Exhibit 4(e)(2)
INDENTURE AND SECURITY AGREEMENT
(N372DA)
Dated as of April 30, 2002
between
DELTA AIR LINES, INC.,
and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
as Loan Trustee
One Boeing 737-832 Aircraft
U.S. Registration No. N372DA
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.......................................................
Section 1.02 Other Definitional Provisions.....................................
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01 Form of Equipment Notes...........................................
Section 2.02 Issuance and Terms of Equipment Notes.............................
Section 2.03 Method of Payment.................................................
Section 2.04 Withholding Taxes.................................................
Section 2.05 Application of Payments...........................................
Section 2.06 Termination of Interest in Collateral.............................
Section 2.07 Registration, Transfer and Exchange of Equipment Notes............
Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment Notes..............
Section 2.09 Payment of Expenses on Transfer; Cancellation.....................
Section 2.10 Mandatory Redemption of Equipment Notes...........................
Section 2.11 Voluntary Redemption of Equipment Notes...........................
Section 2.12 Redemptions; Notice of Redemptions; Repurchases...................
Section 2.13 Subordination.....................................................
Section 2.14 Certain Payments..................................................
Section 2.15 Repayment of Monies for Equipment Note Payments Held by
Loan Trustee.....................................................
Section 2.16 Directions by Subordination Agent.................................
Section 2.17 Assumption of Equipment Notes.....................................
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE COLLATERAL
Section 3.01 Basic Distributions...............................................
Section 3.02 Event of Loss; Optional Redemption................................
Section 3.03 Payments after Event of Default...................................
Section 3.04 Certain Payments..................................................
Section 3.05 Payments to Company...............................................
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
Section 4.01 Events of Default.................................................
Section 4.02 Remedies..........................................................
Section 4.03 Remedies Cumulative...............................................
Section 4.04 Discontinuance of Proceedings.....................................
Section 4.05 Waiver of Past Defaults...........................................
Section 4.06 Noteholders May Not Bring Suit Except Under Certain
Conditions.......................................................
ARTICLE V
DUTIES OF LOAN TRUSTEE
Section 5.01 Notice of Event of Default........................................
Section 5.02 Action upon Instructions; Certain Rights and Limitations..........
Section 5.03 Indemnification...................................................
Section 5.04 No Duties Except as Specified in Indenture or Instructions........
Section 5.05 No Action Except under Indenture or Instructions..................
Section 5.06 Investment of Amounts Held by Loan Trustee........................
ARTICLE VI
LOAN TRUSTEE
Section 6.01 Acceptance of Trusts and Duties...................................
Section 6.02 Absence of Certain Duties.........................................
Section 6.03 No Representations or Warranties as to the Documents..............
Section 6.04 No Segregation of Monies; No Interest.............................
Section 6.05 Reliance; Agents; Advice of Counsel...............................
Section 6.06 Instructions from Noteholders.....................................
ARTICLE VII
OPERATING COVENANTS OF COMPANY
Section 7.01 Liens.............................................................
Section 7.02 Possession, Operation and Use, Maintenance and
Registration......................................................
Section 7.03 Inspection; Financial Information.................................
Section 7.04 Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution of Engines.............
Section 7.05 Loss, Destruction or Requisition..................................
Section 7.06 Insurance.........................................................
ARTICLE VIII
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01 Resignation or Removal; Appointment of Successor..................
Section 8.02 Appointment of Additional and Separate Trustees...................
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01 Amendments to this Indenture without Consent of Holders...........
Section 9.02 Amendments to this Indenture with Consent of Holders..............
Section 9.03 Amendments, Waivers, Etc. of the Participation Agreement..........
Section 9.04 Revocation and Effect of Consents.................................
Section 9.05 Notation on or Exchange of Equipment Notes........................
Section 9.06 Trustee Protected.................................................
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination of Indenture..........................................
Section 10.02 No Legal Title to Collateral in Noteholders.......................
Section 10.03 Sale of Aircraft by Loan Trustee is Binding.......................
Section 10.04 Indenture for Benefit of Company, Loan Trustee and
Noteholders......................................................
Section 10.05 Notices...........................................................
Section 10.06 Severability......................................................
Section 10.07 No Oral Modification or Continuing Waivers........................
Section 10.08 Successors and Assigns............................................
Section 10.09 Headings..........................................................
Section 10.10 Normal Commercial Relations.......................................
Section 10.11 Voting by Noteholders.............................................
Section 10.12 Section 1110......................................................
Section 10.13 Company's Performance and Rights..................................
Section 10.14 Counterparts......................................................
Section 10.15 Governing Law.....................................................
Section 10.16 Confidential Information..........................................
Section 10.17 Submission to Jurisdiction........................................
Exhibit A - Form of Indenture Supplement
Exhibit B - List of Permitted Countries
Exhibit C - Aircraft Type Equipment Value for Section 7.06(b)
Schedule I - Description of Equipment Notes
Schedule II - Pass Through Trust Agreement and Pass Through Trust Supplements
Annex A - Definitions
INDENTURE AND SECURITY AGREEMENT
(N372DA)
This INDENTURE AND SECURITY AGREEMENT (N372DA ), dated as of April
30, 2002, is made by and between DELTA AIR LINES, INC., a Delaware corporation
(together with its successors and permitted assigns, "Company"), and STATE
STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, except as expressly stated
herein, but solely as Loan Trustee hereunder (together with its permitted
successors hereunder, "Loan Trustee").
W I T N E S S E T H:
WHEREAS, the parties desire by this Indenture (such term and other
capitalized terms used herein without definition being defined as provided in
Article I), among other things, to provide for (i) the issuance by Company of
the Equipment Notes and (ii) the assignment, mortgage and pledge by Company to
Loan Trustee, as part of the Collateral hereunder, among other things, of all of
Company's estate, right, title and interest in and to the Aircraft, as security
for, among other things, Company's obligations to Loan Trustee, for the ratable
benefit and security of Noteholders, subject to Section 2.13 and Article III;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by Company and authenticated and delivered by Loan Trustee hereunder,
the valid, binding and enforceable obligations of Company; and
WHEREAS, all things necessary to make this Indenture a legal, valid
and binding obligation of Company for the uses and purposes herein set forth, in
accordance with its terms, have been done and performed and have occurred;
GRANTING CLAUSE
NOW, THEREFORE, to secure the prompt and complete payment (whether
at stated maturity, by acceleration or otherwise) of principal of, Make-Whole
Amount, if any, and interest on, the Equipment Notes and all other amounts
payable by Company under the Operative Documents and the performance and
observance by Company of all the agreements and covenants to be performed or
observed by Company for the benefit of Noteholders and Indenture Indemnitees
contained in the Operative Documents, and in consideration of the premises and
of the covenants contained in the Operative Documents, and for other good and
valuable consideration given by Loan Trustee, Noteholders and Indenture
Indemnitees to Company at or before the Closing Date, the receipt of which is
hereby acknowledged, Company does hereby grant, bargain, sell, convey, transfer,
mortgage, assign, pledge and confirm unto Loan Trustee and its successors in
trust and permitted assigns, for the security and benefit of Loan Trustee,
Noteholders and Indenture Indemnitees, a first priority security interest in,
and mortgage lien on, all estate, right, title and interest of Company in, to
and under, all and singular, the following described properties, rights,
interests and privileges whether now or hereafter acquired (hereinafter
sometimes referred to as the "Collateral"):
(1) the Aircraft, including the Airframe and the Engines, whether or
not any such Engine from time to time is installed on the Airframe or any
other airframe or any other aircraft, and any and all Parts relating
thereto, and, to the extent provided herein, all substitutions and
replacements of, and additions, improvements, accessions and accumulations
to, the Aircraft, including the Airframe, the Engines and any and all
Parts (in each case other than any substitutions, replacements, additions,
improvements, accessions and accumulations that constitute items excluded
from the definition of Parts by clauses (b), (c), (d), (e) and (f)
thereof) relating thereto (such Airframe and Engines as more particularly
described in the Indenture Supplement executed and delivered with respect
to the Aircraft on the Closing Date or with respect to any substitutions
or replacements therefor) and together with all logs, manuals maintained
on the Aircraft, modification and maintenance records at any time required
to be maintained with respect to the Aircraft, in accordance with the
rules and regulations of the FAA if the Aircraft is registered under the
laws of the United States or the rules and regulations of the government
of the country of registry if the Aircraft is registered under the laws of
a jurisdiction other than the United States;
(2) the Warranty Rights, together with all rights, powers,
privileges, options and other benefits of Company under the same;
(3) all requisition proceeds with respect to the Aircraft or any
Part thereof, and all insurance proceeds with respect to the Aircraft or
any Part thereof, but excluding all proceeds of, and rights under, any
insurance maintained by Company and in excess of that required under
Section 7.06(b);
(4) all moneys and securities now or hereafter paid or deposited or
required to be paid or deposited to or with Loan Trustee by or for the
account of Company pursuant to any term of any Operative Document and held
or required to be held by Loan Trustee hereunder or thereunder; and
(5) all proceeds of the foregoing;
PROVIDED, HOWEVER, that notwithstanding any of the foregoing
provisions, so long as no Event of Default shall have occurred and be
continuing, Company shall have the right, to the exclusion of Loan Trustee, (i)
to quiet enjoyment of the Aircraft, the Airframe, the Parts and the Engines, and
to possess, use, retain and control the Aircraft, the Airframe, the Parts and
the Engines and all revenues, income and profits derived therefrom and (ii) with
respect to the Warranty Rights, to exercise in Company's name all rights and
powers of the Buyer (as defined in the Purchase Agreement) under the Warranty
Rights and to retain any recovery or benefit resulting from the enforcement of
any warranty or indemnity or other obligation under the Warranty Rights;
provided, further, that notwithstanding the occurrence and continuation of an
Event of Default, Loan Trustee shall not enter into any amendment or
modification of the Purchase Agreement that would alter the rights, benefits or
obligations of Company thereunder;
TO HAVE AND TO HOLD all and singular the aforesaid property unto
Loan Trustee, and its successors and permitted assigns, in trust for the ratable
benefit and security of Noteholders and Indenture Indemnitees, except as
otherwise provided in this Indenture, including Section 2.13 and Article III,
without any preference, distinction or priority of any one Equipment Note 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 (5) inclusive above, subject to the terms and provisions set forth in
this Indenture.
It is expressly agreed that notwithstanding anything herein to the
contrary, Company shall remain liable under the Purchase Agreement to perform
all of its obligations thereunder, and, except to the extent expressly provided
in any Operative Document, none of Loan Trustee, any Noteholders or any
Indenture Indemnitee shall be required or obligated in any manner to perform or
fulfill any obligations of Company under or pursuant to any Operative Document,
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 amount that may have been assigned to it or to which it may be
entitled at any time or times.
Notwithstanding anything herein to the contrary (but without in any
way releasing Company from any of its duties or obligations under the Purchase
Agreement), Loan Trustee, Noteholders and Indenture Indemnitees confirm for the
benefit of Manufacturer that in exercising any rights under the Warranty Rights,
or in making any claim with respect to the Aircraft or other goods and services
delivered or to be delivered pursuant to the Purchase Agreement, the terms and
conditions of the Purchase Agreement relating to the Warranty Rights, including,
without limitation, the warranty disclaimer provisions for the benefit of
Manufacturer, shall apply to and be binding upon Loan Trustee, Noteholders and
Indenture Indemnitees to the same extent as Company. Company hereby directs
Manufacturer, so long as an Event of Default shall have occurred and be
continuing, to pay all amounts, if any, payable to Company pursuant to the
Warranty Rights directly to Loan Trustee to be held and applied as provided
herein. Nothing contained herein shall subject Manufacturer to any liability to
which it would not otherwise be subject under the Purchase Agreement or modify
in any respect the contract rights of Manufacturer thereunder except as provided
in the Manufacturer's Consent.
Company does hereby constitute Loan Trustee the true and lawful
attorney of Company (which appointment is coupled with an interest) with full
power (in the name of Company or otherwise) to ask, require, demand and receive
any and all monies and claims for monies (in each case including insurance and
requisition proceeds) due and to become due to Company under or arising out of
the Purchase Agreement (to the extent assigned hereby), and all other property
which now or hereafter constitutes part of the Collateral, 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 Loan Trustee may deem
to be necessary or advisable in the premises; provided that Loan Trustee shall
not exercise any such rights except during the continuance of an Event of
Default. Company agrees that promptly upon receipt thereof, to the extent
required by the Operative Documents, it will transfer to Loan Trustee any and
all monies from time to time received by Company constituting part of the
Collateral, for distribution by Loan Trustee pursuant to this Indenture.
Company does hereby warrant and represent that it has not sold,
assigned or pledged, and hereby covenants and agrees that it will not sell,
assign or pledge, so long as this Indenture shall remain in effect and the Lien
hereof shall not have been released pursuant to the provisions hereof, any of
its estate, right, title or interest hereby assigned, to any Person other than
Loan Trustee, except as otherwise provided in or permitted by any Operative
Document.
Company agrees that at any time and from time to time, upon the
written request of Loan Trustee, Company shall promptly and duly execute and
deliver or cause to be duly executed and delivered any and all such further
instruments and documents as Loan Trustee may reasonably deem necessary to
perfect, preserve or protect the mortgage, security interests and assignments
created or intended to be created hereby or to obtain for Loan Trustee the full
benefit of the assignment hereunder and of the rights and powers herein granted,
provided that any instrument or other document so executed by Company will not
expand any obligations or limit any rights of Company in respect of the
transactions contemplated by the Operative Documents.
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, unless
the context otherwise requires, capitalized terms used but not defined herein
have the respective meanings set forth or incorporated by reference in Annex A.
Section 1.02 Other Definitional Provisions. (a) The definitions
stated herein and in Annex A apply equally to both the singular and the plural
forms of the terms defined.
(b) All references in this Indenture to designated "Articles",
"Sections", "Subsections", "Schedules", "Exhibits", "Annexes" and other
subdivisions are to the designated Article, Section, Subsection, Schedule,
Exhibit, Annex or other subdivision of this Indenture, unless otherwise
specifically stated.
(c) The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section, Subsection, Schedule, Exhibit, Annex or other subdivision.
(d) Unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, they shall be deemed to be
followed by the phrase "without limitation".
(e) All references in this Indenture to a "government" are to such
government and any instrumentality or agency thereof.
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01 Form of Equipment Notes. The Equipment Notes shall be
substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. ACCORDINGLY,
THIS EQUIPMENT NOTE MAY NOT BE OFFERED FOR SALE OR SOLD UNLESS
EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE OR OTHER
LAWS OR EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS ARE
AVAILABLE.
DELTA AIR LINES, INC.
SERIES 2002-1 [___] EQUIPMENT NOTE DUE [___]
ISSUED IN CONNECTION WITH THE BOEING 737-832 AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N372DA
No.____ Date: [______,__]
$_________________
INTEREST RATE MATURITY DATE
[____] [____________, ____]
DELTA AIR LINES, INC. (together with its successors and permitted
assigns, "Company") hereby promises to pay to ___________, or the registered
assignee thereof, the principal amount of ________________ Dollars ($_________)
[on __________]1 [in installments on the Payment Dates set forth in Schedule I
hereto, each such installment to be in an amount computed by multiplying the
original principal amount of this Equipment Note by the percentage set forth in
Schedule I hereto opposite the Payment Date on which such installment is due,]2
and to pay interest in arrears on each Payment Date at the Debt Rate on 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. [Notwithstanding the foregoing, the final payment made on this
Equipment Note 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 Equipment Note.]2 Notwithstanding anything to the contrary
contained herein, if any date on which a payment under this Equipment Note
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 if
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.
------------------
1 To be inserted in non-installment Equipment Notes.
2 To be inserted in installment Equipment Notes.
For purposes hereof, the term "Indenture" means the Indenture and
Security Agreement (N372DA), dated as of April 30, 2002, between Company and
State Street Bank and Trust Company of Connecticut, National Association, as
Loan Trustee ("Loan Trustee"), as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms. All
capitalized terms used in this Equipment Note and not defined herein, unless the
context otherwise requires, shall have the respective meanings set forth or
incorporated by reference, and shall be construed and interpreted in the manner
described, in the Indenture. This Equipment Note shall bear interest, payable on
demand, at the Past Due Rate (and not the Debt Rate) (calculated on the basis of
a year of 360 days comprised of twelve 30-day months) on any principal amount
and (to the extent permitted by applicable law) Make-Whole Amount, if any,
interest and any other amounts payable hereunder not paid when due for any
period during which the same is overdue, in each case for the period the same is
overdue. Amounts shall be overdue if not paid in the manner provided herein or
in the Indenture when due (whether at stated maturity, by acceleration or
otherwise).
There shall be maintained an Equipment Note Register for the purpose
of registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of Loan Trustee, or at the office of any successor trustee, in the manner
provided in Section 2.07 of the 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 Loan Trustee, or as otherwise provided in
the Indenture. Company shall not have any responsibility for the distribution of
any such payment to Noteholder of this Equipment Note. Each such payment shall
be made on the date such payment is due and without any presentment or surrender
of this Equipment Note, except that in the case of any final payment with
respect to this Equipment Note, the Equipment Note shall be surrendered to Loan
Trustee for cancellation. The holder hereof, by its acceptance of this Equipment
Note, agrees that, except as provided in the Indenture, including the
subordination provisions referred to below, each payment of an installment of
principal amount, Make-Whole Amount, if any, and interest received by it
hereunder shall be applied: first, to the payment of accrued interest on this
Equipment Note (as well as any interest on any overdue principal amount, and, to
the extent permitted by law, any overdue Make-Whole Amount, if any, any overdue
interest and other overdue amounts hereunder) to the date of such payment;
second, to the payment of Make-Whole Amount, if any, and third, to the payment
of the principal amount of this Equipment Note (or portion hereof) then due.
This Equipment Note is one of the Equipment Notes referred to in the
Indenture which have been or are to be issued by Company pursuant to the terms
of the Indenture. The Collateral is held by Loan Trustee as security, in part,
for the Equipment Notes. The provisions of this Equipment Note are subject to
the Indenture and the Participation Agreement. Reference is hereby made to the
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 Equipment Note and the rights and obligations of the holders of, and the
nature and extent of the security for, any other Equipment Notes executed and
delivered under the Indenture, to all of which terms and conditions in the
Indenture and the Participation Agreement each holder hereof agrees by its
acceptance of this Equipment Note.
As provided in the Indenture and subject to certain limitations
therein set forth, this Equipment Note is exchangeable for a like aggregate
principal amount of Equipment Notes of the same Series of different authorized
denominations, as requested by the holder surrendering the same. Prior to the
due presentment for registration of transfer of this Equipment Note, Company and
Loan Trustee shall deem and treat the Person in whose name this Equipment Note
is registered on the Equipment Note Register as the absolute owner and holder
hereof for the purpose of receiving all amounts payable with respect to this
Equipment Note and for all purposes, and neither Company nor Loan Trustee shall
be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in Sections
2.10 and 2.11 of the Indenture but not otherwise. This Equipment Note is also
subject to assumption by an owner trustee and reoptimization (by changing the
maturity date and/or the principal payment requirements) as provided in Section
2.17 of the Indenture.
The indebtedness evidenced by this Equipment Note [shall rank in
right of payment equally with all Series G-2 Equipment Notes and all other
Series G-1 Equipment Notes.]3 [shall rank in right of payment equally with all
Series G-1 Equipment Notes and all other Series G-2 Equipment Notes.]4 [is, to
the extent and in the manner provided in the Indenture, subordinate and subject
in right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series G-1 Equipment Notes and Series
G-2 Equipment Notes]5, and this Equipment Note is issued subject to such
provisions.]6 Noteholder of this Equipment Note, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs Loan
Trustee on such Noteholder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Indenture and (c)
appoints Loan Trustee such Noteholder's attorney-in-fact for such purpose.
------------------
3 To be inserted in the case of a Series G-1 Equipment Note.
4 To be inserted in the case of a Series G-2 Equipment Note.
5 To be inserted in the case of a Series C Equipment Note.
6 To be inserted in the case of a Series C Equipment Note.
[Without limiting the foregoing, the]7 [The]8 Noteholder of this
Equipment Note, by accepting the same, agrees that if such Noteholder, in its
capacity as a Noteholder, receives any payment or distribution on any Secured
Obligation in respect of this Equipment Note that it is not entitled to receive
under Section 2.13 or Article III of the Indenture, it shall hold any amount so
received in trust for Loan Trustee and forthwith turn over such amount to Loan
Trustee in the form received to be applied as provided in Article III of the
Indenture. Unless the certificate of authentication hereon has been executed by
or on behalf of Loan Trustee by manual signature, this Equipment Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
------------------
7 To be inserted in the case of a Series C Equipment Note.
8 To be inserted in the case of a Series G-1 Equipment Note or a Series G-2
Equipment Note.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, Company has caused this Equipment Note to be
executed in its corporate name by its officer thereunto duly authorized on the
date hereof.
DELTA AIR LINES, INC.
By:
------------------------------------
Name:
Title:
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not
in its individual capacity but solely
as Loan Trustee
By:
------------------------------------
Name:
Title:
SCHEDULE I (9)
EQUIPMENT NOTE AMORTIZATION
Payment Date Percentage of Original
Principal Amount
to be Paid
[SEE "EQUIPMENT NOTES AMORTIZATION" ON SCHEDULE I TO
INDENTURE WHICH IS TO BE INSERTED UPON ISSUANCE]
* * *
Section 2.02 Issuance and Terms of Equipment Notes. The Equipment Notes shall be
dated the date of issuance thereof, shall be issued in (a) three separate series
consisting of Series G-1 Equipment Notes, Series G-2 Equipment Notes, and Series
C Equipment Notes and (b) the maturities and principal amounts and shall bear
interest at the applicable Debt Rates specified in Schedule I. On the Closing
Date, each Series G-1 Equipment Note, Series G-2 Equipment Note, and Series C
Equipment Note shall be issued to Subordination Agent on behalf of each of Pass
Through Trustees for the Pass Through Trusts created under the Pass Through
Trust Agreements referred to in Schedule II. The Equipment Notes shall be issued
in registered form only. The Equipment Notes shall be issued in denominations of
$1,000 and integral multiples thereof, except that one Equipment Note of each
Series may be in an amount that is not an integral multiple of $1,000.
---------------
(9) To be inserted on installment Equipment Notes.
Each Equipment Note shall bear interest at the Debt Rate (calculated
on the basis of a year of 360 days comprised of twelve 30-day months), payable
in arrears on each Payment Date on the unpaid principal amount thereof from time
to time outstanding until such principal amount is paid in full, as further
provided in the form of Equipment Note set forth in Section 2.01. The principal
amount of each Series G-1 Equipment Note and each Series C Equipment Note shall
be payable in installments on the Payment Dates and in the installments equal to
the corresponding percentage of the principal amount set forth in Schedule I
hereto applicable to such Series, which shall be attached as Schedule I to such
Equipment Note. The principal amount of each Series G-2 Equipment Note shall be
due in a single payment on July 2, 2012. Notwithstanding the foregoing, the
final payment made under each Series G-1 Equipment Note and each Series C
Equipment Note 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 Equipment Note. Each Equipment Note shall bear interest, payable
on demand, at the Past Due Rate (and not at the Debt Rate) (calculated on the
basis of a year of 360 days comprised of twelve 30-day months) on any principal
amount and (to the extent permitted by applicable law) Make-Whole Amount, if
any, interest and any other amounts payable thereunder not paid when due for any
period during which the same is overdue, in each case for the period the same is
overdue. Amounts shall be overdue under an Equipment Note if not paid in the
manner provided therein or in this Indenture when due (whether at stated
maturity, by acceleration or otherwise). Notwithstanding anything to the
contrary contained herein, if any date on which a payment hereunder or under any
Equipment Note 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 if 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.
The Equipment Notes shall be executed on behalf of Company by the
manual or facsimile signature of one of its authorized officers. Equipment Notes
bearing the signatures of individuals who were at the time of execution the
proper officers of Company shall bind Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Equipment Notes or did not hold such offices
at the respective dates of such Equipment Notes. No Equipment Note shall be
secured by or entitled to any benefit under this Indenture or be valid or
obligatory for any purposes unless there appears on such Equipment Note a
certificate of authentication in the form provided herein executed by Loan
Trustee by the manual signature of one of its authorized officers, and such
certificate upon any Equipment Notes shall be conclusive evidence, and the only
evidence, that such Equipment Note has been duly authenticated and delivered
hereunder.
Section 2.03 Method of Payment. The principal amount of, interest
on, Make-Whole Amount, if any, and, except to the extent expressly provided
herein, all other amounts due to any Noteholder under each Equipment Note or
otherwise payable hereunder shall be payable by Company in Dollars by wire
transfer of immediately available funds not later than 10:00 a.m. (New York City
time) on the due date of payment to Loan Trustee at the Corporate Trust Office
for distribution among Noteholders in the manner provided herein. Company shall
not have any responsibility for the distribution of such payment to any
Noteholder. Notwithstanding the foregoing or any provision in any Equipment Note
to the contrary, Loan Trustee will use reasonable efforts to pay or cause to be
paid, if so directed in writing by any Noteholder (with a copy to Company), all
amounts paid by Company hereunder and under such Noteholder's Equipment Note or
Equipment Notes to such Noteholder or a nominee therefor (including all amounts
distributed pursuant to Article III) by transferring, or causing to be
transferred, by wire transfer of immediately available funds in Dollars, prior
to 12:00 noon (New York City time) on the due date of payment, to an account
maintained by such Noteholder with a bank located in the continental United
States the amount to be distributed to such Noteholder, for credit to the
account of such Noteholder maintained at such bank; provided that, in the event
the Equipment Notes are not held by Subordination Agent on behalf of Pass
Through Trustees, Loan Trustee may at its option pay such amounts by check
mailed to Noteholder's address as it appears on the Equipment Note Register. If,
after its receipt of funds at the place and prior to the time specified above in
the immediately preceding sentence, Loan Trustee fails (other than as a result
of a failure of Noteholder to provide it with wire transfer instructions) to
make any such payment required to be paid by wire transfer as provided in the
immediately preceding sentence on the Business Day it receives such funds, Loan
Trustee, in its individual capacity and not as trustee, agrees to compensate
such Noteholders for loss of use of funds at the Federal Funds Rate until such
payment is made and Loan 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 Equipment Note, except that, in the
case of the final payment in respect of any Equipment Note, such Equipment Note
shall be surrendered to Loan Trustee for cancellation. Notwithstanding any other
provision of this Indenture to the contrary, Loan 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 Loan 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 1:00 p.m. (New York City time) at the place of
payment.
Section 2.04 Withholding Taxes. Loan 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 Equipment Note (which exclusion and withholding shall constitute payment of
such amounts payable hereunder or in respect of such Equipment Notes, as
applicable) any and all withholding taxes applicable thereto as required by law.
Loan Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future taxes or similar charges are required
to be withheld with respect to any amounts payable hereunder or in respect of
the Equipment Notes, to withhold such amounts (which withholding shall
constitute payment of such amounts payable hereunder or in respect of such
Equipment Notes, as applicable) and timely pay the same to the appropriate
authority in the name of and on behalf of Noteholders, that it will file any
necessary withholding tax returns or statements when due, and that as promptly
as possible after the payment thereof it will deliver to each Noteholder (with a
copy to Company) appropriate documentation showing the payment thereof, together
with such additional documentary evidence as any such Noteholder may reasonably
request from time to time. Loan Trustee agrees to file any other information
reports it is required to file under United States law.
Section 2.05 Application of Payments. Subject always to Section 2.13
and except as otherwise provided in Article III, in the case of each Equipment
Note, each payment of an installment of principal amount, Make-Whole Amount, if
any, and interest paid thereon shall be applied:
first, to the payment of accrued interest on such Equipment Note (as
well as any interest on any overdue principal amount and (to the extent
permitted by law) any overdue Make-Whole Amount, if any, any overdue
interest and any other overdue amounts thereunder) to the date of such
payment; and
second, to the payment of Make-Whole Amount, if any; and
third, to the payment of principal amount of such Equipment Note (or
portion thereof) then due thereunder.
Section 2.06 Termination of Interest in Collateral. No Noteholder or
Indenture Indemnitee shall, as such, have any further interest in, or other
right with respect to, the Collateral when and if the principal amount of,
Make-Whole Amount, if any, and interest (including interest on any overdue
amounts) on and all other amounts due under all Equipment Notes held by such
Noteholder and all other sums then payable to such Noteholder or Indenture
Indemnitee, as the case may be, hereunder and under the Participation Agreement
by Company (collectively, "Secured Obligations") have been paid in full.
Section 2.07 Registration, Transfer and Exchange of Equipment Notes.
Loan Trustee shall keep a register or registers (the "Equipment Note Register")
in which Loan Trustee shall provide for the registration of Equipment Notes and
the registration of transfers of Equipment Notes. No such transfer shall be
given effect unless and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust Office of Loan
Trustee. Loan Trustee is hereby appointed "Equipment Note Registrar" for the
purpose of registering Equipment Notes and transfers of Equipment Notes. A
holder of any Equipment Note intending to exchange or transfer such Equipment
Note shall surrender such Equipment Note to Loan Trustee at the Corporate Trust
Office, together with a written request from the registered holder thereof for
the issuance of a new Equipment Note of the same Series, 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 Equipment Note and subject to
satisfaction of Section 2.09, Company shall execute, and Loan Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Equipment Notes of an equal aggregate principal
amount and of the same Series. At the option of Noteholder, Equipment Notes may
be exchanged for other Equipment Notes of the same Series of any authorized
denominations of an equal aggregate principal amount, upon surrender of the
Equipment Notes to be exchanged to Loan Trustee at the Corporate Trust Office.
Whenever any Equipment Notes are so surrendered for exchange, Company shall
execute, and Loan Trustee shall authenticate and deliver, the Equipment Notes
which Noteholder making the exchange is entitled to receive. All Equipment Notes
issued upon any registration of transfer or exchange of Equipment Notes (whether
under this Section 2.07 or under Section 2.08 or otherwise under this Indenture)
shall be the valid obligations of Company evidencing the same respective
obligations, and entitled to the same security and benefits under this
Indenture, as the Equipment Notes surrendered upon such registration of transfer
or exchange. Every Equipment Note presented or surrendered for registration of
transfer shall be duly endorsed or be accompanied by a written instrument of
transfer in form satisfactory to Loan Trustee, duly executed by Noteholder or
such Noteholder's attorney duly authorized in writing, and Loan Trustee shall
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act of 1933, as amended, and the securities laws of any
applicable state or jurisdiction. Loan Trustee shall make a notation on each new
Equipment Note of the amount of all payments of principal amount previously made
on the old Equipment Note or Equipment Notes with respect to which such new
Equipment Note is issued and the date to which interest on such old Equipment
Note or Equipment Notes has been paid. Principal, interest and all other amounts
shall be deemed to have been paid on such new Equipment Note to the date on
which such amounts have been paid on such old Equipment Note. Company shall not
be required to exchange any surrendered Equipment Notes as provided above (a)
during the ten-day period preceding the due date of any payment on such
Equipment Note or (b) that has been called for redemption. Company and Loan
Trustee shall in all cases deem and treat the Person in whose name any Equipment
Note has been issued and registered on the Equipment Note Register as the
absolute owner and Noteholder of such Equipment Note for the purpose of
receiving payment of all amounts payable with respect to such Equipment Note and
for all other purposes, and neither Company nor Loan Trustee shall be affected
by any notice to the contrary. Loan Trustee will promptly notify Company of each
registration of a transfer of an Equipment Note. Any such transferee of an
Equipment Note, by its acceptance of an Equipment Note, agrees to the provisions
of the Operative Documents applicable to Noteholders, 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
Noteholders, including Pass Through Trustees, in the Participation Agreement.
Subject to compliance by Noteholder and any transferee of the requirements set
forth in this Section 2.07 and in Section 2.09, Loan Trustee and Company shall
use all reasonable efforts to issue new Equipment Notes upon transfer or
exchange within ten Business Days of the date an Equipment Note is surrendered
for transfer or exchange.
Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment Notes.
If any Equipment Note becomes mutilated, destroyed, lost or stolen, Company
shall, upon the written request of the holder of such Equipment Note and subject
to satisfaction of this Section 2.08 and of Section 2.09, execute and Loan
Trustee shall authenticate and deliver in replacement thereof a new Equipment
Note of the same Series, payable in the same principal amount, dated the same
date and captioned as issued in connection with the Aircraft. If the Equipment
Note being replaced has become mutilated, such Equipment Note shall be
surrendered to Loan Trustee, and a photocopy thereof shall be furnished to
Company. If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to Company and Loan
Trustee such security or indemnity as may be required by them to save Company
and Loan Trustee harmless and evidence satisfactory to Company and Loan Trustee
of the destruction, loss or theft of such Equipment Note and of the ownership
thereof.
Section 2.09 Payment of Expenses on Transfer; Cancellation. (a) No
service charge shall be made to a Noteholder for any registration of transfer or
exchange of Equipment Notes, but Loan Trustee, as Equipment Note 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 Equipment Notes.
(b) Loan Trustee shall cancel all Equipment Notes surrendered for
replacement, redemption, transfer, exchange, payment or cancellation, shall keep
a copy of such canceled Equipment Notes, and shall send the original canceled
Equipment Notes marked "canceled" to Company.
Section 2.10 Mandatory Redemption of Equipment Notes. Company shall
redeem the Equipment Notes in whole in connection with an Event of Loss in
respect of the Airframe or the Airframe and the Engines installed thereon
(unless Company has performed the option set forth in Section 7.05(a)(i) with
respect thereto) on or before the Loss Payment Date at a redemption price equal
to 100% of the unpaid principal amount thereof, together with all accrued
interest thereon to (but excluding) the date of redemption, but without any
Make-Whole Amount.
Section 2.11 Voluntary Redemption of Equipment Notes. All, but not
less than all, of the Equipment Notes may be redeemed in whole by Company upon
at least 20 days' revocable prior written notice to Loan Trustee at a redemption
price equal to 100% of the unpaid principal amount of the Equipment Notes being
redeemed, together with accrued interest thereon to (but excluding) the date of
redemption and all other amounts payable hereunder or under the Participation
Agreement to Noteholders plus the Make-Whole Amount, if any. Any notice shall
become irrevocable three days before the redemption date if not previously
revoked.
Section 2.12 Redemptions; Notice of Redemptions; Repurchases. (a) No
redemption of any Equipment Note may be made except to the extent and in the
manner expressly permitted by this Indenture. At such time as no Pass Through
Certificates are outstanding, Company may at any time repurchase any of the
Equipment Notes at any price in the open market and may hold, resell or
surrender such Equipment Notes to Loan Trustee for cancellation.
(b) Notice of redemption with respect to the Equipment Notes shall
be given by Loan 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
Noteholder at such Noteholder's address appearing in the Equipment Note
Register. 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
Equipment Note, and that, if any such Equipment Notes are then outstanding,
interest on such Equipment Notes shall cease to accrue on and after such
redemption date and (4) the place or places where such Equipment Notes are to be
surrendered for payment of the redemption price.
(c) On or before the redemption date, Company (or any person on
behalf of Company) shall, to the extent an amount equal to the redemption price
for the Equipment Notes to be redeemed on the redemption date shall not then be
held in the Collateral, deposit or cause to be deposited with Loan Trustee by
10:00 a.m. (New York City time) on the redemption date in immediately available
funds the redemption price of the Equipment Notes to be redeemed.
(d) Notice of redemption having been given as aforesaid (and not
revoked as permitted by Section 2.11), the Equipment Notes to be redeemed shall,
on the redemption date, become due and payable at the Corporate Trust Office of
Loan Trustee, and from and after such redemption date (unless there is a default
in the deposit of the redemption price pursuant to Section 2.12(c)) any such
Equipment Notes then outstanding shall cease to bear interest. Upon surrender of
any such Equipment Note for redemption in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price.
Section 2.13 Subordination. (a) The indebtedness evidenced by the
Series G-1 Equipment Notes and Series G-2 Equipment Notes shall rank in right of
payment equally with all other Series G-1 Equipment Notes and Series G-2
Equipment Notes. The indebtedness evidenced by the Series C Equipment Notes is,
to the extent and in the manner provided in this Indenture, subordinate and
subject in right of payment to the prior payment in full of the Secured
Obligations in respect of the Series G-1 Equipment Notes and Series G-2
Equipment Notes, and the Series C Equipment Notes are issued subject to such
provisions. By acceptance of its Equipment Notes of any Series, each Noteholder
of such Series (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs Loan Trustee on such Noteholder's behalf to take any
action necessary or appropriate to effectuate the subordination as provided in
this Indenture and (c) appoints Loan Trustee as such Noteholder's
attorney-in-fact for such purpose.
(b) Company, Loan Trustee and, by acceptance of its Equipment Notes
of any Series, each Noteholder of such Series, hereby agree that no payment or
distribution shall be made on or in respect of the Secured Obligations owed to
such Noteholder of such Series, including any payment or distribution of cash,
property or securities, after the occurrence of any of the events referred to in
Section 4.01(f) or after the commencement of any proceedings of the type
referred to in Sections 4.01(g), (h) or (i), except as expressly provided in
Article III.
(c) By the acceptance of its Equipment Notes of any Series, each
Noteholder of such Series agrees that if such Noteholder, in its capacity as a
Noteholder, receives any payment or distribution on any Secured Obligations in
respect of such Series that it is not entitled to receive under this Section
2.13 or Article III hereof, it will hold any amount so received in trust for
Loan Trustee and forthwith turn over such amount to Loan Trustee in the form
received to be applied as provided in Article III.
Section 2.14 Certain Payments. Company agrees to pay to Loan Trustee
for distribution in accordance with Section 3.04:
(a) an amount or amounts equal to the fees payable to Liquidity
Provider under Section 2.03 of each Liquidity Facility and the related Fee
Letter (as defined in the Intercreditor Agreement), multiplied by a fraction,
the numerator of which is the sum of the then outstanding aggregate principal
amount of the Series G-1 Equipment Notes, Series G-2 Equipment Notes and Series
C Equipment Notes and the denominator of which is the sum of the then
outstanding aggregate principal amount of all "Series G-1 Equipment Notes",
"Series G-2 Equipment Notes" and "Series C Equipment Notes" (in each case as
defined in the Intercreditor Agreement);
(b) if any payment default shall have occurred and be continuing
with respect to interest on any Series G-1 Equipment Note, Series G-2 Equipment
Note or Series C Equipment Note, (x) the excess, if any, of (1) the amount equal
to the sum of interest on any Unpaid Advance or Applied Provider Advance payable
under Section 3.07 of each Liquidity Facility plus any other amounts payable in
respect of such Unpaid Advance or Applied Provider Advance under Section 3.01,
3.03 or 3.09 of the Liquidity Facility under which such Unpaid Advance or
Applied Provider Advance was made over (2) the sum of Investment Earnings from
any Final Advance plus any amount of interest at the Past Due Rate actually
payable (whether or not in fact paid) by Company in respect of the overdue
scheduled interest on the Equipment Notes, multiplied by (y) a fraction, the
numerator of which is the then aggregate overdue amounts of interest on the
Series G-1 Equipment Notes, Series G-2 Equipment Notes and Series C Equipment
Notes (other than interest becoming due and payable solely as a result of
acceleration of any such Equipment Notes) and the denominator of which is the
then aggregate overdue amounts of interest on all "Series G-1 Equipment Notes",
"Series G-2 Equipment Notes" and "Series C Equipment Notes" (in each case as
defined in the Intercreditor Agreement) (other than interest becoming due and
payable solely as a result of acceleration of any such "Equipment Notes");
(c) any amounts owed to Liquidity Provider by Subordination Agent as
borrower under Section 3.01 (other than in respect of an Unpaid Advance or
Applied Provider Advance), 3.03 (other than in respect of an Unpaid Advance or
Applied Provider Advance), 7.05 and 7.07 of each Liquidity Facility multiplied
by the fraction specified in the foregoing clause (a);
(d) an amount or amounts equal to the compensation, including
reasonable expenses and disbursements actually incurred, payable to
Subordination Agent under Section 6.07 of the Intercreditor Agreement,
multiplied by the fraction specified in the foregoing clause (a) (but in any
event without duplication of any amount or amounts payable by Company in respect
of such compensation under any other Operative Document or Pass Through
Document); and
(e) an amount or amounts equal to all compensation and reimbursement
of fees, expenses and disbursements (including payment of indemnities) owed to
Policy Provider under the Policy Provider Agreement, multiplied by the fraction
specified in the foregoing clause (a).
For purposes of this paragraph, the terms "Applied Provider
Advance", "Cash Collateral Account", "Final Advance", "Investment Earnings",
"Replacement Liquidity Facility" and "Unpaid Advance" have the meanings
specified in each Liquidity Facility or the Intercreditor Agreement.
Section 2.15 Repayment of Monies for Equipment Note Payments Held by
Loan Trustee. Any money held by Loan Trustee in trust for any payment of the
principal of, Make-Whole Amount, if any, or interest or any other amounts due
on, any Equipment Note, including, without limitation, any money deposited
pursuant to Section 2.12(c) or Section 10.01, and remaining unclaimed for two
years after the due date for such payment (or such lesser time as Loan Trustee
is satisfied, after 60 days' notice from Company, is one month prior to the
escheat period provided under applicable state law) shall be paid to Company.
Noteholders of any outstanding Equipment Notes shall thereafter, as unsecured
general creditors, look only to Company for payment thereof, and all liability
of Loan Trustee with respect to such trust money shall thereupon cease. Loan
Trustee, before being required to make any such repayment, may at the expense of
Company cause to be mailed to each such Noteholder notice that such money
remains unclaimed. After a date specified in such notice, which may not be less
than 30 days from the date of mailing, any unclaimed balance of such money then
remaining will be repaid to Company as provided herein.
Section 2.16 Directions by Subordination Agent. So long as
Subordination Agent is a Noteholder, notwithstanding anything contained herein
or in any other Operative Document to the contrary, in exercising its right to
vote the Equipment Notes held by it, or in giving or taking any direction,
consent, request, demand, instruction, authorization, notice, waiver or other
action provided by this Indenture or in respect of the Equipment Notes to be
given or taken by a Noteholder (each such vote or other action, a "Direction")
in respect of such Equipment Notes, Subordination Agent may act in accordance
with any votes, directions, consents, requests, demands, instructions,
authorizations, notices, waivers or other actions given or taken by any
applicable Pass Through Trustee or the Controlling Party pursuant to the
Intercreditor Agreement, including without limitation pursuant to Section 2.06,
Article IV or Section 8.01(b) thereof. Subordination Agent shall be permitted
(x) to give a Direction with respect to less than the entire principal amount of
any single Equipment Note held by it, and (y) to give different Directions with
respect to different portions of the principal amount of any single Equipment
Note held by it. Any Direction given by Subordination Agent at any time with
respect to more than a majority in aggregate unpaid principal amount of all of
the Equipment Notes issued and then outstanding hereunder shall be deemed to
have been given by a Majority in Interest of Noteholders.
Section 2.17 Assumption of Equipment Notes. Pursuant to the
provisions of Section 7.11 of the Participation Agreement, an owner trustee
shall be entitled to assume on a non-recourse basis all of the obligations of
Company hereunder and under the Equipment Notes by an amended and restated
indenture, an amended and restated participation agreement, and the issuance of
new equipment notes having substantially the same tenor as the Equipment Notes,
which new equipment notes may be reoptimized (by changing the maturity date
and/or principal payment requirements) in accordance with Section 7.11 of the
Participation Agreement. If an owner trustee shall assume such obligations of
Company, Company shall be released and discharged from any further obligations
hereunder and under the Equipment Notes (except with respect to any such
obligations that accrued prior thereto) and the Equipment Notes shall be
delivered to Loan Trustee for cancellation.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM
THE COLLATERAL
Section 3.01 Basic Distributions. Except as otherwise provided in
Sections 3.02, 3.03 and 3.04, each periodic payment by Company of regularly
scheduled installments of principal or interest on the Equipment Notes received
by Loan Trustee shall be promptly distributed in the following order of
priority:
first, so much of such payment as is required to pay in full the
aggregate amount of the payment or payments of principal amount and
interest (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 G-1 Equipment Notes and
Series G-2 Equipment Notes shall be distributed to Noteholders of Series
G-1 Equipment Notes and Series G-2 Equipment Notes ratably, without
priority of one over the other, in the proportion that the amount of such
payment or payments then due under each Series G-1 Equipment Note or
Series G-2 Equipment Note bears to the aggregate amount of the payments
then due under all Series G-1 Equipment Notes and Series G-2 Equipment
Notes;
second, after giving effect to clause "first" above, so much of such
payment remaining as is required to pay in full the aggregate amount of
the payment or payments of principal amount and interest (as well as any
interest on any overdue principal amount and, to the extent permitted by
applicable law, on any overdue interest and other overdue amounts) then
due under all Series C Equipment Notes shall be distributed to Noteholders
of Series C Equipment Notes 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 Equipment Note bears to the aggregate amount of
the payments then due under all Series C Equipment Notes; and
third, the balance, if any, of such installment remaining thereafter
shall be distributed to Company.
Section 3.02 Event of Loss; Optional Redemption. Except as otherwise
provided in Sections 3.03 and 3.04 and subject to the following proviso, any
payments received by Loan Trustee with respect to the Aircraft as the result of
(a) an Event of Loss (including amounts paid by Company pursuant to Section
2.10) or (b) an optional redemption of the Equipment Notes pursuant to Section
2.11 shall be applied to redemption of the Equipment Notes pursuant to Section
2.10 or Section 2.11, as applicable, and to payment of all other Secured
Obligations by applying such funds in the following order of priority:
first, (i) to reimburse Loan Trustee and Noteholders for any
reasonable costs or expenses actually incurred in connection with such
redemption for which they are entitled to reimbursement, or indemnity by
Company, under the Operative Documents; and then (ii) to pay any other
amounts then due (except as provided in clause "second" below) to Loan
Trustee, Noteholders and Indenture Indemnitees under this Indenture, the
Participation Agreement or the Equipment Notes;
second, (i) to pay the amounts specified in subclause (i) of clause
"third" of Section 3.03 plus Make-Whole Amount, if any, then due and
payable in respect of the Series G-1 Equipment Notes and the Series G-2
Equipment Notes; and (ii) after giving effect to subclause (i) above, to
pay the amounts specified in subclause (ii) of clause "third" of Section
3.03 plus Make-Whole Amount, if any, then due and payable in respect of
the Series C Equipment Notes; and
third, the balance, if any, of such payments shall be distributed to
Company.
Notwithstanding the foregoing, any insurance, condemnation or similar proceeds
resulting from an Event of Loss that are received by Loan Trustee shall be held
or disbursed by Loan Trustee as provided by Sections 7.05(c) and 7.06(d). Any
such money held by Loan Trustee shall be invested as provided in Section 5.06.
No Make-Whole Amount shall be payable on the Equipment Notes in
connection with their redemption as a result of an Event of Loss in respect of
the Airframe or the Airframe and the Engines installed thereon.
Section 3.03 Payments after Event of Default. Except as otherwise
provided in Section 3.04, all payments received and amounts held or realized by
Loan Trustee (including any amounts realized by Loan Trustee from the exercise
of any remedies pursuant to Article IV) after both an Event of Default shall
have occurred and be continuing and the Equipment Notes shall have become due
and payable pursuant to Section 4.02(a), as well as all payments or amounts then
held by Loan Trustee as part of the Collateral, shall be promptly distributed by
Loan Trustee in the following order of priority:
first, so much of such payments or amounts as is required to (i)
reimburse Loan Trustee, to the extent Loan Trustee is entitled to be
reimbursed or indemnified under the Operative Documents, 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 Collateral and every part thereof
pursuant to Section 4.02(a)) actually incurred by Loan 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 actually incurred or expenditures or advances made
by Loan Trustee or Noteholders in the protection, exercise or enforcement
of any right, power or remedy or any damages sustained by Loan Trustee or
any Noteholder, liquidated or otherwise, upon such Event of Default shall
be applied by Loan Trustee as between itself and Noteholders in
reimbursement of such expenses and any other expenses for which Loan
Trustee or Noteholders are entitled to reimbursement under any Operative
Document, and (ii) to pay all amounts payable (except as provided in
clauses "second" and "third" below) to the other Indenture Indemnitees
hereunder and under the Participation Agreement; and in case the aggregate
amount so to be 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 is required
to reimburse the then existing or prior Noteholders for payments made
pursuant to Section 5.03 (to the extent not previously reimbursed) shall
be distributed to such then existing or prior Noteholders 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 Noteholder
pursuant to Section 5.03;
third, (i) so much of such payments or amounts remaining as is
required to pay in full the aggregate unpaid principal amount of all
Series G-1 Equipment Notes and Series G-2 Equipment Notes and the accrued
but unpaid interest and all other Secured Obligations in respect of the
Series G-1 Equipment Notes and Series G-2 Equipment Notes to the date of
distribution shall be distributed to Noteholders of Series G-1 Equipment
Notes and Series G-2 Equipment Notes ratably, without priority of one over
the other, in the proportion that the aggregate unpaid principal amount of
all Series G-1 Equipment Notes and Series G-2 Equipment Notes held by each
Noteholder 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 G-1 Equipment Notes and Series G-2
Equipment Notes held by all such Noteholders plus the accrued but unpaid
interest and other amounts due thereon to the date of distribution; and
(ii) after giving effect to subclause (i) above, so much of such payments
or amounts remaining as is required to pay in full the aggregate unpaid
principal amount of all Series C Equipment Notes and the accrued but
unpaid interest and all other Secured Obligations in respect of the Series
C Equipment Notes to the date of distribution shall be distributed to
Noteholders of Series C Equipment Notes ratably, without priority of one
over the other, in the proportion that the aggregate unpaid principal
amount of all Series C Equipment Notes held by each Noteholder 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 Equipment Notes held by all such Noteholders 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 shall be
distributed to Company.
No Make-Whole Amount shall be payable on the Equipment Notes as a
consequence of or in connection with an Event of Default or the acceleration of
the Equipment Notes.
Section 3.04 Certain Payments. (a) Any payments received by Loan
Trustee for which provision as to the application thereof is made in this
Indenture other than in this Article III shall be applied as provided in those
provisions. Without limiting the foregoing, any payments received by Loan
Trustee which are payable to Company pursuant to any of the provisions of this
Indenture other than those set forth in this Article III (including Sections
5.06, 7.05 and 7.06 hereof) shall be so paid to Company. Any payments received
by Loan Trustee for which no provision as to the application thereof is made in
this Indenture and for which such provision is made in any other Operative
Document shall be applied forthwith to the purpose for which such payment was
made in accordance with the terms of such other Operative Document.
(b) Loan Trustee will distribute promptly upon receipt any indemnity
payment received by it from Company pursuant to Section 4.02 of the
Participation Agreement in respect of (i) State Street and Loan Trustee, (ii)
Subordination Agent, (iii) Pass Through Trustees, (iv) Liquidity Provider and
(v) Policy Provider, in each case, directly to the Person entitled thereto. Any
payment received by Loan Trustee from Company under Section 2.14 shall be
distributed to Subordination Agent to be distributed in accordance with Section
2.03(c) of the Intercreditor Agreement.
(c) Any payments received by Loan Trustee not constituting part of
the Collateral or otherwise for which no provision as to the application thereof
is made in any Operative Document shall be distributed by Loan Trustee to
Company. Further, and except as otherwise provided in Sections 3.02, 3.03 and
3.04, all payments received and amounts realized by Loan Trustee with respect to
the Aircraft, to the extent received or realized at any time after payment in
full of all Secured Obligations or after the conditions set forth in Section
10.01(a)(ii) for the defeasance of this Indenture have been satisfied, as well
as any amounts remaining as part of the Collateral after the occurrence of such
payment in full or defeasance, shall be distributed by Loan Trustee to Company.
Section 3.05 Payments to Company. Any amounts distributed hereunder
by Loan Trustee to Company shall be paid to Company (within the time limits
contemplated by Section 2.03) by wire transfer of funds of the type received by
Loan Trustee at such office and to such account or accounts of such entity or
entities as shall be designated by notice from Company to Loan Trustee from time
to time.
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
Section 4.01 Events of Default. Each of the following events
constitutes an "Event of Default" whether such event is voluntary or involuntary
or comes about or is 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 is deemed to exist and continue so long as, but only as long as, it has
not been remedied or explicitly waived:
(a) Company fails to make any payment of principal amount of,
Make-Whole Amount, if any, or interest on, any Equipment Note within 15 days
after such payment is due;
(b) Company fails to make payment when the same is due of any amount
(other than amounts referred to in Section 4.01(a)) due hereunder, under any
Equipment Note or under any other Operative Document, and such failure continues
unremedied for 30 days after the receipt by Company of written notice thereof
from Loan Trustee or any Noteholder;
(c) Company fails to carry and maintain insurance or indemnity on or
with respect to the Aircraft in accordance with the provisions of Section 7.06;
provided that no such failure to carry and maintain insurance shall constitute
an Event of Default until the earlier of (i) the date such failure has continued
unremedied for a period of 30 days after receipt by Loan Trustee of the notice
of cancellation or lapse referred to in Section 7.06 or (ii) the date such
insurance is not in effect as to Loan Trustee;
(d) Company fails to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any Operative
Document, and such failure continues unremedied for a period of 60 days after
receipt by Company of written notice thereof from Loan Trustee or any
Noteholder; provided that, if such failure is capable of being remedied, no such
failure shall constitute an Event of Default for a period of one year after such
notice is received by Company so long as Company is diligently proceeding to
remedy such failure;
(e) any representation or warranty made by Company in any Operative
Document was incorrect in any material respect at the time made, and such
incorrectness continues to be material to the transactions contemplated hereby
and continues unremedied for a period of 60 days after receipt by Company of
written notice thereof from Loan Trustee; provided that, if such incorrectness
is capable of being remedied, no such incorrectness shall constitute an Event of
Default for a period of one year after such notice is received by Company so
long as Company is diligently proceeding to remedy such incorrectness;
(f) Company consents to the appointment of or the taking of
possession by a receiver, trustee or liquidator in respect of a substantial part
of its property, admits in writing its inability to pay its debts generally as
they come due or makes a general assignment for the benefit of its creditors;
(g) Company files a voluntary petition in bankruptcy or a voluntary
petition or an answer seeking reorganization, liquidation or other relief as a
debtor in a case under any bankruptcy laws or insolvency laws (as in effect at
such time) or an answer admitting the material allegations of a petition filed
against Company as a debtor in any such case, or Company as a debtor seeks
relief by voluntary petition, answer or consent, under the provisions of any
other bankruptcy or other similar law providing for the reorganization or
winding-up of corporations (as in effect at such time), or Company seeks an
agreement, composition, extension or adjustment with its creditors under such
laws;
(h) an order, judgment or decree is entered by any court of
competent jurisdiction appointing, without the consent of Company, a receiver,
trustee or liquidator of Company or sequestering any substantial part of its
property, or granting any other relief in respect of Company as a debtor under
any bankruptcy laws or insolvency laws (as in effect at such time), and any such
order, judgment or decree of appointment or sequestration remains in force
undismissed, unstayed or unvacated for a period of 90 days after the date of
entry thereof; or
(i) a petition against Company as a debtor in a case under the
federal bankruptcy laws or other insolvency laws (as in effect at such time) is
filed and not withdrawn or dismissed within 90 days thereafter, or if, under the
provisions of any law providing for reorganization or winding-up of corporations
that may apply to Company, any court of competent jurisdiction assumes
jurisdiction, custody or control of Company or of any substantial part of its
property and such jurisdiction, custody or control remains in force
unrelinquished, unstayed or unterminated for a period of 90 days;
provided, however, that notwithstanding anything to the contrary contained in
this Section 4.01, any failure of Company to perform or observe any covenant,
condition or agreement shall not constitute an Event of Default if such failure
arises by reason of an event referred to in the definition of "Event of Loss" so
long as Company is continuing to comply with all of the terms of Section 7.05.
Section 4.02 Remedies. (a) If an Event of Default has occurred and
is continuing and so long as the same shall continue unremedied, then and in
every such case Loan Trustee may, and upon the written instructions of a
Majority in Interest of Noteholders, Loan Trustee shall, do one or more of the
following to the extent permitted by, and subject to compliance with the
requirements of, applicable law then in effect (provided, however, that during
any period the Airframe or any Engine is subject to the CRAF Program and is in
possession of or being operated under the direction of the United States
government or an agency or instrumentality of the United States, Loan Trustee
shall not, on account of any Event of Default, be entitled to exercise or pursue
any of the powers, rights or remedies described in this Section 4.02 in such
manner as to limit Company's control under this Indenture (or any Permitted
Lessee's control under any Lease) of the Airframe or such Engine, 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) prior written
notice of default hereunder has been given by Loan Trustee by registered or
certified mail to Company (and any such Permitted Lessee) with a copy addressed
to the Contracting Office Representative or other appropriate person for the
Military Airlift Command of the United States Air Force under any contract with
Company (or such Permitted Lessee) relating to the Aircraft):
(i) declare by written notice to Company all the Equipment Notes to
be due and payable, whereupon the aggregate unpaid principal amount of all
Equipment Notes then outstanding, together with accrued but unpaid
interest thereon and other amounts due thereunder (but without Make-Whole
Amount), shall immediately become due and payable without presentment,
demand, protest or notice, all of which are hereby waived; provided that
if an Event of Default referred to in Subsections 4.01(f), (g), (h) or (i)
has occurred and is continuing, then and in every such case the unpaid
principal amount then outstanding, together with accrued but unpaid
interest and all other amounts due thereunder (but without Make-Whole
Amount) shall immediately and without further act become due and payable
without presentment, demand, protest or other notice, all of which are
hereby waived; and, following such declaration or deemed declaration:
(ii) (A) cause Company, upon the demand by notice of Loan Trustee,
at Company's expense, to deliver promptly, and Company shall deliver
promptly, all or such part of the Airframe or any Engine as Loan Trustee
so demands to Loan Trustee or its order, or, if Company has failed to so
deliver the Airframe or any Engine after such demand, Loan Trustee, at its
option, may enter upon the premises where all or any part of the Airframe
or any Engine are located and take immediate possession of and remove the
same together with any engine which is not an Engine but which is
installed on the Airframe, subject to all of the rights of the owner,
lessor, lienor or secured party of such engine; provided that the Airframe
with an engine (which is not an Engine) installed thereon may be flown or
returned only to a location within the continental United States, and such
engine shall be held for the account of any such owner, lessor, lienor,
secured party or, if such engine is owned by Company, may at the option of
Company with the consent of Loan Trustee (which will not be unreasonably
withheld) or at the option of Loan Trustee with the consent of Company
(which will not be unreasonably withheld), be exchanged with Company for
an Engine in accordance with the provisions of Section 7.05(b); (B) sell
all or any part of the Airframe and any Engine at public or private sale,
whether or not Loan Trustee at the time has possession thereof, as Loan
Trustee may determine, or otherwise dispose of, hold, use, operate, lease
to others or keep idle all or any part of the Airframe or such Engine as
Loan Trustee, in its sole discretion, determines, all free and clear of
any rights or claims of Company, and the proceeds of such sale or
disposition shall be applied as set forth in Section 3.03; or (C) exercise
any other remedy of a secured party under the Uniform Commercial Code of
the State of New York (whether or not in effect in the jurisdiction in
which enforcement is sought).
Upon every such taking of possession of Collateral under this
Section 4.02, Loan Trustee may, from time to time, at the expense of the
Collateral, make all such expenditures for maintenance, insurance, repairs,
alterations, additions and improvements to and of the Collateral as it deems
necessary to cause the Collateral to be in such condition as required by the
provisions of this Indenture. In each such case, Loan Trustee may maintain, use,
operate, store, lease, control or manage the Collateral and may exercise all
rights and powers of Company relating to the Collateral as Loan Trustee
reasonably deems best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, leasing,
control, management or disposition of the Collateral or any part thereof as Loan
Trustee may reasonably determine; and Loan Trustee shall be entitled to collect
and receive directly all tolls, rents, revenues, issues, income, products and
profits of the Collateral and every part thereof. Such tolls, rents, revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, leasing, control, management or disposition of the
Collateral, and of all maintenance, repairs, replacements, alterations,
additions and improvements, and to make all payments that Loan Trustee is
required or elects to make, if any, for Taxes, insurance or other proper charges
assessed against or otherwise imposed upon the Collateral or any part thereof,
and all other payments which Loan Trustee is required or expressly authorized to
make under any provision of this Indenture, as well as just and reasonable
compensation for the services of Loan Trustee, and shall otherwise be applied in
accordance with Article III. If an Event of Default has occurred and is
continuing and the Equipment Notes either have been accelerated pursuant to this
Section 4.02 or have become due at maturity and Loan Trustee is entitled to
exercise rights hereunder, at the request of Loan Trustee, Company shall
promptly execute and deliver to Loan Trustee such instruments of title and other
documents as Loan Trustee reasonably deems necessary or advisable to enable Loan
Trustee or an agent or representative designated by Loan Trustee, at such time
or times and place or places as Loan Trustee specifies, to obtain possession of
all or any part of the Collateral to which Loan Trustee at the time is entitled
hereunder. If Company for any reason fails to execute and deliver such
instruments and documents after such request by Loan Trustee, Loan Trustee may
obtain a judgment conferring on Loan Trustee the right to immediate possession
and requiring Company to execute and deliver such instruments and documents to
Loan Trustee, to the entry of which judgment Company hereby specifically
consents to the fullest extent it may lawfully do so.
(b) Loan Trustee shall give Company at least 30 days' prior written
notice of any public sale or of the date on or after which any private sale will
be held, which notice Company hereby agrees to the extent permitted by
applicable law is reasonable notice. Any Noteholder or Noteholders shall be
entitled to bid for and become the purchaser of any Collateral offered for sale
pursuant to this Section 4.02 and to credit against the purchase price bid at
such sale by such Noteholders all or any part of the unpaid amounts owing to
such Noteholders under the Operative Documents and secured by the Lien of this
Indenture (but only to the extent that such purchase price would have been paid
to such Noteholders pursuant to Article III if such purchase price were paid in
cash and the foregoing provision of this Section 4.02(b) were not given effect).
Loan Trustee may exercise such right without possession or production of the
Equipment Notes or proof of ownership thereof, and as a representative of
Noteholders may exercise such right without notice to Noteholders as parties to
any suit or proceeding relating to the foreclosure of any Collateral. Company
may also bid for and become the purchaser of any Collateral offered for sale
pursuant to this Section 4.02.
(c) To the extent permitted by applicable law, while an Event of
Default has occurred and is continuing, Company irrevocably appoints Loan
Trustee the true and lawful attorney-in-fact of Company (which appointment is
coupled with an interest) 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 Indenture, whether pursuant to foreclosure or
power of sale, or otherwise, to execute and deliver all such bills of sale,
assignments and other instruments as may be necessary or appropriate, with full
power of substitution, Company hereby ratifying and confirming all that such
attorney or any substitute does by virtue hereof in accordance with applicable
law; provided that if so requested by Loan Trustee or any purchaser, Company
shall ratify and confirm any such sale, assignment or transfer of delivery, by
executing and delivering to Loan 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.
(d) At any time after Loan Trustee has declared the unpaid principal
amount of all Equipment Notes then outstanding to be due and payable and prior
to the sale of any part of the Collateral pursuant to this Article IV, a
Majority in Interest of Noteholders, by written notice to Company and Loan
Trustee, may rescind and annul such declaration, whether made by Loan Trustee on
its own accord or as directed, and its consequences if: (i) there has been paid
to or deposited with Loan Trustee an amount sufficient to pay all overdue
installments of principal amount of, and interest on, the Equipment Notes, and
all other amounts owing under the Operative Documents, that have become due
otherwise than by such declaration of acceleration and (ii) all other Events of
Default, other than nonpayment of principal amount or interest on the Equipment
Notes that have become due solely because of such acceleration, have been either
cured or waived.
(e) Notwithstanding anything contained herein, so long as Pass
Through Trustee under any Pass Through Trust Agreement or Subordination Agent on
its behalf is a Noteholder, Loan Trustee will not be authorized or empowered to
acquire title to any Collateral or take any action with respect to any
Collateral so acquired by it if such acquisition or action would cause any Pass
Through Trust to fail to qualify as a "grantor trust" for federal income tax
purposes.
Section 4.03 Remedies Cumulative. To the extent permitted under
applicable law, each and every right, power and remedy specifically given to
Loan Trustee herein or otherwise in this Indenture shall be cumulative and shall
be in addition to every other right, power and remedy specifically given herein
or now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically given herein or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by Loan 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 Loan Trustee in the exercise of any right,
remedy or power or in the pursuance of any remedy shall, to the extent permitted
by applicable law, impair any such right, power or remedy or be construed to be
a waiver of any default on the part of Company or to be an acquiescence therein.
Section 4.04 Discontinuance of Proceedings. In case Loan Trustee has
instituted any proceedings to enforce any right, power or remedy under this
Indenture by foreclosure, entry or otherwise, and such proceedings have been
discontinued or abandoned for any reason or have been determined adversely to
Loan Trustee, then and in every such case Company and Loan Trustee shall,
subject to any determination in such proceedings, be restored to their former
positions and rights hereunder with respect to the Collateral, and all rights,
remedies and powers of Loan Trustee shall continue as if no such proceedings had
been undertaken (but otherwise without prejudice).
Section 4.05 Waiver of Past Defaults. Upon written instruction from
a Majority in Interest of Noteholders, Loan 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 the Operative Documents, but no such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon; provided, however, that in the absence of written instructions from
each of the affected Noteholders, Loan Trustee shall not waive any default (i)
in the payment of the principal amount, Make-Whole Amount, if any, or interest
due under any Equipment Note then outstanding (other than with the consent of
the holder thereof), or (ii) in respect of a covenant or provision hereof which,
under Article IX, cannot be modified or amended without the consent of each such
affected Noteholder.
Section 4.06 Noteholders May Not Bring Suit Except Under Certain
Conditions. A Noteholder of any Series shall not have the right to institute any
suit, action or proceeding at law or in equity or otherwise with respect to this
Indenture for the appointment of a receiver or for the enforcement of any other
remedy under this Indenture, unless:
(1) such Noteholder previously shall have given written notice to
Loan Trustee of a continuing Event of Default;
(2) A Majority in Interest of Noteholders shall have requested Loan
Trustee in writing to institute such action, suit or proceeding and shall
have offered to Loan Trustee indemnity as provided in Section 5.03;
(3) Loan Trustee shall have refused or neglected to institute any
such action, suit or proceeding for 60 days after receipt of such notice,
request and offer of indemnity; and
(4) no direction inconsistent with such written request shall have
been given to Loan Trustee during such 60-day period by a Majority in
Interest of Noteholders.
Except to the extent provided in the Intercreditor Agreement or in
any Indenture Supplement, it is understood and intended that no one or more of
Noteholders of any Series shall have any right in any manner whatsoever
hereunder or under the Indenture Supplement or under the Equipment Notes of such
Series to (i) surrender, impair, waive, affect, disturb or prejudice any
Collateral, or the Lien of the Indenture on any Collateral, or the rights of
Noteholders of such Series, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Noteholder of such Series or (iii)
enforce any right under this Indenture, except in the manner provided in this
Indenture and for the equal, ratable and common benefit of all Noteholders of
such Series subject to the provisions of this Indenture.
ARTICLE V
DUTIES OF LOAN TRUSTEE
Section 5.01 Notice of Event of Default. If Loan Trustee has
knowledge of an Event of Default or of a default arising from a failure by
Company to pay when due any payment of principal amount, interest or Make-Whole
Amount, if any, due and payable under any Equipment Note, Loan Trustee shall
promptly give notice thereof to Company and each Noteholder; provided, however,
that except in the case of a default in the payment of the principal amount,
interest or Make-Whole Amount, if any, due and payable under any Equipment Note,
Loan Trustee shall be protected in withholding the notice to Noteholders
required in the foregoing part of this sentence if and so long as the executive
committee or trust committee of directors of Loan Trustee and/or trust officers
thereof in good faith determine that withholding such notice is in the interest
of Noteholders. Subject to the terms of Sections 4.02, 4.05, 5.02 and 5.03, Loan
Trustee shall take such action, or refrain from taking such action, with respect
to such Event of Default (including with respect to the exercise of any rights
or remedies hereunder) as Loan Trustee is instructed in writing by a Majority in
Interest of Noteholders. Subject to the provisions of Section 5.03, if Loan
Trustee does not receive instructions as above provided within 20 Business Days
after giving notice of such Event of Default to Noteholders, Loan 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 with
respect to such Event of Default as it reasonably determines to be advisable in
the best interests of Noteholders, but shall be under no duty to take or refrain
from taking any action. It shall use the same degree of care and skill in
connection therewith as a prudent person would use under the circumstances in
the conduct of his or her own affairs. Loan Trustee may not sell the Airframe or
any Engine without the consent of a Majority in Interest of Noteholders.
For all purposes of this Indenture, in the absence of actual
knowledge, Loan Trustee shall not be deemed to have knowledge of a default or an
Event of Default unless notified in writing by Company or one or more
Noteholders; and "actual knowledge" (as used in the foregoing clause) of Loan
Trustee shall mean actual knowledge of an officer in the Corporate Trust
Division of Loan Trustee; provided, however, that Loan Trustee is deemed to have
actual knowledge of (i) the failure of Company to pay any principal amount of,
or interest on, the Equipment Notes directly to Loan Trustee when the same shall
become due or (ii) the failure of Company to maintain insurance as required
under Section 7.06 if Loan Trustee receives written notice thereof from an
insurer or insurance broker.
Section 5.02 Action upon Instructions; Certain Rights and
Limitations. Subject to the terms of Article IV and this Article V, upon the
written instructions at any time of a Majority in Interest of Noteholders, Loan
Trustee shall promptly (i) give such notice, direction, consent, waiver or
approval or exercise such right, remedy or power hereunder in respect of all or
any part of the Collateral or (ii) take such other action, as is specified in
such instructions.
Loan Trustee will cooperate with Company in connection with the
recording, filing, re-recording and refiling of the Indenture and any
supplements to it and any financing statements or other documents as is
necessary to maintain the perfection hereof or otherwise protect the security
interests created hereby. Loan Trustee shall furnish to Company upon request
such information and copies of such documents as Loan Trustee may have and as
are necessary for Company to perform its duties under Article II hereof.
Section 5.03 Indemnification. Loan Trustee shall not be required to
take any action or refrain from taking any action under Sections 5.01 (other
than the first sentence thereof) or 5.02 or Article IV unless it shall have
received indemnification against any risks incurred in connection therewith in
form and substance reasonably satisfactory to it, including, without limitation,
adequate advances against costs that may be incurred by it in connection
therewith. Loan 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, nor shall
any other provision of any Operative Document be deemed to impose a duty on Loan
Trustee to take any action, if Loan Trustee shall have been advised by outside
counsel that such action is contrary to the terms hereof or is otherwise
contrary to law.
Section 5.04 No Duties Except as Specified in Indenture or
Instructions. Loan Trustee shall not have any duty or obligation to manage,
control, lease, use, sell, operate, store, dispose of or otherwise deal with the
Aircraft or any other part of the Collateral, or to otherwise take or refrain
from taking any action under, or in connection with, this Indenture, except as
expressly provided by the terms of this Indenture or the Participation Agreement
or as expressly provided in written instructions received pursuant to the terms
of Section 5.01 or 5.02; and no implied duties or obligations shall be read into
this Indenture against Loan Trustee.
Section 5.05 No Action Except under Indenture or Instructions. Loan
Trustee will not manage, control, use, sell, lease, operate, store, dispose of
or otherwise deal with the Aircraft or any other part of the Collateral except
in accordance with the powers granted to, or the authority conferred upon, Loan
Trustee pursuant to this Indenture and in accordance with the express terms
hereof.
Section 5.06 Investment of Amounts Held by Loan Trustee. Any monies
(including for the purpose of this Section 5.06 any cash deposited with Loan
Trustee by Company, any cash received by Loan Trustee pursuant to Sections
7.05(c) or 7.06(d) or otherwise) or Permitted Investments purchased by the use
of such cash pursuant to this Section 5.06 or any cash constituting the proceeds
of the maturity, sale or other disposition of any Permitted Investments) held by
Loan Trustee hereunder as part of the Collateral, until paid out by Loan Trustee
as herein provided, (i) subject to clause (ii) below, may be carried by Loan
Trustee on deposit with itself or on deposit to its account with any bank, trust
company or national banking association incorporated or doing business under the
laws of the United States or one of the states thereof having combined capital
and surplus and retained earnings of a least $100,000,000, and Loan Trustee
shall not have any liability for interest upon any such monies except as
otherwise agreed in writing with Company, or (ii) at any time and from time to
time, so long as no Event of Default shall have occurred and be continuing, at
the request of Company, shall be invested and reinvested in Permitted
Investments as specified in such request (if such investments are reasonably
available for purchase) and sold, in any case at such prices, including accrued
interest or its equivalent, as are set forth in such request, and such Permitted
Investments shall be held by Loan Trustee in trust as part of the Collateral
until so sold; provided that Company shall upon demand pay to Loan Trustee the
amount of any loss realized upon maturity, sale or other disposition of any such
Permitted Investment and, so long as no Event of Default or Payment Default
shall have occurred and be continuing, Company shall be entitled to receive from
Loan Trustee, and Loan Trustee shall promptly pay to Company, any profit,
income, interest, dividend or gain realized upon maturity, sale or other
disposition of any Permitted Investment. If an Event of Default or Payment
Default shall have occurred and be continuing, any net income, profit, interest,
dividend or gain realized upon maturity, sale or other disposition of any
Permitted Investment shall be held as part of the Collateral and shall be
applied by Loan Trustee at the same time, on the same conditions and in the same
manner as the amounts in respect of which such income, profit, interest,
dividend or gain was realized are required to be distributed in accordance with
the provisions hereof pursuant to which such amounts were required to be held.
Loan Trustee shall not be responsible for any losses on any investments or sales
of Permitted Investments made pursuant to the procedure specified in this
Section 5.06 other than by reason of its willful misconduct or negligence. If
any moneys or investments are held by Loan Trustee solely because an Event of
Default has occurred and is continuing and such moneys or investments have been
held for a period of 90 consecutive days during which such Event of Default is
continuing without any remedial action being taken by Loan Trustee in respect of
such Event of Default pursuant to Section 4.02 hereof, and provided that there
is no stay, moratorium or injunction in effect preventing the taking of such
action, then, notwithstanding any other provision of the Operative Documents,
all such moneys and investments held by Loan Trustee shall be released to
Company on such 90th day, or on the next Business Day after such 90th day.
ARTICLE VI
LOAN TRUSTEE
Section 6.01 Acceptance of Trusts and Duties. State Street accepts
the trusts and duties hereby created and applicable to it and agrees to perform
such duties, but only upon the terms of this Indenture and agrees to receive,
handle and disburse all monies received by it as Loan Trustee constituting part
of the Collateral in accordance with the terms hereof. State Street shall have
no liability hereunder except (a) for its own willful misconduct or negligence,
(b) as provided in the fourth sentence of Section 2.03 and the penultimate
sentence of Section 5.06, (c) for liabilities that may result from the
inaccuracy of any representation or warranty of State Street in the
Participation Agreement or expressly made hereunder and (d) as otherwise
expressly provided in the Operative Documents.
Section 6.02 Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Sections 5.01, 5.02 or 6.06, and
except as provided in, and without limiting the generality of, Sections 5.02,
5.03 and 5.04, Loan Trustee shall have no duty (a) to see to any registration of
the Aircraft or any recording or filing of this Indenture or any other document,
or to see to the maintenance of any such registration, recording or filing, (b)
to see to any insurance on the Aircraft or to effect or maintain any such
insurance, whether or not Company is in default with respect thereto, (c) to
confirm, verify or inquire into the failure to receive any financial statements
of Company or (d) to inspect the Aircraft at any time or ascertain or inquire as
to the performance or observance of any of Company's covenants hereunder with
respect to the Aircraft.
Section 6.03 No Representations or Warranties as to the Documents.
Except as provided in Article 5 of the Participation Agreement, Loan Trustee
shall not be deemed to have made any representation or warranty as to the
validity, legality or enforceability of any Operative Document or any other
document or instrument, or as to the correctness of any statement (other than a
statement by Loan Trustee) contained herein or therein, except that Loan Trustee
hereby represents and warrants that each of said specified documents to which it
is a party has been or will be duly executed and delivered by one of its
officers who is and will be duly authorized to execute and deliver such document
on its behalf.
Section 6.04 No Segregation of Monies; No Interest. Subject to
Section 5.06 hereof, all moneys received by Loan Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law, and neither Loan Trustee nor any agent
of Loan Trustee shall be under any liability for interest on any moneys received
by it hereunder; provided, however, that any payments received, or applied
hereunder, by Loan Trustee shall be accounted for by Loan Trustee so that any
portion thereof paid or applied pursuant hereto shall be identifiable as to the
source thereof.
Section 6.05 Reliance; Agents; Advice of Counsel. Loan Trustee shall
not 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 reasonably believed by it to be genuine and
reasonably believed by it to be signed by the proper party or parties. Loan
Trustee may accept a copy of a resolution of the Board of Directors of any party
to the Participation Agreement, certified by the Secretary or an Assistant
Secretary of such party 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 any fact or matter the manner of
ascertainment of which is not specifically described herein, Loan Trustee may
for all purposes hereof rely on a certificate, signed by a duly authorized
officer of Company, as to such fact or matter, and such certificate shall
constitute full protection to Loan Trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon. In the administration of the
trusts hereunder, Loan Trustee may, with the consent of Company (such consent
not to be unreasonably withheld), (a) execute any of the trusts or powers hereof
and perform its powers and duties hereunder directly or through agents
(including paying agents or registrars) or attorneys, and (b) at the expense of
the Collateral, consult with counsel, accountants and other skilled Persons to
be selected and retained by it. Loan 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 acting within
such counsel's, accountants' or Person's area of competence (so long as Loan
Trustee shall have exercised reasonable care and judgment in selecting such
Persons).
Section 6.06 Instructions from Noteholders. In the administration of
the trusts created hereunder, Loan Trustee shall have the right to seek
instructions from a Majority in Interest of Noteholders should any provision of
this Indenture appear to conflict with any other provision herein or any other
Operative Document or Pass Through Document or should Loan Trustee's duties or
obligations hereunder be unclear, and Loan Trustee shall incur no liability in
refraining from acting until it receives such instructions. Loan Trustee shall
be fully protected for acting in accordance with any instructions received under
this Section 6.06.
ARTICLE VII
OPERATING COVENANTS OF COMPANY
Section 7.01 Liens. Company will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Aircraft,
its title thereto or any of its interest therein, except:
(a) the respective rights of Loan Trustee and Company as provided in
the Operative Documents, the Lien of this Indenture, the rights of any Permitted
Lessee under a Lease permitted hereunder and the rights of any Person existing
pursuant to the Operative Documents or the Pass Through Documents;
(b) the rights of others under agreements or arrangements to the
extent expressly permitted by this Indenture;
(c) Loan Trustee Liens, Noteholder Liens and Other Party Liens;
(d) Liens for Taxes either not yet due or payable 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 Loan Trustee's interest therein or materially impair the Lien of this
Indenture;
(e) materialmen's, mechanics', workers', repairmen's, employees' or
other like Liens arising in the ordinary course of business (including those
arising under maintenance agreements entered into in the ordinary course of
business) securing obligations that either are not yet 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 risk of the
sale, forfeiture or loss of the Airframe or any Engine or Loan Trustee's
interest therein or materially impair the Lien of this Indenture;
(f) Liens arising out of any judgment or award, so long as such
judgment is, within 60 days after the entry thereof, discharged, vacated or
reversed, or execution thereof stayed pending appeal or other judicial review or
is discharged, vacated or reversed within 60 days after the expiration of such
stay;
(g) any other Lien with respect to which Company provides a bond,
cash collateral or other security adequate in the reasonable opinion of Loan
Trustee;
(h) salvage or similar rights of insurers under insurance policies
maintained by Company; and
(i) Liens approved in writing by Loan Trustee with the consent of a
Majority in Interest of Noteholders.
Liens described in clauses (a) through (i) above are referred to herein as
"Permitted Liens". Company shall promptly, at its own expense, take (or cause to
be taken) such action as may be necessary duly to discharge (by bonding or
otherwise) any Lien other than a Permitted Lien arising at any time with respect
to the Aircraft, its title thereto or any of its interest therein.
Section 7.02 Possession, Operation and Use, Maintenance and
Registration. (a) Possession. Without the prior written consent of Loan Trustee,
Company shall not lease or otherwise in any manner deliver, transfer or
relinquish possession of the Airframe or any Engine or install any Engine, or
permit any Engine to be installed, on any airframe other than the Airframe;
provided that Company (or, except with respect to clauses (viii) and (ix) below,
any Permitted Lessee) may without the prior written consent of Loan Trustee:
(i) subject the Airframe to interchange agreements or subject any
Engine to interchange or pooling agreements or arrangements, in each case
entered into by Company (or any Permitted Lessee) 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 and (B) if
Company's title to any such Engine is divested under any such agreement or
arrangement, such divestiture shall be deemed to be an Event of Loss with
respect to such Engine, and Company shall (or shall cause any Permitted
Lessee to) comply with Section 7.05(b) in respect thereof;
(ii) deliver possession of the Airframe or any Engine to any Person
for testing, service, repair, restoration, storage, maintenance or other
similar purposes or for alterations, modifications or additions to the
Airframe or such Engine to the extent required or permitted by the terms
hereof;
(iii) transfer or permit the transfer of possession of the Airframe
or any Engine to any Government pursuant to a lease, contract or other
instrument;
(iv) subject (or permit any Permitted Lessee to subject) the
Airframe or any Engine to the CRAF Program or transfer (or permit any
Permitted Lessee to transfer) possession of the Airframe or any Engine to
the United States government in accordance with applicable laws, rulings,
regulations or orders (including, without limitation, any transfer of
possession pursuant to the CRAF Program); provided, that Company (or any
Permitted Lessee) (A) shall promptly notify Loan Trustee upon transferring
possession of the Airframe or any Engine pursuant to this clause (iv) and
(B) in the case of a transfer of possession pursuant to the CRAF Program,
shall notify Loan Trustee of the name and address of the responsible
Contracting Office Representative for the Military Airlift Command of the
United States Air Force or other appropriate Person to whom notices must
be given and to whom requests or claims must be made to the extent
applicable under the CRAF Program;
(v) install an Engine on an airframe owned by Company (or any
Permitted Lessee) free and clear of all Liens, except (A) Permitted Liens
and Liens that 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) and (B) the rights of third parties under
interchange agreements or pooling or similar arrangements that would be
permitted under clause (i) above;
(vi) install an Engine on an airframe leased to Company (or any
Permitted Lessee) or purchased or owned by Company (or any Permitted
Lessee) subject to a conditional sale or other security agreement;
provided that: (A) such airframe is free and clear of all Liens except (1)
the rights of the parties to the lease or conditional sale or other
security agreement covering such airframe, or their successors and
assigns, and (2) Liens of the type permitted by clause (v) of this Section
7.02(a); and (B) either: (1) Company has obtained from the lessor or
secured party of such airframe a written agreement (which may be the
lease, conditional sale or other security agreement covering such
airframe), in form and substance satisfactory to Loan Trustee (an
agreement from such lessor or secured party substantially in the form of
the penultimate paragraph of this Section 7.02(a) being deemed to be
satisfactory to Loan Trustee), whereby such lessor or secured party
expressly agrees that neither it nor its successors or assigns will
acquire or claim any right, title or interest in any Engine by reason of
such Engine being installed on such airframe at any time while such Engine
is subject to the Lien of this Indenture, or (2) such lease, conditional
sale or other security agreement provides that such Engine shall not
become subject to the Lien of such lease, conditional sale or other
security agreement at any time while such Engine is subject to the Lien of
this Indenture, notwithstanding its installation on such airframe;
(vii) install an Engine on an airframe owned by Company (or any
Permitted Lessee), leased to Company (or any Permitted Lessee) or
purchased by Company (or any Permitted Lessee) subject to a conditional
sale or other security agreement under circumstances where neither clause
(v) nor clause (vi) of this Section 7.02(a) is applicable; provided that
such installation shall be deemed an Event of Loss with respect to such
Engine, and Company shall comply with Section 7.05(b) in respect thereof,
if such installation adversely affects Loan Trustee's security interest in
such Engine, Loan Trustee not intending hereby to waive any right or
interest it may have to or in such Engine under applicable law until
compliance by Company with Section 7.05(b);
(viii) lease any Engine or the Airframe and Engines to any United
States air carrier as to which there is in force a certificate issued
pursuant to the Transportation Code (49 U.S.C. Sections 41101-41112) or
successor provision that gives like authority; and
(ix) lease any Engine or the Airframe and Engines to (A) any foreign
air carrier other than those set forth in clause (B), (B) any foreign air
carrier that is at the inception of the lease based in and a domiciliary
of a country listed in Exhibit B hereto, (C) the manufacturer of the
Airframe or any Engine (either directly or through an affiliate) and (D)
any foreign air carrier consented to in writing by Loan Trustee with the
consent of a Majority in Interest of Noteholders; provided that (x) in the
case of a lease to a foreign air carrier under clause (A) above, Loan
Trustee receives at the time of such lease (1) written confirmation from
each of the Rating Agencies that such lease would not result in a
reduction of the rating for any class of Pass Through Certificates below
the then current rating for such class of Pass Through Certificates or a
withdrawal or suspension of the rating of any class of Pass Through
Certificates, without regard to the Policy (as defined in the Policy
Provider Agreement) and (2) an opinion of counsel to Company (such counsel
to be reasonably satisfactory to Loan Trustee) to the effect that there
exist no possessory rights in favor of the lessee under the laws of such
lessee's country which would, upon bankruptcy or insolvency of or other
default by Company and assuming at such time such lessee is not insolvent
or bankrupt, prevent the taking of possession of any such Engine or the
Airframe and any such Engine by Loan Trustee in accordance with and when
permitted by the terms of Section 4.02 upon the exercise by Loan Trustee
of its remedies under Section 4.02, (y) in the case of a lease to any
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 foreign air carrier is based at the time such lease is
entered into and (z) in the case of any lease to a foreign air carrier,
such carrier is not then subject to any bankruptcy, insolvency,
liquidation, reorganization, dissolution or similar proceeding and shall
not have substantially all of its property in the possession of any
liquidator, trustee, receiver or similar person;
provided that the rights of any lessee or other transferee who receives
possession of the Aircraft, the Airframe or any Engine by reason of a transfer
permitted by this Section 7.02(a) (other than the transfer of an Engine which is
deemed an Event of Loss) shall be subject and subordinate to, and any permitted
lease shall be made expressly subject and subordinate to, all the terms of this
Indenture, including Loan Trustee's rights to repossess pursuant to Section 4.02
and to avoid such lease upon such repossession, and Company shall remain
primarily liable hereunder for the performance and observance of all of the
terms and conditions of this Indenture to the same extent as if such lease or
transfer had not occurred, any such lease shall include appropriate provisions
for the maintenance and insurance of the Aircraft, the Airframe or such Engine,
and no lease or transfer of possession otherwise in compliance with this Section
shall (x) result in any registration or re-registration of the Aircraft except
to the extent permitted in Section 7.02(e) or the maintenance, operation or use
thereof that does not comply with Section 7.02(b) and (c) or (y) permit any
action not permitted to be taken by Company with respect to the Aircraft
hereunder. Company shall promptly notify Loan Trustee and the Rating Agencies of
the existence of any such lease with a term in excess of one year.
Loan Trustee, and each Noteholder by acceptance of an Equipment
Note, agrees, for the benefit of Company (and any Permitted Lessee) and for the
benefit of the lessor or secured party of any airframe or engine leased to
Company (or any Permitted Lessee) or purchased or owned by Company (or any
Permitted Lessee) subject to a conditional sale or other security agreement,
that Loan Trustee and Noteholders will not acquire or claim, as against Company
(or any Permitted Lessee) or such lessor or secured party, any right, title or
interest in: (A) any engine or engines owned by Company (or any Permitted
Lessee) or by the lessor under such lease or subject to a security interest in
favor of the secured party under such conditional sale or other security
agreement as the result of such engine or engines being installed on the
Airframe, or (B) any airframe owned by Company (or any Permitted Lessee) or by
the lessor under such lease or subject to a security interest in favor of the
secured party under such conditional sale or other security agreement as the
result of any Engine being installed on such airframe.
Loan Trustee acknowledges that any "wet lease" or other similar
arrangement under which Company (or any Permitted Lessee) maintains operational
control of the Aircraft does not constitute a delivery, transfer or
relinquishment of possession for purposes of this Section 7.02(a).
(b) Operation and Use. Company agrees that the Aircraft will not be
maintained, used or operated in violation of any law, rule or regulation of any
government of any country having jurisdiction over the Aircraft or in violation
of any airworthiness certificate, license or registration relating to the
Aircraft issued by any such government, except to the extent Company (or, if a
Lease is then in effect, any Permitted Lessee) is contesting in good faith the
validity or application of any such law, rule or regulation in any manner that
does not involve any material risk of sale, forfeiture or loss of the Aircraft
or materially impair the Lien of this Indenture; provided, that Company shall
not be in default under, or required to take any action set forth in, this
sentence if it is not possible for it to comply with the laws of a jurisdiction
other than the United States (or other than any jurisdiction in which the
Aircraft is then registered) because of a conflict with the applicable laws of
the United States (or such jurisdiction in which the Aircraft is then
registered). Company will not operate the Aircraft, or permit the Aircraft to be
operated or located, (i) in any area excluded from coverage by any insurance
required by the terms of Section 7.06 or (ii) in any war zone or recognized or,
in Company's judgment, threatened areas of hostilities unless covered by war
risk insurance in accordance with Section 7.06, unless in the case of either
clause (i) or (ii), (x) indemnification complying with Section 7.06 (a) and (b)
has been provided or (y) the Aircraft is only temporarily located in such area
as a result of an isolated occurrence or isolated series of occurrences
attributable to a hijacking, medical emergency, equipment malfunction, weather
conditions, navigational error or other similar unforeseen circumstances and
Company is using its good faith efforts to remove the Aircraft from such area as
promptly as practicable.
(c) Maintenance. Company shall maintain, service, repair and
overhaul the Aircraft (or cause the same to be done) so as to keep the Aircraft
in good operating condition and in such condition as may be necessary to enable
the airworthiness certification of the Aircraft to be maintained in good
standing at all times (other than during temporary periods of storage, during
maintenance, testing or modification permitted hereunder, or during periods of
grounding by applicable governmental authorities) under the Transportation Code,
during such periods in which the Aircraft is registered under the laws of the
United States, or, if the Aircraft is registered under the laws of any other
jurisdiction, the applicable laws of such jurisdiction. In any case, the
Aircraft will be maintained in accordance with the maintenance standards
required by the FAA (while operated under an FAA-approved maintenance program)
or, while operated under the maintenance program of another jurisdiction,
standards substantially equivalent to those required by the central aviation
authority of Australia, Austria, Belgium, Canada, Denmark, Finland, France,
Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Spain,
Sweden, Switzerland or the United Kingdom. Company shall maintain or cause to be
maintained all records, logs and other documents required to be maintained in
respect of the Aircraft by appropriate authorities in the jurisdiction in which
the Aircraft is registered.
(d) Identification of Loan Trustee's Interest. Company agrees to
affix as promptly as practicable after the Closing Date and thereafter to
maintain in the cockpit of the Aircraft, in a clearly visible location, and (if
not prevented by applicable law or regulations or by any government) on each
Engine, a nameplate bearing the inscription "MORTGAGED TO STATE STREET BANK AND
TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, AS LOAN TRUSTEE" (such
nameplate to be replaced, if necessary, with a nameplate reflecting the name of
any successor Loan Trustee).
(e) Registration. Company shall cause the Aircraft to remain duly
registered, under the laws of the United States, in the name of Company except
as otherwise required by the Transportation Code; provided that Loan Trustee
shall, at Company's expense, execute and deliver all such documents as Company
may reasonably request for the purpose of continuing such registration.
Notwithstanding the preceding sentence, Company, at its own expense, may cause
or allow the Aircraft to be duly registered under the laws of any foreign
jurisdiction in which a Permitted Lessee could be principally based, in the name
of Company or of any nominee of Company, or, if required by applicable law, in
the name of any other Person (and, following any such foreign registration, may
cause the Aircraft to be re-registered under the laws of the United States);
provided, that in the case of jurisdictions other than those approved by Loan
Trustee with the consent of a Majority in Interest of Noteholders (i) if such
jurisdiction is at the time of registration listed on Exhibit B, Loan Trustee
shall have received at the time of such registration an opinion of counsel to
Company to the effect that (A) this Indenture and Loan Trustee's right to
repossession thereunder is valid and enforceable under the laws of such country,
(B) after giving effect to such change in registration, the Lien of this
Indenture shall continue as a valid Lien and shall be duly perfected in the new
jurisdiction of registration and that all filing, recording or other action
necessary to perfect and protect the Lien of this Indenture has been
accomplished (or if such opinion cannot be given at such time, (x) the opinion
shall detail what filing, recording or other action is necessary and (y) Loan
Trustee shall have received a certificate from a Responsible Officer of Company
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 promptly
delivered to Loan Trustee subsequent to the effective date of such change in
registration), (C) the obligations of Company under this Indenture 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) and (D) all approvals or consents of any government in such jurisdiction
having jurisdiction required for such change in registration shall have been
duly obtained and shall be in full force and effect, and (ii) if such
jurisdiction is at the time of registration not listed on Exhibit B, Loan
Trustee shall have received (in addition to the opinions set forth in clause (i)
above) at the time of such registration an opinion of counsel to Company to the
effect that (A) the terms of this Indenture are legal, valid, binding and
enforceable in such jurisdiction (subject to exceptions customary in such
jurisdiction, provided, that, subject to exceptions relating to bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights of
creditors generally and exceptions relating to general principles of equity,
such counsel shall opine that any applicable laws limiting the remedies provided
in Section 4.02 do not in the opinion of such counsel make the remedies provided
in Section 4.02 inadequate for the practical realization of the rights and
benefits provided thereby), (B) that it is not necessary for Loan Trustee to
register or qualify to do business in such jurisdiction, (C) that there is no
tort liability of the lender of an aircraft not in possession thereof under the
laws of such jurisdiction other than tort liability that might have been imposed
on such lender under the laws of the United States or any state thereof (it
being understood that such opinion shall be waived if insurance reasonably
satisfactory to Loan Trustee is provided, at Company's expense, to cover such
risk) and (D) (unless Company shall have agreed to provide insurance covering
the risk of requisition of use or title of the Aircraft by the government of
such jurisdiction so long as the Aircraft is registered under the laws of such
jurisdiction) that 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 or title of the Aircraft in the event of requisition
by such government of such use or title. Loan Trustee will cooperate with
Company in effecting such foreign registration. Notwithstanding the foregoing,
prior to any such change in the country of registry of the Aircraft, the
following conditions shall be met (or waived as provided in Section 6.01(b) of
the Participation Agreement):
(i) no Event of Default shall have occurred and be continuing at the
effective date of the change in registration; provided, that it shall not
be necessary to comply with this condition if the change in registration
results in the registration of the Aircraft under the laws of the United
States or if a Majority in Interest of Noteholders consents to such change
in registration;
(ii) Loan Trustee shall have received evidence of compliance with
the insurance provisions contained herein after giving effect to such
change in registration; and
(iii) Company shall have paid or made provision reasonably
satisfactory to Loan Trustee for the payment of all reasonable expenses
(including reasonable attorneys' fees) of Loan Trustee and Noteholders in
connection with such change in registration.
Section 7.03 Inspection; Financial Information. (a) Inspection. At
all reasonable times, but upon at least 15 Business Days' prior written notice
to Company, Policy Provider or Loan Trustee or their respective authorized
representatives may, subject to the other conditions of this Section 7.03(a),
inspect the Aircraft and may inspect the books and records of Company relating
to the maintenance of the Aircraft required to be maintained by the FAA or the
government of another jurisdiction in which the Aircraft is then registered;
provided, that (i) Policy Provider or Loan Trustee or their respective
representatives, as the case may be, shall be fully insured at no cost to
Company in a manner satisfactory to Company with respect to any risks incurred
in connection with any such inspection or shall provide to Company a written
release satisfactory to Company with respect to such risks, (ii) any such
inspection shall be during Company's normal business hours and subject to the
safety, security and workplace rules applicable at the location where such
inspection is conducted and any applicable governmental rules or regulations,
(iii) any such inspection of the Aircraft shall be a visual, walk-around
inspection of the interior and exterior of the Aircraft and shall not include
opening any panels, bays or the like without Company's express consent, which
consent Company may in its sole discretion withhold, and (iv) no exercise of
such inspection right shall interfere with the use, operation or maintenance of
the Aircraft by, or the business of, Company and Company shall not be required
to undertake or incur any additional liabilities in connection therewith. All
information obtained in connection with any such inspection of the Aircraft and
of such books and records shall be Confidential Information and shall be treated
by Policy Provider and Loan Trustee and their respective representatives in
accordance with the provisions of Section 10.16. Any inspection pursuant to this
Section 7.03(a) shall be at the sole risk (including, without limitation, any
risk of personal injury or death) and expense of Policy Provider or Loan Trustee
(or their respective representatives) making such inspection. Except during the
continuance of an Event of Default, all inspections by Policy Provider and Loan
Trustee and their respective representatives provided for under this Section
7.03(a) shall be limited to one inspection of any kind contemplated by this
Section 7.03(a) during any consecutive twelve month period.
(b) Financial Information. So long as any of the Equipment Notes
remain unpaid, Company agrees to furnish to Loan Trustee, Policy Provider and
Liquidity Provider: (i) within 60 days after the end of each of the first three
quarterly periods in each fiscal year of Company, either (x) a consolidated
balance sheet of Company and its consolidated subsidiaries prepared by it as of
the close of such period, together with the related consolidated statements of
income for such period or (y) a report of Company on Form 10-Q in respect of
such period in the form filed with the Securities and Exchange Commission and
(ii) within 120 days after the close of each fiscal year of Company, either (x)
a consolidated balance sheet of Company and its consolidated subsidiaries as of
the close of such fiscal year, together with the related consolidated statements
of income for such fiscal year, certified by independent public accountants, or
(y) a report of Company on Form 10-K in respect of such year in the form filed
with the Securities and Exchange Commission. Company may fulfill the
requirements of this Section 7.03(b) by providing the material described above
in an electronic format by electronic mail or accessible over the Internet.
Section 7.04 Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution of Engines. (a) Replacement of Parts.
Company shall promptly replace or cause to be replaced all Parts incorporated or
installed in or attached to the Airframe or any Engine and that become worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or rendered
permanently unfit for use for any reason, except as otherwise provided in
Section 7.04(c) or if the Airframe or an Engine to which a Part relates has
suffered an Event of Loss. In addition, Company (or any Permitted Lessee) may
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 rendered permanently unfit for use;
provided that Company (or any Permitted Lessee), except as otherwise provided in
Section 7.04(c), will replace such Parts as promptly as practicable. All
replacement Parts shall be free and clear of all Liens (except for Permitted
Liens and except in the case of replacement property temporarily installed on an
emergency basis) and shall be in the condition and repair required to be
maintained by the terms hereof. Except as otherwise provided in Section 7.04(c),
any Parts removed from the Airframe or any Engine shall remain subject to the
Lien of this Indenture no matter where located until it is replaced by a part
incorporated or installed in or attached to the Airframe or such Engine that
meets 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 (except in the case of replacement
property temporarily installed on an emergency basis), without further act, (i)
the replaced Part shall thereupon be free and clear of all rights of Loan
Trustee and of the Lien of this Indenture and shall no longer be deemed a Part
hereunder, and (ii) such replacement Part shall become subject to the Lien of
this Indenture and be deemed a Part of the Airframe or such Engine for all
purposes to the same extent as the Parts originally incorporated or installed in
or attached to the Airframe or such Engine. Upon request of Company from time to
time, Loan Trustee shall execute and deliver to Company an appropriate
instrument confirming the release of any such replaced Part from the Lien of
this Indenture.
(b) Pooling of Parts. Any Part removed from the Airframe or any
Engine as provided in Section 7.04(a) may be subjected by Company or a Person
permitted to be in possession of the Aircraft to a pooling arrangement entered
into in the ordinary course of Company's or such Person's business; provided
that the part replacing such removed Part shall be incorporated or installed in
or attached to the Airframe or such Engine in accordance with Section 7.04(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 may be owned by any third party subject to such a pooling
arrangement; provided that Company, at its expense, as promptly thereafter as
practicable either (i) causes title to such replacement Part to vest in Company
free and clear of all Liens (except Permitted Liens), or (ii) replaces such
replacement Part by incorporating or installing in or attaching to the Airframe
or such Engine a further replacement Part in the manner contemplated by Section
7.04(a).
(c) Alterations, Modifications and Additions. Company will make (or
cause to be made) such alterations and modifications in and additions to the
Airframe and the Engines as are required from time to time to meet the
applicable requirements of the FAA or any applicable government of any other
jurisdiction in which the Aircraft is then registered; provided, however, that
Company (or, if a Lease is then in effect, any Permitted Lessee) may, in good
faith, contest the validity or application of any such requirement in any manner
that does not involve any material risk of sale, loss or forfeiture of the
Aircraft and does not materially adversely affect Loan Trustee's interest in the
Aircraft. In addition, Company (or any Permitted Lessee), at its own expense,
may from time to time add further parts or accessories and make or cause to be
made such alterations and modifications in and additions to the Airframe or any
Engine as Company (or any Permitted Lessee) deems desirable in the proper
conduct of its business, including, without limitation, removal (without
replacement) of Parts, provided that no such alteration, modification or
addition shall materially diminish the value or utility of the Airframe or such
Engine below its value or utility immediately prior to such alteration,
modification or addition, assuming that the Airframe or such Engine was then in
the condition required to be maintained by the terms of this Indenture, except
that the value (but not the utility) of the Airframe or any Engine may be
reduced by the value of any such Parts that are removed that Company deems
obsolete or no longer suitable or appropriate for use on the Airframe or any
Engine. All Parts incorporated or installed in or attached or added to the
Airframe or any Engine as the result of such alteration, modification or
addition shall, without further act, be subject to the Lien of this Indenture.
Notwithstanding the foregoing, Company (or any Permitted Lessee) may, at any
time, remove any Part from the Airframe or any Engine if 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 such Engine at the
time of delivery thereof to Company 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 such Engine pursuant to the
first sentence of this Section 7.04(c) and (iii) can be removed from the
Airframe or such Engine without materially diminishing the value or utility
required to be maintained by the terms of this Indenture that the Airframe or
such Engine would have had at such time had such removal not occurred. Upon the
removal by Company (or any Permitted Lessee) of any Part as permitted by this
Section 7.04(c), such removed Part shall, without further act, be free and clear
of all rights and interests of Loan Trustee and the Lien of this Indenture and
shall no longer be deemed a Part hereunder. Upon request of Company from time to
time, Loan Trustee shall execute and deliver to Company an appropriate
instrument confirming the release of any such removed Part from the Lien of this
Indenture.
(d) Substitution of Engines. Company shall have the right at its
option at any time, on at least 30 days' prior written notice to Loan Trustee,
to substitute a Replacement Engine for any Engine. In such event, and prior to
the date of such substitution, Company shall replace such Engine by complying
with the terms of Section 7.05(b) to the same extent as if an Event of Loss had
occurred with respect to such Engine.
Section 7.05 Loss, Destruction or Requisition. (a) Event of Loss
with Respect to the Airframe. Upon the occurrence of an Event of Loss with
respect to the Airframe or the Airframe and the Engines then installed thereon,
Company shall as soon as practicable (and, in any event, within 30 days after an
Event of Loss has occurred) notify Loan Trustee of such Event of Loss, and,
within 90 days after such Event of Loss, Company shall give Loan Trustee written
notice of its election to perform one of the following options (it being agreed
that if Company has not given such notice of election within such 90-day period,
Company shall be deemed to have elected to perform the option set forth in the
following clause (ii)). Company may elect either to:
(i) substitute, on or before the Loss Payment Date (as defined
below), as replacement for the Airframe or Airframe and Engines with
respect to which an Event of Loss has occurred, a Replacement Airframe
(together with a number of Replacement Engines equal to the number of
Engines, if any, with respect to which the Event of Loss occurred), such
Replacement Airframe and Replacement Engines to be owned by Company free
and clear of all Liens (other than Permitted Liens); provided that if
Company has not performed such obligation on or prior to the Loss Payment
Date, then Company shall on the Loss Payment Date prepay the Equipment
Notes in full in accordance with Section 2.10; or
(ii) redeem, on or before the Loss Payment Date, the Equipment Notes
in full in accordance with Section 2.10. Company shall give Loan Trustee
20 days prior written notice if it elects to redeem the Equipment Notes on
any day prior to the Loss Payment Date.
The "Loss Payment Date" with respect to an Event of Loss means the
Business Day next succeeding the 120th day following the date of occurrence of
such Event of Loss.
If Company elects to substitute a Replacement Airframe (or a
Replacement Airframe and one or more Replacement Engines, as the case may be)
Company shall, at its sole expense, not later than the Loss Payment Date, (A)
cause an Indenture Supplement for such Replacement Airframe and Replacement
Engines, if any, to be delivered to Loan Trustee for execution and, upon such
execution, to be filed for recordation pursuant to the Transportation Code or
the applicable laws of such other jurisdiction in which the Aircraft is then
registered, (B) cause a financing statement or statements with respect to the
Replacement Airframe and Replacement Engines, if any, or other requisite
documents or instruments to be filed in such place or places as necessary in
order to perfect Loan Trustee's interest therein in the United States, or in any
other jurisdiction in which the Aircraft is then registered, (C) furnish Loan
Trustee with an opinion of Company's counsel (which may be internal counsel of
Company) addressed to Loan Trustee to the effect that upon such replacement,
such Replacement Airframe and Replacement Engines, if any, will be subject to
the Lien of this Indenture and addressing the matters set forth in clauses (A)
and (B), (D) furnish Loan Trustee with a certificate of an independent aircraft
engineer or appraiser, certifying that the Replacement Airframe and Replacement
Engines, if any, have a value and utility (without regard to hours or cycles) at
least equal to the Airframe and Engines, if any, so replaced, assuming the
Airframe and such Engines were in the condition and repair required by the terms
hereof immediately prior to the occurrence of such Event of Loss, (E) furnish
Loan Trustee with evidence of compliance with the insurance provisions of
Section 7.06 with respect to such Replacement Airframe and Replacement Engines,
if any, and (F) furnish Loan Trustee with an opinion of Company's counsel (which
may be internal counsel of Company) to the effect that Loan Trustee will be
entitled to the benefits of Section 1110 with respect to the Replacement
Airframe, provided that (i) such opinion need not be delivered to the extent
that the benefits of Section 1110 were not, by reason of a change in law or
governmental or judicial interpretation thereof, available to Loan Trustee with
respect to the Aircraft immediately prior to such substitution and (ii) such
opinion may contain qualifications and assumptions of the tenor contained in the
Section 1110 opinion of Company's special counsel delivered pursuant to Section
3.01 of the Participation Agreement on the Closing Date and such other
qualifications and assumptions as are at the time customary in opinions rendered
in comparable circumstances.
In the case of each Replacement Airframe or Replacement Airframe and
one or more Replacement Engines subjected to the Lien of this Indenture under
this Section 7.05(a), promptly upon the recordation of the Indenture Supplement
covering any such Replacement Airframe and Replacement Engines, if any, pursuant
to the Transportation Code (or pursuant to the applicable law of such other
jurisdiction in which such Replacement Airframe and Replacement Engines, if any,
are registered), Company will cause to be delivered to Loan Trustee a favorable
opinion of FAA counsel selected by Company if at the time of the Event of Loss
the Aircraft was registered under the laws of the United States (or, if at the
time of the Event of Loss the Aircraft was registered under the laws of another
jurisdiction, counsel qualified to opine on matters of registration in such
jurisdiction selected by Company, which counsel shall be reasonably satisfactory
to Loan Trustee) addressed to Loan Trustee as to the due registration of such
Replacement Aircraft and the due recordation of such Indenture Supplement or
such other requisite documents or instruments and the validity and perfection of
the security interest in the Replacement Aircraft granted to Loan Trustee under
this Indenture.
For all purposes hereof, upon the attachment of the Lien of this
Indenture thereto, the Replacement Aircraft and Replacement Engines, if any,
shall become part of the Collateral, the Replacement Airframe shall be deemed an
"Airframe" as defined herein, and each such Replacement Engine shall be deemed
an "Engine" as defined herein. Upon compliance with clauses (A) through (F) of
the third paragraph of this Section 7.05(a), Loan Trustee shall execute and
deliver to Company an appropriate instrument releasing such replaced Airframe
and Engines (if any) installed thereon at the time such Event of Loss occurred,
all proceeds (including, without limitation, insurance proceeds), the Warranty
Rights in respect of such replaced Airframe and Engines (if any) and all rights
relating to the foregoing, from the Lien of this Indenture and assigning to
Company all claims against third Persons for damage to or loss of the Airframe
and Engines arising from the Event of Loss.
If, after an Event of Loss, Company performs the option set forth in
clause (ii) of the first paragraph of this Section 7.05(a), Loan Trustee shall
execute and deliver to Company an appropriate instrument releasing the Aircraft,
all proceeds (including, without limitation, insurance proceeds), the Warranty
Rights in respect of the Aircraft and all rights relating to the foregoing from
the Lien of this Indenture and assigning to Company all claims against third
Persons for damage to or loss of the Aircraft arising from the Event of Loss.
(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, Company shall
give Loan Trustee prompt written notice thereof and shall, within 120 days after
the occurrence of such Event of Loss, cause to be subjected to the Lien of this
Indenture, as replacement for the Engine with respect to which such Event of
Loss occurred, a Replacement Engine free and clear of all Liens (other than
Permitted Liens).
Prior to or at the time of any replacement under this Section
7.05(b), Company will (i) cause an Indenture Supplement covering such
Replacement Engine to be delivered to Loan Trustee for execution and, upon such
execution, to be filed for recordation pursuant to the Transportation Code or
the applicable laws of any other jurisdiction in which the Aircraft is then
registered, (ii) cause a financing statement or statements with respect to such
Replacement Engine or other requisite documents or instruments to be filed in
such place or places as necessary in order to perfect Loan Trustee's interest
therein in the United States, or in such other jurisdiction in which the Engine
is then registered, (iii) furnish Loan Trustee with an opinion of Company's
counsel (which may be internal counsel to Company) addressed to Loan Trustee to
the effect that, upon such replacement, the Replacement Engine will be subject
to the Lien of this Indenture, (iv) furnish Loan Trustee with a certificate of
an aircraft engineer or appraiser (who may be an employee of Company) certifying
that such Replacement Engine has a value and utility (without regard to hours or
cycles) at least equal to the Engine so replaced assuming such Engine was in the
condition and repair required by the terms hereof immediately prior to the
occurrence of such Event of Loss and (v) furnish Loan Trustee with evidence of
compliance with the insurance provisions of Section 7.06 with respect to such
Replacement Engine. In the case of each Replacement Engine subjected to the Lien
of this Indenture under this Section 7.05(b), promptly upon the recordation of
the Indenture Supplement covering such Replacement Engine pursuant to the
Transportation Code (or pursuant to the applicable law of such other
jurisdiction in which the Aircraft is registered), Company will cause to be
delivered to Loan Trustee an opinion of FAA counsel selected by Company if at
the time of the Event of Loss the Aircraft was registered under the laws of the
United States (or, if at the time of the Event of Loss the Aircraft was
registered under the laws of another jurisdiction, counsel qualified to opine on
matters of registration in such jurisdiction selected by Company, which counsel
shall be reasonably satisfactory to Loan Trustee) addressed to Loan Trustee as
to the due recordation of such Indenture Supplement or such other requisite
documents or instruments and the validity and perfection of the security
interest in the Replacement Engine granted to Loan Trustee under this Indenture.
For all purposes hereof, upon the attachment of the Lien of this Indenture
thereto, the Replacement Engine shall become part of the Collateral and shall be
deemed an "Engine" as defined herein. Upon compliance with clauses (i) through
(v) of the first sentence of this paragraph, Loan Trustee shall execute and
deliver to Company an appropriate instrument releasing such replaced Engine, any
proceeds (including, without limitation, insurance proceeds), the Warranty
Rights in respect of such replaced Engine and all rights relating to any of the
foregoing from the Lien of this Indenture and assigning to Company all claims
against third Persons for damage to or loss of such Engine arising from the
Event of Loss.
(c) Application of Payments for Event of Loss from Requisition of
Title or Use. Any payments other than insurance proceeds (the application of
which is provided for in Section 7.06) received at any time by Company or by
Loan Trustee from any government or other Person with respect to an Event of
Loss to the Airframe or any Engine, will be applied as follows:
(i) if such payments are received with respect to the Airframe or
the Airframe and any Engines installed on the Airframe that has been or is
being replaced by Company pursuant to Section 7.05(a), such payments shall
be paid over to, or retained by, Loan Trustee and upon completion of such
replacement shall be paid over to, or retained by, Company;
(ii) if such payments are received with respect to the Airframe or
the Airframe and any Engines installed on the Airframe that has not been
and will not be replaced pursuant to Section 7.05(a), so much of such
payments remaining after reimbursement of Loan Trustee for costs and
expenses that shall not exceed the amounts required to be paid to
Noteholders pursuant to Section 2.10 shall be applied in reduction of
Company's obligation to pay such amounts, if not already paid by Company,
or, if already paid by Company, shall be applied to reimburse Company for
its payment of such amount and the balance, if any, of such payment
remaining thereafter will be paid over to, or retained by, Company; and
(iii) if such payments are received with respect to an Engine with
regard to which an Event of Loss has occurred, so much of such payments
remaining after reimbursement of Loan Trustee for costs and expenses shall
be paid over to, or retained by, Company; provided that Company has fully
performed its obligations under Section 7.05(b) with respect to the Event
of Loss for which such payments are made.
(d) Requisition for Use by the Government of the Airframe and the
Engines Installed Thereon. In the event of the requisition for use by any
government (it being acknowledged that the use of the Airframe or any Engine
pursuant to the CRAF Program does not constitute such a requisition) of the
Airframe and the Engines or engines installed on the Airframe that does not
constitute an Event of Loss, all of Company's rights and obligations under this
Indenture with respect to the Airframe and such Engines shall continue to the
same extent as if such requisition had not occurred; provided that,
notwithstanding the foregoing, Company's obligations other than payment
obligations shall only continue to the extent feasible. All payments received by
Company or Loan Trustee from such government for such use of the Airframe and
Engines or engines shall be paid over to, or retained by, Company.
(e) Requisition for Use by the Government of an Engine not Installed
on the Airframe. If any government requisitions the use, for a period in excess
of sixty (60) days, of any Engine not then installed on the Airframe, Company
will replace such Engine by complying with the terms of Section 7.05(b) to the
same extent as if an Event of Loss had occurred with respect to such Engine.
Upon such replacement, any payments received by Company or Loan Trustee from
such government with respect to such requisition shall be paid over to, or
retained by, Company.
(f) Application of Payments During Existence of Event of Default.
Any amount referred to in Section 7.05 that is payable to or retainable by
Company shall not be paid to or retained by Company if at the time of such
payment or retention an Event of Default or Payment Default has occurred and is
continuing, but shall be held by or paid over to Loan Trustee as security for
the obligations of Company under this Indenture. When any such Event of Default
or Payment Default ceases, such amount shall be paid to Company.
Section 7.06 Insurance. (a) Aircraft Liability Insurance. (i) Except
as provided in clause (ii) of this subsection (a), and subject to the rights of
Company to establish and maintain self-insurance in the manner and to the extent
specified in Section 7.06(c), Company will carry, or cause to be carried, at no
expense to Loan Trustee, aircraft liability insurance (including, but not
limited to, bodily injury, personal injury and property damage liability,
exclusive of manufacturer's product liability insurance) and contractual
liability insurance with respect to the Aircraft (A) in amounts that are not
less than the aircraft liability insurance applicable to similar aircraft and
engines in Company's fleet on which Company carries insurance; provided that
such liability insurance shall not be less than the amount certified in the
insurance report delivered to Loan Trustee on the Closing Date, (B) of the type
covering the same risks as from time to time applicable to aircraft operated by
Company (or, if a Lease is then in effect, by the Permitted Lessee) of the same
type as the Aircraft, and (C) that is maintained in effect with insurers of
recognized responsibility. Any policies of insurance carried in accordance with
this Section 7.06(a) and any policies taken out in substitution or replacement
for any of such policies shall: (A) name Loan Trustee, Subordination Agent, each
Pass Through Trustee, Policy Provider and Liquidity Provider as their Interests
(as defined below in this Section 7.06) may appear, as additional insured (the
"Additional Insureds"), (B) subject to the condition of clause (C) below,
provide that, in respect of the interest of the Additional Insureds in such
policies, the insurance shall not be invalidated by any action or inaction of
Company and shall insure the Additional Insureds' Interests as they appear,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Company, (C) provide that, if such insurance is
canceled for any reason whatever, or if any change is made in the policy that
materially reduces the amount of insurance or the coverage certified in the
insurance report delivered on the Closing Date to Loan Trustee, Policy Provider
and Liquidity Provider, or if such insurance is allowed to lapse for nonpayment
of premium, such cancellation, change or lapse shall not be effective as to any
Additional Insured for 30 days (seven days, or such other period as is then
generally available in the industry, in the case of any war risk or allied
perils coverage) after receipt by such Additional Insured of written notice from
such insurers of such cancellation, change or lapse, (D) provide that the
Additional Insureds shall have no obligation or liability for premiums,
commissions, assessments or calls in connection with such insurance, (E) provide
that the insurers shall waive any rights of (1) set-off, counterclaim or any
other deduction, whether by attachment or otherwise, in respect of any liability
of the Additional Insureds to the extent of any moneys due to the Additional
Insureds and (2) subrogation against the Additional Insureds to the extent that
Company has waived its rights by its agreements to indemnify the Additional
Insureds pursuant to the Operative Documents, (F) be primary without right of
contribution from any other insurance carried by any Additional Insured with
respect to its Interests as such in the Aircraft and (G) 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.
"Interests" as used in this Section 7.06(a) and in Section 7.06(b) with respect
to any Person means the interests of such Person in the transactions
contemplated by the Operative Documents. In the case of a lease or contract with
any government in respect of the Aircraft or any Engine, or in the case of any
requisition for use of the Aircraft or any Engine by any government, a valid
agreement by such government to indemnify Company, or an insurance policy issued
by such government, against any of the risks that Company is required to insure
against hereunder shall be considered adequate insurance for purposes of this
Section 7.06(a) to the extent of the risks (and in the amounts) that are the
subject of such indemnification or insurance.
(ii) During any period that the Airframe or an Engine, as the case
may be, is on the ground and not being flown, Company may carry or cause
to be carried as to such non-flown Airframe or Engine, in lieu of the
insurance required by clause (i) above, and subject to self-insurance to
the extent permitted by Subsection 7.06(c), 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 airline liability
insurance from time to time applicable to airframes or engines owned or
leased by Company (or, if a Lease is then in effect, by the Permitted
Lessee) of the same type as such non-flown Airframe or Engine and that are
on the ground and not being flown and (B) the scope of the risks covered
and the type of insurance shall be the same as from time to time are
applicable to airframes or engines operated by Company (or, if a Lease is
then in effect, by the Permitted Lessee) of the same type as such
non-flown Airframe or Engine and that are on the ground and not being
flown.
(b) Insurance Against Loss or Damage to Aircraft. (i) Except as
provided in clause (ii) of this subsection (b), and subject to the rights of
Company to establish and maintain self-insurance in the manner and to the extent
specified in Section 7.06(c), Company shall maintain, or cause to be maintained,
in effect with insurers of recognized responsibility, at no expense to Loan
Trustee, all-risk aircraft hull insurance covering the Aircraft and all-risk
coverage with respect to any Engines or Parts while removed from the Aircraft
(including, without limitation, war risk insurance if and to the extent the same
is maintained by Company (or, if a Lease is then in effect, by the Permitted
Lessee) with respect to other similar aircraft operated by Company or such
Permitted Lessee, as the case may be, on the same routes) that is of the type as
from time to time applicable to the aircraft operated by Company (or, if a Lease
is then in effect, by the Permitted Lessee) of the same type as the Aircraft;
provided that (A) such insurance (including the permitted self-insurance) shall
at all times while the Aircraft is subject to this Indenture be for an amount
not less than 110% of the aggregate principal amount of the Equipment Notes
outstanding from time to time, (B) such insurance need not cover an Engine while
attached to an airframe not owned, leased or operated by Company, and (C) such
insurance covering Engines and Parts removed from an Airframe or an airframe or
(in the case of Parts) an Engine need be obtained only to the extent available
at reasonable cost (as reasonably determined by Company). Any policies carried
in accordance with this Section 7.06(b) and any policies taken out in
substitution or replacement for any such policies shall: (A) provide that any
insurance proceeds up to an amount equal to the outstanding principal amount of
the Equipment Notes, together with accrued but unpaid interest thereon, plus an
amount equal to the interest that would accrue on the outstanding principal
amount of the Equipment Notes at the Debt Rate in effect on the date of payment
of such insurance proceeds to Loan Trustee (as provided for in this sentence)
during the period commencing on the day following the date of such payment to
Loan Trustee and ending on the Loss Payment Date (the sum of such three amounts
being the "Loan Amount"), payable for any loss or damage constituting an Event
of Loss with respect to the Aircraft and any insurance proceeds in excess of the
amount set forth on Exhibit C up to the amount of the Loan Amount for any loss
or damage to the Aircraft (or Engines) not constituting an Event of Loss with
respect to the Aircraft (or Engines), shall be paid to Loan Trustee as long as
the Indenture has not been discharged, and that all other amounts shall be
payable to Company, unless the insurer has received notice that an Event of
Default exists, in which case all insurance proceeds for any loss or damage to
the Aircraft (or Engines) up to the Loan Amount shall be payable to Loan
Trustee, (B) subject to the conditions of clause (C) below, provide that, in
respect of the interests of the Additional Insureds in such policies, the
insurance shall not be invalidated by any action or inaction of Company and
shall insure the Additional Insureds' Interests as they appear, regardless of
any breach or violation by Company of any warranty, declaration or condition
contained in such policies, (C) provide that if such insurance is canceled for
any reason, or if any change is made in the insurance that materially reduces
the coverage (not including the amount) certified in the insurance report
delivered on the Closing Date to Loan Trustee and Liquidity Provider or if such
insurance is allowed to lapse for nonpayment of premium, such cancellation,
change or lapse shall not be effective as to the Additional Insureds for 30 days
(seven days, or such other period as is customarily available in the industry,
in the case of war risk or allied perils coverage) after receipt by the
Additional Insureds of written notice from such insurers of such cancellation,
change or lapse, (D) provide that the Additional Insureds shall have no
obligation or liability for premiums, commissions, assessments or calls in
connection with such insurance, (E) provide that the insurers shall waive rights
of (1) setoff, counterclaim or any other deduction, whether by attachment or
otherwise, in respect of any liability of the Additional Insureds to the extent
of any moneys due to the Additional Insureds and (2) subrogation against the
Additional Insureds to the extent Company has waived its rights by its agreement
to indemnify the Additional Insureds pursuant to the Operative Documents and (F)
be primary without right of contribution from any other insurance carried by any
Additional Insured with respect to its Interests as such in the Aircraft. In the
case of a lease or contract with any government in respect of the Aircraft or
any Engine, or in the case of any requisition for use of the Aircraft or any
Engine by any government, a valid agreement by such government to indemnify
Company, or an insurance policy issued by such government, against any risks
which Company is required hereunder to insure against shall be considered
adequate insurance for purposes of this Section 7.06(b) to the extent of the
risks (and in the amounts) that are the subject of such indemnification or
insurance.
(ii) During any period that the Airframe or an Engine is on the
ground and not being flown, Company may carry or cause to be carried as to
such non-flown Airframe or Engine, in lieu of the insurance required by
clause (i) above, and subject to self-insurance to the extent permitted by
Subsection 7.06(c), insurance otherwise conforming with the provisions of
said clause (i) except that the scope of the risks covered and the type of
insurance shall be the same as from time to time applicable to airframes
and engines operated by Company (or, if a Lease is then in effect, by the
Permitted Lessee) of the same type as such non-flown Airframe or Engine
and that are on the ground and not being flown; provided that, subject to
self-insurance to the extent permitted by Subsection 7.06(c), Company
shall maintain or cause to be maintained insurance against risk of loss or
damage to such non-flown Airframe or Engine in an amount at least equal to
110% of the aggregate outstanding principal amount of the Equipment Notes
during such period that such Airframe or Engine is on the ground and not
being flown.
(c) Self-Insurance. Company may from time-to-time self-insure, by
way of deductible, self-insured retention, premium adjustment or franchise or
otherwise (including, with respect to insurance maintained pursuant to
Subsections 7.06(a) or 7.06(b), insuring for a maximum amount that is less than
the amounts set forth in Sections 7.06(a) and 7.06(b)), the risks required to be
insured against pursuant to Sections 7.06(a) and 7.06(b), but in no case shall
the self-insurance with respect to all of the aircraft and engines in Company's
fleet (including, without limitation, the Aircraft) exceed for any 12-month
policy year 1% of the average aggregate insurable value (for the preceding
policy year) of all aircraft (including, without limitation, the Aircraft) on
which Company carries insurance, unless an insurance broker of national standing
certifies that the standard among other major United States airlines is a higher
level of self-insurance, in which case Company may self-insure the Aircraft to
such higher level. In addition to the foregoing right to self-insure, Company
may self-insure to the extent of (1) any deductible per occurrence that, in the
case of the Aircraft, is not in excess of the amount customarily allowed as a
deductible in the industry or is required to facilitate claims handling or (2)
any applicable mandatory minimum per aircraft (or if applicable per annum or
other period) hull or liability insurance deductibles imposed by the aircraft
hull or liability insurers.
(d) Application of Insurance Payments. All losses will be adjusted
by Company with the insurers. As between Loan Trustee and Company it is agreed
that all insurance payments received under policies required to be maintained by
Company hereunder, exclusive of any payments received in excess of the Loan
Amount for the Aircraft from such policies, as the result of the occurrence of
an Event of Loss with respect to the Airframe or an Engine will be applied as
follows:
(i) if such payments are received with respect to the Airframe or
the Airframe and any Engines installed on the Airframe that has been or is
being replaced by Company pursuant to Section 7.05(a), such payments shall
be paid over to, or retained by, Loan Trustee and upon completion of such
replacement shall be paid over to, or retained by, Company;
(ii) if such payments are received with respect to the Airframe or
the Airframe and any Engines installed on the Airframe that has not been
and will not be replaced as contemplated by Section 7.05(a), so much of
such payments remaining after reimbursement of Loan Trustee for its costs
and expenses as do not exceed the amounts required to be paid by Company
pursuant to Section 2.10 shall be applied in reduction of Company's
obligation to pay such amounts, if not already paid by Company, or, if
already paid by Company, shall be applied to reimburse Company for its
payment of such amounts and the balance, if any, of such payment remaining
thereafter will be paid over to, or retained by, Company; and
(iii) if such payments are received with respect to an Engine, so
much of such payments remaining after reimbursement of Loan Trustee for
its costs and expenses shall be paid over to, or retained by, Company;
provided that Company has fully performed its obligations under Section
7.05(b) with respect to the Event of Loss for which such payments are
made.
In all events, the insurance payment of any property damage loss
received under policies maintained by Company in excess of the Loan Amount for
the Aircraft shall be paid to Company.
The insurance payments for any loss or damage to the Airframe or an
Engine not constituting an Event of Loss with respect to the Airframe or such
Engine will be applied in payment (or to reimburse Company) for repairs or for
replacement property in accordance with the terms of Sections 7.02 and 7.04, and
any balance remaining after compliance with such Sections with respect to such
loss or damage shall be paid to Company. Any amount referred to in the preceding
sentence or in clause (i), (ii) or (iii) of the first paragraph of this Section
7.06(d) that is payable to Company shall not be paid to Company (or, if it has
been previously paid directly to Company, shall not be retained by Company) if
at the time of such payment an Event of Default or Payment Default has occurred
and is continuing, but shall be paid to and held by Loan Trustee as security for
the obligations of Company under this Indenture, and when any such Event of
Default or Payment Default ceases, such amount shall, to the extent not
theretofore applied as provided herein, be paid to Company.
(e) Reports, Etc. On or before the Closing Date and annually
following renewal of Company's insurance coverage, Company will furnish to Loan
Trustee, Policy Provider and Liquidity Provider a report signed by a firm of
independent aircraft insurance brokers appointed by Company (which brokers may
be in the regular employ of Company), stating the opinion of such firm that the
insurance then carried and maintained on the Aircraft complies with the terms
hereof. All information contained in such report shall be Confidential
Information and shall be treated by Loan Trustee, Policy Provider and Liquidity
Provider and each of their affiliates and officers, directors, agents and
employees in accordance with the provisions of Section 10.16. Company will cause
such firm to notify Loan Trustee, Policy Provider and Liquidity Provider of any
act or omission on the part of Company of which such firm has knowledge that
might invalidate or render unenforceable, in whole or in part, any insurance on
the Aircraft. Company will also cause such firm to notify Loan Trustee, Policy
Provider and Liquidity Provider as promptly as practicable after such firm
acquires knowledge that an interruption of any insurance carried and maintained
on the Aircraft pursuant to this Section 7.06 will occur. Such information may
only be provided to other Persons in accordance with Section 10.16.
(f) Salvage Rights; Other. All salvage rights to the Airframe and
each Engine shall remain with Company's insurers at all times, and any insurance
policies of Loan Trustee insuring the Airframe or any Engine shall provide for a
release to Company of any and all salvage rights in and to the Airframe or any
Engine. Neither Loan Trustee nor any Noteholder may, directly or indirectly,
obtain insurance for its own account with respect to the Airframe or any Engine
if such insurance would limit or otherwise adversely affect the coverage or
amounts payable under, or increase the premiums for, any insurance required to
be maintained pursuant to this Section 7.06 or any other insurance maintained
with respect to the Aircraft or any other aircraft in Company's fleet.
ARTICLE VIII
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01 Resignation or Removal; Appointment of Successor. (a)
The resignation or removal of Loan Trustee and the appointment of a successor
Loan Trustee shall become effective only upon the successor Loan Trustee's
acceptance of appointment as provided in this Section 8.01. Loan Trustee or any
successor thereto must resign if at any time it ceases to be eligible in
accordance with the provisions of Section 8.01(c) and may resign at any time
without cause by giving at least 60 days' prior written notice to Company and
each Noteholder. In addition, either Company (so long as no Event of Default or
Payment Default shall have occurred and be continuing) or a Majority in Interest
of Noteholders (but only with the consent of Company so long as no Event of
Default or Payment Default shall have occurred and be continuing), may at any
time remove Loan Trustee without cause by an instrument in writing delivered to
Loan Trustee and each Noteholder, and, in case of a removal by a Majority in
Interest of Noteholders, to Company. In the case of the resignation or removal
of Loan Trustee, Company shall promptly appoint a successor Loan Trustee. If a
successor Loan Trustee has not been appointed within 60 days after such notice
of resignation or removal, Loan Trustee, Company or any Noteholder may apply to
any court of competent jurisdiction to appoint a successor Loan Trustee to act
until such time, if any, as a successor is appointed as above provided. The
successor Loan Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Loan Trustee appointed as above
provided.
(b) Any successor Loan Trustee, however appointed, shall execute and
deliver to the predecessor Loan Trustee and Company an instrument accepting such
appointment and assuming the obligations of Loan Trustee arising from and after
the time of such appointment, and thereupon such successor Loan Trustee, without
further act, shall become vested with all the estates, properties, rights,
powers and duties of the predecessor Loan Trustee in the trust hereunder
applicable to it with like effect as if originally named Loan Trustee herein;
but nevertheless upon the written request of such successor Loan Trustee, such
predecessor Loan Trustee shall execute and deliver an instrument transferring to
such successor Loan Trustee all the estates, properties, rights and powers of
such predecessor Loan Trustee, and such predecessor Loan Trustee shall duly
assign, transfer, deliver and pay over to such successor Loan Trustee all monies
or other property and all other books and records, or true, correct and complete
copies thereof, then held by such predecessor Loan Trustee.
(c) This Indenture shall at all times have a Loan Trustee, however
appointed, that is a Citizen of the United States (without the use of a voting
trust) and a bank or trust company having a combined capital and surplus of at
least $100,000,000 (or a combined capital and surplus in excess of $5,000,000
and the obligations of which, whether now in existence or hereafter incurred,
are fully and unconditionally guaranteed by a corporation organized and doing
business under the laws of the United States or any state or territory thereof
or the District of Columbia and having a combined capital and surplus of at
least $100,000,000) or a corporation with a net worth of at least $100,000,000,
if there be such an institution willing, able and legally qualified to perform
the duties of Loan Trustee upon reasonable or customary terms. If such bank,
trust company or corporation publishes reports of conditions at least annually,
pursuant to law or to the requirements of federal, state, territorial or
District of Columbia supervising or examining authority, then for the purposes
of this Section 8.01(c) the combined capital and surplus of such bank, trust
company or corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of conditions so published. In case at any
time Loan Trustee ceases to be eligible in accordance with the provisions of
this Section 8.01(c), Loan Trustee shall resign immediately in the manner and
with the effect specified in Section 8.01(a).
(d) Any corporation into which Loan 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 Loan Trustee is a party,
or any corporation to which substantially all the corporate trust business of
Loan Trustee may be transferred, shall, subject to the terms of Section 8.01(c),
be a successor Loan Trustee under this Indenture without further act.
Section 8.02 Appointment of Additional and Separate Trustees. (a)
Whenever (i) Loan Trustee deems it necessary or desirable in order to conform to
any law of any jurisdiction in which all or any part of the Collateral is
situated or to make any claim or bring any suit with respect to or in connection
with the Collateral, any Operative Document or any of the transactions
contemplated by the Operative Documents, (ii) Loan Trustee shall be advised by
counsel satisfactory to it that it is necessary or prudent in the interests of
Noteholders (and Loan Trustee shall so advise Company) or (iii) Loan Trustee has
been requested to do so by a Majority in Interest of Noteholders, then in any
such case, Loan Trustee and, upon the written request of Loan Trustee, Company,
shall execute and deliver an indenture supplemental hereto and such other
instruments as from time to time are necessary or advisable either (1) to
constitute one or more banks or trust companies or corporations meeting the
requirements of Section 8.01(c) and approved by Loan Trustee, either to act
jointly with Loan Trustee as additional trustee or trustees of all or any part
of the Collateral or to act as separate trustee or trustees of all or any part
of the Collateral, in each case with such rights, powers, duties and obligations
consistent with this Indenture as is provided in such supplemental indenture or
other instruments as Loan Trustee or a Majority in Interest of Noteholders deems
necessary or advisable, or (2) to clarify, add to or subtract from the rights,
powers, duties and obligations theretofore granted any such additional or
separate trustee, subject in each case to the remaining provisions of this
Section 8.02. If no Event of Default has occurred and is continuing, no
additional or supplemental trustee shall be appointed without Company's consent.
If an Event of Default shall have occurred and be continuing, Loan Trustee may
act under the foregoing provisions of this Section 8.02(a) without the
concurrence of Company, and Company hereby irrevocably appoints (which
appointment is coupled with an interest) Loan Trustee as its agent and
attorney-in-fact to act for it under the foregoing provisions of this Section
8.02(a). Loan 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, subject in each
case to the remaining provisions of this Section 8.02. In case any additional or
separate trustee appointed under this Section 8.02(a) becomes incapable of
acting, resigns or is removed, all the assets, property, rights, powers, trusts,
duties and obligations of such additional or separate trustee shall revert to
Loan Trustee until a successor additional or separate trustee is appointed as
provided in this Section 8.02(a).
(b) No additional or separate trustee shall be entitled to exercise
any of the rights, powers, duties and obligations conferred upon Loan 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
Collateral or otherwise payable under any Operative Documents to Loan Trustee
shall be promptly paid over by it to Loan Trustee. All other rights, powers,
duties and obligations conferred or imposed upon any additional or separate
trustee shall be exercised or performed by Loan 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 Loan 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 Collateral 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 Loan Trustee or a
Majority in Interest of Noteholders. No trustee hereunder shall be personally
liable by reason of any act or omission of any other trustee hereunder, except
that Loan Trustee shall be liable for the consequences of its lack of reasonable
care in selecting, and Loan Trustee's own actions in acting with, any additional
or separate trustee. Each additional or separate trustee appointed pursuant to
this Section 8.02 shall be subject to, and shall have the benefit of Articles
IV, V, VI, VIII, IX and X hereof insofar as they apply to Loan Trustee. The
powers of any additional or separate trustee appointed pursuant to this Section
8.02 shall not in any case exceed those of Loan Trustee.
(c) If at any time Loan Trustee deems it no longer necessary or
desirable or in the event that Loan Trustee has been requested to do so in
writing by a Majority in Interest of Noteholders, Loan Trustee and, upon the
written request of Loan Trustee, Company, shall execute and deliver an indenture
supplemental hereto and all other instruments and agreements necessary or proper
to remove any additional or separate trustee. Loan Trustee may act on behalf of
Company under this Section 8.02(c) when and to the extent it could so act under
Section 8.02(a) hereof. In any case, Company may remove an additional or
separate trustee in the manner set forth in Section 8.01.
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01 Amendments to this Indenture without Consent of
Holders. At any time after the date hereof, Company and Loan Trustee may enter
into one or more agreements supplemental hereto without notice to or consent of
any Noteholder for any of the following purposes: (i) to evidence the succession
of another Person to Company and the assumption by any such successor of the
covenants of Company contained in any Operative Documents pursuant to Section
6.02(e) of the Participation Agreement; (ii) to cure any defect or inconsistency
herein or in the Equipment Notes; (iii) to cure any ambiguity or correct any
mistake; (iv) to evidence the succession of a new trustee hereunder pursuant
hereto or the removal of the trustee hereunder or to provide for or facilitate
the appointment of an additional or separate trustee pursuant to Section 8.02
hereof; (v) to convey, transfer, assign, mortgage or pledge any property to or
with Loan Trustee; (vi) to make any other provisions or amendments with respect
to matters or questions arising hereunder or under the Equipment Notes, or to
amend, modify or supplement any provision hereof or thereof, so long as such
action shall not adversely affect the interests of Noteholders or Liquidity
Provider; (vii) to correct or amplify the description of any property at any
time subject to the Lien of this Indenture, or better to assure, convey and
confirm unto Loan Trustee any property subject or required to be subject to the
Lien of this Indenture or to subject to the Lien of this Indenture the Airframe
or Engines or any Replacement Airframe or Replacement Engine; (viii) to add to
the covenants of Company for the benefit of Noteholders, or to surrender any
rights or power herein conferred upon Company; (ix) to add to the rights of
Noteholders; (x) to include on the Equipment Notes any legend required by law or
as otherwise necessary or advisable and (xi) to comply with any applicable
requirements of the Trust Indenture Act of 1939, as amended, or any other
requirements of applicable law or of any regulatory body.
Section 9.02 Amendments to this Indenture with Consent of Holders.
(a) With the written consent of a Majority in Interest of Noteholders, Company
may, and Loan Trustee shall, subject to Section 9.06, at any time and from time
to time, enter into such supplemental agreements to add any provisions to or to
change or eliminate any provisions of this Indenture or of any such supplemental
agreements or to modify in any manner the rights and obligations of Company,
Loan Trustee and of Noteholders under this Indenture; provided, however, that
without the consent of each Noteholder affected thereby, an amendment under this
Section 9.02 may not:
(1) reduce the principal amount of, Make-Whole Amount, if any, or
interest on, any Equipment Note;
(2) change the date on which any principal amount of, Make-Whole
Amount, if any, or interest on any Equipment Note, is due or payable;
(3) create any Lien with respect to the Collateral prior to or pari
passu with the Lien thereon under this Indenture except such as are
permitted by this Indenture, or deprive any Noteholder of the benefit of
the Lien on the Collateral created by this Indenture;
(4) reduce the percentage of the outstanding principal amount of the
Equipment Notes the consent of whose holders is required for any such
supplemental agreement, or the consent of whose holders is required for
any waiver of compliance with certain provisions of this Indenture or of
certain defaults hereunder or their consequences provided for in this
Indenture; or
(5) make any change in Section 4.05 or this Section 9.02, except to
provide that certain other provisions of this Indenture cannot be modified
or waived without the consent of each Noteholder affected thereby.
(b) It is not necessary under this Section 9.02 for Noteholders to
consent to the particular form of any proposed supplemental agreement, but it is
sufficient if they consent to the substance thereof.
(c) Promptly after the execution by Company and Loan Trustee of any
supplemental agreement pursuant to the provisions of this Section 9.02, Loan
Trustee shall transmit by first-class mail a notice, setting forth in general
terms the substance of such supplemental agreement, to all Noteholders, as the
names and addresses of such Noteholders appear on the Equipment Note Register.
Any failure of Loan Trustee to mail such notice, or any defect therein, shall
not, however, in any way impair or affect the validity of any such supplemental
agreement.
Section 9.03 Amendments, Waivers, Etc. of the Participation
Agreement. Without the consent of a Majority in Interest of Noteholders, the
respective parties to the Participation Agreement may not modify, amend or
supplement such agreement, or give any consent, waiver, authorization or
approval thereunder, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder; provided, however, that,
without the consent of Loan Trustee or any Noteholder, the Participation
Agreement may be modified, amended or supplemented in order (i) to cure any
defect or inconsistency therein or to cure any ambiguity or correct any mistake,
(ii) to amend, modify or supplement any provision thereof or make any other
provision with respect to matters or questions arising thereunder or under this
Indenture, provided that the making of any such other provision shall not
materially adversely affect the interests of Noteholders or (iii) to make any
other change, or reflect any other matter, of the kind referred to in clauses
(i) through (xi) of Section 9.01. Notwithstanding the foregoing, without the
consent of Liquidity Provider, Company shall not enter into any amendment,
waiver or modification of or supplement or consent to the Participation
Agreement which shall reduce, modify or amend any indemnities in favor of
Liquidity Provider contained therein.
Section 9.04 Revocation and Effect of Consents. Until an amendment
or waiver becomes effective, a consent to it by a Noteholder is a continuing
consent by Noteholder and every subsequent Noteholder, even if notation of the
consent is not made on any Equipment Note.
Section 9.05 Notation on or Exchange of Equipment Notes. Loan
Trustee may place an appropriate notation about an amendment or waiver on any
Equipment Note thereafter executed. Loan Trustee in exchange for such Equipment
Notes may execute new Equipment Notes that reflect the amendment or waiver.
Section 9.06 Trustee Protected. If, in the reasonable opinion of the
institution acting as Loan Trustee, any document required to be executed by it
pursuant to the terms of Section 9.01 or 9.02 adversely affects any right, duty,
immunity or indemnity with respect to such institution under this Indenture,
such institution may in its discretion decline to execute such document.
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination of Indenture. (a) Upon (or at any time
after):
(i) payment in full of the principal amount, Make-Whole Amount, if
any, and interest on and all other amounts due under all Equipment Notes
and provided that there shall then be no other Secured Obligations due to
Noteholders, Indenture Indemnitees and Loan Trustee hereunder or under the
Participation Agreement; or
(ii) the 91st day after there has been irrevocably deposited (except
as provided in Section 2.15 or 10.01(d)) with Loan Trustee as funds in
trust, specifically pledged as security for, and dedicated solely to, the
benefit of Noteholders: (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
Business Day before the due date of any payment referred to below in this
paragraph) money in an amount, or (C) a combination of money and U.S.
Government Obligations referred to in the foregoing clause (B),
sufficient, in the opinion of a nationally recognized firm of independent
certified public accountants expressed in a written certification thereof
delivered to Loan Trustee, to pay in full the outstanding principal amount
of and interest on all the Equipment Notes then outstanding on the dates
such amounts are due; provided, however, that
(1) Company has delivered to Loan Trustee an officer's certificate
and an opinion of counsel to the effect that there has been a change in
tax law since April 23, 2002 or has been published by the Internal Revenue
Service a ruling to the effect that Noteholders and the holders of the
Pass Through Certificates will not recognize income, gain or loss for
United States Federal income tax purposes as a result of the exercise by
Company of its option under this subsection (ii) and will be subject to
United States Federal income tax on the same amounts and in the same
manner and at the same times, as would have been the case if such option
had not been exercised;
(2) all other amounts then due and payable hereunder have been paid;
(3) Company has delivered to Loan Trustee an officer's certificate
and an opinion of counsel (which may be internal counsel to Company), each
stating that all conditions precedent to the satisfaction and discharge of
this Indenture set forth in this Section 10.01 have been complied with;
(4) such deposit will not result in a breach or violation of, or
constitute an Event of Default under, this Indenture;
(5) no Event of Default set forth in Sections 4.01(f), (g), (h) or
(i) shall have occurred and be continuing on the date of such deposit or
at any time during the period beginning on such date and ending on the
91st day after the date of such deposit; and
(6) Company has delivered to Loan Trustee written confirmation from
each of the Rating Agencies that such deposit, the resulting release and
discharge of Company from its obligations under this Indenture and under
the Equipment Notes and the release of the Aircraft and the balance of the
Collateral from the Lien of this Indenture will not result in a reduction
in the rating for any class of Pass Through Certificates below the then
current rating for such class of Pass Through Certificates or a withdrawal
or suspension of the rating of any class of Pass Through Certificates,
without regard to the Policy (as defined in the Policy Provider
Agreement);
Company and Loan Trustee shall be deemed to have been released and discharged
from their respective obligations hereunder and under the Equipment Notes and
the security interest, mortgage lien and all other estate, right, title and
interest granted by this Indenture shall cease and become null and void and all
of the property, rights, interests and privileges granted as security for the
Equipment Notes shall revert to and revest in Company without any other act or
formality whatsoever, and Loan Trustee shall, upon the written request of
Company, execute and deliver to, or as directed in writing by, Company an
appropriate instrument (in due form for recording) releasing the Aircraft and
the balance of the Collateral from the Lien of this Indenture together with such
other instruments and documents as Company reasonably requests to give effect to
the release and termination, and, in such event, this Indenture and the trusts
created hereby shall terminate and this Indenture shall be of no further force
or effect; provided, however, that this Indenture and the trusts created hereby
shall earlier terminate and this Indenture shall be of no further force or
effect upon any sale or other final disposition by Loan Trustee of all property
constituting part of the Collateral and the final distribution by Loan Trustee
of all monies or other property or proceeds constituting part of the Collateral
in accordance with the terms hereof. Except as otherwise provided above, this
Indenture and the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof. Upon the deposit of the defeasance funds as
described above, the right of Company to cause redemption of the Equipment Notes
shall cease.
(b) Notwithstanding the provisions of Section 10.01(a)(ii), the
obligations of Loan Trustee contained in Sections 2.01, 2.02, 2.03, 2.04, 2.05,
2.07, 2.08, 2.09, 2.13, 2.15, 2.16, 3.01, 10.01(c) and 10.01(d) of this Section
10.01, and the other rights, duties, immunities and privileges hereunder of Loan
Trustee, shall survive.
(c) All monies and U.S. Government Obligations deposited with Loan
Trustee pursuant to Section 10.01(a)(ii) shall be held in trust and applied by
it, in accordance with the provisions of the Equipment Notes and this Indenture,
to the payment to Noteholders of all sums due and to become due thereon for
principal and interest, but such money need not be segregated from other funds
received pursuant hereto except to the extent required by law.
(d) Loan Trustee shall promptly pay or return to Company upon
request of Company any money or U.S. Government Obligations held by it at any
time that are not required for the payment of the amounts described above in
Section 10.01(c) on the Equipment Notes for which money or U.S. Government
Obligations have been deposited pursuant to Section 10.01(a)(ii).
Section 10.02 No Legal Title to Collateral in Noteholders. No
Noteholder shall have legal title to any part of the Collateral. No transfer, by
operation of law or otherwise, of any Equipment Note or other right, title and
interest of any Noteholder in and to the Collateral or hereunder shall operate
to terminate this Indenture or entitle such Noteholder 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 Collateral.
Section 10.03 Sale of Aircraft by Loan Trustee is Binding. Any sale
or other conveyance of the Aircraft, the Airframe, any Engine or any interest
therein by Loan Trustee made pursuant to the terms of this Indenture shall bind
Noteholders and Company and shall be effective to transfer or convey all right,
title and interest of Loan Trustee, Company and such Noteholders in and to such
Aircraft, Airframe, Engine or interest therein. 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 Noteholders.
Section 10.04 Indenture for Benefit of Company, Loan Trustee and
Noteholders. Nothing in this Indenture, whether express or implied, shall be
construed to give any Person other than Company, Loan Trustee, Noteholders or
the other Indenture Indemnitees any legal or equitable right, remedy or claim
under or in respect of this 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 required or permitted under the terms
and provisions of this Indenture shall be in English and in writing, and given
by United States registered or certified mail, courier service or facsimile, and
any such notice shall be effective when delivered (or, if delivered by
facsimile, upon completion of transmission and confirmation by the sender (by a
telephone call to a representative of the recipient or by machine confirmation)
that such transmission was received) addressed as follows:
(i) if to Company, addressed to:
Delta Air Lines, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer, Dept. 856
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the General Counsel at the same address, but
Dept. 971
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Loan Trustee, addressed to:
State Street Bank And Trust Company of Connecticut,
National Association
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Square
Hartford, Connecticut 06103
Attention: Corporate Trust Division
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or if to any Noteholder, addressed to such Noteholder at its address set forth
in the Equipment Note Register maintained pursuant to Section 2.07 hereof.
Any party, by notice to the other parties hereto, may designate
different addresses for subsequent notices or communications. Whenever the words
"notice" or "notify" or similar words are used herein, they mean the provision
of formal notice as set forth in this Section 10.05.
Section 10.06 Severability. Any provision of this Indenture 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.
Section 10.07 No Oral Modification or Continuing Waivers. No terms
or provisions of this Indenture or of the Equipment Notes may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by Company and Loan Trustee, in compliance with Article IX. Any waiver of
the terms hereof or of any Equipment Note 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 bind and inure to the benefit of, and be enforceable by,
each of the parties hereto and the successors and permitted assigns of each, all
as herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successors and permitted
assigns of such Noteholder. Each Noteholder by its acceptance of an Equipment
Note agrees to be bound by this Indenture and all provisions of the
Participation Agreement applicable to a Noteholder.
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 Indenture to the contrary notwithstanding, Loan Trustee, any Noteholder or
any other party to any of the Operative Documents or the Pass Through Documents
or any of their affiliates may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with Company,
fully to the same extent as if this Indenture were not in effect, including
without limitation the making of loans or other extensions of credit to Company
for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
Section 10.11 Voting by Noteholders. All votes of Noteholders shall
be governed by a vote of a Majority in Interest of Noteholders, except as
otherwise provided herein.
Section 10.12 Section 1110. It is the intention of the parties
hereto that the security interest created hereby, to the fullest extent
available under applicable law, entitles Loan Trustee, on behalf of Noteholders,
to all of the benefits of Section 1110 with respect to the Aircraft.
Section 10.13 Company's Performance and Rights. Any obligation
imposed on Company herein shall require only that Company perform or cause to be
performed such obligation, even if stated as a direct obligation, and the
performance of any such obligation by any permitted assignee, lessee or
transferee under an assignment, lease or transfer agreement then in effect and
in accordance with the provisions of the Operative Documents shall constitute
performance by Company and, to the extent of such performance, discharge such
obligation by Company. Except as otherwise expressly provided herein, any right
granted to Company in this Indenture shall grant Company the right to permit
such right to be exercised by any such assignee, lessee or transferee. The
inclusion of specific references to obligations or rights of any such assignee,
lessee or transferee in certain provisions of this Indenture shall not in any
way prevent or diminish the application of the provisions of the two sentences
immediately preceding with respect to obligations or rights in respect of which
specific reference to any such assignee, lessee or transferee has not been made
in this Indenture.
Section 10.14 Counterparts. This Indenture 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 Indenture including a
signature page or pages executed by each of the parties hereto shall be an
original counterpart of this Indenture, but all of such counterparts together
shall constitute one instrument.
Section 10.15 Governing Law. THIS INDENTURE HAS BEEN DELIVERED IN
THE STATE OF NEW YORK AND THIS INDENTURE, ANY INDENTURE SUPPLEMENT AND THE
EQUIPMENT NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.16 Confidential Information. The term "Confidential
Information" means: (a) the existence and terms of any lease of the Airframe or
Engines pursuant to Section 7.02(a) and the identity of the Permitted Lessee
thereunder; (b) all information obtained in connection with any inspection
conducted by Loan Trustee or its representative pursuant to Section 7.03(a); (c)
each certification furnished to Loan Trustee pursuant to Sections 7.06(a) and
7.06(b); (d) all information contained in each report furnished to Loan Trustee
pursuant to Section 7.06(e); and (e) all information regarding the Warranty
Rights. All Confidential Information shall be held confidential by Loan Trustee
and each Noteholder and each affiliate, agent, officer, director, or employee of
any thereof and shall not be furnished or disclosed by any of them to anyone
other than (i) Loan Trustee or any Noteholder and (ii) their respective bank
examiners, auditors, accountants, agents and legal counsel, and except as may be
required by an order of any court or administrative agency or by any statute,
rule, regulation or order of any governmental authority.
Section 10.17 Submission to Jurisdiction. Each of the parties
hereto, and by acceptance of Equipment Notes, each Noteholder, to the extent it
may do so under applicable law, for purposes hereof and of all other Operative
Agreements hereby (a) irrevocably submits itself to the non-exclusive
jurisdiction of the courts of the State of New York sitting in the City of New
York and to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Indenture, the subject matter hereof or any
of the transactions contemplated hereby brought by any party or parties hereto
or thereto, or their successors or permitted assigns and (b) waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any such suit,
action or proceeding, 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 Indenture or the Equipment Notes or the subject matter hereof or
any of the transactions contemplated hereby may not be enforced in or by such
courts.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers thereof duly authorized, as of the
date first above written.
DELTA AIR LINES, INC.
By:
------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not in
its individual capacity, except as
expressly provided herein, but solely as
Loan Trustee
By:
------------------------------------
Name:
Title:
EXHIBIT A
to INDENTURE AND
SECURITY AGREEMENT
INDENTURE SUPPLEMENT NO. ___
INDENTURE SUPPLEMENT NO. __ , dated _____________, ____ ("Indenture
Supplement"), between DELTA AIR LINES, INC. ("Company") and STATE STREET BANK
AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual
capacity but solely as Loan Trustee under the Indenture (each as hereinafter
defined).
W I T N E S S E T H:
WHEREAS, the Indenture and Security Agreement (N372DA), dated as of
April 30, 2002 (the "Indenture"; capitalized terms used herein without
definition shall have the meanings specified therefor in Annex A to the
Indenture), between Company and State Street Bank and Trust Company of
Connecticut, National Association, not in its individual capacity, except as
expressly provided therein, but solely as Loan Trustee ("Loan Trustee"),
provides for the execution and delivery of supplements thereto substantially in
the form hereof which shall particularly describe the Aircraft, and shall
specifically grant a security interest in the Aircraft to Loan Trustee; and
[WHEREAS, the Indenture relates to the Airframe and Engines
described in Annex A attached hereto and made a part hereof, and a counterpart
of the Indenture is attached to and made a part of this Indenture Supplement;]*
-----------------
* Use for Indenture Supplement No. 1 only.
[WHEREAS, Company has, as provided in the Indenture, heretofore
executed and delivered to Loan Trustee Indenture Supplement(s) for the purpose
of specifically subjecting to the Lien of the Indenture certain airframes and/or
engines therein described, which Indenture Supplement(s) is/are dated and
has/have been duly recorded with the FAA as set forth below, to wit:
Date Recordation Date FAA Document Number]**
---- ---------------- --------------------
----------------
** Use for all Indenture Supplements other than Indenture Supplement No. 1.
NOW, THEREFORE, to secure the prompt and complete payment (whether
at stated maturity, by acceleration or otherwise) of principal of, Make-Whole
Amount, if any, and interest on, the Equipment Notes and all other amounts
payable by Company under the Operative Documents and the performance and
observance by Company of all the agreements and covenants to be performed or
observed by Company for the benefit of Noteholders and Indenture Indemnitees
contained in the Operative Documents, and in consideration of the premises and
of the covenants contained in the Operative Documents, and for other good and
valuable consideration given by Loan Trustee, Noteholders and Indenture
Indemnitees to Company at or before the Closing Date, the receipt of which is
hereby acknowledged, Company does hereby grant, bargain, sell, convey, transfer,
mortgage, assign, pledge and confirm unto Loan Trustee and its successors in
trust and permitted assigns, for the security and benefit of Loan Trustee,
Noteholders and Indenture Indemnitees, a first priority security interest in,
and mortgage lien on, all estate, right, title and interest of Company in, to
and under the Aircraft, including the Airframe and Engines described in Annex A
attached hereto, whether or not any such Engine from time to time is installed
on the Airframe or any other airframe or any other aircraft, and any and all
Parts relating thereto, and, to the extent provided in the Indenture, all
substitutions and replacements of, and additions, improvements, accessions and
accumulations to, the Aircraft, including the Airframe, the Engines and any and
all Parts (in each case other than any substitutions, replacements, additions,
improvements, accessions and accumulations that constitute items excluded from
the definition of Parts by clauses (b), (c), (d), (e) and (f) thereof) relating
thereto;
To have and to hold all and singular the aforesaid property unto
Loan Trustee, and its successors and assigns, in trust for the ratable benefit
and security of Noteholders and Indenture Indemnitees, except as otherwise
provided in the Indenture, including Section 2.13 and Article III of the
Indenture, without any preference, distinction or priority of any one Equipment
Note 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
Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
THIS INDENTURE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF NEW
YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the undersigned have caused this Indenture
Supplement No. __ to be duly executed by their respective duly authorized
officers, on the date first above written.
DELTA AIR LINES, INC.
By:
------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, as
Loan Trustee
By:
------------------------------------
Name:
Title:
Annex A to
Indenture Supplement No. __
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
Manufacturer Model FAA Registration No. Manufacturer's Serial No.
------------ ----- -------------------- -------------------------
ENGINES
Manufacturer Model Manufacturer's Serial No.
------------ ----- -------------------------
Each Engine is of 750 or more "rated take-off horsepower" or the
equivalent of such horsepower.
EXHIBIT B
to INDENTURE AND
SECURITY AGREEMENT
LIST OF PERMITTED COUNTRIES
Argentina
Australia
Austria
Bahamas
Barbados
Belgium
Bermuda Islands
Brazil
British Virgin Islands
Canada
Cayman Islands
Chile
Czech Republic
Denmark
Ecuador
Egypt
Finland
France
Germany
Greece
Grenada
Guatemala
Hungary
Iceland
India
Indonesia
Ireland
Italy
Jamaica
Japan
Kuwait
Liechtenstein
Luxembourg
Malta
Mexico
Monaco
Morocco
Netherlands Antilles
Netherlands, the
New Zealand
Norway
Paraguay
Peoples' Republic of China
Philippines
Poland
Portugal
Republic of China (Taiwan)
Singapore
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
Trinidad and Tobago
United Kingdom
Uruguay
Venezuela
EXHIBIT C
to INDENTURE AND
SECURITY AGREEMENT
AIRCRAFT TYPE VALUE FOR SECTION 7.06(b)
Boeing 737-832 - $8,000,000
SCHEDULE I
to INDENTURE AND
SECURITY AGREEMENT
DESCRIPTION OF EQUIPMENT NOTES
Original Principal Interest Rate Maturity Date
Amount ------------- -------------
------
Series G-1
Equipment Notes: $19,985,061.21 6.718% January 2, 2022
Series G-2
Equipment Notes: $1,073,800.00 6.417% July 2, 2012
Series C
Equipment Notes: $4,602,000.00 7.779% January 2, 2011
EQUIPMENT NOTES AMORTIZATION
SERIES G-1 EQUIPMENT NOTES
Percentage of
Original Principal Amount
Payment Date to be Paid
------------ ----------
The portion of this Schedule appearing below this text is intentionally deleted
from the FAA filing counterpart because the parties hereto deem it to contain
confidential information.
[Intentionally Omitted]
EQUIPMENT NOTES AMORTIZATION
SERIES C EQUIPMENT NOTES
Percentage of
Original Principal Amount
Payment Date to be Paid
------------ ----------
The portion of this Schedule appearing below this text is intentionally
deleted from the FAA filing counterpart because the parties hereto deem it to
contain confidential information.
[Intentionally Omitted]
SCHEDULE II
to INDENTURE AND
SECURITY AGREEMENT
PASS THROUGH TRUST AGREEMENT AND
PASS THROUGH TRUST SUPPLEMENTS
Pass Through Trust Agreement, dated as of November 16, 2000, between Delta
Air Lines, Inc. and State Street Bank and Trust Company of Connecticut,
National Association, as trustee, as supplemented by Trust Supplement No.
2002-1G-1, dated as of April 30, 2002, Trust Supplement No. 2002-1G-2, dated
as of April 30, 2002, and Trust Supplement No. 2002-1C, dated as of April 30,
2002.
Annex A to
Participation Agreement and
Indenture and Security Agreement
(N372DA)
DEFINITIONS
(N372DA)
"Additional Insureds" has the meaning specified in Section 7.06(a)
of the Indenture.
"After-Tax Basis" means that indemnity and compensation payments
required to be made on such basis will be supplemented by the Person paying the
base amount by that amount which, when added to such base amount, and after
deduction of all Federal, state, local and foreign Taxes required to be paid by
or on behalf of the payee with respect of the receipt or realization of any such
amounts, and after consideration of any current tax savings of such payee
resulting by way of any deduction, credit or other tax benefit attributable to
such base amount or Tax, shall net such payee the full amount of such base
amount.
"Agreement" and "Participation Agreement" mean that certain
Participation Agreement (N372DA), dated as of April 30, 2002, among Company,
State Street, Pass Through Trustee under each Pass Through Trust Agreement,
Subordination Agent and Loan Trustee, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its Terms.
"Aircraft" means the Airframe (or any Replacement Airframe
substituted therefor pursuant to Section 7.05 of the Indenture) together with
the two Engines described in the Indenture Supplement originally executed and
delivered under the Indenture (or any Replacement Engine that may from time to
time be substituted for any of such Engines pursuant to Section 7.04 or Section
7.05 of the Indenture), whether or not any of such initial or substituted
Engines is from time to time installed on such Airframe or installed on any
other airframe or on any other aircraft. The term "Aircraft" includes any
Replacement Aircraft.
"Airframe" means (a) the Boeing 737-832 aircraft (except (i) the
Engines or engines from time to time installed thereon and any and all Parts
related to such Engine or engines and (ii) items installed or incorporated in or
attached to such Boeing 737-832 aircraft from time to time that are excluded
from the definition of Parts (except Engines or engines)) specified in the
Indenture Supplement originally executed and delivered under the Indenture and
(b) any and all related Parts. The term "Airframe" includes any Replacement
Airframe that is substituted for the Airframe pursuant to Section 7.05 of the
Indenture. At such time as any Replacement Airframe is so substituted and the
Airframe for which such substitution is made is released from the Lien of the
Indenture, such replaced Airframe shall cease to be an Airframe under the
Indenture.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 United
States Code ss.ss.101 et seq., as amended, or any successor statutes thereto.
"Basic Pass Through Trust Agreement" means that certain Pass Through
Trust Agreement, dated as of November 16, 2000, between Company and State
Street, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms (but does not include any Trust
Supplement).
"Bills of Sale" means the FAA ▇▇▇▇ of Sale and the Warranty ▇▇▇▇ of
Sale.
"Business Day" means any day other than a Saturday, a Sunday or a
day on which commercial banks are required or authorized to close in New York,
New York, Atlanta, Georgia or the city and state in which Loan Trustee maintains
its Corporate Trust Office or receives and disburses funds.
"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 of the 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 Section 1110.
"Citizen of the United States" has the meaning specified for such
term in Section 40102(a)(15) of Title 49 of the United States Code or any
similar legislation of the United States enacted in substitution or replacement
therefor.
"Claim" has the meaning specified in Section 4.02(a) of the
Participation Agreement.
"Class C Pass Through Trust" means the Delta Air Lines Pass Through
Trust 2002-1C created pursuant to the Basic Pass Through Trust Agreement, as
supplemented by Trust Supplement No. 2002-1C, dated as of April 30, 2002 between
Company and State Street.
"Class G-1 Pass Through Trust" means the Delta Air Lines Pass
Through Trust 2002-1G-1 created pursuant to the Basic Pass Through Trust
Agreement, as supplemented by Trust Supplement No. 2002-1G-1, dated as of April
30, 2002 between Company and State Street.
"Class G-1 Trustee" means Pass Through Trustee under the Basic Pass
Through Trust Agreement, as supplemented by Trust Supplement No. 2002-1G-1,
dated as of April 30, 2002 between Company and State Street.
"Class G-2 Pass Through Trust" means the Delta Air Lines Pass
Through Trust 2002-1G-2 created pursuant to the Basic Pass Through Trust
Agreement, as supplemented by Trust Supplement No. 2002-1G-2, dated as of April
30, 2002 between Company and State Street.
"Class G-2 Trustee" means Pass Through Trustee under the Basic Pass
Through Trust Agreement, as supplemented by Trust Supplement No. 2002-1G-2,
dated as of April 30, 2002 between Company and State Street.
"Closing" has the meaning specified in Section 2.03 of the
Participation Agreement.
"Closing Date" means the date of the closing of the transaction
contemplated by the Operative Documents.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning specified in the granting clause of the
Indenture.
"Company" means Delta Air Lines, Inc., and its successors and
permitted assigns.
"Compulsory Acquisition" means requisition of title or other
compulsory acquisition, capture, seizure, deprivation, confiscation or detention
for any reason of the Aircraft by any government that results in the loss of
title or use of the Aircraft by Company (or any Permitted Lessee) for a period
in excess of 180 days, but shall exclude requisition for use or hire not
involving requisition of title.
"Confidential Information" has the meaning specified in Section
10.16 of the Indenture.
"Controlling Party" has the meaning specified in Section 2.06 of the
Intercreditor Agreement.
"Corporate Trust Office" means the Corporate Trust Division of Loan
Trustee located at State Street Bank and Trust Company of Connecticut, National
Association, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Square, Hartford, Connecticut, 06103,
Attention: Corporate Trust Division, or such other office at which Loan
Trustee's corporate trust business is administered that Loan Trustee specifies
by notice to Company.
"CRAF Program" means the Civil Reserve Air Fleet Program authorized
under 10 U.S.C. Section 9511 et seq. or any similar or substitute program under
the laws of the United States.
"Debt Rate" means, with respect to any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Indenture.
"Department of Transportation" means the United States Department of
Transportation and any agency or instrumentality of the United States government
succeeding to its functions.
"Direction" has the meaning specified in Section 2.16 of the
Indenture.
"Dollars" and "$" mean the lawful currency of the United States.
"Engine" means (a) each of the two CFM International, Inc.
CFM56-7B26 engines, which may be rated at or limited to -24 or higher power,
listed by manufacturer's serial number in the Indenture Supplement originally
executed and delivered under the Indenture, whether or not from time to time
installed on the Airframe or installed on any other airframe or on any other
aircraft and (b) any Replacement Engine substituted for an Engine pursuant to
Section 7.04 or 7.05 of the Indenture; together in each case with any and all
related Parts. At such time as a Replacement Engine is so substituted and the
Engine for which substitution is made is released from the Lien of the
Indenture, such replaced Engine shall cease to be an Engine under the Indenture.
"Equipment Note" means and includes any Equipment Note originally
issued pursuant to Section 2.02 of the Indenture and any Equipment Note issued
in exchange therefor or replacement thereof pursuant to Section 2.07 or 2.08 of
the Indenture.
"Equipment Note Register" has the meaning specified in Section 2.07
of the Indenture.
"Equipment Note Registrar" has the meaning specified in Section 2.07
of the Indenture.
"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 4.01 of the
Indenture.
"Event of Loss" means, with respect to the Aircraft, Airframe or any
Engine, any of the following events with respect to such property:
(a) the loss of such property or of the use thereof due to
destruction, damage beyond repair or rendition of such property permanently
unfit for normal use for any reason whatsoever;
(b) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total loss, a
compromised total loss or a constructive total loss;
(c) the theft or disappearance of such property for a period in
excess of 180 days;
(d) the requisition for use of such property by any government
(other than a requisition for use by a Government or the government of the
country of registry of the Aircraft) that results in the loss of possession of
such property by Company (or any Permitted Lessee) for a period in excess of 12
consecutive months;
(e) the operation or location of the Aircraft, while under
requisition for use by any government, in any area excluded from coverage by any
insurance policy in effect with respect to the Aircraft required by the terms of
Section 7.06 of the Indenture, unless Company shall have obtained indemnity or
insurance in lieu thereof from such government;
(f) any Compulsory Acquisition;
(g) as a result of any law, rule, regulation, order or other action
by the FAA or other government of the country of registry, the use of the
Aircraft or Airframe in the normal business of air transportation is prohibited
by virtue of a condition affecting all aircraft of the same type for a period of
18 consecutive months, unless Company is diligently carrying forward all steps
that are necessary or desirable to permit the normal use of the Aircraft or
Airframe or, in any event, if such use is prohibited for a period of three
consecutive years; and
(h) with respect to an Engine only, any divestiture of title to or
interest in an Engine or any event with respect to an Engine that is deemed to
be an Event of Loss with respect to such Engine pursuant to Section 7.02(a)(vii)
of the Indenture.
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 unless
Company elects to substitute a Replacement Airframe pursuant to Section
7.05(a)(i) of the Indenture.
"FAA" means the United States Federal Aviation Administration and
any agency or instrumentality of the United States government succeeding to its
functions.
"FAA ▇▇▇▇ of Sale" means the ▇▇▇▇ of sale for the Aircraft on AC
Form 8050-2 executed by Manufacturer or an affiliate of Manufacturer in favor of
Company and recorded with the FAA.
"Federal Funds Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or if such rate
is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by State Street from
three Federal funds brokers of recognized standing selected by it.
"Government" means the government of any of Canada, France, Germany,
Japan, The Netherlands, Sweden, Switzerland, the United Kingdom or the United
States and any instrumentality or agency thereof.
"Indemnitee" has the meaning specified in Section 4.02(b) of the
Participation Agreement.
"Indenture" means that certain Indenture and Security Agreement
(N372DA), dated as of April 30, 2002, between Company and Loan Trustee, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms, including supplementing by an Indenture Supplement
pursuant to the Indenture.
"Indenture Form" means the form of Amended and Restated Indenture
and Security Agreement attached as Exhibit I to the Participation Agreement.
"Indenture Indemnitee" means (i) Loan Trustee, (ii) State Street,
(iii) so long as it holds any Equipment Note as agent and trustee of any Pass
Through Trustee, Subordination Agent, (iv) Liquidity Provider and Policy
Provider and (v) so long as it is the holder of any Equipment Notes, each Pass
Through Trustee and each of their respective directors, officers, employees,
agents and servants. No holder of a Pass Through Certificate in its capacity as
such shall be an Indenture Indemnitee.
"Indenture Supplement" means a supplement to the Indenture,
substantially in the form of Exhibit A to the Indenture, which particularly
describes the Aircraft, and any Replacement Airframe and or Replacement Engine
included in the property subject to the Lien of the Indenture.
"Intercreditor Agreement" means that certain Intercreditor
Agreement, dated as of the Closing Date, among Pass Through Trustees, Liquidity
Provider, Policy Provider and Subordination Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Interests" has the meaning specified in Section 7.06(a) of the
Indenture.
"Lease" means any lease permitted by the terms of Section 7.02(a) of
the Indenture.
"Lease Form" means the form of Lease Agreement attached as Exhibit H
to the Participation Agreement.
"Lien" means any mortgage, pledge, lien, encumbrance, lease,
sublease, sub-sublease or security interest.
"Liquidity Facilities" means the three Revolving Credit Agreements,
each dated as of the Closing Date, between Subordination Agent, as borrower, and
Liquidity Provider, and any replacements thereof, in each case as the same may
be amended or supplemented or otherwise modified from time to time in accordance
with its terms.
"Liquidity Provider" means Westdeutsche Landesbank Girozentrale, a
German banking institution organized under the laws of the State of North
Rhine-Westphalia, acting through its New York branch, as liquidity provider
under each of the Liquidity Facilities, or any liquidity provider under a
replacement liquidity facility.
"Loan Amount" has the meaning specified in Section 7.06(b) of the
Indenture.
"Loan Trustee" has the meaning specified in the introductory
paragraph of the Indenture.
"Loan Trustee Liens" means any Lien attributable to State Street or
Loan Trustee with respect to the Aircraft, any interest therein or any other
portion of the Collateral arising as a result of (i) claims against State Street
or Loan Trustee not related to its interest in the Aircraft or the
administration of the Collateral pursuant to the Indenture, (ii) acts of State
Street or Loan Trustee not permitted by, or the failure of State Street or Loan
Trustee to take any action required by the Operative Documents or the Pass
Through Documents, (iii) claims against State Street or Loan Trustee relating to
Taxes or Claims that are excluded from the indemnification provided by Section
4.02 of the Participation Agreement pursuant to said Section 4.02 or (iv) claims
against State Street or Loan Trustee arising out of the transfer by any such
party of all or any portion of its interest in the Aircraft, the Collateral, the
Operative Documents or the Pass Through Documents, except while an Event of
Default is continuing and prior to the time that Loan Trustee has received all
amounts due to it pursuant to the Indenture.
"Loss Payment Date" has the meaning specified in Section 7.05(a) of
the Indenture.
"Majority in Interest of Noteholders" means, as of a particular date
of determination and subject to Section 2.16 of the Indenture, the holders of at
least a majority in aggregate unpaid principal amount of all Equipment Notes
outstanding as of such date (excluding any Equipment Notes held by Company or
any affiliate thereof.
"Make-Whole Amount" means, with respect to any Equipment Note, the
amount (as determined by an independent investment banker selected by Company
(and, following the occurrence and during the continuance of an Event of
Default, reasonably acceptable to Loan Trustee)), if any, by which (i) the
present value of the remaining scheduled payments of principal and interest from
the redemption date to maturity of such Equipment Note 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 (ii) the outstanding principal amount of such
Equipment Note plus accrued but unpaid interest thereon. For purposes of
determining the Make-Whole Amount, "Treasury Yield" means, at the date of
determination, 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 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 and (B) the other maturing as close as possible to, but later than,
the Average Life Date, 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 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. "Average Life Date" means, for each
Equipment Note to be redeemed, the date which follows the redemption date by a
period equal to the Remaining Weighted Average Life at the redemption date of
such Equipment Note. "Remaining Weighted Average Life" of an Equipment Note, at
the redemption date of such Equipment Note, means the number of days equal to
the quotient obtained by dividing: (i) the sum of the products obtained by
multiplying (A) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Equipment Note, by (B)
the number of days from and including the redemption date to but excluding the
scheduled payment date of such principal installment by (ii) the then unpaid
principal amount of such Equipment Note.
"Mandatory Document Terms" has the meaning specified for such term
in Exhibit L to the Participation Agreement.
"Mandatory Economic Terms" has the meaning specified for such term
in Exhibit M to the Participation Agreement.
"Manufacturer" means The Boeing Company, a Delaware corporation, and
its successors and assigns.
"Manufacturer's Consent" means the Manufacturer's Consent and
Agreement to Assignment of Warranties, dated as of the Closing Date,
substantially in the form of Exhibit E to the Participation Agreement
"Noteholder" means any Person in whose name an Equipment Note is
registered on the Equipment Note Register (including, for so long as it is the
registered holder of any Equipment Notes, Subordination Agent on behalf of Pass
Through Trustees pursuant to the provisions of the Intercreditor Agreement).
"Noteholder Liens" means any Lien attributable to any Noteholder on
or against the Aircraft, any interest herein or any portion of the Collateral,
arising out of any claim against such Noteholder that is not related to the
Operative Documents or Pass Through Documents, or out of any act or omission of
such Noteholder that is not related to the transactions contemplated by, or that
constitutes a breach by such Noteholder of its obligations under, the Operative
Documents or the Pass Through Documents.
"Operative Documents" means, collectively, the Participation
Agreement, the Indenture, each Indenture Supplement, the Manufacturer's Consent
and the Equipment Notes.
"Other Party Liens" means any Lien attributable to Pass Through
Trustee (other than in its capacity as Noteholder), Subordination Agent (other
than in its capacity as Noteholder), Liquidity Provider or Policy Provider on or
against the Aircraft, any interest therein, or any portion of the Collateral
arising out of any claim against such party that is not related to the Operative
Documents or Pass Through Documents, or out of any act or omission of such party
that is not related to the transactions contemplated by, or that constitutes a
breach by such party of its obligations under, the Operative Documents or the
Pass Through Documents.
"Participation Agreement" has the meaning set forth under the
definition of "Agreement".
"Participation Agreement Form" means the form of Amended and
Restated Participation Agreement attached as Exhibit G to the Participation
Agreement.
"Parts" means any and 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 Company or
any Permitted Lessee, (c) cargo containers, (d) components or systems installed
on or affixed to the Airframe that are used to provide individual
telecommunications or electronic entertainment to passengers aboard the
Aircraft, (e) medical and similar emergency equipment and (f) passenger service
items and equipment generally used in but not affixed to the Aircraft, such as
blankets, coffee pots, beverage and meal servicing carts, etc.), so long as the
same are incorporated or installed in or attached to the Airframe or any Engine
or so long as the same are subject to the Lien of the Indenture in accordance
with the terms of Section 7.04 thereof after removal from the Airframe or any
Engine.
"Pass Through Certificates" means the pass through certificates
issued by Pass Through Trustees.
"Pass Through Documents" means the Pass Through Trust Agreements,
the Intercreditor Agreement, the Liquidity Facilities and the Policy Provider
Agreement.
"Pass Through Trust" means each of the three separate grantor trusts
created pursuant to the Pass Through Trust Agreements to facilitate certain of
the transactions contemplated by the Operative Documents.
"Pass Through Trust Agreement" means each of the three separate
Trust Supplements together in each case with the Basic Pass Through Trust
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Pass Through Trustee" has the meaning specified in the introductory
paragraph to the Participation Agreement.
"Pass Through Trustees" means, collectively, Pass Through Trustees
under each Pass Through Trust Agreement.
"Past Due Rate" means, with respect to a particular Series, a rate
per annum equal to the applicable Debt Rate plus 1% and, in any case other than
with respect to a particular Series, the Debt Rate for the Series G-2 Equipment
Notes plus 1%.
"Payment Date" means, for any Equipment Note, each July 2 and
January 2, commencing with January 2, 2003.
"Payment Default" means the occurrence of an event that would give
rise to an Event of Default under Section 4.01(a) of the Indenture upon the
giving of notice or the passing of time or both.
"Permitted Investments" means each of (a) direct obligations of the
United States and agencies thereof; (b) obligations fully guaranteed by the
United States; (c) 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
or one of the states thereof having combined capital and surplus and retained
earnings of at least $100,000,000 and having a rating of A, its equivalent or
better by ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's") or Standard & Poor's
Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. ("S&P") (or, if
neither such organization then rates such institutions, by any nationally
recognized rating organization in the United States); (d) commercial paper of
any holding company of a bank, trust company or national banking association
described in clause (c); (e) commercial paper of companies having a rating
assigned to such commercial paper by either Moody's or S&P (or, if neither such
organization then rates such commercial paper, by any nationally recognized
rating organization in the United States) equal to either of the two highest
ratings assigned by such organization; (f) Dollar-denominated certificates of
deposit issued by, or time deposits with, the European subsidiaries of (i) any
bank, trust company or national banking association described in clause (c), or
(ii) any other bank or financial institution described in clause (h) or (i)
below; (g) United States-issued Yankee certificates of deposit issued by, or
bankers' acceptances of, or commercial paper issued by, any bank having combined
capital and surplus and retained earnings of at least $100,000,000 and
headquartered in Canada, Japan, the United Kingdom, France, Germany, Switzerland
or The Netherlands and having a rating of A, its equivalent or better by Moody's
or S&P (or, if neither such organization then rates such institutions, by any
nationally recognized rating organization in the United States); (h)
Dollar-denominated time deposits with any Canadian bank having a combined
capital and surplus and retained earnings of at least $100,000,000 and having a
rating of A, its equivalent or better by Moody's or S&P (or, if neither such
organization then rates such institutions, by any nationally recognized rating
organization in the United States); (i) Canadian Treasury Bills fully hedged to
Dollars; (j) repurchase agreements with any financial institution having
combined capital and surplus and retained earnings of at least $100,000,000
collateralized by transfer of possession of any of the obligations described in
clauses (a) through (i) above; (k) bonds, notes or other obligations of any
state of the United States, or any political subdivision of any state, or any
agencies or other instrumentalities of any such state, including, but not
limited to, industrial development bonds, pollution control revenue bonds,
public power bonds, housing bonds, other revenue bonds or any general obligation
bonds, that, at the time of their purchase, such obligations are rated A, its
equivalent or better by ▇▇▇▇▇'▇ or S&P (or, if neither such organization then
rates such obligations, by any nationally recognized rating organization in the
United States); (1) bonds or other debt instruments of any company, if such
bonds or other debt instruments, at the time of their purchase, are rated A, its
equivalent or better by ▇▇▇▇▇'▇ or S&P (or, if neither such organization then
rates such obligations, by any nationally recognized rating organization in the
United States); (m) mortgage backed securities (i) guaranteed by the Federal
National Mortgage Association, the Federal Home Loan Mortgage Corporation or the
Government National Mortgage Association or rated AAA, its equivalent or better
by ▇▇▇▇▇'▇ or S&P (or, if neither such organization then rates such obligations,
by any nationally recognized rating organization in the United States) or, if
unrated, deemed to be of a comparable quality by Loan Trustee and (ii) having an
average life not to exceed 15 years as determined by standard industry pricing
practices presently in effect; (n) asset-backed securities rated A, its
equivalent or better by ▇▇▇▇▇'▇ or S&P (or, if neither such organization then
rates such obligations, by any nationally recognized rating organization in the
United States) or, if unrated, deemed to be of a comparable quality by Loan
Trustee; and (o) such other investments approved in writing by Loan Trustee;
provided that, except in clause (m), the instruments described in the foregoing
clauses shall have a maturity of no more than six months from the date of
acquisition thereof. The bank acting as Pass Through Trustee or Loan Trustee is
hereby authorized, in making or disposing of any investment described herein, to
deal with itself (in its individual capacity) or with any one or more of its
affiliates, whether it or such affiliate is acting as an agent of Pass Through
Trustee or Loan Trustee or for any third person or dealing as principal for its
own account.
"Permitted Lessee" means any Person to whom Company is permitted to
lease the Airframe or any Engine pursuant to Section 7.02(a) of the Indenture.
"Permitted Lien" has the meaning specified in Section 7.01 of the
Indenture.
"Person" means any person, including any individual, corporation,
limited liability company, partnership, joint venture, association, joint-stock
company, trust, trustee, unincorporated organization or government or any agency
or political subdivision thereof.
"Policy Provider" means MBIA Insurance Company, a New York-domiciled
stock insurance company.
"Policy Provider Agreement" means the Insurance and Indemnity
Agreement dated as of April 30, 2002 among Subordination Agent, Class G-1
Trustee, Class G-2 Trustee, Company and Policy Provider, including the related
Policy Provider Fee Letter referred to therein, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"Purchase Agreement" means Purchase Agreement No. 2022, dated as of
October 21, 1997, which incorporates by reference the Aircraft General Terms
Agreement AGTA-DAL, dated as of October 21, 1997, between Manufacturer and
Company, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Rating Agencies" has the meaning specified in the Intercreditor
Agreement.
"Related Indemnitee Group" has the meaning specified in Section
4.02(b) of the Participation Agreement.
"Replacement Aircraft" means the Aircraft of which a Replacement
Airframe is part.
"Replacement Airframe" means a Boeing 737-832 aircraft or a
comparable or improved model of Manufacturer (except (a) Engines or engines from
time to time installed thereon and any and all Parts related to such Engine or
engines and (b) items excluded from the definition of Parts (except Engines or
engines)), that shall have been made subject to the Lien of the Indenture
pursuant to Section 7.05 thereof, together with all Parts relating to such
aircraft.
"Replacement Engine" means a CFM International, Inc. CFM56-7B
engine, which may be rated at or limited to -24 or higher power, (or an engine
of the same or another manufacturer of a comparable or an improved model and
suitable for installation and use on the Airframe with the other Engine (or any
other Replacement Engine being substituted simultaneously therewith)) that is
made subject to the Lien of the Indenture pursuant to Section 7.04 or Section
7.05 thereof, together with all Parts relating to such engine.
"Responsible Officer" means, with respect to Company, its Chairman
of the Board, its President, its Chief Operating Officer, any Executive Vice
President, any Senior Vice President, the Chief Financial Officer, any Vice
President, the Treasurer, the Controller or the Secretary.
"Sale/Leaseback Transaction" has the meaning specified for such term
in Section 7.11 of the Participation Agreement.
"Section 1110" means Section 1110 of the Bankruptcy Code.
"Secured Obligations" has the meaning specified in Section 2.06 of
the Indenture.
"Series" means any series of Equipment Notes, including the Series
G-1 Equipment Notes, the Series G-2 Equipment Notes, or the Series C Equipment
Notes.
"Series C Equipment Notes" means Equipment Notes issued and
designated as "Series C Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule I
to the Indenture under the heading "Series C Equipment Notes."
"Series G-1 Equipment Notes" means Equipment Notes issued and
designated as "Series G-1 Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule I
to the Indenture under the heading "Series G-1 Equipment Notes."
"Series G-2 Equipment Notes" means Equipment Notes issued and
designated as "Series G-2 Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule I
to the Indenture under the heading "Series G-2 Equipment Notes."
"State Street" has the meaning specified in the introductory
paragraph of the Participation Agreement.
"Subordination Agent" has the meaning specified in the introductory
paragraph of the Participation Agreement.
"Tax" and "Taxes" mean all governmental fees (including, without
limitation. license, filing and registration fees) and all taxes (including,
without limitation, franchise, excise, stamp, value added, income, gross
receipts, sales, use and property taxes), withholdings, assessments, levies,
imposts, duties or charges, of any nature whatsoever, together with any related
penalties, fines, additions to tax or interest thereon imposed, withheld, levied
or assessed by any country, taxing authority or governmental subdivision thereof
or therein or by any international authority, including any taxes imposed on any
Person as a result of such Person being required to collect and pay over
withholding taxes.
"Transportation Code" means that portion of Title 49 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.
"Trust Supplements" means those agreements supplemental to the Basic
Pass Through Trust Agreement referred to in Schedule II to the Participation
Agreement.
"Underwriters" means the several underwriters listed as such in the
Underwriting Agreement.
"Underwriting Agreement" means that certain Underwriting Agreement,
dated April 23, 2002, among Company and Underwriters.
"United States" means the United States of America.
"U.S. Government Obligations" means securities that are direct
obligations of the United States 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 trust company as custodian with respect
to any such U.S. Government Obligations or a specific payment of interest on or
principal of any such U.S. Government Obligations 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 Obligations or the specific payment of interest on or principal
of the U.S. Government Obligations evidenced by such depository receipt.
"Warranty ▇▇▇▇ of Sale" means the warranty (as to title) ▇▇▇▇ of
sale covering the Aircraft executed by Manufacturer or an affiliate of
Manufacturer in favor of Company and specifically referring to each Engine, as
well as the Airframe, constituting a part of the Aircraft.
"Warranty Rights" means all right and interest of Company in, to and
under Parts 1, 2, 3, 4 and 6 of the Product Assurance Document attached as
Exhibit C to the Aircraft General Terms Agreement AGTA-DAL, dated as of October
21, 1997, but only to the extent the same relate to continuing rights of Company
in respect of any warranty or indemnity, express or implied, pursuant to the
Product Assurance Document with respect to the Airframe, it being understood
that the Warranty Rights exclude any and all other right, title and interest of
Company in, to and under the Purchase Agreement and that the Warranty Rights are
subject to the terms of the Manufacturer's Consent.