] the Transferee Documents and to perform its obligations thereunder in accordance with the conditions and provisions thereof. 3. The execution, delivery and performance by the Transferee of the Transferee Documents have been duly authorized by the Transferee[, and each of the Transferee Documents has been duly executed and delivered by it]. 4. No filing with, notice to or authorization or approval from any governmental or public body or authority of the United States of America or the State of ____________ is required in connection with the execution, delivery and performance by the Transferee of the Transferee Documents. 5. There are no actions, suits or proceedings (whether or not purportedly on behalf of the Transferee) pending or, to our knowledge, threatened against or affecting the Transferee or any property rights of the Transferee at law or in equity or before any court, commission or other administrative agency or instrumentality, which, either individually or in the aggregate, if determined adversely would materially affect the condition, financial or otherwise, of the Transferee or its ability to perform its obligations under the Transferee Documents; and, to our knowledge, the Transferee is not in default with respect to any order or decree of any court or governmental commission, agency or instrumentality which would materially affect the condition, financial or otherwise, of the Transferee or its ability to perform its obligations under the Transferee Documents. 6. Neither the execution and delivery by the Transferee of the Transferee Documents nor the consummation of the transactions therein contemplated or the fulfillment of or compliance with, the terms and provisions thereof will conflict with or result in a breach of, any of the terms, conditions or provisions of (i) any law or regulation of the United States of America or the State of ____________, or (ii) to the best of our knowledge, any order, injunction or decree of any court or governmental instrumentality binding upon the Transferee, or (iii) the Certificate of Incorporation or the By-Laws of the Transferee or (iv) to the best of our knowledge, any bond, debenture, note, mortgage, indenture, agreement or other instrument to which the Transferee is now a party or by which it or its property may be bound, or would constitute (with the giving of notice or the passage of time or both) a default thereunder or result in the creation or imposition of any lien, charge, security interest or other encumbrance (except as expressly contemplated by the Operative Documents) or any nature whatsoever upon the Aircraft pursuant to the terms of any such agreement or instrument. 7. Each of the Transferee Documents constitutes a legal, valid and binding obligation of the Transferee, enforceable against the Transferee in accordance with the terms thereof, except as the enforceability thereof may be limited by (a) general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law), EXHIBIT E - PAGE 2 85 (b) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and (c) public policy considerations (in the case of the indemnity provisions contained therein). 8. Neither the execution and delivery by the Transferee of the Transferee Documents, nor the consummation by the Transferee of any of the transactions contemplated thereby requires the consent or approval of, the giving of notice to, or the registration or filing with, or the taking of any other action with respect to, any governmental authority or agency of the United States of the State of _______________. We express no opinion as to the laws of any jurisdiction other than the laws of the State of ______________ and the federal laws of the United States of America. We note that the Trust Agreement is governed by the laws of the State of Utah. Insofar as the foregoing opinions relate to the legality, validity, binding effect and enforceability of the Trust Agreement, we have assumed for purposes of such opinions (notwithstanding the express provisions of such agreements to the contrary) that such agreement is governed by the laws of the State of ______________ and we express no opinion as to the enforceability of the choice of law provisions in such agreement. In addition, we express no opinion herein as to (i) any federal or state securities laws, (ii) any tax laws, (iii) any aviation laws, (iv) any laws, statutes, rules or regulations applicable to the particular nature of the equipment acquired by the Owner Trustee pursuant to the Participation Agreement or the Purchase Agreement Assignment and (v) ERISA or any other pension and employee benefit laws, rules or regulations. In addition, we express no opinion as to title in or to the Trust Estate on the part of any Person. Insofar as our opinions expressed herein relate to the Tax Indemnity Agreement, such opinions are addressed and are being rendered solely to Lessee. In rendering the opinions expressed herein, we have assumed that (a) each of the Transferee Documents has been duly authorized, executed and delivered by the respective parties thereto (other than the Transferee) and constitutes a legal, valid and binding obligation of each of such parties (other than the Transferee) enforceable against each of such parties in accordance with the terms thereof, (b) each of such parties (other than the Transferee) has the requisite power, authority and legal right to enter into and perform its respective obligations under the Transferee Documents and (c) the transactions provided for in the Transferee Documents are not within the prohibitions of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended. This opinion is furnished by us at the request of the Transferee, with their consent for the sole benefit of the addressees hereof, each of whom we understand and agree may rely upon the opinions set forth herein. No other person or entity is entitled to rely on this opinion without our express written consent. This opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated herein. Very truly yours, EXHIBIT E - PAGE 3 86 SCHEDULE A [Lessee] [Trust Company] [Indenture Trustee] [Loan Participants] SCHEDULE A - PAGE 1 EX-4.K8 94 FIRST AMENDMENT TO PARTICIPATION AGREEMENT -1996 G 1 FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 G] This FIRST AMENDMENT TO PARTICIPATION AGREEMENT [NW 1996 G], dated as of June 12, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) [_____________], a [_________] corporation (the "OWNER PARTICIPANT"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (iv) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (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 (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Amendment, the terms used herein in capitalized form shall have the meanings attributed thereto in the Lease; W I T N E S S E T H: WHEREAS, Lessee, the Owner Participant, the Owner Trustee, ABN AMRO Bank N.V., as the loan participants (collectively, the "ORIGINAL LOAN PARTICIPANT") and the Indenture Trustee entered into the Participation Agreement [NW 1996 G], dated as of May 29, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 G], dated as of May 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 G], dated June 3, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participant secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participant in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and Lessee entered into the Lease Agreement [NW 1996 G] relating to the Aircraft, dated as of May 29, 1996, as supplemented by Lease Supplement No. 1 [NW 1996 G] dated June 3, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to Lessee, and 2 Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 G], dated as of May 29, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 G] relating to the Aircraft, dated as of May 29, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 G] dated as of May 29, 1996 (the "GUARANTEE"), pursuant to which the Guarantor guaranteed certain obligations of Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant Guarantor entered into the Owner Participant Guaranty [NW 1996 G] dated as of May 29, 1996 (the "OWNER PARTICIPANT GUARANTY"), pursuant to which the Owner Participant Guarantor guaranteed certain obligations of the Owner Participant under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent have entered into the Refunding Agreement [NW 1996 G], dated as of June 3, 1996 (the "REFUNDING AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Trustee and the Indenture Trustee have amended and restated the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 G], dated as of the date hereof (the "INDENTURE"), under which Indenture the Owner Trustee shall issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES") in three series; WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Trustee and Lessee entered into the First Amendment to Lease -2- 3 Agreement [NW 1996 G], dated as of June 3, 1996 (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"); WHEREAS, concurrently with the execution and delivery of the Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 G] dated as of June 3, 1996 (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Amendment, the Owner Participant and the Owner Trustee have entered into the First Amendment to Trust Agreement [NW 1996 G] dated as of the date hereof (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date (as defined in Section 1 of the Refunding 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing 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 Amendment, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") entered into three revolving credit agreements (each, a "LIQUIDITY FACILITY"), one for the benefit of the holders of Certificates of each Pass Through Trust, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, the Liquidity Provider and the Subordination Agent entered into the Intercreditor Agreement, dated as of the date hereof (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; -3- 4 NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree that the Original Participation Agreement is amended as follows: SECTION 1. AMENDMENT OF SECTION 1(D) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 1(d) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 2. AMENDMENT OF SECTION 7(B)(I) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(i) of the Original Participation Agreement is hereby amended by (i) adding the words "or the Pass Through Certificates" (1) before and after the clause "or transfer of the Secured Certificates" in clause (E) thereof and (2) after the clause "the Secured Certificates" in clause (F) thereof and (ii) adding the words and punctuation "(including any Make-Whole Amount)" after the word "premium" in clause (F) thereof. SECTION 3. AMENDMENT OF SECTION 7(B)(II) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(ii) of the Original Participation Agreement is hereby amended by (i) deleting the words "other than a Loan Participant" from clauses (1) and (3) thereof; (ii) deleting clauses (2) and (4) thereof in their entirety and substituting therefor "Intentionally Omitted", (iii) deleting the words "a Loan Participant" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (iv) deletign the words "any Loan Participant or any Certificate Holder" from clause (9) thereof and substituting therefor the words "the Indenture Trustee or the Trust Indenture Estate", (v) deleting clause (B) in clause (10) thereof and substituting therefor "or", (vi) deleting "(C)" in clause (10) thereof and substituting therefor "(B)", and (vii) deleting the parenthetical clause and the from clause (12) thereof. SECTION 4. AMENDMENT OF SECTION 7(B)(III) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(iii) of the Original Participation Agreement is hereby amended by (i) deleting the words "U.S. Withholding Taxes" where such words first appear in the second sentence of the first paragraph thereof and substituting therefor "any Income Tax imposed by the Unites States Federal government required to be withheld from payments on the Secured Certificates or the Pass Through Certificates (a "U.S. WITHHOLDING TAX")" and (ii) deleting the second sentence in the last paragraph thereof. SECTION 5. AMENDMENT OF SECTION 7(B)(X) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 7(b)(x) of the Original Participation Agreement is hereby amended by (i) deleting the third and fourth sentences thereof and (ii) deleting the words "other than a Loan Participant" in the first sentence thereof. SECTION 6. AMENDMENT OF SECTION 7(C) OF THE ORIGINAL PARTICIPATION AGREEMENT . Section 7(c) of the Original Participation Agreement is hereby amended by (i) deleting the word "and" between the words "expenses" and "Transaction Expenses" in the second parenthetical phrase of the first paragraph thereof and substituting a comma therefor, (ii) inserting after the phrase "to Section 16 hereof" in such second parenthetical phrase -4- 5 the words "and Refinancing Expenses to the extent not required to be paid by the Owner Trustee or the Owner Participant pursuant to Section 11(a) of the Refunding Agreement", (iii) adding the words and punctuation "and, only in the case of an Indemnitee who is the Owner Participant and its Affiliates, successors, permitted assigns, directors, officers, employees, servants and agents, the Intercreditor Agreement, the Liquidity Facilities and the Pass Through Trust Agreements and, only in the case of an Indemnitee who is the Subordination Agent, the Intercreditor Agreement and the Liquidity Facilities" after the words "respect thereof" in the first clause (A) thereof, and (iv) adding the words and punctuation "the Intercreditor Agreement, the Liquidity Facilities or the Pass Through Trust Agreements" after the words "Operative Documents" in the second clause (A) thereof and in the second clause (B) thereof. SECTION 7. [Reserved] SECTION 8. AMENDMENT OF SECTION 8(F) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(f) of the Original Participation Agreement is hereby amended by deleting the words "each of the Loan Participants" and substituting therefor the words "the Indenture Trustee" in the first line thereof. SECTION 9. AMENDMENT OF SECTION 8(N) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(n) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", any Loan Participant's," from the first sentence thereof, (ii) deleting the words and punctuation "the Loan Participants," each time they appear in the second sentence thereof, (iii) deleting the "," between the words "Owner Trustee" and "the Indenture Trustee" in clause (N) of the third sentence thereof and substituting therefor "and", (iv) deleting the words "and the Loan Participants" from clause (N) of the third sentence thereof, and (v) deleting the words and punctuation "the Loan Participants," from the fifth sentence thereof. SECTION 10. AMENDMENT OF SECTION 8(Q)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(q)(A) of the Original Participation Agreement is hereby amended by (i) deleting the word "Each" in the first sentence thereof and substituting therefor the words "The Owner" and (ii) adding a new sentence to the end thereof to read as follows: "The Pass Through Trustee agrees that it will not agree to any amendment, modification or waiver of -5- 6 Section 1.01(e)(i) of the initial supplement (other than the initial supplement related to the Northwest Airlines 1996-1A Pass Through Trust) to each Pass Through Trust Agreement without the prior written consent of the Owner Participant.". SECTION 11. AMENDMENT OF SECTION 8(T) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(t) of the Original Participation Agreement is hereby amended by deleting the fourth and fifth sentences thereof. SECTION 12. AMENDMENT OF SECTION 8(X) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(x) of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", each Loan Participant" therefrom and (ii) adding a new second paragraph thereto at the end thereof: 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. Section1110; 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. Section1110. SECTION 13. AMENDMENT OF SECTION 8(Y)(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(y)(A) of the Original Participation Agreement is hereby amended by (i) deleting the words "each" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Owner", (ii) deleting the words "such" the first time it appears in Section 8(y)(A)(ii) and substituting therefor the words "the Indenture Trustee and the Owner", (iii) inserting in Section 8(y)(A)(ii) after the words "Purchase Agreement Assignment", the words and punctuation ", the Refunding Agreement", (iv) deleting the word "each" the first time it appears in Section 8(y)(A)(iv) and substituting therefor the words "the Owner", and (v) deleting the word "Participants" from Section 8(y)(A)(iv) and substituting therefor the words "the Indenture Trustee and the Owner Participant". SECTION 14. AMENDMENT OF SECTION 8(DD) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(dd) of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 15. AMENDMENT OF SECTION 8(II) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 8(ii) of the Original Participation Agreement is hereby amended to read in its entirety as follows: (gg) Lessee agrees and covenants that it shall not purchase, guarantee or acquire any interest in (i) any Secured Certificate (except as provided in Section 8(x)) or Pass Through Certificate or (ii) any Advance by the Liquidity Provider. -6- 7 SECTION 16. AMENDMENT OF SECTION 9 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 9 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 17. AMENDMENT OF SECTION 10 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 10 of the Original Participation Agreement is hereby amended by (i) deleting the words and punctuation ", the Loan Participants" from clause (A) thereof, (ii) deleting the words "Loan Participants" the second time they appear in clause (B) thereof and substituting therefor the words "Indenture Trustee", and (iii) deleting the words "or 10.05" from clause (iii) of the second sentence thereof. SECTION 18. AMENDMENT OF SECTION 13(B) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 13(b) of the Original Participation Agreement is hereby amended by deleting the words "at the foot of this Agreement" in clause (A) of the second sentence thereof and substituting therefor the words "on the signature pages to the Refunding Agreement". SECTION 19. AMENDMENT OF SECTION 14 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 14 of the Original Participation Agreement is hereby amended by (i) deleting the words "Loan Participants" each time they appear in clauses (A), (B), and (D) thereof and substituting therefor the words "Indenture Trustee", (ii) deleting the "," both times it appears between the words "Owner Participant" and "the Indenture Trustee" in clause (E) thereof and substituting therefor "and", and (iii) deleting the words "and the Loan Participants" both times they appear in clause (E) thereof. SECTION 20. AMENDMENT OF SECTION 15(A) OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 15(a) of the Original Participation Agreement is hereby amended to read in its entirety as follows: Section 15. Miscellaneous. (a) The Owner Participant covenants and agrees that it shall not unreasonably withhold its consent to any consent requested of the Owner Trustee, as Lessor, under the terms of the Lease which by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor. SECTION 21. AMENDMENT OF SECTION 17 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 17 of the Original Participation Agreement is hereby amended by adding the following new subclause (7) to clause (a) thereof: (7) in connection with any proposed refinancing, if, on the date which is two Business Days prior to the last date on which notice of revocation of redemption may be given pursuant to Section 2.12(b) of the Trust Indenture, the Owner Participant is not satisfied in its sole discretion that such refinancing will occur on the date specified for such refinancing in the notice provided pursuant to Section 2.11 of the Trust Indenture, then Lessee shall not effect such proposed refinancing and shall provide notice to such effect to the Indenture Trustee pursuant to Section 2.12(b) of the Trust Indenture. -7- 8 SECTION 22. AMENDMENT OF SECTION 18 OF THE ORIGINAL PARTICIPATION AGREEMENT. Section 18 of the Original Participation Agreement and all references thereto in the Original Participation Agreement are hereby deleted. SECTION 23. RATIFICATION. Except as hereby modified, the Original Participation Agreement shall continue in full force and effect as originally executed. From and after the date of this Amendment, each and every reference in the Participation Agreement, as amended hereby, to "this Agreement", "herein", "hereof" or similar words or phrases referring to the Participation Agreement or any word or phrase referring to a section or provision of the Participation Agreement is deemed for all purposes to be a reference to the Participation Agreement or such section or provision as amended pursuant to this Amendment. SECTION 24. MISCELLANEOUS. (a) Without in any way affecting the provisions of the letter agreement dated June 3, 1996 between the Owner Participant and Lessee (which letter agreement shall remain in full force and effect) relating to future financings, each of the parties hereto agrees that the transactions contemplated hereby shall constitute one of the three refinancing operations permitted in Section 17 of the Participation Agreement. (b) Each party hereto acknowledges and agrees that the Purchaser is a Loan Participant under the Participation Agreement, the Lease and the other Operative Documents, and is entitled to the benefits of the covenants and other provisions therein running in favor of the Loan Participants, and to the security purported to be afforded by the Trust Indenture, but that (i) the Purchaser has no liability arising out of any actions or inactions of the Original Loan Participant or any prior Certificate Holder or any event or condition which occurred or existed prior to the Closing, (ii) the Purchaser is making no representations or warranties other than those set forth in the Refunding Agreement, and (iii) the Purchaser has no liability or obligation under any covenant in any of such agreements for any period prior to the Closing. (c) This Amendment 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 Amendment 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 Amendment shall be binding upon, and inure to the benefit of, Lessee and its successors and assigns, each Loan Participant and its successors and assigns, the Owner Participant and its successors and 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. THIS AMENDMENT 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, -8- 9 VALIDITY AND PERFORMANCE. THIS AMENDMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -9- 10 IN WITNESS WHEREOF, the parties hereto have caused this Amendment 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: ----------------------------------- Name: Title: FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee By: ----------------------------------- Name: Title: STATE STREET BANK AND TRUST COMPANY, as Pass Through Trustee under each of the Pass Through Trust Agreements By: ----------------------------------- Name: Title: [__________________], as Owner Participant By: ----------------------------------- Name: Title: -10- 11 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, as Subordination Agent By: ------------------------------------ Name: Title: STATE STREET BANK AND TRUST COMPANY, in its individual capacity and as Indenture Trustee By: ------------------------------------ Name: Title -11- 12 SCHEDULE I TO PARTICIPATION AGREEMENT 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. 1996-1A, dated as of June 12, 1996. 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. 1996-1B, dated as of June 12, 1996. 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. 1996-1C, dated as of June 12, 1996. -12- EX-4.K9 95 REFUNDING AGREEMENT -1996 G 1 REFUNDING AGREEMENT [NW 1996 G] This REFUNDING AGREEMENT [NW 1996 G], dated as of June 3, 1996, among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation (the "LESSEE"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the "GUARANTOR"), (iii) [_____________], a [______] corporation (the "OWNER PARTICIPANT"), (iv) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (the "OWNER TRUSTEE") under the Trust Agreement (as defined below), (v) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity except as otherwise expressly provided herein, but solely as trustee (in such capacity, the "PASS THROUGH TRUSTEE") under each of the three separate Pass Through Trust Agreements (as defined below), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as subordination agent and trustee (in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement (as defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, but solely as Indenture Trustee (the "INDENTURE TRUSTEE") under the Original Indenture and the Indenture (as defined below). Except as otherwise defined in this Agreement, the terms used herein in capitalized form shall have the meanings attributed thereto in the Participation Agreement (as defined below) as if the Closing Date had occurred. W I T N E S S E T H: WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, [Insert Bridge Lenders] (the "ORIGINAL LOAN PARTICIPANT") and the Indenture Trustee entered into the Participation Agreement [NW 1996 G], dated as of May 29, 1996 (the "ORIGINAL PARTICIPATION AGREEMENT"), providing for the sale and lease of one Boeing 757-251 aircraft (the "AIRCRAFT"); WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Trust Indenture and Security Agreement [NW 1996 G], dated as of May 29, 1996, as supplemented by Trust Agreement and Indenture Supplement [NW 1996 G], dated June 3, 1996 (collectively, the "ORIGINAL INDENTURE"), pursuant to which the Owner Trustee issued to the Original Loan Participant secured certificates substantially in the form set forth in Article II thereof (the "ORIGINAL SECURED CERTIFICATES") as evidence of the loan then being made by the Original Loan Participant in participating in the payment of Lessor's Cost; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Lessee entered into the Lease Agreement [NW 1996 G] relating to the Aircraft, dated as of May 29, 1996, as supplemented by Lease 2 Supplement No. 1 [NW 1996 G] dated June 3, 1996 (the "ORIGINAL LEASE"), whereby, subject to the terms and conditions set forth therein, the Owner Trustee agreed to lease to the Lessee, and the Lessee agreed to lease from such Owner Trustee, the Aircraft commencing on the Delivery Date; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant and the Owner Trustee entered into the Trust Agreement [NW 1996 G], dated as of May 29, 1996 (the "ORIGINAL TRUST AGREEMENT"), pursuant to which the Owner Trustee agreed, among other things, to hold the Trust Estate defined in Section 1.01 thereof for the benefit of the Owner Participant thereunder; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Participant entered into a Tax Indemnity Agreement [NW 1996 G] relating to the Aircraft, dated as of May 29, 1996 (the "ORIGINAL TAX INDEMNITY AGREEMENT"), with the Lessee; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Guarantor entered into the Guarantee [NW 1996 G] dated as of May 29, 1996 (the "GUARANTEE") pursuant to which the Guarantor guaranteed certain obligations of the Lessee under the Operative Documents; WHEREAS, Section 17 of the Original Participation Agreement contemplates the redemption of the Original Secured Certificates pursuant to Section 2.10 of the Original Indenture as part of a refinancing operation, Section 3(d) of the Original Lease contemplates the adjustment of Rent in the event of such a refinancing operation, and the Lessee has given its written notice to the Owner Participant and the Owner Trustee pursuant to such Section 17 of its desire to implement such a refinancing operation; WHEREAS, at the Closing (as defined below), the Owner Trustee and the Indenture Trustee will amend and restate the Original Indenture as the Amended and Restated Trust Indenture and Security Agreement [NW 1996 G], dated as of the Refinancing Date (the "INDENTURE"), under which Indenture the Owner Trustee will issue new secured certificates substantially in the form set forth in Section 2.01 thereof (the "REFINANCING SECURED CERTIFICATES ") in three series; WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Trustee and the Lessee entered into the First Amendment to Lease Agreement [NW 1996 G], dated as of the date hereof (the "LEASE AMENDMENT NO. 1"; the Original Lease, as amended by the Lease Amendment No. 1, the "LEASE"), containing amendments, modifications and additions necessary to give effect to the transactions described herein; WHEREAS, at the Closing, the Owner Participant and the Owner Trustee will enter into the First Amendment to Trust Agreement [NW 1996 G], dated as of the Refinancing -3- 3 Date (the "TRUST AGREEMENT AMENDMENT NO. 1"; the Original Trust Agreement, as amended by the Trust Agreement Amendment No. 1, the "TRUST AGREEMENT"); WHEREAS, at the Closing, the Lessee, the Owner Trustee, the Pass Through Trustee, the Owner Participant, the Indenture Trustee and the Subordination Agent will enter into the First Amendment to Participation Agreement [NW 1996 G], dated as of the Refinancing Date (the "PA AMENDMENT NO. 1"; the Original Participation Agreement, as amended by the PA Amendment No. 1, the "PARTICIPATION AGREEMENT"); WHEREAS, concurrently with the execution and delivery of this Refunding Agreement, the Owner Participant and Lessee entered into the First Amendment to Tax Indemnity Agreement [NW 1996 G] dated as of the date hereof (the "TIA AMENDMENT NO. 1"; the Original Tax Indemnity Agreement, as amended by the TIA Amendment No. 1, the "TAX INDEMNITY AGREEMENT"); WHEREAS, pursuant to the Pass Through Trust Agreement and each of the Pass Through Trust Supplements set forth in Schedule I hereto (collectively, the "PASS THROUGH TRUST AGREEMENTS"), on the Refinancing Date, 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 at the Closing to purchase from the Owner Trustee, on behalf of each Pass Through Trust, all of the Refinancing Secured Certificates bearing the same interest rate as the Certificates issued by such Pass Through Trust; WHEREAS, at the Closing, (i) Westdeutsche Landesbank Girozentrale, acting through its New York branch (the "LIQUIDITY PROVIDER") will enter 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 Refinancing Date (the "INTERCREDITOR AGREEMENT"); and WHEREAS, the Refinancing Secured Certificates will be held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trusts; NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: -4- 4 SECTION 1. PURCHASE OF REFINANCING SECURED CERTIFICATES; REFUNDING. (a) Subject to the satisfaction or waiver of the conditions set forth herein, on June 12, 1996 or on such other date agreed to by the parties hereto (the "REFINANCING DATE"): (i) immediately prior to the Closing, the Owner Participant shall pay to the Owner Trustee an amount equal to the unpaid interest on the Original Secured Certificates accrued up to but not including the Refinancing Date; (ii) the Pass Through Trustee for each Pass Through Trust shall pay to the Owner Trustee the aggregate purchase price of the Refinancing Secured Certificates being issued to such Pass Through Trustee as set forth in clause (vii) below; (iii) the Owner Trustee shall pay to the Indenture Trustee for the benefit of the holders of the Original Secured Certificates an amount equal to the aggregate principal amount of Original Secured Certificates outstanding on the Refinancing Date, together with accrued and unpaid interest on the Original Secured Certificates up to but not including the Refinancing Date, and all other amounts payable to such holders by the Owner Trustee under the Original Indenture and the Original Participation Agreement; (iv) pursuant to the Indenture, the Indenture Trustee shall disburse to the holders of the Original Secured Certificates the amounts of principal and interest, and other amounts, if any, described in clause (iii) above, owing to them on the Refinancing Date with respect to the Original Secured Certificates as a prepayment of the Original Secured Certificates; (v) simultaneously with the disbursement by the Indenture Trustee of amounts described in clause (iv) above to the holders of the Original Secured Certificates, the Indenture Trustee shall receive the Original Secured Certificates for cancellation; (vi) the Owner Trustee and the Indenture Trustee shall enter into the Indenture; and (vii) the Owner Trustee shall issue, pursuant to Article II of the Indenture, to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts, Refinancing Secured Certificates of the maturity and aggregate principal amount, bearing the interest rate and for the purchase price set forth on Schedule II hereto opposite the name of such Pass Through Trust. (b) The Owner Participant, by its execution and delivery hereof, requests and directs the Owner Trustee to execute and deliver this Agreement and, subject to the terms hereof, to take the actions contemplated herein. -5- 5 (c) In case any Pass Through Trustee shall for any reason fail to purchase the Refinancing Secured Certificates pursuant to Section 1(a) above on or prior to June 12, 1996 or such other date as shall be agreed in writing by the parties hereto, the written notice given by the Lessee pursuant to Section 17 of the Original Participation Agreement shall be deemed never to have been given, none of the Owner Participant, the Owner Trustee nor the Lessee shall have any obligation to pay to the holders of the Original Secured Certificates or the Indenture Trustee any amount in respect of the prepayment of the Original Secured Certificates, the Original Secured Certificates shall remain outstanding and in full force and effect, and the actions contemplated by Sections 1(a), 5, 6 and 7 hereof shall not take place. (d) The closing (the "CLOSING") of the transactions described in this Agreement shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, on the Refinancing Date, or at such other place as the parties hereto may agree. (e) All payments pursuant to this Section 1 shall be made in immediately available funds to such accounts and at such banks as the parties hereto shall designate in writing not less than one Business Day prior to the Refinancing Date. (f) In order to facilitate the transactions contemplated hereby, the Lessee and the Guarantor have entered into the Underwriting Agreement, dated the date hereof, among the Lessee, the Guarantor and the several underwriters (the "UNDERWRITERS") named therein (the "UNDERWRITING AGREEMENT"), and, subject to the terms and conditions hereof, the Lessee and the Guarantor will enter into each of the Pass Through Trust Agreements and will undertake to perform certain administrative and ministerial duties under such Pass Through Trust Agreements. SECTION 2. REFINANCING SECURED CERTIFICATES. The Refinancing Secured Certificates shall be payable as to principal in accordance with the terms of the Indenture, and the Refinancing Secured Certificates shall provide for a fixed rate of interest per annum and shall contain the terms and provisions provided for the Refinancing Secured Certificates in the Indenture. The Owner Trustee shall execute, and the Indenture Trustee shall authenticate and deliver to the Pass Through Trustee for each Pass Through Trust, a principal amount of Refinancing Secured Certificates bearing the interest rate set forth opposite the name of such Pass Through Trust on Schedule II hereto, which Refinancing Secured Certificates in the aggregate shall be in the principal amounts set forth on Schedule II hereto. Subject to the terms hereof, of the Pass Through Trust Agreements and of the other Operative Documents, all such Refinancing Secured Certificates shall be dated and authenticated as of the Refinancing Date and shall bear interest therefrom, shall be registered in such names as shall be specified by the Subordination Agent and shall be paid in the manner and at such places as are set forth in the Indenture. SECTION 3. CONDITIONS PRECEDENT. The obligations of the Pass Through Trustee to make the payments described in Section 1(a)(ii) and the obligations of the Owner Trustee and the Owner Participant to make the payments and participate in the transactions -6- 6 contemplated by this Agreement on the Refinancing Date are subject to the fulfillment, prior to or on the Refinancing Date, of the following conditions precedent (except that paragraphs (a), (f) and (j) shall not be conditions precedent to the obligations of the Owner Trustee hereunder, paragraphs (g) and (l) shall not be conditions precedent to the obligations of the Owner Participant hereunder, and paragraph (r) shall not be a condition precedent to the obligations of the Pass Through Trustee hereunder): (a) The Owner Trustee shall have tendered the Refinancing Secured Certificates to the Indenture Trustee for authentication, and the Indenture Trustee shall have authenticated such Refinancing Secured Certificates and shall have tendered the Refinancing Secured Certificates to the Subordination Agent on behalf of the Pass Through Trustee in accordance with Section 1. (b) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received executed counterparts or conformed copies of the following documents: (1) this Agreement; (2) the Lease Amendment No. 1; (3) the Indenture; (4) the PA Amendment No. L; (5) the Trust Agreement Amendment No. 1; (6) each of the Pass Through Trust Agreements; (7) the Intercreditor Agreement; and (8) the Liquidity Facility for each of the Class A, Class B and Class C Trusts. (c) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Lessee and the Guarantor (as the case may be) as to the person or persons authorized to execute and deliver this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the TIA Amendment No. 1 and any other documents to be executed on behalf of the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby and the signatures of such person or persons; -7- 7 (2) a copy of the resolutions of the board of directors of the Lessee and the Guarantor or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the 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 the Lessee or the Guarantor (as the case may be) in connection with the transactions contemplated hereby; and (3) a copy of the certificate of incorporation of the Lessee and the Guarantor, certified by the Secretary of State of the State of Minnesota in the case of the 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 the Lessee and the Guarantor, certified by the Secretary or Assistant Secretary of the 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 the 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 Refinancing Date, as to the due incorporation and good standing of the Lessee or the Guarantor (as the case may be) in such state. (d) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received a certificate signed by an authorized officer of the Lessee (and, with respect to the matters set forth in clauses (4) and (5) below, of the Guarantor), dated the Refinancing Date, certifying that: (1) the Aircraft has been duly certified by the FAA as to type and airworthiness in accordance with the terms of the Original Lease and has a current, valid certificate of airworthiness; (2) the FAA Bill of Sale, the Original Lease and the Original Indenture have been duly recorded, and the Original Trust Agreement has been duly filed, with the FAA pursuant to the sections of Title 49, United States Code, relating to aviation (the "FEDERAL AVIATION ACT"); (3) the Aircraft has been registered with the FAA in the name of the Owner Trustee and the Lessee has authority to operate the Aircraft; (4) the representations and warranties contained herein of the Lessee and the Guarantor are correct as though made on and as of the Refinancing Date, except to the extent that such representations and warranties (other than those contained in clause (v) of Section 8(d)) -8- 8 relate solely to an earlier date (in which case such representations and warranties were correct on and as of such earlier date); and (5) there has been no material adverse change in the financial condition of the Guarantor and its subsidiaries, taken as a whole, since December 31, 1995. (e) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Indenture Trustee as to the person or persons authorized to execute and deliver this Agreement, the Indenture, the PA Amendment No. 1, 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 and the signatures of such person or persons; (2) a copy of the resolutions of the board of directors of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Indenture Trustee in connection with the transactions contemplated hereby; (3) a copy of the articles of association and by-laws of the Indenture Trustee, each certified by the Secretary or an Assistant Secretary of the Indenture Trustee; and (4) a certificate signed by an authorized officer of the Indenture Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Indenture Trustee are correct as though made on and as of the Refinancing 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). (f) The Pass Through Trustee and the Owner Participant each shall have received the following: (1) an incumbency certificate of the Owner Trustee as to the person or persons authorized to execute and deliver this Agreement, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and any other documents to be executed on behalf of the Owner Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons; -9- 9 (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; (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 Refinancing Date, certifying that the representations and warranties contained herein of the Owner Trustee are correct as though made on and as of the Refinancing 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). (g) The Pass Through Trustee and the Owner Trustee each shall have received a certificate signed by an authorized officer of the Owner Participant, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Owner Participant are correct as though made on and as of the Refinancing 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). (h) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an independent insurance broker's report as to the due compliance with the terms of Section 11 of the Lease relating to insurance with respect to the Aircraft. (i) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Simpson Thacher & Bartlett, special counsel for the Lessee and the Guarantor, an opinion addressed to it from Cadwalader, Wickersham & Taft, special counsel for the Lessee and the Guarantor, and an opinion addressed to it from the Lessee's legal department, in each case in form and substance satisfactory to each of them. (j) The Pass Through Trustee and the Owner Participant each shall have received an opinion addressed to it from Ray, Quinney & Nebeker, special counsel for the Owner Trustee, in form and substance satisfactory to each of them. (k) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Bingham, Dana & Gould LLP, special counsel for the Indenture Trustee, in form and substance satisfactory to each of them. -10- 10 (l) The Pass Through Trustee and the Owner Trustee each shall have received an opinion addressed to it from Dewey Ballantine, special counsel for the Owner Participant, and an opinion addressed to it from corporate counsel to the Owner Participant, in each case in form and substance satisfactory to each of them. (m) The Pass Through Trustee shall have received an opinion of White & Case, special counsel for the Liquidity Provider, and in house German counsel for the Liquidity Provider, each in form and substance satisfactory to the Pass Through Trustee. (n) The Pass Through Trustee, the Owner Trustee and the Owner Participant each shall have received an opinion addressed to it from Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, in form and substance satisfactory to each of them. (o) The 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 Refinancing Secured Certificates to be purchased from the Owner Trustee. (p) No change shall have occurred after the date of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities or any court that would make it illegal for the Pass Through Trustees to make the payments described in Section 1(a)(ii) or for the Owner Trustee or the Owner Participant to participate in the transactions contemplated by this Agreement on the Refinancing Date. (q) All approvals and consents of any trustee or holder of any indebtedness or obligations of the Lessee or the Guarantor which are required in connection with the Pass Through Trustee's making of the payments described in Section 1(a)(ii) or the Owner Trustee's or the Owner Participant's participation in the transactions contemplated by this Agreement on the Refinancing Date shall have been duly obtained. (r) The Lessee and the Owner Participant shall each have executed and delivered to the other the TIA Amendment No. 1. Promptly following the recording of the Lease Amendment No. 1 and the Indenture pursuant to the Federal Aviation Act, the Lessee will cause Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the Indenture Trustee, the Owner Participant and the Owner Trustee an opinion as to the due recording of the Lease Amendment No. 1 and the Indenture. SECTION 4. CERTAIN CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE AND THE GUARANTOR; CONDITIONS PRECEDENT WITH RESPECT TO THE PASS THROUGH TRUSTEE. (a) The obligations of the Lessee and the Guarantor to participate in the transactions contemplated by this Agreement and to execute and deliver each of the Pass Through Trust Agreements and -11- 11 the PA Amendment No. 1 are subject to the receipt by the Lessee and the Guarantor of (i) each opinion referred to in subsections (j) through (n) of Section 3, addressed to the Lessee and the Guarantor or accompanied by a letter from counsel rendering such opinion authorizing the Lessee and the Guarantor to rely on such opinion as if it were addressed to the Lessee and the Guarantor, (ii) each certificate referred to in subsections (e) through (g) of Section 3, (iii) executed counterparts or conformed copies of the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1 and (iv) such other documents and evidence with respect to each other party hereto as the Lessee, the Guarantor or their counsel 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) The respective obligation of each of the Lessee, the Guarantor, the Owner Participant, the Owner Trustee and the Indenture Trustee to participate in the transactions contemplated hereby is subject to the receipt by each of them of (i) a certificate signed by an authorized officer of the Pass Through Trustee, dated the Refinancing Date, certifying that the representations and warranties contained herein of the Pass Through Trustee are correct as though made on and as of the Refinancing 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), (ii) an opinion addressed to each of them of Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee, in form and substance satisfactory to each of them, and (iii) 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. SECTION 5. AMENDMENT AND RESTATEMENT OF THE ORIGINAL INDENTURE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the Indenture, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the Indenture. The Lessee and the Guarantor, by execution and delivery hereof, consent to such execution and delivery of the Indenture. The Indenture shall be effective as of the Refinancing Date. SECTION 6. AMENDMENT OF THE ORIGINAL LEASE. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Indenture Trustee, the Pass Through Trustee and the Owner Participant, by execution and delivery hereof, consent to the amendment to the Original Lease effected by, and request and instruct the Owner Trustee to execute and deliver the Lease Amendment No. 1, and the Owner Trustee and the Lessee agree, by execution and delivery hereof, to execute and deliver, the Lease Amendment No. 1. The Lease Amendment No. 1 shall be effective as provided therein. SECTION 7. AMENDMENT OF THE ORIGINAL PARTICIPATION AGREEMENT. Subject to the satisfaction or waiver of the conditions precedent set forth herein, the Owner -12- 12 Participant, by execution and delivery hereof, requests, authorizes and directs the Owner Trustee to execute and deliver the PA Amendment No. 1, and the Owner Trustee and the Indenture Trustee, by execution and delivery hereof, agree to execute and deliver the PA Amendment No. 1. Upon the execution and delivery of the PA Amendment No. 1 by each of the parties thereto, the Original Participation Agreement shall be amended as set forth in the PA Amendment No. 1, and the Subordination Agent and each Pass Through Trustee shall be a party thereto from and after the Refinancing Date to the extent set forth in such PA Amendment No. 1. The PA Amendment No. 1 shall be effective as of the Refinancing Date. SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE LESSEE AND THE GUARANTOR. The Lessee and the Guarantor represent and warrant to the Pass Through Trustee, the Owner Participant, the Owner Trustee, the Liquidity Provider and the Indenture Trustee that: (a) each of the 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 on the respective dates of execution thereof, the corporate power and authority to enter into and perform its obligations under (i) in the case of the Lessee, this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 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; (b) the 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; (c) the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, and the performance of the obligations of the Lessee or the Guarantor (as the case may be) under this Agreement, the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement and each other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, have been duly authorized by all necessary corporate action on the part of the Lessee or the Guarantor, do not -13- 13 require any stockholder approval, or approval or consent of any trustee or holder of any material indebtedness or material obligations of the 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 the Lessee or the Guarantor (as the case may be) or the certificate of incorporation or by-laws of the 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 the Lessee or the Guarantor (as the case may be) under, any indenture, mortgage, contract or other agreement to which the 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; (d) neither the execution and delivery by the Lessee or the Guarantor (as the case may be) of this Agreement, the Lease Amendment No. 1, the PA Amendment No. 1, the Pass Through Trust Agreements, the Underwriting Agreement, the TIA Amendment No. 1 or any other Operative Document to which the Lessee or the Guarantor (as the case may be) is a party, nor the performance of the obligations of the Lessee or the Guarantor (as the case may be) hereunder or under the Participation Agreement, the Tax Indemnity Agreement, the Lease, the Pass Through Trust Agreements, the Underwriting Agreement or the other Operative Documents to which the Lessee or the Guarantor (as the case may be) is a party, nor the consummation by the Lessee or the Guarantor (as the case may be) 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 in respect of, the Department of Transportation, the FAA, or any other federal, state or foreign governmental authority having jurisdiction, other than (i) 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, (ii) 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, (iii) the consents, approvals, notices, registrations and other actions referred to in Sections 7(a)(iii) and 7(a)(vi) of the Participation Agreement, (iv) the registrations and filings referred to in Section 8(f), and (v) 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; -14- 14 (e) this Agreement constitutes, and each of the Participation Agreement, the Pass Through Trust Agreements, the Tax Indemnity Agreement and the Lease, when the PA Amendment No. 1, the TIA Amendment No. 1 and the Lease Amendment No. 1 shall have been executed and delivered by each of the parties thereto, will constitute, the legal, valid and binding obligations of the Lessee or the Guarantor (as the case may be) enforceable against the 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, 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; (f) except for the filings and registrations referred to in Section 7(a)(vi) of the Participation Agreement, such filings and registrations as shall have been made or effected subsequent thereto and the filing for recording pursuant to the Federal Aviation Act of the Indenture and the Lease Amendment No. 1, 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 the 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 other than the taking of possession by the Indenture Trustee of the original counterparts of the Original Lease and the Lease Amendment No. 1 (to the extent the Lease constitutes chattel paper) and the filing of continuation statements at periodic intervals with respect to the Uniform Commercial Code financing statements in effect on the Refinancing Date covering the security interests created by the Original Indenture or describing the Lease as a lease; (g) neither the 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; (h) neither the Lessee nor the Guarantor is an "investment company" within the meaning of the Investment Company Act of 1940, as amended; -15- 15 (i) 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; and (j) 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. SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each of the parties below represents, warrants and covenants to each of the other parties to this Agreement and to the Liquidity Provider as follows: (a) The Indenture Trustee in its individual capacity represents, warrants and covenants that: (1) 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 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 PA Amendment No. 1, the Indenture and each other Operative Document to which it is a party and to carry out its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party; (2) the execution and delivery by the Indenture Trustee of this Agreement, the Indenture, the PA Amendment No. 1 and each other Operative Document to which it is a party and the performance by the Indenture Trustee of its obligations under this Agreement, the Participation Agreement, the Indenture and each other Operative Document to which it is a party 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; (3) this Agreement constitutes, and the Participation Agreement, when the PA Amendment No. 1 has been executed and delivered by the Indenture Trustee, and the Indenture, when executed and delivered by the Indenture Trustee, will constitute, the legal, valid and binding obligations of the -16- 16 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; (4) 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 (5) there are no Indenture Trustee Liens on the Aircraft or any portion of the Trust Estate. (b) The Owner Trustee, in its individual capacity (except as provided in clauses (3) and (7) below) and (but only as provided in clauses (3) and (7) and, to the extent that it relates to the Owner Trustee, clauses (2), (9) and (11) below) as Owner Trustee, represents and warrants that: (1) 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, or had on the respective dates of execution thereof, the corporate power and authority to execute and deliver the Original Trust Agreement, has the corporate power and authority to carry out the terms of the Trust Agreement, and has, or had on the respective dates of execution thereof (assuming the authorization, execution and delivery of the Trust Agreement by the Owner Participant), as Owner Trustee, and to the extent expressly provided herein or therein, in its individual capacity, the corporate power and authority to execute and deliver and to carry out the terms of this Agreement, the Indenture, the Refinancing Secured Certificates, the Lease, the PA Amendment No. 1, the Trust Agreement Amendment No. 1 and each other Operative Document (other than the Trust Agreement) to which it is a party; (2) 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 and (assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant) this Agreement constitutes, and each of the Participation Agreement, when the PA Amendment No. 1 shall have been entered into, the Indenture, when entered into, the Lease, when the Lease Amendment No. 1 shall have been entered into, and the Trust Agreement, when the Trust Agreement Amendment No. 1 shall -17- 17 have been entered into, will constitute, a legal, valid and binding obligation of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, enforceable against it in its individual capacity or as Owner Trustee, as the case may be, in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity, whether considered in a proceeding at law or in equity; (3) assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant, the Owner Trustee has duly authorized, and on the Refinancing Date shall have duly issued, executed and delivered to the Indenture Trustee for authentication, the Refinancing Secured Certificates pursuant to the terms and provisions hereof and of the Indenture, and each Refinancing Secured Certificate on the Refinancing Date will constitute the valid and binding obligation of the Owner Trustee and will be entitled to the benefits and security afforded by the Indenture in accordance with the terms of such Refinancing Secured Certificate and the Indenture; (4) neither the execution and delivery by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, the Original Participation Agreement, the PA Amendment No. 1, the Original Trust Agreement, the Trust Agreement Amendment No. 1, the Original Indenture, the Indenture, the Original Lease, the Lease Amendment No. 1, the Refinancing Secured Certificates or any other Operative Document to which it is a party, 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 hereby or 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 hereof and 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; (5) 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 -18- 18 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 Indenture, the Lease, the Refinancing 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 8(d); (6) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (7) there exists no Lessor Lien (including for this purpose Liens that 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 that 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 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; (8) 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 redemption of the Original Secured Certificates or the issuance of the Refinancing Secured Certificates, or the execution and delivery in its individual capacity or as Owner Trustee, as the -19- 19 case may be, of any of the instruments referred to in clauses (1), (2), (3) and (4) 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 of Utah, 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; (9) 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 (1), (2), (3) and (4) above; (10) 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; (11) the Owner Trustee has not, in its individual capacity or as Owner Trustee, directly or indirectly offered any Refinancing 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, the Original Loan Participant 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 Refinancing 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; and (12) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangements). (c) The Owner Participant represents and warrants that: (1) The Owner Participant is a corporation 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, has, or had on the respective dates of execution thereof, as the case may be, the corporate power and authority to enter into and to perform its obligations under this Agreement, the Original Participation Agreement, the Original Trust Agreement, the Tax Indemnity -20- 20 Agreement, the Trust Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; this Agreement has been duly authorized, executed and delivered by the Owner Participant; and this Agreement constitutes, and the Participation Agreement when the PA Amendment No. 1 shall have been entered into, the Tax Indemnity Agreement when the TIA Amendment No. 1 shall have been entered into, and the Trust Agreement when the Trust Agreement Amendment No. 1 shall have been entered into, will constitute, the legal, valid and binding obligations of the Owner Participant enforceable against it in accordance with their 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; (2) neither (A) the execution and delivery by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1, the Trust Agreement Amendment No. 1 or any other Operative Document to which it is a party nor (B) compliance by the Owner Participant with all of the provisions hereof or 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, 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; (3) 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 or was required, as the case may be, for the due execution, delivery or performance by the Owner Participant of this Agreement, the PA Amendment No. 1, the TIA Amendment No. 1 and the Trust Agreement Amendment No. 1; (4) there are no pending or, to its knowledge, threatened actions or proceedings before any court or administrative agency or arbitrator which would materially adversely affect the Owner Participant's ability to perform its obligations under this Agreement, the Participation Agreement, the Tax Indemnity Agreement and the Trust Agreement; (5) neither the Owner Participant nor anyone authorized by it to act on its behalf (it being understood that in proposing, facilitating and otherwise -21- 21 taking any action in connection with the refinancing contemplated hereby and agreed to herein by the Owner Participant, the Lessee has not acted as agent of the Owner Participant) has directly or indirectly offered any Refinancing 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 was acquired for its own account and was purchased for investment and not with a view to any resale or distribution thereof; (6) on the Refinancing 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 that 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 Indenture, (D) which the Owner Participant 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 Indenture of Rent assigned to the Indenture Trustee for the benefit of the Certificate Holders; and (7) it is a Citizen of the United States (without making use of a voting trust agreement, voting powers agreement or similar arrangement). (d) The Pass Through Trustee represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Pass Through Trust Agreements, the Intercreditor Agreement and the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, executed and delivered by the Pass Through Trustee; this Agreement constitutes, and when executed and delivered by the Pass Through Trustee, each of the Pass Through Trust Agreements, the Intercreditor -22- 22 Agreement, the PA Amendment No. 1, and (upon execution and delivery of the PA Amendment No. 1), the Participation Agreement, will 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; (3) none of the execution, delivery and performance by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, this Agreement or the PA Amendment No. 1, the performance by the Pass Through Trustee of the Participation Agreement, the purchase by the Pass Through Trustee of the Refinancing 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; (4) neither the execution and delivery by the Pass Through Trustee of any of the Pass Through Trust Agreements, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement, nor the consummation by the Pass Through Trustee of any of the transactions contemplated hereby or thereby or by the Participation Agreement, 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; (5) 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, the Intercreditor Agreement or the Participation 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 Refinancing Secured Certificates (other than franchise or -23- 23 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 as a grantor trust under subpart E, Part I of Subchapter J of the Code, such trusts will not be subject to any Taxes imposed by the Commonwealth of Massachusetts or any political subdivision thereof; (6) 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 Participation Agreement, the Intercreditor Agreement or any Pass Through Trust Agreement; (7) except for the issue and sale of the Certificates contemplated hereby, the Pass Through Trustee has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Pass Through Trustee authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Pass Through Trustee is not in default under any Pass Through Trust Agreement; and (8) 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, the Lessee or the Guarantor. (e) The Subordination Agent represents, warrants and covenants that: (1) 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, the PA Amendment No. 1 and this Agreement and to perform its obligations under this Agreement, the Liquidity Facilities and the Intercreditor Agreement and, when the PA Amendment No. 1 has been executed and delivered by each of the parties thereto, the Participation Agreement; (2) this Agreement has been, and when executed and delivered by the Subordination Agent, each of the Liquidity Facilities, the Intercreditor Agreement and the PA Amendment No. 1 will have been, duly authorized, -24- 24 executed and delivered by the Subordination Agent; this Agreement constitutes, and when executed and delivered by the Subordination Agent each of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 and (upon execution and delivery by the Subordination Agent of the PA Amendment No. 1), the Participation Agreement will 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; (3) none of the execution, delivery and performance by the Subordination Agent of each of the Liquidity Facilities, the Intercreditor Agreement, this Agreement, the PA Amendment No. 1 or the Participation Agreement, or the performance by the Subordination Agent of the Participation 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; (4) neither the execution and delivery by the Subordination Agent of any of the Liquidity Facilities, the Intercreditor Agreement, the PA Amendment No. 1 or this Agreement nor the consummation by the Subordination Agent of any of the transactions contemplated hereby or thereby or by the Participation Agreement requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action with respect to, any Connecticut governmental authority or agency or any federal governmental authority or agency regulating the Subordination Agent's banking, trust or fiduciary powers; (5) 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, the Intercreditor Agreement, the PA Amendment No. 1 or the Participation 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 -25- 25 by the Subordination Agent of any of the Refinancing 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); (6) 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 PA Amendment No. 1, the Participation Agreement, the Intercreditor Agreement or any Liquidity Facility; (7) the Subordination Agent has not directly or indirectly offered any Refinancing Secured Certificate for sale to any Person or solicited any offer to acquire any Refinancing Secured Certificates from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Refinancing Secured Certificate for sale to any Person, or to solicit any offer to acquire any Refinancing Secured Certificate from any Person; and the Subordination Agent is not in default under any Liquidity Facility; and (8) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter, the Lessee or the Guarantor. SECTION 10. NOTICES. Unless otherwise specifically provided herein, all notices required or permitted by the terms of this Agreement shall be in English and in writing, and any such notice shall become effective upon being deposited in the United States mail, with proper postage for first-class registered or certified mail prepaid, or when delivered personally or, if promptly confirmed by mail as provided above, when dispatched by facsimile or other written telecommunication, addressed, if to the Lessee, the Guarantor, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, at their respective addresses or facsimile numbers set forth below the signatures of such parties at the foot of this Agreement. SECTION 11. EXPENSES. (a) Except as provided in paragraph (b) below, all of the reasonable out-of-pocket costs, fees and expenses incurred by the Owner Trustee, the Owner Participant, the Pass Through Trustee, the Subordination Agent, the Indenture Trustee and the Original Loan Participant in connection with the transactions contemplated by this 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) shall be paid promptly by the Owner Participant, including, without limitation: -26- 26 (1) the reasonable fees, expenses and disbursements allocable to the Refinancing Secured Certificates issued under the Indenture of (A) Bingham, Dana & Gould LLP, special counsel for the Pass Through Trustee and the Indenture Trustee, (B) Ray, Quinney & Nebeker, special counsel for the Owner Trustee, (C) Crowe & Dunlevy, P.C., special counsel in Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel for the Underwriters, and (E) Vedder, Price, Kaufman & Kammholz, special counsel for the Original Loan Participant; (2) the fees, expenses and disbursements of Dewey Ballantine, special counsel for the Owner Participant; (3) the fees, expenses and disbursements of Simpson Thacher & Bartlett and Cadwalader, Wickersham & Taft, special counsel for the Lessee; (4) underwriting fees and commissions; (5) the initial fees and expenses of the Liquidity Provider, the Pass Through Trustee and the Subordination Agent; (6) the costs of filing and recording documents with the FAA and filing Uniform Commercial Code financing statements in the United States; and (7) the reasonable fees, expenses and disbursements of White & Case, special counsel for the Liquidity Provider; and (b) In the event that the transactions contemplated by this Section 11 and the agreements referred to herein are not consummated, the Lessee shall bear and pay all costs, expenses and fees referred to in this Section 11 at no after-tax cost to the Owner Trustee, Trust Estate or the Owner Participant; provided that if the transactions fail to be consummated as a result of the failure of the Owner Participant to act in good faith in consummating the transactions, or to otherwise comply with the terms hereof, the Owner Participant shall bear and pay its own fees, costs and expenses (including, without limitation, the fees and expenses of its special counsel) and the Lessee shall pay all other reasonable fees, costs and expenses as aforesaid. SECTION 12. 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. SECTION 13. MISCELLANEOUS. (a) Provided that the transactions contemplated hereby have been consummated, and except as otherwise provided for herein, the representations, warranties and agreements herein of the Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Pass -27- 27 Through Trustee, and the Lessee's, the Guarantor's, the Owner Trustee's, the Indenture Trustee's, the Owner Participant's, the Subordination Agent's and the Pass Through Trustee's obligations under any and all thereof, shall survive the expiration or other termination of this Agreement and the other agreements referred to herein. (b) This Agreement may be executed in any number of counterparts (and each of the parties hereto shall not be required to execute the same counterpart). Each counterpart of this Agreement, including a signature page executed by each of the parties hereto, shall be an original counterpart of this Agreement, but all of such counterparts together shall constitute one instrument. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only 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 each party hereto. The index preceding this Agreement and the headings of the various Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and, subject to the terms of the Participation 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 Indenture Trustee and its successors as Indenture Trustee (and any additional Indenture Trustee appointed) under the Indenture, the Subordination Agent and its successors as Subordination Agent under the Intercreditor Agreement, the Owner Trustee and its successors as Owner Trustee under the Trust Agreement, and the Owner Participant, and, subject to the provisions of the Participation Agreement, its successors and permitted assigns. The terms of this Agreement shall inure to the benefit of the Liquidity Provider, its successors and permitted assigns. No purchaser or holder of any Refinancing Secured Certificates shall be deemed to be a successor or assign of any holder of the Original Secured Certificates. SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. -28- 28 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers there unto duly authorized as of the day and year first above written. NORTHWEST AIRLINES, INC., Lessee By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -29- 29 NORTHWEST AIRLINES CORPORATION, Guarantor By: __________________________________________ Name: Title: Address: U.S. Mail 5101 Northwest Drive (A4010) St. Paul, Minnesota 55111-3034 Overnight Courier 2700 Lone Oak Parkway (A4010) Eagan, Minnesota 55121 Attention: Senior Vice President - Finance and Treasurer Facsimile: (612) 726-0665 -30- 30 [_____________], Owner Participant By: _______________________________________ Title: Address: Attn: Telecopy No.: -31- 31 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: ___________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -32- 32 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Subordination Agent, Subordination Agent By: ___________________________________ Title: Address: c/o State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -33- 33 STATE STREET BANK AND TRUST COMPANY, not in its individual capacity, except as otherwise provided herein, but solely as Indenture Trustee Indenture Trustee By: ____________________________________ Title: Address: Two International Place 4th Floor Boston, Massachusetts 02110 Attn: Corporate Trust Department Facsimile: (617) 664-5371 -34- 34 FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its individual capacity, except as expressly provided herein, but solely as Owner Trustee, Owner Trustee By: ___________________________________ Title: Address: 79 South Main Street Salt Lake City, Utah 84111 Attn: Corporate Trust Department Facsimile: (801) 246-5053 -35- 35 SCHEDULE I TO REFUNDING AGREEMENT PASS THROUGH TRUST AGREEMENTS 1. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1A dated as of the Closing Date. 2. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1B dated as of the Closing Date. 3. Pass Through Trust Agreement dated as of the Closing Date, among Northwest Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and Trust Company, as supplemented by Trust Supplement No. 1996-1C dated as of the Closing Date. 36 SCHEDULE II TO REFUNDING AGREEMENT REFINANCING SECURED CERTIFICATES, PURCHASERS AND PURCHASE PRICE
Interest Rate Purchaser and Maturity --------- ------------- Northwest Airlines Principal Purchase Pass Through Trust Amount Price --------- -------- 1996-1A [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1B [ _ ]% Refinancing Secured Certificates due [ ] $[ ] 1996-1C [ _ ]% Refinancing Secured Certificates due [ ] $[ ]
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