EXHIBIT 4(d)(2)
================================================================================
INDENTURE AND SECURITY AGREEMENT
(N3731T)
Dated as of September 17, 2001
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. N3731T
================================================================================
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
the Loan Trustee.............................................
Section 2.16 Directions by Subordination Agent.............................
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 the 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 THE 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 the Loan Trustee................
ARTICLE VI
THE 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 THE 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 the 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 The 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
(N3731T)
This INDENTURE AND SECURITY AGREEMENT (N3731T), dated as of
September 17, 2001, is made by and between DELTA AIR LINES, INC., a Delaware
corporation (together with its successors and permitted assigns, the "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, the "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 the Company
of the Equipment Notes and (ii) the assignment, mortgage and pledge by the
Company to the Loan Trustee, as part of the Collateral hereunder, among other
things, of all of the Company's estate, right, title and interest in and to the
Aircraft, as security for, among other things, the Company's obligations to the
Loan Trustee, for the ratable benefit and security of the Noteholders, subject
to Section 2.13 and Article III;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Company and authenticated and delivered by the Loan Trustee
hereunder, the valid, binding and enforceable obligations of the Company; and
WHEREAS, all things necessary to make this Indenture a legal, valid
and binding obligation of the 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 the Company under the Operative Documents and the performance and
observance by the Company of all the agreements and covenants to be performed or
observed by the Company for the benefit of the Noteholders and the 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 the Loan Trustee, the Noteholders
and the Indenture Indemnitees to the Company at or before the Closing Date, the
receipt of which is hereby acknowledged, the Company does hereby grant, bargain,
sell, convey, transfer, mortgage, assign, pledge and confirm unto the Loan
Trustee and its successors in trust and permitted assigns, for the security and
benefit of the Loan Trustee, the Noteholders and the Indenture Indemnitees, a
first priority security interest in, and mortgage lien on, all estate, right,
title and interest of the 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 the 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 the 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 the Loan Trustee by or for the
account of the Company pursuant to any term of any Operative Document and
held or required to be held by the 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, the Company shall have the right, to the exclusion of the 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 the 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, the Loan Trustee shall not enter into any amendment or
modification of the Purchase Agreement that would alter the rights, benefits or
obligations of the Company thereunder;
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Loan Trustee, and its successors and permitted assigns, in trust for the ratable
benefit and security of the Noteholders and the 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, the 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 the Loan Trustee, any Noteholders or
any Indenture Indemnitee shall be required or obligated in any manner to perform
or fulfill any obligations of the 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 the Company from any of its duties or obligations under the
Purchase Agreement), the Loan Trustee, the Noteholders and the Indenture
Indemnitees confirm for the benefit of the 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 the Manufacturer, shall apply to and be
binding upon the Loan Trustee, the Noteholders and the Indenture Indemnitees to
the same extent as the Company. The Company hereby directs the Manufacturer, so
long as an Event of Default shall have occurred and be continuing, to pay all
amounts, if any, payable to the Company pursuant to the Warranty Rights directly
to the Loan Trustee to be held and applied as provided herein. Nothing contained
herein shall subject the 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 the Manufacturer thereunder except as provided in the
Manufacturer's Consent.
The Company does hereby constitute the Loan Trustee the true and
lawful attorney of the Company (which appointment is coupled with an interest)
with full power (in the name of the 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 the
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 the Loan Trustee may deem to be necessary or advisable in the
premises; provided that the Loan Trustee shall not exercise any such rights
except during the continuance of an Event of Default. The Company agrees that
promptly upon receipt thereof, to the extent required by the Operative
Documents, it will transfer to the Loan Trustee any and all monies from time to
time received by the Company constituting part of the Collateral, for
distribution by the Loan Trustee pursuant to this Indenture.
The 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
the Loan Trustee, except as otherwise provided in or permitted by any Operative
Document.
The Company agrees that at any time and from time to time, upon the
written request of the Loan Trustee, the 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 the 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 the 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 the
Company will not expand any obligations or limit any rights of the 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
shall 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 2001-1 [___] EQUIPMENT NOTE DUE [___]
ISSUED IN CONNECTION WITH THE BOEING 737-832 AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N3731T
No.____ Date: [______,__]
$________________
INTEREST RATE MATURITY DATE
[____] [___________,_____]
DELTA AIR LINES, INC. (together with its successors and permitted
assigns, the "Company") hereby promises to pay to ___________, or the registered
assignee thereof, the principal amount of ________________ Dollars ($_________)
[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 (N3731T), dated as of September 17, 2001, between the Company
and State Street Bank and Trust Company of Connecticut, National Association, as
Loan Trustee (the "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 the 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 the Loan Trustee,
or as otherwise provided in the Indenture. The Company shall not have any
responsibility for the distribution of any such payment to the 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 the 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 the Company pursuant to the
terms of the Indenture. The Collateral is held by the 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, the Company
and the 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 the Company nor
the 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.
The indebtedness evidenced by this Equipment Note [shall rank in
right of payment equally with all Series A-2 Equipment Notes and all other
Series A-1 Equipment Notes.](3) [shall rank in right of payment equally with all
Series A-1 Equipment Notes and all other Series A-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 A-1 Equipment Notes and Series
A-2 Equipment Notes](5) [Series A-1 Equipment Notes, Series A-2 Equipment Notes
and Series B Equipment Notes](6) [Series A-1 Equipment Notes, Series A-2
Equipment Notes, Series B Equipment Notes and Series C Equipment Notes](7), and
this Equipment Note is issued subject to such provisions.](8) The Noteholder of
this Equipment Note, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the 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 the
Loan Trustee such Noteholder's attorney-in-fact for such purpose.
[Without limiting the foregoing, the](9) [The](10) 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 the Loan Trustee and forthwith turn over such
amount to the 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 the 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.
----------
(3) To be inserted in the case of a Series A-1 Equipment Note.
(4) To be inserted in the case of a Series A-2 Equipment Note.
(5) To be inserted in the case of a Series B Equipment Note.
(6) To be inserted in the case of a Series C Equipment Note.
(7) To be inserted in the case of a Series D Equipment Note.
(8) To be inserted in the case of a Series B Equipment Note, a Series C
Equipment Note or a Series D Equipment Note.
(9) To be inserted in the case of a Series B Equipment Note, a Series C
Equipment Note or a Series D Equipment Note.
(10) To be inserted in the case of a Series A-1 Equipment Note or a Series A-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, the 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(11)
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) five
separate series consisting of Series A-1 Equipment Notes, Series A-2 Equipment
Notes, Series B Equipment Notes, Series C Equipment Notes and Series D 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 A-1 Equipment Note, Series A-2 Equipment Note, Series B Equipment Note,
Series C Equipment Note and Series D Equipment Note shall be issued to the
Subordination Agent on behalf of each of the 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.
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 A-1 Equipment Note shall be payable in installments on the
Payment Dates set forth in Schedule I to such Equipment Note, each such
installment to be in an amount computed by multiplying the original principal
amount of such Equipment Note by the percentage set forth in Schedule I hereto,
the applicable portion of which shall be attached as Schedule I to such
Equipment Note, opposite the Payment Date on which such installment is due. The
principal amount of each Series A-2 Equipment Note and Series B Equipment Note
shall be due in a single payment on September 18, 2011. The principal amount of
each Series C Equipment Note shall be due in a single payment on September 18,
2006. The principal amount of each Series D Equipment Note shall be due in a
single payment on September 18, 2006. Notwithstanding the foregoing, the final
payment made under each Series A-1 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.
----------
(11) To be inserted on installment Equipment Notes.
The Equipment Notes shall be executed on behalf of the 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 the Company shall bind the 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 the 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 the 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 the Loan Trustee at the Corporate Trust
Office for distribution among the Noteholders in the manner provided herein. The
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, the 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 the Company), all amounts paid by the 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 the
Subordination Agent on behalf of the Pass Through Trustees, the Loan Trustee may
at its option pay such amounts by check mailed to the 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, the Loan Trustee fails (other than as a result of a failure of the
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, the 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 the 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 the Loan Trustee for cancellation. Notwithstanding any
other provision of this Indenture to the contrary, the 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 the 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. The 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.
The 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 the 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 the Company) appropriate documentation showing the payment thereof,
together with such additional documentary evidence as any such Noteholder may
reasonably request from time to time. The 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 the Company (collectively, "Secured Obligations") have been paid in full.
Section 2.07 Registration, Transfer and Exchange of Equipment Notes.
The Loan Trustee shall keep a register or registers (the "Equipment Note
Register") in which the 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 the Loan Trustee. The 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 the 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, the
Company shall execute, and the 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 the 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 the
Loan Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so
surrendered for exchange, the Company shall execute, and the Loan Trustee shall
authenticate and deliver, the Equipment Notes which the 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 the 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 the Loan Trustee, duly executed by the Noteholder or such
Noteholder's attorney duly authorized in writing, and the 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. The 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. The 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. The Company and the
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 the Company nor the Loan Trustee shall be
affected by any notice to the contrary. The Loan Trustee will promptly notify
the 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 the Noteholders, including the Pass Through Trustees, in the
Participation Agreement. Subject to compliance by the Noteholder and any
transferee of the requirements set forth in this Section 2.07 and in Section
2.09, the Loan Trustee and the 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, the 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 the 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 the Loan Trustee, and a photocopy thereof shall be furnished to
the Company. If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to the Company and the
Loan Trustee such security or indemnity as may be required by them to save the
Company and the Loan Trustee harmless and evidence satisfactory to the Company
and the 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 the 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) The 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 the Company.
Section 2.10 Mandatory Redemption of Equipment Notes. The 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 the 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 the Company
upon at least 20 days' revocable prior written notice to the 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 the 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, the 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 the Loan Trustee for cancellation.
(b) Notice of redemption with respect to the Equipment Notes shall
be given by the 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, the Company (or any person on
behalf of the 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 the 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
the 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 A-1 Equipment Notes and Series A-2 Equipment Notes shall rank in right of
payment equally with all other Series A-1 Equipment Notes and Series A-2
Equipment Notes. The indebtedness evidenced by the Series B 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 A-1 Equipment Notes and Series A-2
Equipment Notes, and the Series B Equipment Notes are issued subject to such
provisions. 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 A-1 Equipment Notes, the Series A-2 Equipment Notes and
the Series B Equipment Notes, and the Series C Equipment Notes are issued
subject to such provisions. The indebtedness evidenced by the Series D 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 A-1 Equipment Notes, the Series A-2
Equipment Notes, the Series B Equipment Notes and the Series C Equipment Notes,
and the Series D 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
the 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 the Loan Trustee as such Noteholder's attorney-in-fact for such
purpose.
(b) The Company, the 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 the
Loan Trustee and forthwith turn over such amount to the Loan Trustee in the form
received to be applied as provided in Article III.
Section 2.14 Certain Payments. The Company agrees to pay to the Loan
Trustee for distribution in accordance with Section 3.04:
(a) an amount or amounts equal to the fees payable to the 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 A-1 Equipment Notes, Series A-2 Equipment Notes, Series B
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 A-1
Equipment Notes," "Series A-2 Equipment Notes," "Series B 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 A-1 Equipment Note, Series A-2 Equipment
Note, Series B 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
the Company in respect of the overdue scheduled interest on the Equipment Notes
in respect of which such Unpaid Advance or Applied Provider Advance was made,
multiplied by (y) a fraction, the numerator of which is the then aggregate
overdue amounts of interest on the Series A-1 Equipment Notes, Series A-2
Equipment Notes, Series B 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 A-1 Equipment Notes", "Series ▇- ▇ Equipment
Notes", "Series B 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 the Liquidity Provider by the 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 (or
similar provisions of any Replacement 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 the
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 the Company in
respect of such compensation under any other Operative Document or Pass Through
Document); and
(e) (x) the excess, if any, of (1) an amount equal to the interest
on any Unapplied Downgrade Advance payable under Section 3.07 of each Liquidity
Facility over (2) the Investment Earnings from any such Unapplied Downgrade
Advance, multiplied by (y) the fraction specified in the foregoing clause (a).
For purposes of this paragraph, the terms "Advance", "Applied
Provider Advance", "Cash Collateral Account", "Final Advance", "Investment
Earnings", "Replacement Liquidity Facility", "Unapplied Downgrade Advance" 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
the Loan Trustee. Any money held by the 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 the Loan
Trustee is satisfied, after 60 days' notice from the Company, is one month prior
to the escheat period provided under applicable state law) shall be paid to the
Company. The Noteholders of any outstanding Equipment Notes shall thereafter, as
unsecured general creditors, look only to the Company for payment thereof, and
all liability of the Loan Trustee with respect to such trust money shall
thereupon cease. The Loan Trustee, before being required to make any such
repayment, may at the expense of the 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 the Company as
provided herein.
Section 2.16 Directions by Subordination Agent. So long as the
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, the 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. The 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 the 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.
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 the Company of regularly
scheduled installments of principal or interest on the Equipment Notes received
by the 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 A-1 Equipment Notes and
Series A-2 Equipment Notes shall be distributed to the Noteholders of
Series A-1 Equipment Notes and Series A-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 A-1 Equipment Note or
Series A-2 Equipment Note bears to the aggregate amount of the payments
then due under all Series A-1 Equipment Notes and Series A-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 B Equipment Notes shall be distributed to the
Noteholders of Series B 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 B Equipment Note bears to the
aggregate amount of the payments then due under all Series B Equipment
Notes;
THIRD, after giving effect to clause "second" 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 any other overdue amounts)
then due under all Series C Equipment Notes shall be distributed to the
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;
FOURTH, after giving effect to clause "third" 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 any other overdue amounts)
then due under all Series D Equipment Notes shall be distributed to the
Noteholders of Series D 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 D Equipment Note bears to the
aggregate amount of the payments then due under all Series D Equipment
Notes; and
FIFTH, the balance, if any, of such installment remaining thereafter
shall be distributed to the 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 the Loan Trustee with respect to the Aircraft as the result
of (a) an Event of Loss (including amounts paid by the 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 the Loan Trustee and the Noteholders for any
reasonable costs or expenses actually incurred in connection with such
redemption for which they are entitled to reimbursement, or indemnity by
the Company, under the Operative Documents; and then (ii) to pay any other
amounts then due (except as provided in clause "second" below) to the Loan
Trustee, the Noteholders and the 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 A-1 Equipment Notes and the Series A-2
Equipment Notes; (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 B Equipment Notes; (iii) after giving effect to subclause (ii)
above, to pay the amounts specified in subclause (iii) 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 (iv) after giving effect to
subclause (iii) above, to pay the amounts specified in subclause (iv) of
clause "third" of Section 3.03 plus Make-Whole Amount, if any, then due
and payable in respect of the Series D Equipment Notes; and
THIRD, the balance, if any, of such payments shall be distributed to
the Company.
Notwithstanding the foregoing, any insurance, condemnation or similar proceeds
resulting from an Event of Loss that are received by the Loan Trustee shall be
held or disbursed by the Loan Trustee as provided by Sections 7.05(c) and
7.06(d). Any such money held by the 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
the Loan Trustee (including any amounts realized by the 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 the Loan Trustee as part of the Collateral, shall be promptly
distributed by the Loan Trustee in the following order of priority:
FIRST, so much of such payments or amounts as is required to (i)
reimburse the Loan Trustee, to the extent the 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 the 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 the Loan Trustee or the Noteholders in the protection, exercise or
enforcement of any right, power or remedy or any damages sustained by the
Loan Trustee or any Noteholder, liquidated or otherwise, upon such Event
of Default shall be applied by the Loan Trustee as between itself and the
Noteholders in reimbursement of such expenses and any other expenses for
which the Loan Trustee or the 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 A-1 Equipment Notes and Series A-2 Equipment Notes and the accrued
but unpaid interest and all other Secured Obligations in respect of the
Series A-1 Equipment Notes and Series A-2 Equipment Notes to the date of
distribution shall be distributed to the Noteholders of Series A-1
Equipment Notes and Series A-2 Equipment Notes ratably, without priority
of one over the other, in the proportion that the aggregate unpaid
principal amount of all Series A-1 Equipment Notes and Series A-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
A-1 Equipment Notes and Series A-2 Equipment Notes held by all such
Noteholders plus the accrued but unpaid interest and other amounts due
thereon to the date of distribution; (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 B
Equipment Notes and the accrued but unpaid interest and all other Secured
Obligations in respect of the Series B Equipment Notes to the date of
distribution shall be distributed to the Noteholders of Series B Equipment
Notes ratably, without priority of one over the other, in the proportion
that the aggregate unpaid principal amount of all Series B 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 B Equipment Notes held
by all such Noteholders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; (iii) after giving effect
to subclause (ii) 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 the 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
(iv) after giving effect to subclause (iii) above, so much of such
payments or amounts remaining as is required to pay in full the aggregate
unpaid principal amount of all Series D Equipment Notes and the accrued
but unpaid interest and all other Secured Obligations in respect of the
Series D Equipment Notes to the date of distribution shall be distributed
to the Noteholders of Series D Equipment Notes, ratably, without priority
of one over the other, in the proportion that the aggregate unpaid
principal amount of all Series D 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 D 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 the 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 the 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 the Loan
Trustee which are payable to the 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 the Company. Any
payments received by the 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) The Loan Trustee will distribute promptly upon receipt any
indemnity payment received by it from the Company pursuant to Section 4.02 of
the Participation Agreement in respect of (i) State Street and the Loan Trustee,
(ii) the Subordination Agent, (iii) the Pass Through Trustees and (iv) the
Liquidity Provider, in each case, directly to the Person entitled thereto. Any
payment received by the Loan Trustee from the Company under Section 2.14 shall
be distributed to the Subordination Agent to be distributed in accordance with
Section 2.03(c) of the Intercreditor Agreement.
(c) Any payments received by the 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 the Loan
Trustee to the Company. Further, and except as otherwise provided in Sections
3.02, 3.03 and 3.04, all payments received and amounts realized by the 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 the
Loan Trustee to the Company.
Section 3.05 Payments to the Company. Any amounts distributed
hereunder by the Loan Trustee to the Company shall be paid to the Company
(within the time limits contemplated by Section 2.03(a)) by wire transfer of
funds of the type received by the Loan Trustee at such office and to such
account or accounts of such entity or entities as shall be designated by notice
from the Company to the 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) the 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) the 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 the Company of written
notice thereof from the Loan Trustee or any Noteholder;
(c) the 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
shall have continued unremedied for a period of 30 days after receipt by the
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 the Loan Trustee;
(d) the 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 the Company of written notice thereof from the 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 the Company so long as the Company is diligently
proceeding to remedy such failure;
(e) any representation or warranty made by the 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 the
Company of written notice thereof from the 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 the Company so long as the Company is diligently proceeding to
remedy such incorrectness;
(f) the 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) the 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 the Company as a debtor in any such case, or the 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 the
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 the Company, a
receiver, trustee or liquidator of the Company or sequestering any substantial
part of its property, or granting any other relief in respect of the 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 the 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 the Company, any court of competent jurisdiction assumes
jurisdiction, custody or control of the 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 the 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 the 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 the Loan Trustee may, and upon the written instructions of a
Majority in Interest of Noteholders, the 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, the 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 the 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 the Loan Trustee by
registered or certified mail to the 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 the Company (or such Permitted Lessee) relating to the Aircraft):
(i) declare by written notice to the 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 the Company, upon the demand by notice of the Loan
Trustee, at the Company's expense, to deliver promptly, and the Company
shall deliver promptly, all or such part of the Airframe or any Engine as
the Loan Trustee so demands to the Loan Trustee or its order, or, if the
Company has failed to so deliver the Airframe or any Engine after such
demand, the 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 the Company, may at the option of the Company with the consent of
the Loan Trustee (which will not be unreasonably withheld) or at the
option of the Loan Trustee with the consent of the Company (which will not
be unreasonably withheld), be exchanged with the 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 the Loan Trustee at the time has possession thereof, as the 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
the Loan Trustee, in its sole discretion, determines, all free and clear
of any rights or claims of the 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, the 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, the Loan Trustee may maintain,
use, operate, store, lease, control or manage the Collateral and may exercise
all rights and powers of the Company relating to the Collateral as the 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 the Loan Trustee may reasonably determine; and the 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 the 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 the 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 the 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 the Loan
Trustee is entitled to exercise rights hereunder, at the request of the Loan
Trustee, the Company shall promptly execute and deliver to the Loan Trustee such
instruments of title and other documents as the Loan Trustee reasonably deems
necessary or advisable to enable the Loan Trustee or an agent or representative
designated by the Loan Trustee, at such time or times and place or places as the
Loan Trustee specifies, to obtain possession of all or any part of the
Collateral to which the Loan Trustee at the time is entitled hereunder. If the
Company for any reason fails to execute and deliver such instruments and
documents after such request by the Loan Trustee, the Loan Trustee may obtain a
judgment conferring on the Loan Trustee the right to immediate possession and
requiring the Company to execute and deliver such instruments and documents to
the Loan Trustee, to the entry of which judgment the Company hereby specifically
consents to the fullest extent it may lawfully do so.
(b) The Loan Trustee shall give the 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 the 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). The Loan Trustee may exercise such right without possession or
production of the Equipment Notes or proof of ownership thereof, and as a
representative of the Noteholders may exercise such right without notice to the
Noteholders as parties to any suit or proceeding relating to the foreclosure of
any Collateral. The 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, the Company irrevocably appoints the
Loan Trustee the true and lawful attorney-in-fact of the 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, the 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 the Loan
Trustee or any purchaser, the Company shall ratify and confirm any such sale,
assignment or transfer of delivery, by executing and delivering to the 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 the 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 the Company and the
Loan Trustee, may rescind and annul such declaration, whether made by the Loan
Trustee on its own accord or as directed, and its consequences if: (i) there has
been paid to or deposited with the 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 the Pass
Through Trustee under any Pass Through Trust Agreement or the Subordination
Agent on its behalf is a Noteholder, the 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 the
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 the 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 the 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 the Company or to be an acquiescence
therein.
Section 4.04 Discontinuance of Proceedings. In case the 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
the Loan Trustee, then and in every such case the Company and the 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 the 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, the 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, the 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
the Loan Trustee of a continuing Event of Default;
(2) A Majority in Interest of Noteholders shall have requested the
Loan Trustee in writing to institute such action, suit or proceeding and
shall have offered to the Loan Trustee indemnity as provided in Section
5.03;
(3) the 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 the 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
the 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 the
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 the Noteholders
of such Series subject to the provisions of this Indenture.
ARTICLE V
DUTIES OF THE LOAN TRUSTEE
Section 5.01 Notice of Event of Default. If the Loan Trustee has
knowledge of an Event of Default or of a default arising from a failure by the
Company to pay when due any payment of principal amount, interest or Make-Whole
Amount, if any, due and payable under any Equipment Note, the Loan Trustee shall
promptly give notice thereof to the 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, the Loan Trustee shall be protected in withholding the notice to
the Noteholders required in the foregoing part of this sentence if and so long
as the executive committee or trust committee of directors of the Loan Trustee
and/or trust officers thereof in good faith determine that withholding such
notice is in the interest of the Noteholders. Subject to the terms of Sections
4.02, 4.05, 5.02 and 5.03, the 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 the Loan Trustee
is instructed in writing by a Majority in Interest of Noteholders. Subject to
the provisions of Section 5.03, if the Loan Trustee does not receive
instructions as above provided within 20 Business Days after giving notice of
such Event of Default to the Noteholders, the 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 the 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. The 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, the Loan Trustee shall not be deemed to have knowledge of a default
or an Event of Default unless notified in writing by the Company or one or more
Noteholders; and "actual knowledge" (as used in the foregoing clause) of the
Loan Trustee shall mean actual knowledge of an officer in the Corporate Trust
Division of the Loan Trustee; provided, however, that the Loan Trustee is deemed
to have actual knowledge of (i) the failure of the Company to pay any principal
amount of, or interest on, the Equipment Notes directly to the Loan Trustee when
the same shall become due or (ii) the failure of the Company to maintain
insurance as required under Section 7.06 if the 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, the
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.
The Loan Trustee will cooperate with the 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. The Loan Trustee shall furnish to the Company upon
request such information and copies of such documents as the Loan Trustee may
have and as are necessary for the Company to perform its duties under Article II
hereof.
Section 5.03 Indemnification. The 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. The 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 the Loan Trustee to take any action, if the 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. The 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 the Loan Trustee.
Section 5.05 No Action Except under Indenture or Instructions. The
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, the Loan Trustee pursuant to this Indenture and in accordance with the
express terms hereof.
Section 5.06 Investment of Amounts Held by the Loan Trustee. Any
monies (including for the purpose of this Section 5.06 any cash deposited with
the Loan Trustee by the Company, any cash received by the 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 the Loan Trustee hereunder as part of the Collateral, until
paid out by the Loan Trustee as herein provided, (i) subject to clause (ii)
below, may be carried by the 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 the Loan Trustee shall not have any liability for
interest upon any such monies except as otherwise agreed in writing with the
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 the 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 the
Loan Trustee in trust as part of the Collateral until so sold; provided that the
Company shall upon demand pay to the 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, the Company shall be entitled to receive from the
Loan Trustee, and the Loan Trustee shall promptly pay to the 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 the 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.
The 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 the 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 the 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 the Loan Trustee shall be
released to the Company on such 90th day, or on the next Business Day after such
90th day.
ARTICLE VI
THE 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, the 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 the Company is in default with respect
thereto, (c) to confirm, verify or inquire into the failure to receive any
financial statements of the Company or (d) to inspect the Aircraft at any time
or ascertain or inquire as to the performance or observance of any of the
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 V of the Participation Agreement, the 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 the Loan Trustee) contained herein or therein, except that the 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 the 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 the Loan Trustee nor any
agent of the 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 the Loan Trustee shall be accounted for by the 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. The 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. The
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, the Loan Trustee
may for all purposes hereof rely on a certificate, signed by a duly authorized
officer of the Company, as to such fact or matter, and such certificate shall
constitute full protection to the 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, the Loan Trustee may, with the consent of the 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. The 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 the 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, the 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 the Loan Trustee's duties
or obligations hereunder be unclear, and the Loan Trustee shall incur no
liability in refraining from acting until it receives such instructions. The
Loan Trustee shall be fully protected for acting in accordance with any
instructions received under this Section 6.06.
ARTICLE VII
OPERATING COVENANTS OF THE COMPANY
Section 7.01 Liens. The 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 the Loan Trustee and the 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 the 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 the 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 the Company provides a
bond, cash collateral or other security adequate in the reasonable opinion of
the Loan Trustee;
(h) salvage or similar rights of insurers under insurance policies
maintained by the Company; and
(i) Liens approved in writing by the Loan Trustee with the consent
of a Majority in Interest of the Noteholders.
Liens described in clauses (a) through (i) above are referred to herein as
"Permitted Liens". The 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. The Company shall not, without the prior written
consent of the Loan Trustee, 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 the Company may without the prior written consent of the 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 the Company 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 the 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 the Company shall 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, maintenance, overhaul work 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 the Airframe or any Engine to the CRAF Program or
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 the Company (A) shall promptly notify
the 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 the 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 the 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 the Company (or any
Permitted Lessee) or purchased or owned by the 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) the Company shall have 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 the Loan Trustee (it
being understood that an agreement from such lessor or secured party
substantially in the form of the final sentence of the penultimate
paragraph of this Section 7.02(a) shall be deemed to be satisfactory to
the 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 the installation thereof on such airframe;
(vii) install an Engine on an airframe owned by the Company (or any
Permitted Lessee), leased to the Company (or any Permitted Lessee) or
purchased by the 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 the Company shall comply with Section 7.05(b)
in respect thereof, if such installation adversely affects the Loan
Trustee's security interest in such Engine, the 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 the 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 and (C) any foreign air carrier
consented to in writing by the 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, the 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 and (2) an opinion of
counsel to the Company (such counsel to be reasonably satisfactory to the
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 the 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
the Loan Trustee in accordance with and when permitted by the terms of
Section 4.02 upon the exercise by the 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 the Loan Trustee's rights to repossess pursuant to Section
4.02 and to avoid such lease upon such repossession, and the 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 the Company with respect to
the Aircraft hereunder. The Company shall promptly notify the Loan Trustee and
the Rating Agencies of the existence of any such lease with a term in excess of
one year.
The Loan Trustee, and each Noteholder by acceptance of an Equipment
Note, agrees, for the benefit of the Company (and any Permitted Lessee) and for
the benefit of the lessor or secured party of any airframe or engine leased to
the Company (or any Permitted Lessee) or purchased or owned by the Company (or
any Permitted Lessee) subject to a conditional sale or other security agreement,
that the Loan Trustee and the Noteholders will not acquire or claim, as against
the Company (or any Permitted Lessee) or such lessor or secured party, any
right, title or interest in: (A) any engine or engines owned by the 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 the 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.
The Loan Trustee acknowledges that any "wet lease" or other similar
arrangement under which the Company 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. The 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 the 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 the
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). The 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 the 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 the Company is using its good faith efforts to remove the
Aircraft from such area as promptly as practicable.
(c) Maintenance. The 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 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. The 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. The 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. The Company shall cause the Aircraft to remain
duly registered, under the laws of the United States, in the name of the Company
except as otherwise required by the Transportation Code; provided that the Loan
Trustee shall, at the Company's expense, execute and deliver all such documents
as the Company may reasonably request for the purpose of continuing such
registration. Notwithstanding the preceding sentence, the 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 the Company or of any nominee of the 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 the Loan Trustee with the consent of a Majority in Interest of the
Noteholders (i) if such jurisdiction is at the time of registration listed on
Exhibit B, the Loan Trustee shall have received at the time of such registration
an opinion of counsel to the Company to the effect that (A) this Indenture and
the 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) the Loan Trustee shall have received a certificate from a
Responsible Officer of the 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 the Loan Trustee subsequent to the
effective date of such change in registration), (C) the obligations of the
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, the 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 the 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 the 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 the Loan Trustee is provided, at the Company's expense, to cover
such risk) and (D) (unless the 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. The Loan Trustee
will cooperate with the 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) the Loan Trustee shall have received evidence of compliance
with the insurance provisions contained herein after giving effect to such
change in registration; and
(iii) the Company shall have paid or made provision reasonably
satisfactory to the Loan Trustee for the payment of all reasonable
expenses (including reasonable attorneys' fees) of the Loan Trustee and
the 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 the Company, the Loan Trustee or its authorized representative may, subject
to the other conditions of this Section 7.03(a), inspect the Aircraft and may
inspect the books and records of the 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) such
Loan Trustee or its representative, as the case may be, shall be fully insured
at no cost to the Company in a manner satisfactory to the Company with respect
to any risks incurred in connection with any such inspection or shall provide to
the Company a written release satisfactory to the Company with respect to such
risks, (ii) any such inspection shall be during the 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 the Company's
express consent, which consent the 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, the Company and
the 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 the Loan Trustee and its
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 the Loan Trustee (or its representative) making such inspection.
Except during the continuance of an Event of Default, all inspections by the
Loan Trustee and its 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, the Company agrees to furnish to the Loan Trustee and the
Liquidity Provider: (i) within 60 days after the end of each of the first three
quarterly periods in each fiscal year of the Company, either (x) a consolidated
balance sheet of the 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 the 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 the Company, either
(x) a consolidated balance sheet of the 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 the Company on Form 10-K in respect of
such year in the form filed with the Securities and Exchange Commission. The
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.
The Company shall promptly replace or cause to be replaced all Parts that may
from time to time be incorporated or installed in or attached to the Airframe or
any Engine and that may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or rendered permanently
unfit for use for any reason whatsoever, 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, the 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 the
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), all Parts at any
time removed from the Airframe or any Engine shall remain subject to the Lien of
this Indenture no matter where located until such time as such Parts shall be
replaced by parts that have been incorporated or installed in or attached to the
Airframe or such Engine and that meet the requirements for replacement Parts
specified above. Immediately upon any replacement Part becoming incorporated or
installed in or attached to the Airframe or any Engine as above provided (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 the 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 the Company from time to time, the Loan Trustee shall
execute and deliver to the 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 the Company or a
Person permitted to be in possession of the Aircraft to a pooling arrangement
entered into in the ordinary course of the 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 the Company, at its expense, as
promptly thereafter as practicable either (i) causes title to such replacement
Part to vest in the 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. The Company will make
(or cause to be made) such alterations and modifications in and additions to the
Airframe and the Engines as may be 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 may then be registered; provided, however,
that the 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 the Loan Trustee's
interest in the Aircraft. In addition, the 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 the Company (or any Permitted Lessee) may deem
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 the
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, the 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 the 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) or (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 the 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 the Loan Trustee and the
Lien of this Indenture and shall no longer be deemed a Part hereunder. Upon
request of the Company from time to time, the Loan Trustee shall execute and
deliver to the Company an appropriate instrument confirming the release of any
such removed Part from the Lien of this Indenture.
(d) Substitution of Engines. The Company shall have the right at its
option at any time, on at least 30 days' prior written notice to the Loan
Trustee, to substitute a Replacement Engine for any Engine. In such event, and
prior to the date of such substitution, the 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,
the Company shall as soon as practicable (and, in any event, within 30 days
after an Event of Loss has occurred) notify the Loan Trustee of such Event of
Loss, and, within 90 days after such Event of Loss, the Company shall give the
Loan Trustee written notice of its election to perform one of the following
options (it being agreed that if the Company has not given such notice of
election within such 90-day period, the Company shall be deemed to have elected
to perform the option set forth in the following clause (ii)). The 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 the Company
free and clear of all Liens (other than Permitted Liens); provided that if
the Company shall not perform its obligation to effect such substitution
under this clause (i) on or prior to the Loss Payment Date, then the
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. The Company shall give the 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 the Company elects to substitute a Replacement Airframe (or a
Replacement Airframe and one or more Replacement Engines, as the case may be)
the 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 the 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 may then
be 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 the Loan Trustee's interest therein in the United States, or in
any other jurisdiction in which the Aircraft may then be registered, (C) furnish
the Loan Trustee with an opinion of the Company's counsel (which may be internal
counsel of the Company) addressed to the 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 the 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 the 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 the Loan Trustee with an
opinion of the Company's counsel (which may be internal counsel of the Company)
to the effect that the 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 the 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 the 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
shall at the time be 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 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), the Company will cause to be delivered to the Loan Trustee a
favorable opinion of FAA counsel selected by the 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 the Company, which counsel shall
be reasonably satisfactory to the Loan Trustee) addressed to the 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 the 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), the Loan Trustee shall execute and
deliver to the 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 the 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, the Company performs the option set
forth in clause (ii) of the first paragraph of this Section 7.05(a), the Loan
Trustee shall execute and deliver to the 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 the
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, the Company
shall give the 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), the Company will (i) cause an Indenture Supplement covering such
Replacement Engine to be delivered to the 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 may be
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 the Loan Trustee's
interest therein in the United States, or in such other jurisdiction in which
the Engine may then be registered, (iii) furnish the Loan Trustee with an
opinion of the Company's counsel (which may be internal counsel to the Company)
addressed to the Loan Trustee to the effect that, upon such replacement, the
Replacement Engine will be subject to the Lien of this Indenture, (iv) furnish
the Loan Trustee with a certificate of an aircraft engineer or appraiser (who
may be an employee of the 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 the 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), the Company will cause to be delivered to the Loan Trustee an
opinion of FAA counsel selected by the 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 the Company, which counsel shall be reasonably
satisfactory to the Loan Trustee) addressed to the 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 the 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, the Loan Trustee shall execute and deliver to
the 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 the 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 the Company or by
the 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 the Company pursuant to Section 7.05(a), such payments
shall be paid over to, or retained by, the Loan Trustee and upon
completion of such replacement shall be paid over to, or retained by, the
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 the Loan Trustee for costs and
expenses that shall not exceed the amounts required to be paid to the
Noteholders pursuant to Section 2.10 shall be applied in reduction of the
Company's obligation to pay such amounts, if not already paid by the
Company, or, if already paid by the Company, shall be applied to reimburse
the 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,
the Company; and
(iii) if such payments are received with respect to an Engine with
regard to which an Event of Loss has occurred as contemplated by Section
7.05(b), so much of such payments remaining after reimbursement of the
Loan Trustee for costs and expenses shall be paid over to, or retained by,
the Company; provided that the 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 the 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, the Company's obligations other than payment
obligations shall only continue to the extent feasible. All payments received by
the Company or the Loan Trustee from such government for such use of the
Airframe and Engines or engines shall be paid over to, or retained by, the
Company.
(e) Requisition for Use by the Government of an Engine not Installed
on the Airframe. In the event of the requisition for use by any government of
any Engine not then installed on the Airframe for a period in excess of sixty
(60) days, the 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 the
Company or the Loan Trustee from such government with respect to such
requisition shall be paid over to, or retained by, the 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 the
Company shall not be paid to or retained by the Company if at the time of such
payment or retention an Event of Default or Payment Default shall have occurred
and be continuing, but shall be held by or paid over to the Loan Trustee as
security for the obligations of the Company under this Indenture. At such time
as there shall not be continuing any such Event of Default or Payment Default,
such amount shall be paid to the 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
the Company to establish and maintain self-insurance in the manner and to the
extent specified in Section 7.06(c), the Company will carry, or cause to be
carried, at no expense to the 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 the Company's fleet on which the Company carries
insurance; provided that such liability insurance shall not be less than the
amount certified in the insurance report delivered to the Loan Trustee on the
Closing Date, (B) of the type covering the same risks as from time to time
applicable to aircraft operated by the 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 the Loan Trustee, the Subordination Agent, each Pass Through Trustee and
the 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 the 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 the 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 the Loan Trustee and the 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 the 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 that may be carried by each 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 the Company, or an insurance policy issued by such
government, against any of the risks that the Company is required hereunder to
insure against 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, the 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 the 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 shall be applicable to airframes or engines operated by the
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 the
Company to establish and maintain self-insurance in the manner and to the extent
specified in Section 7.06(c), the Company shall maintain, or cause to be
maintained, in effect with insurers of recognized responsibility, at no expense
to the 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 the Company (or, if a Lease is then in effect, by the
Permitted Lessee) with respect to other similar aircraft operated by the 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 the 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 the 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 the
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 the Loan Trustee (as
provided for in this sentence) during the period commencing on the day following
the date of such payment to the 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 the Loan Trustee as long as the Indenture shall not have been
discharged, and that all other amounts shall be payable to the Company, unless
the insurer shall have 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 the 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 the Company and shall insure the Additional Insureds'
Interests as they appear, regardless of any breach or violation by the Company
of any warranty, declaration or condition contained in such policies, (C)
provide that if such insurance is canceled for any reason whatsoever, 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 the Loan Trustee and the 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 the 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 that may be 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 the
Company, or an insurance policy issued by such government, against any risks
which the 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, the 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
the 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), the 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. The 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 the
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 the 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 the Company may
self-insure the Aircraft to such higher level. In addition to the foregoing
right to self-insure, the 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 or hull liability insurers.
(d) Application of Insurance Payments. All losses will be adjusted
by the Company with the insurers. As between the Loan Trustee and the Company it
is agreed that all insurance payments received under policies required to be
maintained by the 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 the Company pursuant to Section 7.05(a), such payments
shall be paid over to, or retained by, the Loan Trustee and upon
completion of such replacement shall be paid over to, or retained by, the
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 the Loan Trustee for its
costs and expenses as do not exceed the amounts required to be paid by the
Company pursuant to Section 2.10 shall be applied in reduction of the
Company's obligation to pay such amounts, if not already paid by the
Company, or, if already paid by the Company, shall be applied to reimburse
the 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,
the Company; and
(iii) if such payments are received with respect to an Engine, so
much of such payments remaining after reimbursement of the Loan Trustee
for its costs and expenses shall be paid over to, or retained by, the
Company; provided that the Company shall have 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 the Company in excess of the Loan Amount
for the Aircraft shall be paid to the 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 the 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 the 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 the Company shall not be paid to the
Company (or, if it has been previously paid directly to the Company, shall not
be retained by the Company) if at the time of such payment an Event of Default
or Payment Default shall have occurred and be continuing, but shall be paid to
and held by the Loan Trustee as security for the obligations of the Company
under this Indenture, and at such time as there shall not be continuing any such
Event of Default or Payment Default, such amount shall, to the extent not
theretofore applied as provided herein, be paid to the Company.
(e) Reports, Etc. On or before the Closing Date and annually upon
renewal of the Company's insurance coverage, the Company will furnish to the
Loan Trustee and the Liquidity Provider a report signed by a firm of independent
aircraft insurance brokers appointed by the Company (which brokers may be in the
regular employ of the Company), stating the opinion of such firm that the
insurance then carried and maintained on the Aircraft complies with the terms
hereof; provided that all information contained in such report shall be
Confidential Information and shall be treated by the Loan Trustee and the
Liquidity Provider and each of their affiliates and officers, directors, agents
and employees in accordance with the provisions of Section 10.16. The Company
will cause such firm to notify the Loan Trustee and the Liquidity Provider of
any act or omission on the part of the Company of which such firm has knowledge
that might invalidate or render unenforceable, in whole or in part, any
insurance on the Aircraft. The Company will also cause such firm to notify the
Loan Trustee and the 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 the Company's insurers at all times, and any
insurance policies of the Loan Trustee insuring the Airframe or any Engine shall
provide for a release to the Company of any and all salvage rights in and to the
Airframe or any Engine. Neither the 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 the
Company's fleet.
ARTICLE VIII
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01 Resignation or Removal; Appointment of Successor. (a)
The resignation or removal of the 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. The 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 the
Company and each Noteholder. In addition, either the 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 the Company so
long as no Event of Default or Payment Default shall have occurred and be
continuing), may at any time remove the Loan Trustee without cause by an
instrument in writing delivered to the Loan Trustee and each Noteholder, and, in
case of a removal by a Majority in Interest of Noteholders, to the Company. In
the case of the resignation or removal of the Loan Trustee, the 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, the
Loan Trustee, the 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 the Company an instrument accepting
such appointment and assuming the obligations of the 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 the
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 the 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 the Loan Trustee ceases to be eligible in accordance with the provisions of
this Section 8.01(c), the Loan Trustee shall resign immediately in the manner
and with the effect specified in Section 8.01(a).
(d) Any corporation into which the 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 the Loan Trustee is a
party, or any corporation to which substantially all the corporate trust
business of the 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) the 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) the Loan Trustee
shall be advised by counsel satisfactory to it that it is necessary or prudent
in the interests of the Noteholders (and the Loan Trustee shall so advise the
Company) or (iii) the Loan Trustee has been requested to do so by a Majority in
Interest of Noteholders, then in any such case, the Loan Trustee and, upon the
written request of the Loan Trustee, the 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 the Loan Trustee, either to act jointly with the 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 the 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 the Company's consent. If an Event of Default shall
have occurred and be continuing, the Loan Trustee may act under the foregoing
provisions of this Section 8.02(a) without the concurrence of the Company, and
the Company hereby irrevocably appoints (which appointment is coupled with an
interest) the Loan Trustee as its agent and attorney-in-fact to act for it under
the foregoing provisions of this Section 8.02(a). The 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 the 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 the 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 the
Loan Trustee shall be promptly paid over by it to the Loan Trustee. All other
rights, powers, duties and obligations conferred or imposed upon any additional
or separate trustee shall be exercised or performed by the 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 the
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 the
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 the Loan Trustee shall be liable for the consequences of
its lack of reasonable care in selecting, and the 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 the 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
the Loan Trustee.
(c) If at any time the Loan Trustee deems it no longer necessary or
desirable or in the event that the Loan Trustee has been requested to do so in
writing by a Majority in Interest of Noteholders, the Loan Trustee and, upon the
written request of the Loan Trustee, the 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. The Loan Trustee may act
on behalf of the 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, the 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, the Company and the 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 the Company and the assumption by any such
successor of the covenants of the 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 the 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 the Noteholders or the 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 the 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 the Company
for the benefit of the Noteholders, or to surrender any rights or power herein
conferred upon the Company; (ix) to add to the rights of the 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, the
Company may, and the 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 the Company, the Loan Trustee and of the 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 the 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 the Company and the Loan Trustee
of any supplemental agreement pursuant to the provisions of this Section 9.02,
the 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 the 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 the 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 the 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 the Liquidity Provider, the 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 the 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 the 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. The Loan
Trustee may place an appropriate notation about an amendment or waiver on any
Equipment Note thereafter executed. The 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
the Noteholders, the Indenture Indemnitees and the 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 the Loan Trustee as funds in
trust, specifically pledged as security for, and dedicated solely to, the
benefit of the 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 the 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) the Company has delivered to the Loan Trustee an officer's
certificate and an opinion of counsel to the effect that there has been a
change in tax law since September 6, 2001 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 the 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) the Company has delivered to the Loan Trustee an officer's
certificate and an opinion of counsel (which may be internal counsel to
the 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) the Company has delivered to the Loan Trustee written
confirmation from each of the Rating Agencies that such deposit, the
resulting release and discharge of the 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;
the Company and the 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 the Company
without any other act or formality whatsoever, and the Loan Trustee shall, upon
the written request of the Company, execute and deliver to, or as directed in
writing by, the 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 the 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 the Loan Trustee of all property constituting part of the
Collateral and the final distribution by the 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 the Company to cause redemption of the Equipment Notes shall cease.
(b) Notwithstanding the provisions of Section 10.01(a)(ii), the
obligations of the 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 the Loan Trustee, shall survive.
(c) All monies and U.S. Government Obligations deposited with the
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 the 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) The Loan Trustee shall promptly pay or return to the Company
upon request of the 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 the Loan Trustee made pursuant to the terms of this Indenture shall
bind the Noteholders and the Company and shall be effective to transfer or
convey all right, title and interest of the Loan Trustee, the 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 the
Noteholders.
Section 10.04 Indenture for Benefit of the Company, Loan Trustee and
Noteholders. Nothing in this Indenture, whether express or implied, shall be
construed to give any Person other than the Company, the Loan Trustee, the
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 the Company, addressed to:
Delta Air Lines, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Director - Corporate Finance, Dept. 856
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the General Counsel at the same address, but
Dept. 971
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to the 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
additional or 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 the Company and the 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, the 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 the
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 the 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 the 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 the Loan Trustee, on behalf of the
Noteholders, to all of the benefits of Section 1110 with respect to the
Aircraft.
Section 10.13 The Company's Performance and Rights. Any obligation
imposed on the Company herein shall require only that the 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 the Company and, to the extent of such performance, discharge
such obligation by the Company. Except as otherwise expressly provided herein,
any right granted to the Company in this Indenture shall grant the 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 the Loan Trustee or its representative pursuant to Section 7.03(a);
(c) each certification furnished to the Loan Trustee pursuant to Sections
7.06(a) and 7.06(b); (d) all information contained in each report furnished to
the Loan Trustee pursuant to Section 7.06(e); and (e) all information regarding
the Warranty Rights. All Confidential Information shall be held confidential by
the 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) the 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:
Director - Treasury
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. (the "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 (N3731T), dated as of
September 17, 2001 (the "Indenture"; capitalized terms used herein without
definition shall have the meanings specified therefor in Annex A to the
Indenture), between the 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 (the "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 the 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;]*
[WHEREAS, the Company has, as provided in the Indenture, heretofore
executed and delivered to the 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 Indenture Supplement No. 1 only.
** 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 the Company under the Operative Documents and the performance and
observance by the Company of all the agreements and covenants to be performed or
observed by the Company for the benefit of the Noteholders and the 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 the Loan Trustee, the Noteholders
and the Indenture Indemnitees to the Company at or before the Closing Date, the
receipt of which is hereby acknowledged, the Company does hereby grant, bargain,
sell, convey, transfer, mortgage, assign, pledge and confirm unto the Loan
Trustee and its successors in trust and permitted assigns, for the security and
benefit of the Loan Trustee, the Noteholders and the Indenture Indemnitees, a
first priority security interest in, and mortgage lien on, all estate, right,
title and interest of the 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 the
Loan Trustee, and its successors and assigns, in trust for the ratable benefit
and security of the Noteholders and the 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: Director - Treasury
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 Grenada Norway
Australia Guatemala Paraguay
Austria Hungary Peoples' Republic of China
Bahamas Iceland Philippines
Barbados India Poland
Belgium Indonesia Portugal
Bermuda Islands Ireland Republic of China (Taiwan)
Brazil Italy Singapore
British Virgin Islands Jamaica South Africa
Canada ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Chile Liechtenstein Sweden
Czech Republic Luxembourg Switzerland
Denmark Malta Thailand
Ecuador Mexico Trinidad and Tobago
Egypt Monaco United Kingdom
Finland Morocco Uruguay
France Netherlands Antilles Venezuela
Germany Netherlands, the
Greece New Zealand
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 Amount Interest Rate Maturity Date
------------------------- ------------- -------------
Series A-1
Equipment Notes: $6,590,608.67 6.619% March 18, 2011
Series A-2
Equipment Notes: $13,427,058.00 7.111% September 18, 2011
Series B
Equipment Notes: $4,758,156.18 7.711% September 18, 2011
Series C
Equipment Notes: $3,901,334.19 7.299% September 18, 2006
Series D
Equipment Notes: $3,446,773.66 6.950% September 18, 2006
EQUIPMENT NOTES AMORTIZATION
SERIES A-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.
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. 2001-1A-1,
dated as of September 17, 2001, Trust Supplement No. 2001-1A-2, dated as of
September 17, 2001, Trust Supplement No. 2001-1B, dated as of September 17,
2001, Trust Supplement No. 2001-1C, dated as of September 17, 2001 and Trust
Supplement No. 2001-1D, dated as of September 17, 2001.
2
Annex A to
Participation Agreement and
Indenture and Security Agreement
(N3731T)
DEFINITIONS
(N3731T)
"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 (N3731T), dated as of September 17, 2001, among the
Company, State Street, the Pass Through Trustee under each Pass Through Trust
Agreement, the Subordination Agent and the 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 Codess.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 the 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 the 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 D Pass Through Trust" means the Delta Air Lines Pass Through
Trust 2001-1D created pursuant to the Basic Pass Through Trust Agreement, as
supplemented by Trust Supplement No. 2001-1D, dated as of September 17, 2001
between the Company and State Street.
"Class D Pass Through Certificates" means the Pass Through
Certificates issued by the Class D Pass Through Trust.
"Class D Trustee" means the Pass Through Trustee under the Basic
Pass Through Trust Agreement, as supplemented by Trust Supplement No. 2001-1D,
dated as of September 17, 2001 between the 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 the 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 the
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 the
Loan Trustee's corporate trust business is administered that the Loan Trustee
specifies by notice to the 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.
"Downgrade Event" means, with respect to any Series other than the
Series D Equipment Notes, the occurrence of the first of any of the following
events: (i) the downgrade of the long-term unsecured debt rating or the
long-term corporate credit rating of the Company after September 6, 2001 by
▇▇▇▇▇'▇ or S&P; (ii) the public announcement after September 6, 2001 by ▇▇▇▇▇'▇
or S&P that it has on review for downgrade (in the case of ▇▇▇▇▇'▇) or has
placed on credit watch with negative implications (in the case of S&P), its
rating of the long-term unsecured debt or the long-term corporate credit rating
of the Company; or (iii) with respect to such Series, the downgrade of the Pass
Through Certificates numerically and alphabetically corresponding to the
numerical and alphabetical designation of such Series after September 6, 2001 by
▇▇▇▇▇'▇ or S&P.
"Engine" means (a) each of the two CFM International, Inc.
CFM56-7B26 engines 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 the 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 the 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 the 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 the
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 the Manufacturer or an affiliate of the Manufacturer in
favor of the 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
(N3731T), dated as of September 17, 2001, between the Company and the 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 Indemnitee" means (i) the Loan Trustee, (ii) State
Street, (iii) so long as it holds any Equipment Note as agent and trustee of any
Pass Through Trustee, the Subordination Agent, (iv) the Liquidity 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 the Pass Through Trustees, the
Liquidity Provider and the 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.
"Lien" means any mortgage, pledge, lien, encumbrance, lease,
sublease, sub-sublease or security interest.
"Liquidity Facilities" means the four Revolving Credit Agreements,
each dated as of the Closing Date, between the Subordination Agent, as borrower,
and the 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 Landesbank Hessen-Thuringen Girozentrale,
a public law banking institution organized under the laws of Germany, 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
the 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 the 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 the Loan Trustee not permitted by, or the failure of State Street or
the Loan Trustee to take any action required by the Operative Documents or the
Pass Through Documents, (iii) claims against State Street or the 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 the 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 the 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 the Company
or any affiliate thereof, it being understood that the Class D Trustee shall be
considered an affiliate of the Company as long as more than 50% in the aggregate
face amount of the Pass Through Certificates issued by the Class D Pass Through
Trust are held by an affiliate of the Company or the Class D Trustee is
otherwise under the control of such affiliate of the Company (unless all
Equipment Notes are held by the 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 the
Company (and, following the occurrence and during the continuance of an Event of
Default, reasonably acceptable to the 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.
"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, the Subordination Agent on behalf of
the 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 the Pass Through
Trustee (other than in its capacity as Noteholder), the Subordination Agent
(other than in its capacity as Noteholder) or the Liquidity 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".
"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 the 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 the Pass Through Trustees.
"Pass Through Documents" means the Pass Through Trust Agreements,
the Intercreditor Agreement and the Liquidity Facilities.
"Pass Through Trust" means each of the five 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 five 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, the 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 A-1 Equipment
Notes plus 1%.
"Payment Date" means, for any Equipment Note, each March 18 and
September 18, commencing with March 18, 2002.
"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 Moody's 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 Moody's 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 Moody's 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 the 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 Moody's 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 the Loan
Trustee; and (o) such other investments approved in writing by the 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 the Pass
Through Trustee or the Loan Trustee or for any third person or dealing as
principal for its own account.
"Permitted Lessee" means any Person to whom the 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.
"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 the Manufacturer and
the 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 the 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. CFM56-7B26
engine (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 the 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.
"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
A-1 Equipment Notes, the Series A-2 Equipment Notes, the Series B Equipment
Notes, the Series C Equipment Notes or the Series D Equipment Notes.
"Series A-1 Equipment Notes" means Equipment Notes issued and
designated as "Series A-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 A-1 Equipment Notes."
"Series A-2 Equipment Notes" means Equipment Notes issued and
designated as "Series A-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 A-2 Equipment Notes."
"Series B Equipment Notes" means Equipment Notes issued and
designated as "Series B 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 B 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 D Equipment Notes" means Equipment Notes issued and
designated as "Series D 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 D 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 September 6, 2001, among the Company and the 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 the Manufacturer or an affiliate of the
Manufacturer in favor of the 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 the 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, but only to the
extent the same relate to continuing rights of the 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 the Company in, to
and under the Purchase Agreement and that the Warranty Rights are subject to the
terms of the Manufacturer's Consent.