EXHIBIT 4.9
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INDENTURE AND SECURITY AGREEMENT
(N3760C)
Dated as of January 30, 2003
between
DELTA AIR LINES, INC.,
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Loan Trustee
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One Boeing 737-832 Aircraft
U.S. Registration No. N3760C
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions............................................................................. 4
Section 1.02 Other Definitional Provisions........................................................... 4
ARTICLE II
THE EQUIPMENT NOTES
Section 2.01 Form of Equipment Notes................................................................. 5
Section 2.02 Issuance and Terms of Equipment Notes................................................... 9
Section 2.03 Method of Payment...................................................................... 10
Section 2.04 Withholding Taxes...................................................................... 11
Section 2.05 Application of Payments................................................................ 11
Section 2.06 Termination of Interest in Collateral.................................................. 11
Section 2.07 Registration, Transfer and Exchange of Equipment Notes................................. 12
Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment Notes................................... 13
Section 2.09 Payment of Expenses on Transfer; Cancellation.......................................... 13
Section 2.10 Mandatory Redemption of Equipment Notes................................................ 13
Section 2.11 Voluntary Redemption of Equipment Notes................................................ 14
Section 2.12 Redemptions; Notice of Redemptions; Repurchases........................................ 14
Section 2.13 Subordination.......................................................................... 15
Section 2.14 Certain Payments....................................................................... 15
Section 2.15 Repayment of Monies for Equipment Note Payments Held by Loan Trustee................... 16
Section 2.16 Directions by Subordination Agent...................................................... 17
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE COLLATERAL
Section 3.01 Basic Distributions.................................................................... 17
Section 3.02 Event of Loss; Optional Redemption..................................................... 18
Section 3.03 Payments after Event of Default........................................................ 20
Section 3.04 Certain Payments....................................................................... 22
Section 3.05 Payments to Company.................................................................... 23
Section 3.06 Cooperation. .......................................................................... 23
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ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
Section 4.01 Events of Default...................................................................... 23
Section 4.02 Remedies............................................................................... 25
Section 4.03 Remedies Cumulative.................................................................... 28
Section 4.04 Discontinuance of Proceedings.......................................................... 28
Section 4.05 Waiver of Past Defaults................................................................ 28
Section 4.06 Noteholders May Not Bring Suit Except Under Certain Conditions......................... 28
Section 4.07 Appointment of a Receiver.............................................................. 29
Section 4.08 Rights of Noteholders to Receive Payment............................................... 29
ARTICLE V
DUTIES OF LOAN TRUSTEE
Section 5.01 Notice of Event of Default............................................................. 29
Section 5.02 Action upon Instructions; Certain Rights and Limitations............................... 30
Section 5.03 Indemnification........................................................................ 30
Section 5.04 No Duties Except as Specified in Indenture or Instructions............................. 31
Section 5.05 No Action Except under Indenture or Instructions....................................... 31
Section 5.06 Investment of Amounts Held by Loan Trustee............................................. 31
ARTICLE VI
LOAN TRUSTEE
Section 6.01 Acceptance of Trusts and Duties........................................................ 32
Section 6.02 Absence of Certain Duties.............................................................. 32
Section 6.03 No Representations or Warranties as to the Documents................................... 32
Section 6.04 No Segregation of Monies; No Interest.................................................. 32
Section 6.05 Reliance; Agents; Advice of Counsel.................................................... 33
Section 6.06 Instructions from Noteholders.......................................................... 33
ARTICLE VII
OPERATING COVENANTS OF COMPANY
Section 7.01 Liens.................................................................................. 33
Section 7.02 Possession, Operation and Use, Maintenance and Registration............................ 34
Section 7.03 Inspection; Financial Information...................................................... 40
Section 7.04 Replacement and Pooling of Parts; Alterations, Modifications and Additions;
Substitution of Engines............................................................... 41
Section 7.05 Loss, Destruction or Requisition....................................................... 43
Section 7.06 Insurance.............................................................................. 47
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ARTICLE VIII
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01 Resignation or Removal; Appointment of Successor....................................... 52
Section 8.02 Appointment of Additional and Separate Trustees........................................ 53
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01 Amendments to this Indenture without Consent of Holders................................ 55
Section 9.02 Amendments to this Indenture with Consent of Holders................................... 55
Section 9.03 Amendments, Waivers, Etc. of the Participation Agreement............................... 56
Section 9.04 Revocation and Effect of Consents...................................................... 57
Section 9.05 Notation on or Exchange of Equipment Notes............................................. 57
Section 9.06 Trustee Protected...................................................................... 57
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination of Indenture............................................................... 57
Section 10.02 No Legal Title to Collateral in Noteholders............................................ 58
Section 10.03 Sale of Aircraft by Loan Trustee is Binding............................................ 58
Section 10.04 Indenture for Benefit of Company, Loan Trustee and Noteholders......................... 58
Section 10.05 Notices................................................................................ 59
Section 10.06 Severability........................................................................... 59
Section 10.07 No Oral Modification or Continuing Waivers............................................. 60
Section 10.08 Successors and Assigns................................................................. 60
Section 10.09 Headings............................................................................... 60
Section 10.10 Normal Commercial Relations............................................................ 60
Section 10.11 Voting by Noteholders.................................................................. 60
Section 10.12 Section 1110........................................................................... 60
Section 10.13 Company's Performance and Rights....................................................... 60
Section 10.14 Counterparts........................................................................... 61
Section 10.15 Governing Law.......................................................................... 61
Section 10.16 Confidential Information............................................................... 61
Section 10.17 Submission to Jurisdiction............................................................. 61
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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
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INDENTURE AND SECURITY AGREEMENT
(N3760C)
This INDENTURE AND SECURITY AGREEMENT (N3760C), dated as of
January 30, 2003, is made by and between DELTA AIR LINES, INC., a Delaware
corporation (together with its successors and permitted assigns, "Company"),
and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity, except as expressly stated herein, but solely as
Loan Trustee hereunder (together with its permitted successors hereunder, "Loan
Trustee").
W I T N E S S E T H:
WHEREAS, the parties desire by this Indenture (such term and
other capitalized terms used herein without definition being defined as
provided in Article I), among other things, to provide for (i) the issuance by
Company of the Equipment Notes and (ii) the assignment, mortgage and pledge by
Company to Loan Trustee, as part of the Collateral hereunder, among other
things, of all of Company's estate, right, title and interest in and to the
Aircraft, as security for, among other things, Company's obligations to Loan
Trustee, for the ratable benefit and security of Noteholders, subject to
Section 2.13 and Article III;
WHEREAS, all things have been done to make the Equipment
Notes, when executed by Company and authenticated and delivered by Loan Trustee
hereunder, the valid, binding and enforceable obligations of Company; and
WHEREAS, all things necessary to make this Indenture a legal,
valid and binding obligation of Company for the uses and purposes herein set
forth, in accordance with its terms, have been done and performed and have
occurred;
GRANTING CLAUSE
NOW, THEREFORE, to secure the prompt and complete payment
(whether at stated maturity, by acceleration or otherwise) of principal of,
Make-Whole Amount, if any, Break Amount, if any, and interest on, the Equipment
Notes and all other amounts payable by Company under the Operative Documents
and the performance and observance by Company of all the agreements and
covenants to be performed or observed by Company for the benefit of Noteholders
and Indenture Indemnitees contained in the Operative Documents and to secure
the Related Secured Obligations under any Related Indentures, and in
consideration of the premises and of the covenants contained in the Operative
Documents, and for other good and valuable consideration given by Loan Trustee,
Noteholders and Indenture Indemnitees to Company at or before the Closing Date,
the receipt of which is hereby acknowledged, Company does hereby grant,
bargain, sell, convey, transfer, mortgage, assign, pledge and confirm unto Loan
Trustee and its successors in trust and permitted assigns, for the security and
benefit of Loan Trustee, Noteholders, Related Noteholders and Indenture
Indemnitees, a first priority security interest in, and mortgage lien on, all
estate, right, title and interest of Company in, to and under, all and
singular, the following described properties, rights, interests and privileges
whether now or hereafter acquired (hereinafter sometimes referred to as the
"Collateral"):
(1) the Aircraft, including the Airframe and the
Engines, whether or not any such Engine from time to time is installed
on the Airframe or any other airframe or any other aircraft, and any
and all Parts relating thereto, and, to the extent provided herein,
all substitutions and replacements of, and additions, improvements,
accessions and accumulations to, the Aircraft, including the Airframe,
the Engines and any and all Parts (in each case other than any
substitutions, replacements, additions, improvements, accessions and
accumulations that constitute items excluded from the definition of
Parts by clauses (b), (c), (d), (e) and (f) thereof) relating thereto
(such Airframe and Engines as more particularly described in the
Indenture Supplement executed and delivered with respect to the
Aircraft on the Closing Date or with respect to any substitutions or
replacements therefor) and together with all logs, manuals maintained
on the Aircraft, modification and maintenance records at any time
required to be maintained with respect to the Aircraft, in accordance
with the rules and regulations of the FAA if the Aircraft is
registered under the laws of the United States or the rules and
regulations of the government of the country of registry if the
Aircraft is registered under the laws of a jurisdiction other than the
United States;
(2) the Warranty Rights, together with all rights,
powers, privileges, options and other benefits of Company under the
same;
(3) all requisition proceeds with respect to the
Aircraft or any Part thereof, and all insurance proceeds with respect
to the Aircraft or any Part thereof, but excluding all proceeds of,
and rights under, any insurance maintained by Company and in excess of
that required under Section 7.06(b);
(4) all moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with Loan Trustee
by or for the account of Company pursuant to any term of any Operative
Document and held or required to be held by Loan Trustee hereunder or
thereunder; and
(5) all proceeds of the foregoing;
PROVIDED, HOWEVER, that notwithstanding any of the foregoing
provisions, so long as no Event of Default shall have occurred and be
continuing, Company shall have the right, to the exclusion of Loan Trustee, (i)
to quiet enjoyment of the Aircraft, the Airframe, the Parts and the Engines,
and to possess, use, retain and control the Aircraft, the Airframe, the Parts
and the Engines and all revenues, income and profits derived therefrom and (ii)
with respect to the Warranty Rights, to exercise in Company's name all rights
and powers of the Buyer (as defined in the Purchase Agreement) under the
Warranty Rights and to retain any recovery or benefit resulting from the
enforcement of any warranty or indemnity or other obligation under the Warranty
Rights; provided, further, that notwithstanding the occurrence and continuation
of an Event of Default, Loan Trustee shall not enter into any amendment or
modification of the Purchase Agreement that would alter the rights, benefits or
obligations of Company thereunder;
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TO HAVE AND TO HOLD all and singular the aforesaid property
unto Loan Trustee, and its successors and permitted assigns, in trust for the
ratable benefit and security of Noteholders, Related Noteholders and Indenture
Indemnitees, except as otherwise provided in this Indenture, including Section
2.13 and Article III, without any preference, distinction or priority of any
one Equipment Note over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and in all cases and as to all property specified
in paragraphs (1) through (5) inclusive above, subject to the terms and
provisions set forth in this Indenture.
It is expressly agreed that notwithstanding anything herein
to the contrary, Company shall remain liable under the Purchase Agreement to
perform all of its obligations thereunder, and, except to the extent expressly
provided in any Operative Document, none of Loan Trustee, any Noteholders or
any Indenture Indemnitee shall be required or obligated in any manner to
perform or fulfill any obligations of Company under or pursuant to any
Operative Document, or have any obligation or liability under the Purchase
Agreement by reason of or arising out of the assignment hereunder, or to make
any inquiry as to the nature or sufficiency of any payment received by it, or
present or file any claim or take any action to collect or enforce the payment
of any amount that may have been assigned to it or to which it may be entitled
at any time or times.
Notwithstanding anything herein to the contrary (but without
in any way releasing Company from any of its duties or obligations under the
Purchase Agreement), Loan Trustee, Noteholders and Indenture Indemnitees
confirm for the benefit of Manufacturer that in exercising any rights under the
Warranty Rights, or in making any claim with respect to the Aircraft or other
goods and services delivered or to be delivered pursuant to the Purchase
Agreement, the terms and conditions of the Purchase Agreement relating to the
Warranty Rights, including, without limitation, the warranty disclaimer
provisions for the benefit of Manufacturer, shall apply to and be binding upon
Loan Trustee, Noteholders and Indenture Indemnitees to the same extent as
Company. Company hereby directs Manufacturer, so long as an Event of Default
shall have occurred and be continuing, to pay all amounts, if any, payable to
Company pursuant to the Warranty Rights directly to Loan Trustee to be held and
applied as provided herein. Nothing contained herein shall subject Manufacturer
to any liability to which it would not otherwise be subject under the Purchase
Agreement or modify in any respect the contract rights of Manufacturer
thereunder except as provided in the Manufacturer's Consent.
Company does hereby irrevocably constitute Loan Trustee the
true and lawful attorney of Company (which appointment is coupled with an
interest) with full power (in the name of Company or otherwise) to ask for,
require, demand and receive any and all monies and claims for monies (in each
case including insurance and requisition proceeds) due and to become due to
Company under or arising out of the Purchase Agreement (to the extent assigned
hereby), and all other property which now or hereafter constitutes part of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings which Loan Trustee may deem to be necessary or advisable in the
premises; provided that Loan Trustee shall not exercise any such rights except
during the continuance of an Event of Default. Company agrees that promptly
upon receipt thereof, to the extent required by the Operative Documents, it
will transfer to Loan Trustee any
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and all monies from time to time received by Company constituting part of the
Collateral, for distribution by Loan Trustee pursuant to this Indenture.
Company does hereby warrant and represent that it has not
sold, assigned or pledged, and hereby covenants and agrees that it will not
sell, assign or pledge, so long as this Indenture shall remain in effect and
the Lien hereof shall not have been released pursuant to the provisions hereof,
any of its estate, right, title or interest hereby assigned, to any Person
other than Loan Trustee, except as otherwise provided in or permitted by any
Operative Document.
Company agrees that at any time and from time to time, upon
the written request of Loan Trustee, Company shall promptly and duly execute
and deliver or cause to be duly executed and delivered any and all such further
instruments and documents as Loan Trustee may reasonably deem necessary to
perfect, preserve or protect the mortgage, security interests and assignments
created or intended to be created hereby or to obtain for Loan Trustee the full
benefit of the assignment hereunder and of the rights and powers herein
granted, provided that any instrument or other document so executed by Company
will not expand any obligations or limit any rights of Company in respect of
the transactions contemplated by the Operative Documents.
IT IS HEREBY COVENANTED AND AGREED by and between the parties
hereto as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. For all purposes of this Indenture,
unless the context otherwise requires, capitalized terms used but not defined
herein have the respective meanings set forth or incorporated by reference in
Annex A.
Section 1.02 Other Definitional Provisions. (a) The
definitions stated herein and in Annex A apply equally to both the singular and
the plural forms of the terms defined.
(b) All references in this Indenture to designated
"Articles", "Sections", "Subsections", "Schedules", "Exhibits", "Annexes" and
other subdivisions are to the designated Article, Section, Subsection,
Schedule, Exhibit, Annex or other subdivision of this Indenture, unless
otherwise specifically stated.
(c) The words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and not to any
particular Article, Section, Subsection, Schedule, Exhibit, Annex or other
subdivision.
(d) Unless the context otherwise requires, whenever the
words "including", "include" or "includes" are used herein, they shall be
deemed to be followed by the phrase "without limitation".
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(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 2003-1 [___] EQUIPMENT NOTE DUE [___]
ISSUED IN CONNECTION WITH THE BOEING 737-832 AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N3760C
No. Date: [ , ]
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$
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MATURITY DATE
[ , ]
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DELTA AIR LINES, INC. (together with its successors and
permitted assigns, "Company") hereby promises to pay to ___________, or the
registered assignee thereof, the principal amount of ________________ Dollars
($_________) [on __________](1) [in installments on the Payment Dates set forth
in Schedule I hereto, each such installment to be in an amount computed by
multiplying the original principal amount of this Equipment Note by the
percentage set forth in Schedule I hereto opposite the Payment Date on which
such installment is due,](2) and to pay interest in arrears on each Payment Date
at a rate per annum for each Interest Period equal to the Debt Rate for Series
[__] for such Interest Period on the principal amount remaining unpaid from
time to time (calculated on the basis of a year of 360 days and actual days
elapsed during the period for which such amount accrues) from the date hereof
until paid in full. Interest shall be payable with respect to the first but not
the last day of each Interest Period. [Notwithstanding the foregoing, the final
payment made on this Equipment Note shall be in an
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(1) To be inserted in non-installment Equipment Notes.
(2) To be inserted in installment Equipment Notes.
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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 and such extension of time
shall be included in the computation of interest payable.
For purposes hereof, the term "Indenture" means the Indenture
and Security Agreement (N3760C), dated as of January 30, 2003, between Company
and U.S. Bank Trust National Association, as Loan Trustee ("Loan Trustee"), as
the same may be amended, supplemented or otherwise modified from time to time
in accordance with its terms. All capitalized terms used in this Equipment Note
and not defined herein, unless the context otherwise requires, shall have the
respective meanings set forth or incorporated by reference, and shall be
construed and interpreted in the manner described, in the Indenture. This
Equipment Note shall bear interest, payable on demand, at the Past Due Rate
(and not the Debt Rate) (calculated on the basis of a year of 360 days and
actual days elapsed during which such amount accrues) on any principal amount
and (to the extent permitted by applicable law) interest and any other amounts
payable hereunder not paid when due for any period during which the same is
overdue, in each case for the period the same is overdue. Amounts shall be
overdue if not paid in the manner provided herein or in the Indenture when due
(whether at stated maturity, by acceleration or otherwise).
There shall be maintained an Equipment Note Register for the
purpose of registering transfers and exchanges of Equipment Notes at the
Corporate Trust Office of Loan Trustee, or at the office of any successor
trustee, in the manner provided in Section 2.07 of the Indenture. The principal
amount and interest and other amounts due hereunder shall be payable in Dollars
in immediately available funds at the Corporate Trust Office of Loan Trustee,
or as otherwise provided in the Indenture. Company shall not have any
responsibility for the distribution of any such payment to Noteholder of this
Equipment Note. Each such payment shall be made on the date such payment is due
and without any presentment or surrender of this Equipment Note, except that in
the case of any final payment with respect to this Equipment Note, the
Equipment Note shall be surrendered to Loan Trustee for cancellation. The
holder hereof, by its acceptance of this Equipment Note, agrees that, except as
provided in the Indenture, including the subordination provisions referred to
below, each payment of an installment of principal amount, Make-Whole Amount,
if any, Break Amount, if any, and interest received by it hereunder shall be
applied: first, to the payment of Break Amount, if any, on this Equipment Note,
second, 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; third, to the payment
of Make-Whole Amount, if any, and fourth, to the payment of the principal
amount of this Equipment Note (or portion hereof) then due.
This Equipment Note is one of the Equipment Notes referred to
in the Indenture which have been or are to be issued by Company pursuant to the
terms of the Indenture. The Collateral is held by Loan Trustee as security, in
part, for the Equipment Notes. The provisions of this Equipment Note are
subject to the Indenture, the Related Indentures and the Participation
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Agreement. Reference is hereby made to the Indenture, the Related Indentures
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 (including as a "Related Equipment Note" under each Related
Indenture) and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Equipment Notes executed and delivered
under the Indenture, to all of which terms and conditions in the Indenture and
the Participation Agreement each holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Indenture and subject to certain
limitations therein set forth, this Equipment Note is exchangeable for a like
aggregate principal amount of Equipment Notes of the same Series of different
authorized denominations, as requested by the holder surrendering the same.
Prior to the due presentment for registration of transfer of this Equipment
Note, Company and Loan Trustee shall deem and treat the Person in whose name
this Equipment Note is registered on the Equipment Note Register as the
absolute owner and holder hereof for the purpose of receiving all amounts
payable with respect to this Equipment Note and for all purposes, and neither
Company nor Loan Trustee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in
Sections 2.10 and 2.11 of the Indenture but not otherwise.
[The indebtedness evidenced by this Equipment Note is, to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations (as
defined in the Indenture) in respect of [Series G Equipment Notes](3) [Series G
Equipment Notes and Series C Equipment Notes](4), and this Equipment Note is
issued subject to such provisions. Noteholder of this Equipment Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs Loan Trustee on such Noteholder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints Loan Trustee such Noteholder's
attorney-in-fact for such purpose.](5)
[Without limiting the foregoing, the](6) [The](7) Noteholder
of this Equipment Note, by accepting the same, agrees that if such Noteholder,
in its capacity as a Noteholder, receives any payment or distribution on any
Secured Obligation in respect of this Equipment Note that it is not entitled to
receive under Section 2.13 or Article III of the Indenture, it shall hold any
amount so received in trust for Loan Trustee and forthwith turn over such
amount to Loan Trustee in the form received to be applied as provided in
Article III of the Indenture. Unless the certificate of authentication hereon
has been executed by or on behalf of Loan Trustee by manual signature, this
Equipment Note shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
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(3) To be inserted in the case of a Series C Equipment Note.
(4) To be inserted in the case of a Series D Equipment Note.
(5) To be inserted in the case of a Series C Equipment Note or a Series D
Equipment Note.
(6) To be inserted in the case of a Series C Equipment Note or a Series D
Equipment Note.
(7) To be inserted in the case of a Series G Equipment Note.
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THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, Company has caused this Equipment Note to
be executed in its corporate name by its officer thereunto duly authorized on
the date hereof.
DELTA AIR LINES, INC.
By:
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Name:
Title:
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred
to in the within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Loan Trustee
By:
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Name:
Title:
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SCHEDULE I(8)
EQUIPMENT NOTE AMORTIZATION
Payment Date Percentage of Original
Principal Amount
to be Paid
[SEE "EQUIPMENT NOTES AMORTIZATION" ON SCHEDULE I TO
INDENTURE WHICH IS TO BE INSERTED UPON ISSUANCE]
* * *
Section 2.02 Issuance and Terms of Equipment Notes. The Equipment
Notes shall be dated the date of issuance thereof, shall be issued in (a) three
separate series consisting of Series G 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 G Equipment Note, Series C Equipment Note and
Series D Equipment Note shall be issued to Subordination Agent on behalf of
each of Pass Through Trustees for the Pass Through Trusts created under the
Pass Through Trust Agreements referred to in Schedule II. The Equipment Notes
shall be issued in registered form only. The Equipment Notes shall be issued in
denominations of $1,000 and integral multiples thereof, except that one
Equipment Note of each Series may be in an amount that is not an integral
multiple of $1,000.
Each Equipment Note shall bear interest for each Interest Period at
the Debt Rate specified for such Interest Period for the applicable Series
(calculated on the basis of a year of 360 days and actual days elapsed during
the period for which such amount accrues), payable in arrears on each Payment
Date on the unpaid principal amount thereof from time to time outstanding until
such principal amount is paid in full, as further provided in the form of
Equipment Note set forth in Section 2.01. The principal amount of each Series G
Equipment Note and each Series D Equipment Note shall be payable in
installments on the Payment Dates and in the installments equal to the
corresponding percentage of the principal amount set forth in Schedule I hereto
applicable to such Series, which shall be attached as Schedule I to such
Equipment Note. The principal amount of each Series C Equipment Note shall be
due in a single payment on January 25, 2008. Notwithstanding the foregoing, the
final payment made under each Series G Equipment Note and each Series D
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 and actual days elapsed during the period
for which such amount accrues) on any principal amount and (to the extent
permitted by applicable law) interest and any other amounts payable thereunder
not paid when due for any period during which the same 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
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8 To be inserted on installment Equipment Notes.
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(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 such extension of time shall be included in
the computation of interest payable.
The Equipment Notes shall be executed on behalf of Company by the
manual or facsimile signature of one of its authorized officers. Equipment
Notes bearing the signatures of individuals who were at the time of execution
the proper officers of Company shall bind Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Equipment Notes or did not hold such
offices at the respective dates of such Equipment Notes. No Equipment Note
shall be secured by or entitled to any benefit under this Indenture or be valid
or obligatory for any purposes unless there appears on such Equipment Note a
certificate of authentication in the form provided herein executed by Loan
Trustee by the manual signature of one of its authorized officers, and such
certificate upon any Equipment Notes shall be conclusive evidence, and the only
evidence, that such Equipment Note has been duly authenticated and delivered
hereunder.
Section 2.03 Method of Payment. The principal amount of, interest on,
Make-Whole Amount, if any, and, except to the extent expressly provided herein,
all other amounts due to any Noteholder under each Equipment Note or otherwise
payable hereunder shall be payable by Company in Dollars by wire transfer of
immediately available funds not later than 10:00 a.m. (New York City time) on
the due date of payment to Loan Trustee at the Corporate Trust Office for
distribution among Noteholders in the manner provided herein. Company shall not
have any responsibility for the distribution of such payment to any Noteholder.
Notwithstanding the foregoing or any provision in any Equipment Note to the
contrary, Loan Trustee will use reasonable efforts to pay or cause to be paid,
if so directed in writing by any Noteholder (with a copy to Company), all
amounts paid by Company hereunder and under such Noteholder's Equipment Note or
Equipment Notes to such Noteholder or a nominee therefor (including all amounts
distributed pursuant to Article III) by transferring, or causing to be
transferred, by wire transfer of immediately available funds in Dollars, prior
to 12:00 noon (New York City time) on the due date of payment, to an account
maintained by such Noteholder with a bank located in the continental United
States the amount to be distributed to such Noteholder, for credit to the
account of such Noteholder maintained at such bank; provided that, in the event
the Equipment Notes are not held by Subordination Agent on behalf of Pass
Through Trustees, Loan Trustee may at its option pay such amounts by check
mailed to Noteholder's address as it appears on the Equipment Note Register.
If, after its receipt of funds at the place and prior to the time specified
above in the immediately preceding sentence, Loan Trustee fails (other than as
a result of a failure of Noteholder to provide it with wire transfer
instructions) to make any such payment required to be paid by wire transfer as
provided in the immediately preceding sentence on the Business Day it receives
such funds, Loan Trustee, in its individual capacity and not as trustee, agrees
to compensate such Noteholders for loss of use of funds at the Federal Funds
Rate until such payment is made and Loan Trustee shall be entitled to any
interest earned on such funds until such payment is made. Any payment made
hereunder shall be made without any presentment or surrender of any Equipment
Note, except that, in the case of the final payment in respect of any Equipment
Note, such Equipment Note shall be surrendered to Loan Trustee for
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cancellation. Notwithstanding any other provision of this Indenture to the
contrary, Loan Trustee shall not be required to make, or cause to be made, wire
transfers as aforesaid prior to the first Business Day on which it is
practicable for Loan Trustee to do so in view of the time of day when the funds
to be so transferred were received by it if such funds were received after 1:00
p.m. (New York City time) at the place of payment.
Section 2.04 Withholding Taxes. Loan Trustee shall exclude and
withhold at the appropriate rate from each payment of principal amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or
under each Equipment Note (which exclusion and withholding shall constitute
payment of such amounts payable hereunder or in respect of such Equipment
Notes, as applicable) any and all withholding taxes applicable thereto as
required by law. Loan Trustee agrees to act as such withholding agent and, in
connection therewith, whenever any present or future taxes or similar charges
are required to be withheld with respect to any amounts payable hereunder or in
respect of the Equipment Notes, to withhold such amounts (which withholding
shall constitute payment of such amounts payable hereunder or in respect of
such Equipment Notes, as applicable) and timely pay the same to the appropriate
authority in the name of and on behalf of Noteholders, that it will file any
necessary withholding tax returns or statements when due, and that as promptly
as possible after the payment thereof it will deliver to each Noteholder (with
a copy to Company) appropriate documentation showing the payment thereof,
together with such additional documentary evidence as any such Noteholder may
reasonably request from time to time. Loan Trustee agrees to file any other
information reports it is required to file under United States law.
Section 2.05 Application of Payments. Subject always to Section 2.13
and except as otherwise provided in Article III, in the case of each Equipment
Note, each payment of an installment of principal amount, Make-Whole Amount, if
any, Break Amount, if any, and interest paid thereon shall be applied:
FIRST, to the payment of Break Amount, if any, with respect
to such Equipment Note; and
SECOND, 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
THIRD, to the payment of Make-Whole Amount, if any; and
FOURTH, 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,
Related Noteholder or Indenture Indemnitee shall, as such, have any further
interest in, or other right with respect to, the Collateral when and if (i) 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
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Agreement by Company, and (ii) amounts (if any) available for distribution in
accordance with clause "fourth" of Section 3.03 hereof ((i) and (ii)
collectively, "Secured Obligations") have been paid in full.
Section 2.07 Registration, Transfer and Exchange of Equipment Notes.
Loan Trustee shall keep a register or registers (the "Equipment Note Register")
in which Loan Trustee shall provide for the registration of Equipment Notes and
the registration of transfers of Equipment Notes. No such transfer shall be
given effect unless and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust Office of Loan
Trustee. Loan Trustee is hereby appointed "Equipment Note Registrar" for the
purpose of registering Equipment Notes and transfers of Equipment Notes. A
holder of any Equipment Note intending to exchange or transfer such Equipment
Note shall surrender such Equipment Note to Loan Trustee at the Corporate Trust
Office, together with a written request from the registered holder thereof for
the issuance of a new Equipment Note of the same Series, specifying, in the
case of a surrender for transfer, the name and address of the new holder or
holders. Upon surrender for registration of transfer of any Equipment Note and
subject to satisfaction of Section 2.09, Company shall execute, and Loan
Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Equipment Notes of an equal
aggregate principal amount and of the same Series. At the option of Noteholder,
Equipment Notes may be exchanged for other Equipment Notes of the same Series
of any authorized denominations of an equal aggregate principal amount, upon
surrender of the Equipment Notes to be exchanged to Loan Trustee at the
Corporate Trust Office. Whenever any Equipment Notes are so surrendered for
exchange, Company shall execute, and Loan Trustee shall authenticate and
deliver, the Equipment Notes which Noteholder making the exchange is entitled
to receive. All Equipment Notes issued upon any registration of transfer or
exchange of Equipment Notes (whether under this Section 2.07 or under Section
2.08 or otherwise under this Indenture) shall be the valid obligations of
Company evidencing the same respective obligations, and entitled to the same
security and benefits under this Indenture, as the Equipment Notes surrendered
upon such registration of transfer or exchange. Every Equipment Note presented
or surrendered for registration of transfer shall be duly endorsed or be
accompanied by a written instrument of transfer in form satisfactory to Loan
Trustee, duly executed by Noteholder or such Noteholder's attorney duly
authorized in writing, and Loan Trustee shall require evidence satisfactory to
it as to the compliance of any such transfer with the Securities Act of 1933,
as amended, and the securities laws of any applicable state or jurisdiction.
Loan Trustee shall make a notation on each new Equipment Note of the amount of
all payments of principal amount previously made on the old Equipment Note or
Equipment Notes with respect to which such new Equipment Note is issued and the
date to which interest on such old Equipment Note or Equipment Notes has been
paid. Principal, interest and all other amounts shall be deemed to have been
paid on such new Equipment Note to the date on which such amounts have been
paid on such old Equipment Note. Company shall not be required to exchange any
surrendered Equipment Notes as provided above (a) during the ten-day period
preceding the due date of any payment on such Equipment Note or (b) that has
been called for redemption. Company and Loan Trustee shall in all cases deem
and treat the Person in whose name any Equipment Note has been issued and
registered on the Equipment Note Register as the absolute owner and Noteholder
of such Equipment Note for the purpose of receiving payment of all amounts
payable with respect to such Equipment Note and for all other purposes, and
neither Company nor Loan Trustee shall be affected by any notice to the
contrary. Loan Trustee will promptly notify Company of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an
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Equipment Note, agrees to the provisions of the Operative Documents applicable
to Noteholders, and shall be deemed to have represented, warranted and
covenanted to the parties to the Participation Agreement as to the matters
represented, warranted and covenanted by Noteholders, including Pass Through
Trustees, in the Participation Agreement. Subject to compliance by Noteholder
and any transferee of the requirements set forth in this Section 2.07 and in
Section 2.09, Loan Trustee and Company shall use all reasonable efforts to
issue new Equipment Notes upon transfer or exchange within ten Business Days of
the date an Equipment Note is surrendered for transfer or exchange.
Section 2.08 Mutilated, Destroyed, Lost or Stolen Equipment Notes. If
any Equipment Note becomes mutilated, destroyed, lost or stolen, Company shall,
upon the written request of the holder of such Equipment Note and subject to
satisfaction of this Section 2.08 and of Section 2.09, execute and Loan Trustee
shall authenticate and deliver in replacement thereof a new Equipment Note of
the same Series, payable in the same principal amount, dated the same date and
captioned as issued in connection with the Aircraft. If the Equipment Note
being replaced has become mutilated, such Equipment Note shall be surrendered
to Loan Trustee, and a photocopy thereof shall be furnished to Company. If the
Equipment Note being replaced has been destroyed, lost or stolen, the holder of
such Equipment Note shall furnish to Company and Loan Trustee such security or
indemnity as may be required by them to save Company and Loan Trustee harmless
and evidence satisfactory to Company and Loan Trustee of the destruction, loss
or theft of such Equipment Note and of the ownership thereof.
Section 2.09 Payment of Expenses on Transfer; Cancellation. (a) No
service charge shall be made to a Noteholder for any registration of transfer
or exchange of Equipment Notes, but Loan Trustee, as Equipment Note Registrar,
may require payment of a sum sufficient to cover any Tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Equipment Notes.
(b) Loan Trustee shall cancel all Equipment Notes surrendered for
replacement, redemption, transfer, exchange, payment or cancellation, shall
keep a copy of such canceled Equipment Notes, and shall send the original
canceled Equipment Notes marked "canceled" to Company.
Section 2.10 Mandatory Redemption of Equipment Notes. (a) Company
shall redeem the Equipment Notes in whole in connection with an Event of Loss
in respect of the Airframe or the Airframe and the Engines installed thereon
(unless Company has performed the option set forth in Section 7.05(a)(i) with
respect thereto) on or before the Loss Payment Date at a redemption price equal
to 100% of the unpaid principal amount thereof, together with all accrued
interest thereon to (but excluding) the date of redemption, Break Amount, if
any (but excluding any Make-Whole Amount) and all other Secured Obligations
(other than any Related Secured Obligations) owed or then due and payable to
Noteholders.
(b) Company shall redeem the Series G Equipment Notes in whole or
in part in connection with an Event of Loss in respect of a Core Aircraft
(other than the Aircraft) (unless Company has performed the option set forth in
Section 7.05(a)(i) of the Related Indenture with respect to such Core Aircraft)
on or before the "Loss Payment Date" (as defined in such Related
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Indenture) in an amount equal to the lesser of (x) the "Excess Amount" (as
defined in such Related Indenture) multiplied by a fraction, the numerator of
which is the then outstanding aggregate principal amount of the Series G
Equipment Notes and the denominator of which is the sum of the then outstanding
aggregate principal amount of the Series G Equipment Notes and the Related
Series G Equipment Notes issued with respect to Core Aircraft other than the
Core Aircraft which suffered such Event of Loss and (y) the then outstanding
principal amount of Series G Equipment Notes, at a redemption price equal to
100% of the amount of the unpaid principal amount of the Series G Equipment
Notes being redeemed, together, in the case of (x) and (y), with all accrued
interest on such amount of Series G Equipment Notes being redeemed to (but
excluding) the date of redemption and Break Amount, if any (but excluding any
Make-Whole Amount).
(c) Company shall redeem the Equipment Notes in whole or
in part in connection with the receipt of payments made by a Related Loan
Trustee pursuant to clause "fourth" of Section 3.03 of a Related Indenture.
Section 2.11 Voluntary Redemption of Equipment Notes. Company shall
not redeem in whole or in part any Equipment Notes, except in accordance with
the provisions of Section 2.10 above.
Section 2.12 Redemptions; Notice of Redemptions; Repurchases. (a) No
redemption of any Equipment Note may be made except to the extent and in the
manner expressly permitted by this Indenture. At such time as no Pass Through
Certificates are outstanding, Company may at any time repurchase any of the
Equipment Notes at any price in the open market and may hold, resell or
surrender such Equipment Notes to Loan Trustee for cancellation.
(b) Notice of redemption with respect to the Equipment Notes,
other than redemptions made pursuant to Section 2.10(c), shall be given by Loan
Trustee by first-class mail, postage prepaid, mailed not less than 15 nor more
than 60 days prior to the applicable redemption date, to each Noteholder at
such Noteholder's address appearing in the Equipment Note Register. All notices
of redemption shall state: (1) the redemption date, (2) the applicable basis
for determining the redemption price, (3) that on the redemption date, the
redemption price will become due and payable upon each such Equipment Note, and
that, if any such Equipment Notes are then outstanding, interest on such
Equipment Notes shall cease to accrue on and after such redemption date and (4)
the place or places where such Equipment Notes are to be surrendered for
payment of the redemption price.
(c) On or before the redemption date, Company (or any person on
behalf of Company) shall, to the extent an amount equal to the redemption price
for the Equipment Notes to be redeemed on the redemption date shall not then be
held in the Collateral, deposit or cause to be deposited with Loan Trustee by
10:00 a.m. (New York City time) on the redemption date in immediately available
funds the redemption price of the Equipment Notes to be redeemed.
(d) Notice of redemption having been given as aforesaid (and not
revoked as permitted by Section 2.11), the Equipment Notes to be redeemed
shall, on the redemption date, become due and payable at the Corporate Trust
Office of Loan Trustee, and from and after such
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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.
(e) Any redemption in part of any Series of Equipment Notes made
pursuant to Section 2.10(b) or 2.10(c) shall be made pro rata on the basis of
unpaid principal amount of such Series of Equipment Notes being redeemed.
Section 2.13 Subordination. (a) The indebtedness evidenced by the
Series C Equipment Notes is, to the extent and in the manner provided in this
Indenture, subordinate and subject in right of payment to the prior payment in
full of the Secured Obligations in respect of the Series G 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 G 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 Loan Trustee on
such Noteholder's behalf to take any action necessary or appropriate to
effectuate the subordination as provided in this Indenture and (c) appoints
Loan Trustee as such Noteholder's attorney-in-fact for such purpose.
(b) Company, Loan Trustee and, by acceptance of its Equipment
Notes of any Series, each Noteholder of such Series, hereby agree that no
payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Noteholder of such Series, including any payment or
distribution of cash, property or securities, after the occurrence of any of
the events referred to in Section 4.01(f) or after the commencement of any
proceedings of the type referred to in Sections 4.01(g), (h) or (i), except as
expressly provided in Article III.
(c) By the acceptance of its Equipment Notes of any Series, each
Noteholder of such Series agrees that if such Noteholder, in its capacity as a
Noteholder, receives any payment or distribution on any Secured Obligations in
respect of such Series that it is not entitled to receive under this Section
2.13 or Article III hereof, it will hold any amount so received in trust for
Loan Trustee and forthwith turn over such amount to Loan Trustee in the form
received to be applied as provided in Article III.
Section 2.14 Certain Payments. Company agrees to pay to Loan Trustee
for distribution in accordance with Section 3.04:
(a) an amount or amounts equal to the fees payable to Primary
Liquidity Provider under Section 2.03 of the Primary Liquidity Facility and the
related Fee Letter (as defined in the Intercreditor Agreement), multiplied by a
fraction, the numerator of which is the sum of the then outstanding aggregate
principal amount of the Series G Equipment Notes and the denominator of which
is the sum of the then outstanding aggregate principal amount of all "Series G
Equipment Notes" (as defined in the Intercreditor Agreement);
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(b) if any payment default shall have occurred and be continuing
with respect to interest on any Series G 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 the Primary 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 Primary
Liquidity Facility (or, if Policy Provider has made a payment equivalent to
such an Advance as would have been payable under Section 3.07 of the Primary
Liquidity Facility in respect of the Class G Certificates had such Advance been
made) under which such Unpaid Advance or Applied Provider Advance was made over
(2) the sum of Investment Earnings from any Final Advance plus any amount of
interest at the Past Due Rate actually payable (whether or not in fact paid) by
Company in respect of the overdue scheduled interest on the "Series G Equipment
Notes" (as defined in the Intercreditor Agreement) was made, multiplied by (y)
a fraction, the numerator of which is the then aggregate overdue amounts of
interest on the Series G Equipment Notes (other than interest becoming due and
payable solely as a result of acceleration of any such Equipment Notes) and the
denominator of which is the then aggregate overdue amounts of interest on all
"Series G Equipment Notes", (as defined in the Intercreditor Agreement) (other
than interest becoming due and payable solely as a result of acceleration of
any such "Series G Equipment Notes");
(c) any amounts owed to Primary Liquidity Provider by
Subordination Agent as borrower under Section 3.01 (other than in respect of an
Unpaid Advance or Applied Provider Advance), 3.03 (other than in respect of an
Unpaid Advance or Applied Provider Advance), 7.05 and 7.07 of the Primary
Liquidity Facility (or similar provisions of any Replacement Primary Liquidity
Facility) multiplied by the fraction specified in the foregoing clause (a);
(d) an amount or amounts equal to the compensation, including
reasonable expenses and disbursements actually incurred, payable to
Subordination Agent under Section 6.07 of the Intercreditor Agreement,
multiplied by the fraction specified in the foregoing clause (a) (but in any
event without duplication of any amount or amounts payable by Company in
respect of such compensation under any other Operative Document or Pass Through
Document); and
(e) an amount or amounts equal to all compensation and
reimbursement of fees, expenses and disbursements (including payment of
indemnities) owed to Policy Provider under the Policy Provider Agreement and
any Policy Provider Interest Amount, multiplied by the fraction specified in
the foregoing clause (a).
For purposes of this paragraph, the terms "Applied Provider Advance",
"Cash Collateral Account", "Class G Certificates", "Final Advance", "Investment
Earnings", "Policy Provider Interest Amount", "Replacement Primary Liquidity
Facility" and "Unpaid Advance" have the meanings specified in the Primary
Liquidity Facility or the Intercreditor Agreement.
Section 2.15 Repayment of Monies for Equipment Note Payments Held by
Loan Trustee. Any money held by Loan Trustee in trust for any payment of the
principal of, Make-Whole Amount, if any, Break 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 a 730-day period (for purposes of calculating this
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730-day period, all days on which the payment of such money shall not have been
made because of operation of law shall be excluded) after the due date for such
payment (or such lesser time as Loan Trustee is satisfied, after 60 days'
notice from Company, is one month prior to the escheat period provided under
applicable state law) shall be paid to Company. Noteholders of any outstanding
Equipment Notes shall thereafter, as unsecured general creditors, look only to
Company for payment thereof, and all liability of Loan Trustee with respect to
such trust money shall thereupon cease. Loan Trustee, before being required to
make any such repayment, may at the expense of Company cause to be mailed to
each such Noteholder notice that such money remains unclaimed. After a date
specified in such notice, which may not be less than 30 days from the date of
mailing, any unclaimed balance of such money then remaining will be repaid to
Company as provided herein.
Section 2.16 Directions by Subordination Agent. So long as
Subordination Agent is a Noteholder, notwithstanding anything contained herein
or in any other Operative Document to the contrary, in exercising its right to
vote the Equipment Notes held by it, or in giving or taking any direction,
consent, request, demand, instruction, authorization, notice, waiver or other
action provided by this Indenture or in respect of the Equipment Notes to be
given or taken by a Noteholder (each such vote or other action, a "Direction")
in respect of such Equipment Notes, Subordination Agent may act in accordance
with any votes, directions, consents, requests, demands, instructions,
authorizations, notices, waivers or other actions given or taken by any
applicable Pass Through Trustee or the Controlling Party pursuant to the
Intercreditor Agreement, including without limitation pursuant to Section 2.06,
Article IV or Section 8.01(b) thereof. Subordination Agent shall be permitted
(x) to give a Direction with respect to less than the entire principal amount
of any single Equipment Note held by it, and (y) to give different Directions
with respect to different portions of the principal amount of any single
Equipment Note held by it. Any Direction given by Subordination Agent at any
time with respect to more than a majority in aggregate unpaid principal amount
of all of the Equipment Notes issued and then outstanding hereunder shall be
deemed to have been given by a Majority in Interest of Noteholders.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
FROM THE COLLATERAL
Section 3.01 Basic Distributions. Except as otherwise provided in
Sections 3.02, 3.03 and 3.04, each periodic payment by Company of regularly
scheduled installments of principal or interest on the Equipment Notes received
by Loan Trustee shall be promptly distributed in the following order of
priority:
FIRST, so much of such payment as is required to pay in full
the aggregate amount of the payment or payments of principal amount
and interest (as well as any interest on any overdue principal amount
and, to the extent permitted by applicable law, on any overdue
interest and any other overdue amounts) then due under all Series G
Equipment Notes shall be distributed to Noteholders of Series G
Equipment Notes ratably, without priority of one over the other, in
the proportion that the amount of such payment or
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payments then due under each Series G Equipment Note bears to the
aggregate amount of the payments then due under all Series G Equipment
Notes;
SECOND, after giving effect to clause "first" above, so much
of such payment remaining as is required to pay in full the aggregate
amount of the payment or payments of principal amount and interest (as
well as any interest on any overdue principal amount and, to the
extent permitted by applicable law, on any overdue interest and other
overdue amounts) then due under all Series C Equipment Notes shall be
distributed to Noteholders of Series C Equipment Notes ratably,
without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series C
Equipment Note bears to the aggregate amount of the payments then due
under all Series C Equipment Notes;
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 D Equipment Notes
shall be distributed to 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
FOURTH, the balance, if any, of such installment remaining
thereafter shall be distributed to Company.
Section 3.02 Event of Loss; Mandatory Redemption; Optional Redemption.
Except as otherwise provided in Sections 3.03 and 3.04 and subject to the
following proviso, any payments received by Loan Trustee with respect to the
Aircraft as the result of (a) an Event of Loss with respect to the Aircraft or
with respect to another Core Aircraft (including amounts paid by Company
pursuant to Section 2.10(a) or (b)), or (b) a mandatory redemption of the
Equipment Notes pursuant to Section 2.10(c) shall be applied to redemption of
the Equipment Notes pursuant to Section 2.10, and to payment of all other
Secured Obligations by applying such funds in the following order of priority:
FIRST, (i) to reimburse Loan Trustee and Noteholders for any
reasonable costs or expenses actually incurred in connection with such
redemption for which they are entitled to reimbursement, or indemnity
by Company, under the Operative Documents; and then (ii) to pay any
other amounts then due (except as provided in clause "second" below)
to Loan Trustee, Noteholders and Indenture Indemnitees under this
Indenture, the Participation Agreement or the Equipment Notes;
SECOND, (i) so much of such payments or amounts remaining as
is required to pay in full the aggregate unpaid principal amount of
all Series G Equipment Notes (or, in the case of payments made
pursuant to Section 2.10(b), the amount of unpaid principal amount of
Series G Equipment Notes being redeemed) and the accrued but unpaid
interest thereon, Break Amount, if any, with respect to the Series G
Equipment Notes (or,
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in the case of payments made pursuant to Section 2.10(b), the accrued
but unpaid interest on, and Break Amount, if any, with respect to,
such Series G Equipment Notes being redeemed) and all other Secured
Obligations in respect of the Series G Equipment Notes (or, in the
case of payments made pursuant to Section 2.10(b), other Secured
Obligations in respect of the Series G Equipment Notes being redeemed)
to the date of distribution shall be distributed to Noteholders of
Series G Equipment Notes ratably, without priority of one over the
other, in the proportion that the aggregate unpaid principal amount of
all Series G Equipment Notes held by each Noteholder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder to
the date of distribution bears to the aggregate unpaid principal
amount of all Series G 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 C
Equipment Notes and the accrued but unpaid interest thereon, Break
Amount, if any, with respect to the Series C Equipment Notes and all
other Secured Obligations in respect of the Series C Equipment Notes
to the date of distribution shall be distributed to Noteholders of
Series C Equipment Notes ratably, without priority of one over the
other, in the proportion that the aggregate unpaid principal amount of
all Series C Equipment Notes held by each Noteholder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder to
the date of distribution bears to the aggregate unpaid principal
amount of all Series C Equipment Notes held by all such Noteholders
plus the accrued but unpaid interest and other amounts due thereon to
the date of distribution; and (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 D Equipment Notes and the accrued but unpaid interest thereon,
Break Amount, if any, with respect to the Series D Equipment Notes and
all other Secured Obligations in respect of the Series D Equipment
Notes to the date of distribution shall be distributed to 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
THIRD, the balance, if any, of such payments shall be
distributed to Company.
Notwithstanding the foregoing, any insurance, condemnation or similar proceeds
resulting from an Event of Loss that are received by Loan Trustee shall be held
or disbursed by Loan Trustee as provided by Sections 7.05(c) and 7.06(d). Any
such money held by Loan Trustee shall be invested as provided in Section 5.06.
No Make-Whole Amount shall be payable on the Equipment Notes in
connection with their redemption as a result of (i) an Event of Loss in respect
of the Airframe or the Airframe and the Engines installed thereon, (ii) a
mandatory redemption of Equipment Notes pursuant to Section 2.10(b) or (iii) a
mandatory redemption of Equipment Notes pursuant to Section 2.10(c).
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Section 3.03 Payments after Event of Default. Except as otherwise
provided in Section 3.04, all payments received and amounts held or realized by
Loan Trustee (including any amounts realized by Loan Trustee from the exercise
of any remedies pursuant to Article IV) after both an Event of Default shall
have occurred and be continuing and the Equipment Notes shall have become due
and payable pursuant to Section 4.02(a), as well as all payments or amounts
then held by Loan Trustee as part of the Collateral, shall be promptly
distributed by Loan Trustee in the following order of priority:
FIRST, so much of such payments or amounts as is required (i)
to reimburse Loan Trustee, to the extent Loan Trustee is entitled to
be reimbursed or indemnified under the Operative Documents, for any
Tax, expense or other loss (including, without limitation, all amounts
to be expended at the expense of, or charged upon the tolls, rents,
revenues, issues, products and profits of, the Collateral and every
part thereof pursuant to Section 4.02(a)) actually incurred by Loan
Trustee (to the extent not previously reimbursed), the expenses of any
sale, taking or other proceeding, reasonable attorneys' fees and
expenses, court costs and any other expenditures actually incurred or
expenditures or advances made by Loan Trustee or Noteholders in the
protection, exercise or enforcement of any right, power or remedy or
any damages sustained by Loan Trustee or any Noteholder, liquidated or
otherwise, upon such Event of Default shall be applied by Loan Trustee
as between itself and Noteholders in reimbursement of such expenses
and any other expenses for which Loan Trustee or Noteholders are
entitled to reimbursement under any Operative Document, and (ii) to
pay all amounts payable (except as provided in clauses "second",
"third" and "fourth" below) to the other Indenture Indemnitees
hereunder and under the Participation Agreement; and in case the
aggregate amount so to be distributed is insufficient to pay as
aforesaid, then ratably, without priority of one over the other, in
proportion to the amounts owed each hereunder;
SECOND, so much of such payments or amounts remaining as is
required to reimburse the then existing or prior Noteholders for
payments made pursuant to Section 5.03 (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Noteholders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each
such then existing or prior Noteholder pursuant to Section 5.03;
THIRD, (i) so much of such payments or amounts remaining as
is required to pay in full the aggregate unpaid principal amount of
all Series G Equipment Notes and the accrued but unpaid interest
thereon, Break Amount, if any, with respect to the Series G Equipment
Notes and all other Secured Obligations in respect of the Series G
Equipment Notes to the date of distribution shall be distributed to
Noteholders of Series G Equipment Notes ratably, without priority of
one over the other, in the proportion that the aggregate unpaid
principal amount of all Series G Equipment Notes held by each
Noteholder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder to the date of distribution bears to the
aggregate unpaid principal amount of all Series G 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 C Equipment Notes and
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the accrued but unpaid interest thereon, Break Amount, if any, with
respect to the Series C Equipment Notes and all other Secured
Obligations in respect of the Series C Equipment Notes to the date of
distribution shall be distributed to Noteholders of Series C Equipment
Notes ratably, without priority of one over the other, in the
proportion that the aggregate unpaid principal amount of all Series C
Equipment Notes held by each Noteholder plus the accrued but unpaid
interest and other amounts due hereunder or thereunder to the date of
distribution bears to the aggregate unpaid principal amount of all
Series C Equipment Notes held by all such Noteholders plus the accrued
but unpaid interest and other amounts due thereon to the date of
distribution; and (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 D Equipment
Notes and the accrued but unpaid interest thereon, Break Amount, if
any, with respect to the Series D Equipment Notes and all other
Secured Obligations in respect of the Series D Equipment Notes to the
date of distribution shall be distributed to 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;
FOURTH, (i) so much of such payments or amounts remaining as
is required to pay in full the aggregate unpaid principal amount of
all Related Series G Core Equipment Notes and the accrued but unpaid
interest thereon, Break Amount, if any, with respect to such Related
Series G Core Equipment Notes and all other Related Secured
Obligations in respect of the Related Series G Core Equipment Notes to
the date of distribution shall be distributed to Related Loan Trustees
for further distribution to Related Noteholders of Related Series G
Core Equipment Notes ratably, without priority of one over the other,
in the proportion that the aggregate unpaid principal amount of all
Related Series G Core Equipment Notes held by each holder plus the
accrued but unpaid interest and other amounts due hereunder or
thereunder to the date of distribution bears to the aggregate unpaid
principal amount of all Related Series G Core Equipment Notes held by
all such holders plus the accrued but unpaid interest and other
amounts due thereon to the date of distribution; (ii) after giving
effect to 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 remaining Related Series G Non-Core Equipment Notes and
the accrued but unpaid interest thereon, Break Amount, if any, with
respect to the Related Series G Non-Core Equipment Notes and all other
Related Secured Obligations in respect of the Related Series G
Non-Core Equipment Notes to the date of distribution shall be
distributed to Related Loan Trustees for further distribution to
Related Noteholders of Related Series G Non-Core Equipment Notes
ratably, without priority of one over the other, in the proportion
that the aggregate unpaid principal amount of all Related Series G
Non-Core Equipment Notes held by each holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder to the
date of distribution bears to the aggregate unpaid principal amount of
all Related Series G Non-Core Equipment Notes held by all such holders
plus the accrued but unpaid interest and other amounts due thereon to
the date of distribution; (iii) after giving effect to subclause (ii)
above, so much of such
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payments or amounts remaining as is required to pay in full all
Related Secured Obligations in respect of Related Series C Equipment
Notes issued under any Related Indenture then due shall be distributed
to Related Loan Trustees for further distribution to Related
Noteholders of Related Series C Equipment Notes ratably, without
priority of one over the other, in the proportion that the aggregate
unpaid amount of all Related Secured Obligations in respect of such
Related Series C Equipment Notes then due held by such holder bears to
the aggregate unpaid amount of all other Related Secured Obligations
in respect of such Related Series C Equipment Notes then due; and (iv)
after giving effect to subclause (iii) above, so much of such payments
or amounts remaining as is required to pay in full all Related Secured
Obligations in respect of Related Series D Equipment Notes issued
under any Related Indenture then due shall be distributed to Related
Loan Trustees for further distribution to Related Noteholders of
Related Series D Equipment Notes ratably, without priority of one over
the other, in the proportion that the aggregate unpaid amount of all
Related Secured Obligations in respect of such Related Series D
Equipment Notes then due held by such holder bears to the aggregate
unpaid amount of all other Related Secured Obligations in respect of
such Related Series D Equipment Notes then due; and
FIFTH, the balance, if any, of such payments or amounts shall
be distributed to Company.
No Make-Whole Amount shall be payable on the Equipment Notes as a
consequence of or in connection with an Event of Default or the acceleration of
the Equipment Notes.
Section 3.04 Certain Payments. (a) Any payments received by Loan
Trustee for which provision as to the application thereof is made in this
Indenture other than in this Article III shall be applied as provided in those
provisions. Without limiting the foregoing, any payments received by Loan
Trustee which are payable to Company pursuant to any of the provisions of this
Indenture other than those set forth in this Article III (including Sections
5.06, 7.05 and 7.06 hereof) shall be so paid to Company. Any payments received
by Loan Trustee for which no provision as to the application thereof is made in
this Indenture and for which such provision is made in any other Operative
Document shall be applied forthwith to the purpose for which such payment was
made in accordance with the terms of such other Operative Document.
(b) Loan Trustee will distribute promptly upon receipt any
indemnity payment received by it from Company pursuant to Section 4.02 of the
Participation Agreement in respect of (i) U.S. Bank and Loan Trustee, (ii)
Subordination Agent, (iii) any separate or successor trustee appointed pursuant
to Section 8.02 hereof, (iv) Pass Through Trustees, (v) either Liquidity
Provider and (vi) Policy Provider, in each case, directly to the Person
entitled thereto. Any payment received by Loan Trustee from Company under
Section 2.14 shall be distributed to Subordination Agent to be distributed in
accordance with Section 2.03(c) of the Intercreditor Agreement.
(c) Any payments received by Loan Trustee not constituting part
of the Collateral or otherwise for which no provision as to the application
thereof is made in any Operative Document shall be distributed by Loan Trustee
to Company. Further, and except as
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otherwise provided in Sections 3.02, 3.03 and 3.04, all payments received and
amounts realized by Loan Trustee with respect to the Aircraft, to the extent
received or realized at any time after payment in full of all Secured
Obligations, as well as any amounts remaining as part of the Collateral after
the occurrence of such payment in full, shall be distributed by Loan Trustee to
Company.
Section 3.05 Payments to Company. Any amounts distributed hereunder by
Loan Trustee to Company shall be paid to Company (within the time limits
contemplated by Section 2.03) by wire transfer of funds of the type received by
Loan Trustee at such office and to such account or accounts of such entity or
entities as shall be designated by notice from Company to Loan Trustee from
time to time.
Section 3.06 Cooperation. Prior to making any distribution under this
Article III, Loan Trustee shall consult with Related Loan Trustees to determine
amounts payable with respect to the Related Secured Obligations. Loan Trustee
shall cooperate with Related Loan Trustees and shall provide such information
as shall be reasonably requested by each Related Loan Trustee to enable such
Related Loan Trustee to determine amounts distributable under Article III of
its Related Indenture.
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
Section 4.01 Events of Default. Each of the following events
constitutes an "Event of Default" whether such event is voluntary or
involuntary or comes about or is effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body and each such
Event of Default is deemed to exist and continue so long as, but only as long
as, it has not been remedied or explicitly waived:
(a) Company fails to make any payment of principal amount of,
Make-Whole Amount, if any, Break Amount, if any, or interest on, any Equipment
Note within 15 days after such payment is due;
(b) Company fails to make payment when the same is due of any
amount (other than amounts referred to in Section 4.01(a)) due hereunder, under
any Equipment Note or under any other Operative Document, and such failure
continues unremedied for 30 days after the receipt by Company of written notice
thereof from Loan Trustee or any Noteholder;
(c) Company fails to carry and maintain insurance or indemnity on
or with respect to the Aircraft in accordance with the provisions of Section
7.06; provided that no such failure to carry and maintain insurance shall
constitute an Event of Default until the earlier of (i) the date such failure
has continued unremedied for a period of 30 days after receipt by Loan Trustee
of the notice of cancellation or lapse referred to in Section 7.06 or (ii) the
date such insurance is not in effect as to Loan Trustee;
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(d) Company fails to perform or observe any other covenant,
condition or agreement to be performed or observed by it under any Operative
Document, and such failure continues unremedied for a period of 60 days after
receipt by Company of written notice thereof from Loan Trustee or any
Noteholder; provided that, if such failure is capable of being remedied, no
such failure shall constitute an Event of Default for a period of one year
after such notice is received by Company so long as Company is diligently
proceeding to remedy such failure;
(e) any representation or warranty made by Company in any
Operative Document was incorrect in any material respect at the time made, and
such incorrectness continues to be material to the transactions contemplated
hereby and continues unremedied for a period of 60 days after receipt by
Company of written notice thereof from Loan Trustee; provided that, if such
incorrectness is capable of being remedied, no such incorrectness shall
constitute an Event of Default for a period of one year after such notice is
received by Company so long as Company is diligently proceeding to remedy such
incorrectness;
(f) Company consents to the appointment of or the taking of
possession by a receiver, trustee or liquidator in respect of a substantial
part of its property, admits in writing its inability to pay its debts
generally as they come due or makes a general assignment for the benefit of its
creditors;
(g) Company files a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization, liquidation or other
relief as a debtor in a case under any bankruptcy laws or insolvency laws (as
in effect at such time) or an answer admitting the material allegations of a
petition filed against Company as a debtor in any such case, or Company as a
debtor seeks relief by voluntary petition, answer or consent, under the
provisions of any other bankruptcy or other similar law providing for the
reorganization or winding-up of corporations (as in effect at such time), or
Company seeks an agreement, composition, extension or adjustment with its
creditors under such laws;
(h) an order, judgment or decree is entered by any court of
competent jurisdiction appointing, without the consent of Company, a receiver,
trustee or liquidator of Company or sequestering any substantial part of its
property, or granting any other relief in respect of Company as a debtor under
any bankruptcy laws or insolvency laws (as in effect at such time), and any
such order, judgment or decree of appointment or sequestration remains in force
undismissed, unstayed or unvacated for a period of 90 days after the date of
entry thereof;
(i) a petition against Company as a debtor in a case under the
federal bankruptcy laws or other insolvency laws (as in effect at such time) is
filed and not withdrawn or dismissed within 90 days thereafter, or if, under
the provisions of any law providing for reorganization or winding-up of
corporations that may apply to Company, any court of competent jurisdiction
assumes jurisdiction, custody or control of Company or of any substantial part
of its property and such jurisdiction, custody or control remains in force
unrelinquished, unstayed or unterminated for a period of 90 days; or
(j) any amount in respect of the Equipment Notes or Related
Equipment Notes, including any payment of principal amount of, Make-Whole
Amount, if any, Break
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Amount, if any, or interest on, any Equipment Note or any Related Equipment
Note has not been paid in full on the Final Payment Date;
provided, however, that notwithstanding anything to the contrary contained in
this Section 4.01, any failure of Company to perform or observe any covenant,
condition or agreement shall not constitute an Event of Default if such failure
arises by reason of an event referred to in the definition of "Event of Loss"
so long as Company is continuing to comply with all of the terms of Section
7.05.
Section 4.02 Remedies. (a) If an Event of Default has occurred and is
continuing and so long as the same shall continue unremedied, then and in every
such case Loan Trustee may, and upon the written instructions of a Majority in
Interest of Noteholders, Loan Trustee shall, do one or more of the following to
the extent permitted by, and subject to compliance with the requirements of,
applicable law then in effect (provided, however, that during any period the
Airframe or any Engine is subject to the CRAF Program and is in possession of
or being operated under the direction of the United States government or an
agency or instrumentality of the United States, Loan Trustee shall not, on
account of any Event of Default, be entitled to exercise or pursue any of the
powers, rights or remedies described in this Section 4.02 in such manner as to
limit Company's control under this Indenture (or any Permitted Lessee's control
under any Lease) of the Airframe or such Engine, unless at least 60 days' (or
such lesser period as may then be applicable under the Military Airlift Command
Program of the United States government) prior written notice of default
hereunder has been given by Loan Trustee by registered or certified mail to
Company (and any such Permitted Lessee) with a copy addressed to the
Contracting Office Representative or other appropriate person for the Military
Airlift Command of the United States Air Force under any contract with Company
(or such Permitted Lessee) relating to the Aircraft):
(i) declare by written notice to Company all the
Equipment Notes to be due and payable, whereupon the aggregate unpaid
principal amount of all Equipment Notes then outstanding, together
with accrued but unpaid interest thereon, Break Amount, if any, with
respect thereto, 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, Break Amount,
if any, with respect thereto, and all other amounts due thereunder
(but without Make-Whole Amount) shall immediately and without further
act become due and payable without presentment, demand, protest or
other notice, all of which are hereby waived; and, following such
declaration or deemed declaration:
(ii) (A) cause Company, upon the demand by notice of Loan
Trustee, at Company's expense, to deliver promptly, and Company shall
deliver promptly, all or such part of the Airframe or any Engine as
Loan Trustee so demands to Loan Trustee or its order, or, if Company
has failed to so deliver the Airframe or any Engine after such demand,
Loan Trustee, at its option, may enter upon the premises where all or
any part of the Airframe or any Engine are located and take immediate
possession of and remove the same together with any engine which is
not an Engine but which is installed on the
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Airframe, subject to all of the rights of the owner, lessor, lienor or
secured party of such engine; provided that the Airframe with an
engine (which is not an Engine) installed thereon may be flown or
returned only to a location within the continental United States, and
such engine shall be held for the account of any such owner, lessor,
lienor, secured party or, if such engine is owned by Company, may at
the option of Company with the consent of Loan Trustee (which will not
be unreasonably withheld) or at the option of Loan Trustee with the
consent of Company (which will not be unreasonably withheld), be
exchanged with Company for an Engine in accordance with the provisions
of Section 7.05(b); (B) sell all or any part of the Airframe and any
Engine at public or private sale, whether or not Loan Trustee at the
time has possession thereof, as Loan Trustee may determine, or
otherwise dispose of, hold, use, operate, lease to others or keep idle
all or any part of the Airframe or such Engine as Loan Trustee, in its
sole discretion, determines, all free and clear of any rights or
claims of Company, and the proceeds of such sale or disposition shall
be applied as set forth in Section 3.03; or (C) exercise any other
remedy of a secured party under the Uniform Commercial Code of the
State of New York (whether or not in effect in the jurisdiction in
which enforcement is sought).
Upon every such taking of possession of Collateral under this
Section 4.02, Loan Trustee may, from time to time, at the expense of the
Collateral, make all such expenditures for maintenance, insurance, repairs,
alterations, additions and improvements to and of the Collateral as it deems
necessary to cause the Collateral to be in such condition as required by the
provisions of this Indenture. In each such case, Loan Trustee may maintain,
use, operate, store, insure, lease, control, manage or dispose of the
Collateral and may exercise all rights and powers of Company relating to the
Collateral as Loan Trustee reasonably deems best, including the right to enter
into any and all such agreements with respect to the maintenance, use,
operation, storage, insurance, leasing, control, management or disposition of
the Collateral or any part thereof as Loan Trustee may reasonably determine;
and Loan Trustee shall be entitled to collect and receive directly all tolls,
rents, revenues, issues, income, products and profits of the Collateral and
every part thereof without prejudice, however, to the rights of Loan Trustee
under any provision of this Indenture to collect and receive all cash held by,
or required to be deposited with Loan Trustee hereunder. Such tolls, rents,
revenues, issues, income, products and profits shall be applied to pay the
expenses of the use, operation, storage, insurance, leasing, control,
management or disposition of the Collateral, and of all maintenance, repairs,
replacements, alterations, additions and improvements, and to make all payments
that Loan Trustee is required or elects to make, if any, for Taxes, insurance
or other proper charges assessed against or otherwise imposed upon the
Collateral or any part thereof, and all other payments which Loan Trustee is
required or expressly authorized to make under any provision of this Indenture,
as well as just and reasonable compensation for the services of Loan Trustee,
and shall otherwise be applied in accordance with Article III. If an Event of
Default has occurred and is continuing and the Equipment Notes either have been
accelerated pursuant to this Section 4.02 or have become due at maturity and
Loan Trustee is entitled to exercise rights hereunder, at the request of Loan
Trustee, Company shall promptly execute and deliver to Loan Trustee such
instruments of title and other documents as Loan Trustee reasonably deems
necessary or advisable to enable Loan Trustee or an agent or representative
designated by Loan Trustee, at such time or times and place or places as Loan
Trustee specifies, to obtain possession of all or any part of the Collateral to
which Loan Trustee at the time is entitled hereunder. If Company for any reason
fails to execute and deliver such instruments and documents after such request
by Loan Trustee, Loan Trustee
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may obtain a judgment conferring on Loan Trustee the right to immediate
possession and requiring Company to execute and deliver such instruments and
documents to Loan Trustee, to the entry of which judgment Company hereby
specifically consents to the fullest extent it may lawfully do so. All actual
and reasonable expenses of obtaining such judgement or of pursuing, searching
for and taking such property shall, until paid, be secured by the Lien of this
Indenture.
(b) Loan Trustee shall give Company at least 30 days' prior
written notice of any public sale or of the date on or after which any private
sale will be held, which notice Company hereby agrees to the extent permitted
by applicable law is reasonable notice. Any Noteholder or Noteholders shall be
entitled to bid for and become the purchaser of any Collateral offered for sale
pursuant to this Section 4.02 and to credit against the purchase price bid at
such sale by such Noteholders all or any part of the unpaid amounts owing to
such Noteholders under the Operative Documents and secured by the Lien of this
Indenture (but only to the extent that such purchase price would have been paid
to such Noteholders pursuant to Article III if such purchase price were paid in
cash and the foregoing provision of this Section 4.02(b) were not given
effect). Loan Trustee may exercise such right without possession or production
of the Equipment Notes or proof of ownership thereof, and as a representative
of Noteholders may exercise such right without notice to Noteholders as parties
to any suit or proceeding relating to the foreclosure of any Collateral.
Company may also bid for and become the purchaser of any Collateral offered for
sale pursuant to this Section 4.02.
(c) To the extent permitted by applicable law, while an Event of
Default has occurred and is continuing, Company irrevocably appoints Loan
Trustee the true and lawful attorney-in-fact of Company (which appointment is
coupled with an interest) in its name and stead and on its behalf, for the
purpose of effectuating any sale, assignment, transfer or delivery for the
enforcement of the Lien of this Indenture, whether pursuant to foreclosure or
power of sale, or otherwise, to execute and deliver all such bills of sale,
assignments and other instruments as may be necessary or appropriate, with full
power of substitution, Company hereby ratifying and confirming all that such
attorney or any substitute does by virtue hereof in accordance with applicable
law; provided that if so requested by Loan Trustee or any purchaser, Company
shall ratify and confirm any such sale, assignment or transfer of delivery, by
executing and delivering to Loan Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
(d) At any time after Loan Trustee has declared the unpaid
principal amount of all Equipment Notes then outstanding to be due and payable
and prior to the sale of any part of the Collateral pursuant to this Article
IV, a Majority in Interest of Noteholders, by written notice to Company and
Loan Trustee, may rescind and annul such declaration, whether made by Loan
Trustee on its own accord or as directed, and its consequences if: (i) there
has been paid to or deposited with Loan Trustee an amount sufficient to pay all
overdue installments of principal amount of, and interest on, the Equipment
Notes, and all other amounts owing under the Operative Documents, that have
become due otherwise than by such declaration of acceleration and (ii) all
other Events of Default, other than nonpayment of principal amount or interest
on the Equipment Notes that have become due solely because of such
acceleration, have been either cured or waived; provided, that no such
recission or annulment shall extend to or affect any subsequent default or
Event of Default or impair any right consequent thereon.
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(e) Notwithstanding anything contained herein, so long as Pass
Through Trustee under any Pass Through Trust Agreement or Subordination Agent
on its behalf is a Noteholder, Loan Trustee will not be authorized or empowered
to acquire title to any Collateral or take any action with respect to any
Collateral so acquired by it if such acquisition or action would cause any Pass
Through Trust to fail to qualify as a "grantor trust" for federal income tax
purposes.
Section 4.03 Remedies Cumulative. To the extent permitted under
applicable law, each and every right, power and remedy specifically given to
Loan Trustee herein or otherwise in this Indenture shall be cumulative and
shall be in addition to every other right, power and remedy specifically given
herein or now or hereafter existing at law, in equity or by statute, and each
and every right, power and remedy whether specifically given herein or
otherwise existing may be exercised from time to time and as often and in such
order as may be deemed expedient by Loan Trustee, and the exercise or the
beginning of the exercise of any power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by Loan Trustee in the exercise of any
right, remedy or power or in the pursuance of any remedy shall, to the extent
permitted by applicable law, impair any such right, power or remedy or be
construed to be a waiver of any default on the part of Company or to be an
acquiescence therein.
Section 4.04 Discontinuance of Proceedings. In case Loan Trustee has
instituted any proceedings to enforce any right, power or remedy under this
Indenture by foreclosure, entry or otherwise, and such proceedings have been
discontinued or abandoned for any reason or have been determined adversely to
Loan Trustee, then and in every such case Company and Loan Trustee shall,
subject to any determination in such proceedings, be restored to their former
positions and rights hereunder with respect to the Collateral, and all rights,
remedies and powers of Loan Trustee shall continue as if no such proceedings
had been undertaken (but otherwise without prejudice).
Section 4.05 Waiver of Past Defaults. Upon written instruction from a
Majority in Interest of Noteholders, Loan Trustee shall waive any past default
hereunder and its consequences, and upon any such waiver such default shall
cease to exist and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of the Operative Documents, but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon; provided, however, that in the absence of written
instructions from each of the affected Noteholders, Loan Trustee shall not
waive any default (i) in the payment of the principal amount, Make-Whole
Amount, if any, Break 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:
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(1) such Noteholder previously shall have given written
notice to Loan Trustee of a continuing Event of Default;
(2) A Majority in Interest of Noteholders shall have
requested Loan Trustee in writing to institute such action, suit or
proceeding and shall have offered to Loan Trustee indemnity as
provided in Section 5.03;
(3) Loan Trustee shall have refused or neglected to
institute any such action, suit or proceeding for 60 days after
receipt of such notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request
shall have been given to Loan Trustee during such 60-day period by a
Majority in Interest of Noteholders.
Except to the extent provided in the Intercreditor Agreement
or in any Indenture Supplement, it is understood and intended that no one or
more of Noteholders of any Series shall have any right in any manner whatsoever
hereunder or under the Indenture Supplement or under the Equipment Notes of
such Series to (i) surrender, impair, waive, affect, disturb or prejudice any
Collateral, or the Lien of the Indenture on any Collateral, or the rights of
Noteholders of such Series, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Noteholder of such Series or (iii)
enforce any right under this Indenture, except in the manner provided in this
Indenture and for the equal, ratable and common benefit of all Noteholders of
such Series subject to the provisions of this Indenture.
Section 4.07 Appointment of a Receiver. Loan Trustee shall, as a
matter of right, be entitled to the appointment of a receiver (who may be Loan
Trustee or any successor or nominee thereof) for all or any part of the
Collateral, whether such receivership be incidental to a proposed sale of the
Collateral or the taking of possession thereof or otherwise, and Company hereby
consents to the appointment of such a receiver and will not oppose any such
appointment. Any receiver appointed for all or any part of the Collateral shall
be entitled to exercise all the rights and powers of Loan Trustee with respect
to the Collateral.
Section 4.08 Rights of Noteholders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Noteholder to receive
payment of principal of, and premium, if any, and interest on an Equipment Note
on or after the respective due dates expressed in such Equipment Note, shall
not be impaired or affected without the consent of such Noteholder.
ARTICLE V
DUTIES OF LOAN TRUSTEE
Section 5.01 Notice of Event of Default. If Loan Trustee has knowledge
of an Event of Default or of a default arising from a failure by Company to pay
when due any payment of principal amount, interest on, Break Amount, if any, or
Make-Whole Amount, if any, due and payable under any Equipment Note, Loan
Trustee shall promptly give notice thereof to Company, Policy Provider, the
Primary Liquidity Provider and each Noteholder. Subject to the
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terms of Sections 4.02, 4.05, 5.02 and 5.03, Loan Trustee shall take such
action, or refrain from taking such action, with respect to such default or
Event of Default (including with respect to the exercise of any rights or
remedies hereunder) as Loan Trustee is instructed in writing by a Majority in
Interest of Noteholders. Subject to the provisions of Section 5.03, if Loan
Trustee does not receive instructions as above provided within 20 Business Days
after giving notice of such default or Event of Default to Noteholders, Loan
Trustee may, subject to instructions thereafter received pursuant to the
preceding provisions of this Section 5.01, take such action, or refrain from
taking such action with respect to such default or Event of Default as it
reasonably determines to be advisable in the best interests of Noteholders, but
shall be under no duty to take or refrain from taking any action. It shall use
the same degree of care and skill in connection therewith as a prudent person
would use under the circumstances in the conduct of his or her own affairs.
Loan Trustee may not sell the Airframe or any Engine without the consent of a
Majority in Interest of Noteholders.
For all purposes of this Indenture, in the absence of actual
knowledge, Loan Trustee shall not be deemed to have knowledge of a default or
an Event of Default unless notified in writing by Company or one or more
Noteholders; and "actual knowledge" (as used in the foregoing clause) of Loan
Trustee shall mean actual knowledge of an officer in the Corporate Trust
Division of Loan Trustee; provided, however, that Loan Trustee is deemed to
have actual knowledge of (i) the failure of Company to pay any principal amount
of, or interest on, the Equipment Notes directly to Loan Trustee when the same
shall become due or (ii) the failure of Company to maintain insurance as
required under Section 7.06 if Loan Trustee receives written notice thereof
from an insurer or insurance broker.
Section 5.02 Action upon Instructions; Certain Rights and Limitations.
Subject to the terms of Article IV and this Article V, upon the written
instructions at any time of a Majority in Interest of Noteholders, Loan Trustee
shall promptly (i) give such notice, direction, consent, waiver or approval or
exercise such right, remedy or power hereunder in respect of all or any part of
the Collateral or (ii) take such other action, as is specified in such
instructions.
Loan Trustee will cooperate with Company in connection with the
recording, filing, re-recording and refiling of the Indenture and any
supplements to it and any financing statements or other documents as is
necessary to maintain the perfection hereof or otherwise protect the security
interests created hereby. Loan Trustee shall furnish to Company upon request
such information and copies of such documents as Loan Trustee may have and as
are necessary for Company to perform its duties under Article II hereof.
Section 5.03 Indemnification. Loan Trustee shall not be required to
take any action or refrain from taking any action under Sections 5.01 (other
than the first sentence thereof) or 5.02 or Article IV unless it shall have
received indemnification against any risks incurred in connection therewith in
form and substance reasonably satisfactory to it, including, without
limitation, adequate advances against costs that may be incurred by it in
connection therewith. Loan Trustee shall not be required to take any action
under Section 5.01 (other than the first sentence thereof) or 5.02 or Article
IV, nor shall any other provision of any Operative Document be deemed to impose
a duty on Loan Trustee to take any action, if Loan Trustee shall have been
advised by outside counsel that such action is contrary to the terms hereof or
is otherwise contrary to law.
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Section 5.04 No Duties Except as Specified in Indenture or
Instructions. Loan Trustee shall not have any duty or obligation to manage,
control, lease, use, sell, operate, store, dispose of or otherwise deal with
the Aircraft or any other part of the Collateral, or to otherwise take or
refrain from taking any action under, or in connection with, this Indenture,
except as expressly provided by the terms of this Indenture or the
Participation Agreement or as expressly provided in written instructions
received pursuant to the terms of Section 5.01 or 5.02; and no implied duties
or obligations shall be read into this Indenture against Loan Trustee.
Section 5.05 No Action Except under Indenture or Instructions. Loan
Trustee will not manage, control, use, sell, lease, operate, store, dispose of
or otherwise deal with the Aircraft or any other part of the Collateral except
in accordance with the powers granted to, or the authority conferred upon, Loan
Trustee pursuant to this Indenture and in accordance with the express terms
hereof.
Section 5.06 Investment of Amounts Held by Loan Trustee. Any monies
(including for the purpose of this Section 5.06 any cash deposited with Loan
Trustee by Company, any cash received by Loan Trustee pursuant to Sections
7.05(c) or 7.06(d) or otherwise) or Permitted Investments purchased by the use
of such cash pursuant to this Section 5.06 or any cash constituting the
proceeds of the maturity, sale or other disposition of any Permitted
Investments) held by Loan Trustee hereunder as part of the Collateral, until
paid out by Loan Trustee as herein provided, (i) subject to clause (ii) below,
may be carried by Loan Trustee on deposit with itself or on deposit to its
account with any bank, trust company or national banking association
incorporated or doing business under the laws of the United States or one of
the states thereof having combined capital and surplus and retained earnings of
a least $100,000,000, and Loan Trustee shall not have any liability for
interest upon any such monies except as otherwise agreed in writing with
Company, or (ii) at any time and from time to time, so long as no Event of
Default shall have occurred and be continuing, at the request of Company, shall
be invested and reinvested in Permitted Investments as specified in such
request (if such investments are reasonably available for purchase) and sold,
in any case at such prices, including accrued interest or its equivalent, as
are set forth in such request, and such Permitted Investments shall be held by
Loan Trustee in trust as part of the Collateral until so sold; provided that
Company shall upon demand pay to Loan Trustee the amount of any loss realized
upon maturity, sale or other disposition of any such Permitted Investment and,
so long as no Event of Default or Payment Default shall have occurred and be
continuing, Company shall be entitled to receive from Loan Trustee, and Loan
Trustee shall promptly pay to Company, any profit, income, interest, dividend
or gain realized upon maturity, sale or other disposition of any Permitted
Investment. If an Event of Default or Payment Default shall have occurred and
be continuing, any net income, profit, interest, dividend or gain realized upon
maturity, sale or other disposition of any Permitted Investment shall be held
as part of the Collateral and shall be applied by Loan Trustee at the same
time, on the same conditions and in the same manner as the amounts in respect
of which such income, profit, interest, dividend or gain was realized are
required to be distributed in accordance with the provisions hereof pursuant to
which such amounts were required to be held. Loan Trustee shall not be
responsible for any losses on any investments or sales of Permitted Investments
made pursuant to the procedure specified in this Section 5.06 other than by
reason of its willful misconduct or negligence. If any moneys or investments
are held by Loan Trustee solely because an Event of Default has occurred and is
continuing and such moneys or investments have been held for a period of 90
consecutive days during which such
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Event of Default is continuing without any remedial action being taken by Loan
Trustee (it being expressly understood that such remedial action includes any
declaration of acceleration of the Equipment Notes) in respect of such Event of
Default pursuant to Section 4.02 hereof, and provided that there is no stay,
moratorium or injunction in effect preventing the taking of such action, then,
notwithstanding any other provision of the Operative Documents, all such moneys
and investments held by Loan Trustee shall be released to Company on such 90th
day, or on the next Business Day after such 90th day.
ARTICLE VI
LOAN TRUSTEE
Section 6.01 Acceptance of Trusts and Duties. U.S. Bank 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. U.S. Bank 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 U.S. Bank in the Participation
Agreement or expressly made hereunder and (d) as otherwise expressly provided
in the Operative Documents.
Section 6.02 Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Sections 5.01, 5.02 or 6.06, and
except as provided in, and without limiting the generality of, Sections 5.02,
5.03 and 5.04, Loan Trustee shall have no duty (a) to see to any registration
of the Aircraft or any recording or filing of this Indenture or any other
document, or to see to the maintenance of any such registration, recording or
filing, (b) to see to any insurance on the Aircraft or to effect or maintain
any such insurance, whether or not Company is in default with respect thereto,
(c) to confirm, verify or inquire into the failure to receive any financial
statements of Company or (d) to inspect the Aircraft at any time or ascertain
or inquire as to the performance or observance of any of Company's covenants
hereunder with respect to the Aircraft.
Section 6.03 No Representations or Warranties as to the Documents.
Except as provided in Article 5 of the Participation Agreement, Loan Trustee
shall not be deemed to have made any representation or warranty as to the
validity, legality or enforceability of any Operative Document or any other
document or instrument, or as to the correctness of any statement (other than a
statement by Loan Trustee) contained herein or therein, except that Loan
Trustee hereby represents and warrants that each of said specified documents to
which it is a party has been or will be duly executed and delivered by one of
its officers who is and will be duly authorized to execute and deliver such
document on its behalf.
Section 6.04 No Segregation of Monies; No Interest. Subject to Section
5.06 hereof, all moneys received by Loan Trustee shall, until used or applied
as herein provided, be held in trust for the purposes for which they were
received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law, and neither Loan Trustee nor any agent
of Loan Trustee shall be under any liability for interest on any moneys
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received by it hereunder; provided, however, that any payments received, or
applied hereunder, by Loan Trustee shall be accounted for by Loan Trustee so
that any portion thereof paid or applied pursuant hereto shall be identifiable
as to the source thereof.
Section 6.05 Reliance; Agents; Advice of Counsel. Loan Trustee shall
not incur any liability to anyone in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion, bond
or other document or paper reasonably believed by it to be genuine and
reasonably believed by it to be signed by the proper party or parties. Loan
Trustee may accept a copy of a resolution of the Board of Directors of any
party to the Participation Agreement, certified by the Secretary or an
Assistant Secretary of such party as duly adopted and in full force and effect,
as conclusive evidence that such resolution has been duly adopted and that the
same is in full force and effect. As to any fact or matter the manner of
ascertainment of which is not specifically described herein, Loan Trustee may
for all purposes hereof rely on a certificate, signed by a duly authorized
officer of Company, as to such fact or matter, and such certificate shall
constitute full protection to Loan Trustee for any action taken or omitted to
be taken by it in good faith in reliance thereon. In the administration of the
trusts hereunder, Loan Trustee may, (a) execute any of the trusts or powers
hereof and perform its powers and duties hereunder directly or through agents
(including paying agents or registrars) or attorneys, and (b) at the expense of
the Collateral, consult with counsel, accountants and other skilled Persons to
be selected and retained by it. Loan Trustee shall not be liable for anything
done, suffered or omitted in good faith by it in accordance with the advice or
opinion of any such counsel, accountants or other skilled Persons acting within
such counsel's, accountants' or Person's area of competence (so long as Loan
Trustee shall have exercised reasonable care and judgment in selecting such
Persons).
Section 6.06 Instructions from Noteholders. In the administration of
the trusts created hereunder, Loan Trustee shall have the right to seek
instructions from a Majority in Interest of Noteholders should any provision of
this Indenture appear to conflict with any other provision herein or any other
Operative Document or Pass Through Document or should Loan Trustee's duties or
obligations hereunder be unclear, and Loan Trustee shall incur no liability in
refraining from acting until it receives such instructions. Loan Trustee shall
be fully protected for acting in accordance with any instructions received
under this Section 6.06.
ARTICLE VII
OPERATING COVENANTS OF COMPANY
Section 7.01 Liens. Company will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Aircraft,
its title thereto or any of its interest therein, except:
(a) the rights of Loan Trustee as provided in the Operative
Documents, the Lien of this Indenture, the rights of any Permitted Lessee under
a Lease permitted hereunder;
(b) the rights of others under agreements or arrangements to the
extent expressly permitted by this Indenture;
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(c) Loan Trustee Liens, Noteholder Liens and Other Party Liens;
(d) Liens for Taxes either not yet due or payable or being
contested in good faith by appropriate proceedings so long as such proceedings
do not involve any material risk of the sale, forfeiture or loss of the
Airframe or any Engine or Loan Trustee's interest therein or impair the Lien of
this Indenture;
(e) materialmen's, mechanics', workers', repairmen's, employees'
or other like Liens arising in the ordinary course of business (including those
arising under maintenance agreements entered into in the ordinary course of
business) securing obligations that either are not yet overdue for a period of
more than 60 days or are being contested in good faith by appropriate
proceedings so long as such proceedings do not involve any material risk of the
sale, forfeiture or loss of the Airframe or any Engine or Loan Trustee's
interest therein or impair the Lien of this Indenture;
(f) Liens arising out of any judgment or award, so long as such
judgment is, within 60 days after the entry thereof, discharged, vacated or
reversed, or execution thereof stayed pending appeal or other judicial review
or is discharged, vacated or reversed within 60 days after the expiration of
such stay;
(g) any other Lien with respect to which Company provides a bond,
cash collateral or other security adequate in the reasonable opinion of Loan
Trustee;
(h) salvage or similar rights of insurers under insurance
policies maintained by Company; and
(i) Liens approved in writing by Loan Trustee with the consent of
a Majority in Interest of Noteholders.
Liens described in clauses (a) through (i) above are referred to herein as
"Permitted Liens". Company shall promptly, at its own expense, take (or cause
to be taken) such action as may be necessary duly to discharge (by bonding or
otherwise) any Lien other than a Permitted Lien arising at any time with
respect to the Aircraft, its title thereto or any of its interest therein.
Section 7.02 Possession, Operation and Use, Maintenance and
Registration. (a) Possession. Without the prior written consent of Loan
Trustee, Company shall not lease or otherwise in any manner deliver, transfer
or relinquish possession of the Airframe or any Engine or install any Engine,
or permit any Engine to be installed, on any airframe other than the Airframe;
provided that Company (or, except with respect to clauses (viii) and (ix)
below, any Permitted Lessee) may without the prior written consent of Loan
Trustee:
(i) subject the Airframe to interchange agreements or
subject any Engine to interchange or pooling agreements or
arrangements, in each case entered into by Company (or any Permitted
Lessee) in the ordinary course of its business; provided that (A) no
such agreement or arrangement contemplates or requires the transfer of
title to the Airframe and (B) if Company's title to any such Engine is
divested under any such agreement or arrangement, such divestiture
shall be deemed to be an Event of Loss with
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respect to such Engine, and Company shall (or shall cause any
Permitted Lessee to) comply with Section 7.05(b) in respect thereof;
(ii) deliver possession of the Airframe or any Engine to
any Person for testing, service, repair, restoration, storage,
maintenance or other similar purposes or for alterations,
modifications or additions to the Airframe or such Engine to the
extent required or permitted by the terms hereof;
(iii) transfer or permit the transfer of possession of the
Airframe or any Engine to any Government pursuant to a lease, contract
or other instrument;
(iv) subject (or permit any Permitted Lessee to subject)
the Airframe or any Engine to the CRAF Program or transfer (or permit
any Permitted Lessee to transfer) possession of the Airframe or any
Engine to the United States government in accordance with applicable
laws, rulings, regulations or orders (including, without limitation,
any transfer of possession pursuant to the CRAF Program); provided,
that Company (or any Permitted Lessee) (A) shall promptly notify Loan
Trustee upon transferring possession of the Airframe or any Engine
pursuant to this clause (iv) and (B) in the case of a transfer of
possession pursuant to the CRAF Program, shall notify Loan Trustee of
the name and address of the responsible Contracting Office
Representative for the Military Airlift Command of the United States
Air Force or other appropriate Person to whom notices must be given
and to whom requests or claims must be made to the extent applicable
under the CRAF Program;
(v) install an Engine on an airframe owned by Company
(or any Permitted Lessee) free and clear of all Liens, except (A)
Permitted Liens and Liens that apply only to the engines (other than
Engines), appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment (other than Parts) installed on such
airframe (but not to the airframe as an entirety) and (B) the rights
of third parties under interchange agreements or pooling or similar
arrangements that would be permitted under clause (i) above;
(vi) install an Engine on an airframe leased to Company
(or any Permitted Lessee) or purchased or owned by Company (or any
Permitted Lessee) subject to a conditional sale or other security
agreement; provided that: (A) such airframe is free and clear of all
Liens except (1) the rights of the parties to the lease or conditional
sale or other security agreement covering such airframe, or their
successors and assigns, and (2) Liens of the type permitted by clause
(v) of this Section 7.02(a); and (B) either: (1) Company has obtained
from the lessor or secured party of such airframe a written agreement
(which may be the lease, conditional sale or other security agreement
covering such airframe), in form and substance satisfactory to Loan
Trustee (an agreement from such lessor or secured party substantially
in the form of the penultimate paragraph of this Section 7.02(a) being
deemed to be satisfactory to Loan Trustee), whereby such lessor or
secured party expressly agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any
Engine by reason of such Engine being installed on such airframe at
any time while such Engine is subject to the Lien of this Indenture,
or (2) such lease, conditional sale or other security agreement
provides that such Engine shall
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not become subject to the Lien of such lease, conditional sale or
other security agreement at any time while such Engine is subject to
the Lien of this Indenture, notwithstanding its installation on such
airframe;
(vii) install an Engine on an airframe owned by Company
(or any Permitted Lessee), leased to Company (or any Permitted Lessee)
or purchased by Company (or any Permitted Lessee) subject to a
conditional sale or other security agreement under circumstances where
neither clause (v) nor clause (vi) of this Section 7.02(a) is
applicable; provided that such installation shall be deemed an Event
of Loss with respect to such Engine, and Company shall comply with
Section 7.05(b) in respect thereof, if such installation adversely
affects Loan Trustee's security interest in such Engine, Loan Trustee
not intending hereby to waive any right or interest it may have to or
in such Engine under applicable law until compliance by Company with
Section 7.05(b);
(viii) lease any Engine or the Airframe and Engines to any
United States air carrier as to which there is in force a certificate
issued pursuant to the Transportation Code (49 U.S.C. Sections
41101-41112) or successor provision that gives like authority;
provided that no Event of Default exists at the time such lease is
entered into; and
(ix) lease any Engine or the Airframe and Engines to (A)
any foreign air carrier other than those set forth in clause (B), (B)
any foreign air carrier that is at the inception of the lease based in
and a domiciliary of a country listed in Exhibit B hereto, (C) the
manufacturer of the Airframe or any Engine (either directly or through
an affiliate) and (D) any foreign air carrier consented to in writing
by Loan Trustee with the consent of a Majority in Interest of
Noteholders; provided that (v) no Event of Default exists at the time
such lease is entered into, (w) in the case of a lease to a foreign
air carrier under clause (A) above, Loan Trustee receives at the time
of such lease (1) written confirmation from each of the Rating
Agencies that such lease would not result in a reduction of the rating
for any class of Pass Through Certificates below the then current
rating for such class of Pass Through Certificates or a withdrawal or
suspension of the rating of any class of Pass Through Certificates,
without regard to the Policy (as defined in the Policy Provider
Agreement) and (2) an opinion of counsel to Company (such counsel to
be reasonably satisfactory to Loan Trustee) to the effect that there
exist no possessory rights in favor of the lessee under the laws of
such lessee's country which would, upon bankruptcy or insolvency of or
other default by Company and assuming at such time such lessee is not
insolvent or bankrupt, prevent the taking of possession of any such
Engine or the Airframe and any such Engine by Loan Trustee in
accordance with and when permitted by the terms of Section 4.02 upon
the exercise by Loan Trustee of its remedies under Section 4.02, (x)
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 normal diplomatic relations with the country in which such
foreign air carrier is based at the time such lease is entered into
and in the case of a lease to a foreign air carrier principally based
in Taiwan, the United States maintains diplomatic relations with
Taiwan at least as good as those on the Closing Date, (y) in the case
of a lease to any foreign air carrier, Company furnishes Loan Trustee
with a certificate from a Responsible Officer of Company certifying
that there exist no possessory rights in favor of such lessee under
the laws of such lessee's country which would, upon bankruptcy or
insolvency of or other
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default by Company, and assuming at such time such lessee is not
insolvent or bankrupt, prevent the taking of possession of any such
Engine or the Airframe and any such Engine by Loan Trustee in
accordance with and when permitted by the terms of Section 4.02 upon
the exercise by Loan Trustee of its remedies under Section 4.02, and
(z) in the case of any lease to a foreign air carrier, such carrier is
not then subject to any bankruptcy, insolvency, liquidation,
reorganization, dissolution or similar proceeding and shall not have
substantially all of its property in the possession of any liquidator,
trustee, receiver or similar person;
provided that the rights of any lessee or other transferee who receives
possession of the Aircraft, the Airframe or any Engine by reason of a transfer
permitted by this Section 7.02(a) (other than the transfer of an Engine which
is deemed an Event of Loss) shall be subject and subordinate to, and any
permitted lease shall be made expressly subject and subordinate to, all the
terms of this Indenture, including Loan Trustee's rights to repossess pursuant
to Section 4.02 and to avoid such lease upon such repossession, and Company
shall remain primarily liable hereunder for the performance and observance of
all of the terms and conditions of this Indenture to the same extent as if such
lease or transfer had not occurred, any such lease shall include appropriate
provisions for the maintenance and insurance of the Aircraft, the Airframe or
such Engine, and no lease or transfer of possession otherwise in compliance
with this Section shall (x) result in any registration or re-registration of
the Aircraft except to the extent permitted in Section 7.02(e) or the
maintenance, operation or use thereof that does not comply with Section 7.02(b)
and (c) or (y) permit any action not permitted to be taken by Company with
respect to the Aircraft hereunder. Company shall promptly notify Loan Trustee
and the Rating Agencies of the existence of any such lease with a term in
excess of one year.
Loan Trustee, each Noteholder by acceptance of an Equipment Note, and
each Related Noteholder by acceptance of a Related Equipment Note agrees, for
the benefit of Company (and any Permitted Lessee) and for the benefit of the
lessor or secured party of any airframe or engine leased to Company (or any
Permitted Lessee) or purchased or owned by Company (or any Permitted Lessee)
subject to a conditional sale or other security agreement, that Loan Trustee,
Noteholders and Related Noteholders will not acquire or claim, as against
Company (or any Permitted Lessee) or such lessor or secured party, any right,
title or interest in: (A) any engine or engines owned by Company (or any
Permitted Lessee) or by the lessor under such lease or subject to a security
interest in favor of the secured party under such conditional sale or other
security agreement as the result of such engine or engines being installed on
the Airframe, or (B) any airframe owned by Company (or any Permitted Lessee) or
by the lessor under such lease or subject to a security interest in favor of
the secured party under such conditional sale or other security agreement as
the result of any Engine being installed on such airframe.
Loan Trustee acknowledges that any "wet lease" or other similar
arrangement under which Company (or any Permitted Lessee) maintains operational
control of the Aircraft does not constitute a delivery, transfer or
relinquishment of possession for purposes of this Section 7.02(a).
(b) Operation and Use. Company agrees that the Aircraft will not
be maintained, used or operated in violation of any law, rule or regulation of
any government of any
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country having jurisdiction over the Aircraft or in violation of any
airworthiness certificate, license or registration relating to the Aircraft
issued by any such government, except to the extent Company (or, if a Lease is
then in effect, any Permitted Lessee) is contesting in good faith the validity
or application of any such law, rule or regulation in any manner that does not
involve any material risk of sale, forfeiture or loss of the Aircraft or impair
the Lien of this Indenture; provided, that Company shall not be in default
under, or required to take any action set forth in, this sentence if it is not
possible for it to comply with the laws of a jurisdiction other than the United
States (or other than any jurisdiction in which the Aircraft is then
registered) because of a conflict with the applicable laws of the United States
(or such jurisdiction in which the Aircraft is then registered). Company will
not operate the Aircraft, or permit the Aircraft to be operated or located, (i)
in any area excluded from coverage by any insurance required by the terms of
Section 7.06 or (ii) in any war zone or recognized or, in Company's judgment,
threatened areas of hostilities unless covered by war risk insurance in
accordance with Section 7.06, unless in the case of either clause (i) or (ii),
(x) government indemnification complying with Section 7.06 (a) and (b) has been
provided or (y) the Aircraft is only temporarily located in such area as a
result of an isolated occurrence or isolated series of occurrences attributable
to a hijacking, medical emergency, equipment malfunction, weather conditions,
navigational error or other similar unforeseen circumstances and Company is
using its good faith efforts to remove the Aircraft from such area as promptly
as practicable.
(c) Maintenance. Company shall maintain, service, repair and
overhaul the Aircraft (or cause the same to be done) (i) so as to keep the
Aircraft in good operating condition and in such condition as may be necessary
to enable the airworthiness certification of the Aircraft to be maintained in
good standing at all times (other than during temporary periods of storage,
during maintenance, testing or modification permitted hereunder, or during
periods of grounding by applicable governmental authorities) under the
Transportation Code, during such periods in which the Aircraft is registered
under the laws of the United States, or, if the Aircraft is registered under
the laws of any other jurisdiction, the applicable laws of such jurisdiction
and (ii) using the same standards as Company (or a Permitted Lessee, if a Lease
is in effect) uses with respect to similar aircraft operated by Company (or
such Permitted Lessee) in similar circumstances (it being understood that the
obligations pursuant to this clause (ii) do not limit Company's obligations
under the preceding clause (i)). In any case, the Aircraft will be maintained
in accordance with the maintenance standards required by the FAA (while
operated under an FAA-approved maintenance program) or, while operated under
the maintenance program of another jurisdiction, standards substantially
equivalent to those required by the central aviation authority of Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy,
Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland or the
United Kingdom. Company shall maintain or cause to be maintained all records,
logs and other documents required to be maintained in respect of the Aircraft
by appropriate authorities in the jurisdiction in which the Aircraft is
registered.
(d) Identification of Loan Trustee's Interest. Company agrees to
affix as promptly as practicable after the Closing Date and thereafter to
maintain in the cockpit of the Aircraft, in a clearly visible location, and (if
not prevented by applicable law or regulations or by any government) on each
Engine, a nameplate bearing the inscription "MORTGAGED TO U.S. BANK TRUST
NATIONAL ASSOCIATION, AS LOAN TRUSTEE" (such nameplate to be replaced, if
necessary, with a nameplate reflecting the name of any successor Loan Trustee).
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(e) Registration. Company shall cause the Aircraft to remain duly
registered, under the laws of the United States, in the name of Company except
as otherwise required by the Transportation Code; provided that Loan Trustee
shall, at Company's expense, execute and deliver all such documents as Company
may reasonably request for the purpose of continuing such registration.
Notwithstanding the preceding sentence, Company, at its own expense, may cause
or allow the Aircraft to be duly registered under the laws of any foreign
jurisdiction in which a Permitted Lessee could be principally based, in the
name of Company or of any nominee of Company, or, if required by applicable
law, in the name of any other Person (and, following any such foreign
registration, may cause the Aircraft to be re-registered under the laws of the
United States); provided, that in the case of jurisdictions other than those
approved by Loan Trustee with the consent of a Majority in Interest of
Noteholders (i) if such jurisdiction is at the time of registration listed on
Exhibit B, Loan Trustee and Policy Provider shall have received at the time of
such registration an opinion of counsel to Company reasonably satisfactory to
Loan Trustee to the effect that (A) this Indenture and Loan Trustee's right to
repossession thereunder is valid and enforceable under the laws of such
country, (B) after giving effect to such change in registration, the Lien of
this Indenture shall continue as a valid first priority Lien and shall be duly
perfected in the new jurisdiction of registration and that all filing,
recording or other action necessary to perfect and protect the Lien of this
Indenture has been accomplished (or if such opinion cannot be given at such
time, (x) the opinion shall detail what filing, recording or other action is
necessary and (y) Loan Trustee and Policy Provider shall have received a
certificate from a Responsible Officer of Company that all possible
preparations to accomplish such filing, recording and other action shall have
been done, and such filing, recording and other action shall be accomplished
and a supplemental opinion to that effect shall be promptly delivered to Loan
Trustee subsequent to the effective date of such change in registration), (C)
the obligations of Company under this Indenture shall remain valid, binding and
(subject to customary bankruptcy and equitable remedies exceptions and to other
exceptions customary in foreign opinions generally) enforceable under the laws
of such jurisdiction (or the laws of the jurisdiction to which the laws of such
jurisdiction would refer as the applicable governing law), (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 (E) (unless Company shall have agreed to provide
insurance covering the risk of requisition of use or title of the Aircraft by
the government of such jurisdiction so long as the Aircraft is registered under
the laws of such jurisdiction) 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, and (ii) if such
jurisdiction is at the time of registration not listed on Exhibit B, Loan
Trustee shall have received (in addition to the opinions set forth in clause
(i) above) at the time of such registration an opinion of counsel to Company
reasonably satisfactory to Loan Trustee 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)
it is not necessary for Loan Trustee to register or qualify to do business in
such jurisdiction and (C) there is no tort
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liability of the lender of an aircraft not in possession thereof under the laws
of such jurisdiction other than tort liability that might have been imposed on
such lender under the laws of the United States or any state thereof (it being
understood that such opinion shall be waived if insurance reasonably
satisfactory to Loan Trustee is provided, at Company's expense, to cover such
risk). Loan Trustee will cooperate with Company in effecting such foreign
registration. Notwithstanding the foregoing, prior to any such change in the
country of registry of the Aircraft, the following conditions shall be met (or
waived as provided in Section 6.01(b) of the Participation Agreement):
(i) no Event of Default shall have occurred and be
continuing at the effective date of the change in registration;
provided, that it shall not be necessary to comply with this condition
if the change in registration results in the registration of the
Aircraft under the laws of the United States or if a Majority in
Interest of Noteholders consents to such change in registration;
(ii) Loan Trustee shall have received evidence of
compliance with the insurance provisions contained herein after giving
effect to such change in registration;
(iii) other than in the case of a change in registration
to Taiwan, the proposed change in registration is made to a country
with which the United States then maintains normal diplomatic
relations, and in the case of a change in registration to Taiwan, the
United States maintains diplomatic relations with Taiwan at least as
good as those on the Closing Date;
(iv) the indemnities in favor of each Person named as an
indemnitee under any other Operative Document afford each such Person
substantially the same protection as provided prior to such change of
registration (or Company shall have agreed upon additional indemnities
that, together with such original indemnities, to the reasonable
satisfaction of Loan Trustee, afford such protection); and
(v) Company shall have paid or made provision reasonably
satisfactory to Loan Trustee for the payment of all reasonable
expenses (including reasonable attorneys' fees) of Loan Trustee and
Noteholders in connection with such change in registration.
Section 7.03 Inspection; Financial Information. (a) Inspection. At all
reasonable times, but upon at least 15 Business Days' prior written notice to
Company, Policy Provider or Loan Trustee or their respective authorized
representatives may, subject to the other conditions of this Section 7.03(a),
inspect the Aircraft and may inspect the books and records of Company relating
to the maintenance of the Aircraft required to be maintained by the FAA or the
government of another jurisdiction in which the Aircraft is then registered;
provided, that (i) Policy Provider or Loan Trustee or their respective
representatives, as the case may be, shall be fully insured at no cost to
Company in a manner satisfactory to Company with respect to any risks incurred
in connection with any such inspection or shall provide to Company a written
release satisfactory to Company with respect to such risks, (ii) any such
inspection shall be during Company's normal business hours and subject to the
safety, security and workplace rules applicable at the location where such
inspection is conducted and any applicable governmental rules or regulations,
(iii) any such inspection of the Aircraft shall be a visual, walk-around
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inspection of the interior and exterior of the Aircraft and shall not include
opening any panels, bays or the like without Company's express consent, which
consent Company may in its sole discretion withhold, and (iv) no exercise of
such inspection right shall interfere with the use, operation or maintenance of
the Aircraft by, or the business of, Company and Company shall not be required
to undertake or incur any additional liabilities in connection therewith. All
information obtained in connection with any such inspection of the Aircraft and
of such books and records shall be Confidential Information and shall be
treated by Policy Provider and Loan Trustee and their respective
representatives in accordance with the provisions of Section 10.16. Any
inspection pursuant to this Section 7.03(a) shall be at the sole risk
(including, without limitation, any risk of personal injury or death) and
expense of Policy Provider or Loan Trustee (or their respective
representatives) making such inspection. Except during the continuance of an
Event of Default, all inspections by Policy Provider and Loan Trustee and their
respective representatives provided for under this Section 7.03(a) shall be
limited to one inspection of any kind contemplated by this Section 7.03(a)
during any consecutive twelve month period.
(b) Financial Information. So long as any of the Secured
Obligations remain unpaid, Company agrees to furnish to Loan Trustee and Policy
Provider: (i) within 60 days after the end of each of the first three quarterly
periods in each fiscal year of Company, either (x) a consolidated balance sheet
of Company and its consolidated subsidiaries prepared by it as of the close of
such period, together with the related consolidated statements of income for
such period or (y) a report of Company on Form 10-Q in respect of such period
in the form filed with the Securities and Exchange Commission and (ii) within
120 days after the close of each fiscal year of Company, either (x) a
consolidated balance sheet of Company and its consolidated subsidiaries as of
the close of such fiscal year, together with the related consolidated
statements of income for such fiscal year, certified by independent public
accountants, or (y) a report of Company on Form 10-K in respect of such year in
the form filed with the Securities and Exchange Commission. Company may fulfill
the requirements of this Section 7.03(b) by providing the material described
above in an electronic format by electronic mail or accessible over the
Internet.
Section 7.04 Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution of Engines. (a) Replacement of Parts.
Company shall promptly replace or cause to be replaced all Parts incorporated
or installed in or attached to the Airframe or any Engine and that become worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
rendered permanently unfit for use for any reason, except as otherwise provided
in Section 7.04(c) or if the Airframe or an Engine to which a Part relates has
suffered an Event of Loss. In addition, Company (or any Permitted Lessee) may
remove in the ordinary course of maintenance, service, repair, overhaul or
testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or rendered permanently unfit for use;
provided that Company (or any Permitted Lessee), except as otherwise provided
in Section 7.04(c), will replace such Parts as promptly as practicable. All
replacement Parts shall be free and clear of all Liens (except for Permitted
Liens and except in the case of replacement property temporarily installed on
an emergency basis) and shall be in the condition and repair required to be
maintained by the terms hereof. Except as otherwise provided in Section
7.04(c), any Parts removed from the Airframe or any Engine shall remain subject
to the Lien of this Indenture no matter where located until it is replaced by a
part incorporated or installed in or attached to the Airframe or such Engine
that meets the requirements for replacement Parts specified above.
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Immediately upon any replacement Part becoming incorporated or installed in or
attached to the Airframe or any Engine as above provided (except in the case of
replacement property temporarily installed on an emergency basis), without
further act, (i) the replaced Part shall thereupon be free and clear of all
rights of Loan Trustee and of the Lien of this Indenture and shall no longer be
deemed a Part hereunder, and (ii) such replacement Part shall become subject to
the Lien of this Indenture and be deemed a Part of the Airframe or such Engine
for all purposes to the same extent as the Parts originally incorporated or
installed in or attached to the Airframe or such Engine. Upon request of
Company from time to time, Loan Trustee shall execute and deliver to Company an
appropriate instrument confirming the release of any such replaced Part from
the Lien of this Indenture.
(b) Pooling of Parts. Any Part removed from the Airframe or any
Engine as provided in Section 7.04(a) may be subjected by Company or a Person
permitted to be in possession of the Aircraft to a pooling arrangement entered
into in the ordinary course of Company's or such Person's business; provided
that the part replacing such removed Part shall be incorporated or installed in
or attached to the Airframe or such Engine in accordance with Section 7.04(a)
as promptly as practicable after the removal of such removed Part. In addition,
any replacement Part when incorporated or installed in or attached to the
Airframe or any Engine may be owned by any third party subject to such a
pooling arrangement; provided that Company, at its expense, as promptly
thereafter as practicable either (i) causes title to such replacement Part to
vest in Company free and clear of all Liens (except Permitted Liens), or (ii)
replaces such replacement Part by incorporating or installing in or attaching
to the Airframe or such Engine a further replacement Part in the manner
contemplated by Section 7.04(a).
(c) Alterations, Modifications and Additions. Company will make
(or cause to be made) such alterations and modifications in and additions to
the Airframe and the Engines as are required from time to time to meet the
applicable requirements of the FAA or any applicable government of any other
jurisdiction in which the Aircraft is then registered; provided, however, that
Company (or, if a Lease is then in effect, any Permitted Lessee) may, in good
faith, contest the validity or application of any such requirement in any
manner that does not involve any material risk of sale, loss or forfeiture of
the Aircraft and does not adversely affect Loan Trustee's interest in the
Collateral. In addition, Company (or any Permitted Lessee), at its own expense,
may from time to time add further parts or accessories and make or cause to be
made such alterations and modifications in and additions to the Airframe or any
Engine as Company (or any Permitted Lessee) deems desirable in the proper
conduct of its business, including, without limitation, removal (without
replacement) of Parts, provided that no such alteration, modification or
addition shall materially diminish the value or utility of the Airframe or such
Engine below its value or utility immediately prior to such alteration,
modification or addition, assuming that the Airframe or such Engine was then in
the condition required to be maintained by the terms of this Indenture, except
that the value (but not the utility) of the Airframe or any Engine may be
reduced by the value of any such Parts that are removed that Company deems
obsolete or no longer suitable or appropriate for use on the Airframe or any
Engine. All Parts incorporated or installed in or attached or added to the
Airframe or any Engine as the result of such alteration, modification or
addition shall, without further act, be subject to the Lien of this Indenture.
Notwithstanding the foregoing, Company (or any Permitted Lessee) may, at any
time, remove any Part from the Airframe or any Engine if such Part: (i) is in
addition to, and not in replacement of or substitution for, any Part originally
incorporated or installed in or
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attached to the Airframe or such Engine at the time of delivery thereof to
Company or any Part in replacement of, or substitution for, any such Part, (ii)
is not required to be incorporated or installed in or attached or added to the
Airframe or such Engine pursuant to the first sentence of this Section 7.04(c)
and (iii) can be removed from the Airframe or such Engine without materially
diminishing the value or utility required to be maintained by the terms of this
Indenture that the Airframe or such Engine would have had at such time had such
removal not occurred. Upon the removal by Company (or any Permitted Lessee) of
any Part as permitted by this Section 7.04(c), such removed Part shall, without
further act, be free and clear of all rights and interests of Loan Trustee and
the Lien of this Indenture and shall no longer be deemed a Part hereunder. Upon
request of Company from time to time, Loan Trustee shall execute and deliver to
Company an appropriate instrument confirming the release of any such removed
Part from the Lien of this Indenture.
(d) Substitution of Engines. Company shall have the right at its
option at any time, on at least 30 days' prior written notice to Loan Trustee,
to substitute a Replacement Engine for any Engine. In such event, and prior to
the date of such substitution, Company shall replace such Engine by complying
with the terms of Section 7.05(b) to the same extent as if an Event of Loss had
occurred with respect to such Engine.
Section 7.05 Loss, Destruction or Requisition. (a) Event of Loss with
Respect to the Airframe. Upon the occurrence of an Event of Loss with respect
to the Airframe or the Airframe and the Engines then installed thereon, Company
shall as soon as practicable (and, in any event, within 30 days after an Event
of Loss has occurred) notify Loan Trustee of such Event of Loss, and, within 90
days after such Event of Loss, Company shall give Loan Trustee written notice
of its election to perform one of the following options (it being agreed that
if Company has not given such notice of election within such 90-day period,
Company shall be deemed to have elected to perform the option set forth in the
following clause (ii)). Company may elect either to:
(i) substitute, on or before the Loss Payment Date (as
defined below), as replacement for the Airframe or Airframe and
Engines with respect to which an Event of Loss has occurred, a
Replacement Airframe (together with a number of Replacement Engines
equal to the number of Engines, if any, with respect to which the
Event of Loss occurred), such Replacement Airframe and Replacement
Engines to be owned by Company free and clear of all Liens (other than
Permitted Liens); provided that if Company has not performed such
obligation on or prior to the Loss Payment Date, then Company shall on
the Loss Payment Date prepay the Equipment Notes in full in accordance
with Section 2.10; or
(ii) redeem, on or before the Loss Payment Date, the
Equipment Notes in full in accordance with Section 2.10. Company shall
give Loan Trustee 20 days prior written notice if it elects to redeem
the Equipment Notes on any day prior to the Loss Payment Date.
The "Loss Payment Date" with respect to an Event of Loss means the
Business Day next succeeding the 120th day following the date of occurrence of
such Event of Loss.
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If Company elects to substitute a Replacement Airframe (or a
Replacement Airframe and one or more Replacement Engines, as the case may be)
Company shall, at its sole expense, not later than the Loss Payment Date, (A)
cause an Indenture Supplement for such Replacement Airframe and Replacement
Engines, if any, to be delivered to Loan Trustee for execution and, upon such
execution, to be filed for recordation pursuant to the Transportation Code or
the applicable laws of such other jurisdiction in which the Aircraft is then
registered, (B) cause a financing statement or statements with respect to the
Replacement Airframe and Replacement Engines, if any, or other requisite
documents or instruments to be filed in such place or places as necessary in
order to perfect Loan Trustee's interest therein in the United States, or in
any other jurisdiction in which the Aircraft is then registered, (C) furnish
Loan Trustee with an opinion of Company's counsel (which may be internal
counsel of Company) addressed to Loan Trustee to the effect that upon such
replacement, such Replacement Airframe and Replacement Engines, if any, will be
subject to the Lien of this Indenture and addressing the matters set forth in
clauses (A) and (B), (D) furnish Loan Trustee with a certificate of an
independent aircraft engineer or appraiser, certifying to the reasonable
satisfaction of Loan Trustee 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 and that
such Replacement Airframe shall have been delivered from the Manufacturer no
earlier than one year prior to the date that the Airframe being replaced was
delivered from the Manufacturer, (E) furnish Loan Trustee with evidence of
compliance with the insurance provisions of Section 7.06 with respect to such
Replacement Airframe and Replacement Engines, if any, (F) furnish Loan Trustee
with a copy of the original ▇▇▇▇ of sale respecting such Replacement Airframe
and a copy of the original ▇▇▇▇ of sale or, if the ▇▇▇▇ of sale is unavailable,
other evidence of ownership reasonably satisfactory to Loan Trustee (which may
be a copy of an invoice or purchase order) respecting such Replacement Engines,
if any, and (G) furnish Loan Trustee with an opinion of Company's counsel
(which may be internal counsel of Company) reasonably satisfactory to Loan
Trustee to the effect that Loan Trustee will be entitled to the benefits of
Section 1110 with respect to the Replacement Airframe, provided that (i) such
opinion need not be delivered to the extent that the benefits of Section 1110
were not, by reason of a change in law or governmental or judicial
interpretation thereof, available to Loan Trustee with respect to the Aircraft
immediately prior to such substitution and (ii) such opinion may contain
qualifications and assumptions of the tenor contained in the Section 1110
opinion of Company's special counsel delivered pursuant to Section 3.01 of the
Participation Agreement on the Closing Date and such other qualifications and
assumptions as are at the time customary in opinions rendered in comparable
circumstances.
In the case of each Replacement Airframe or Replacement Airframe and
one or more Replacement Engines subjected to the Lien of this Indenture under
this Section 7.05(a), promptly upon the recordation of the Indenture Supplement
covering any such Replacement Airframe and Replacement Engines, if any,
pursuant to the Transportation Code (or pursuant to the applicable law of such
other jurisdiction in which such Replacement Airframe and Replacement Engines,
if any, are registered), Company will cause to be delivered to Loan Trustee a
favorable opinion of FAA counsel selected by Company and reasonably
satisfactory to Loan Trustee 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
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selected by Company, which counsel shall be reasonably satisfactory to Loan
Trustee) addressed to Loan Trustee as to the due registration of such
Replacement Aircraft and the due recordation of such Indenture Supplement or
such other requisite documents or instruments and the validity and perfection
of the security interest in the Replacement Aircraft granted to Loan Trustee
under this Indenture.
For all purposes hereof, upon the attachment of the Lien of this
Indenture thereto, the Replacement Aircraft and Replacement Engines, if any,
shall become part of the Collateral, the Replacement Airframe shall be deemed
an "Airframe" as defined herein, and each such Replacement Engine shall be
deemed an "Engine" as defined herein. Upon compliance with clauses (A) through
(F) of the third paragraph of this Section 7.05(a), Loan Trustee shall execute
and deliver to Company an appropriate instrument releasing such replaced
Airframe and Engines (if any) installed thereon at the time such Event of Loss
occurred, all proceeds (including, without limitation, insurance proceeds), the
Warranty Rights in respect of such replaced Airframe and Engines (if any) and
all rights relating to the foregoing, from the Lien of this Indenture and
assigning to Company all claims against third Persons for damage to or loss of
the Airframe and Engines arising from the Event of Loss.
If, after an Event of Loss, Company performs the option set forth in
clause (ii) of the first paragraph of this Section 7.05(a), Loan Trustee shall
execute and deliver to Company an appropriate instrument releasing the
Aircraft, all proceeds (including, without limitation, insurance proceeds), the
Warranty Rights in respect of the Aircraft and all rights relating to the
foregoing from the Lien of this Indenture and assigning to Company all claims
against third Persons for damage to or loss of the Aircraft arising from the
Event of Loss.
(b) Event of Loss with Respect to an Engine. Upon the occurrence
of an Event of Loss with respect to an Engine under circumstances in which
there has not occurred an Event of Loss with respect to the Airframe, Company
shall give Loan Trustee prompt written notice thereof and shall, within 120
days after the occurrence of such Event of Loss, cause to be subjected to the
Lien of this Indenture, as replacement for the Engine with respect to which
such Event of Loss occurred, a Replacement Engine free and clear of all Liens
(other than Permitted Liens).
Prior to or at the time of any replacement under this Section 7.05(b),
Company will (i) cause an Indenture Supplement covering such Replacement Engine
to be delivered to Loan Trustee for execution and, upon such execution, to be
filed for recordation pursuant to the Transportation Code or the applicable
laws of any other jurisdiction in which the Aircraft is then registered, (ii)
furnish Loan Trustee with a copy of the original ▇▇▇▇ of sale or, if the ▇▇▇▇
of sale is unavailable, other evidence of ownership reasonably satisfactory to
Loan Trustee (which may be a copy of an invoice or purchase order) respecting
such Replacement Engine, (iii) cause a financing statement or statements with
respect to such Replacement Engine or other requisite documents or instruments
to be filed in such place or places as necessary in order to perfect Loan
Trustee's interest therein in the United States, or in such other jurisdiction
in which the Engine is then registered, (iv) furnish Loan Trustee with an
opinion of Company's counsel (which may be internal counsel to Company)
reasonably satisfactory to Loan Trustee addressed to Loan Trustee to the effect
that, upon such replacement, the Replacement Engine will be subject to the Lien
of this Indenture, (v) furnish Loan Trustee with a certificate of an aircraft
engineer or appraiser
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(who may be an employee of Company) certifying to the reasonable satisfaction
of Loan Trustee that such Replacement Engine has a value and utility (without
regard to hours or cycles) at least equal to the Engine so replaced assuming
such Engine was in the condition and repair required by the terms hereof
immediately prior to the occurrence of such Event of Loss and (v) furnish Loan
Trustee with evidence of compliance with the insurance provisions of Section
7.06 with respect to such Replacement Engine. In the case of each Replacement
Engine subjected to the Lien of this Indenture under this Section 7.05(b),
promptly upon the recordation of the Indenture Supplement covering such
Replacement Engine pursuant to the Transportation Code (or pursuant to the
applicable law of such other jurisdiction in which the Aircraft is registered),
Company will cause to be delivered to Loan Trustee an opinion of FAA counsel
selected by Company reasonably satisfactory to Loan Trustee if at the time of
the Event of Loss the Aircraft was registered under the laws of the United
States (or, if at the time of the Event of Loss the Aircraft was registered
under the laws of another jurisdiction, counsel qualified to opine on matters
of registration in such jurisdiction selected by Company, which counsel shall
be reasonably satisfactory to Loan Trustee) addressed to Loan Trustee as to the
due recordation of such Indenture Supplement or such other requisite documents
or instruments and the validity and perfection of the security interest in the
Replacement Engine granted to Loan Trustee under this Indenture. For all
purposes hereof, upon the attachment of the Lien of this Indenture thereto, the
Replacement Engine shall become part of the Collateral and shall be deemed an
"Engine" as defined herein. Upon compliance with clauses (i) through (v) of the
first sentence of this paragraph, Loan Trustee shall execute and deliver to
Company an appropriate instrument releasing such replaced Engine, any proceeds
(including, without limitation, insurance proceeds), the Warranty Rights in
respect of such replaced Engine and all rights relating to any of the foregoing
from the Lien of this Indenture and assigning to Company all claims against
third Persons for damage to or loss of such Engine arising from the Event of
Loss.
(c) Application of Payments for Event of Loss from Requisition of
Title or Use. Any payments other than insurance proceeds (the application of
which is provided for in Section 7.06) received at any time by Company or by
Loan Trustee from any government or other Person with respect to an Event of
Loss to the Airframe or any Engine, will be applied as follows:
(i) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe
that has been or is being replaced by Company pursuant to Section
7.05(a), such payments shall be paid over to, or retained by, Loan
Trustee and upon completion of such replacement shall be paid over to,
or retained by, Company;
(ii) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe
that has not been and will not be replaced pursuant to Section
7.05(a), so much of such payments remaining after reimbursement of
Loan Trustee for costs and expenses that shall not exceed the amounts
required to be paid to Noteholders pursuant to Section 2.10 shall be
applied in reduction of Company's obligation to pay such amounts, if
not already paid by Company, or, if already paid by Company, shall be
applied to reimburse Company for its payment of such amount and the
balance, if any, of such payment remaining thereafter will be paid
over to, or retained by, Company; and
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(iii) if such payments are received with respect to an
Engine with regard to which an Event of Loss has occurred, so much of
such payments remaining after reimbursement of Loan Trustee for costs
and expenses shall be paid over to, or retained by, Company; provided
that Company has fully performed its obligations under Section 7.05(b)
with respect to the Event of Loss for which such payments are made.
(d) Requisition for Use by the Government of the Airframe and the
Engines Installed Thereon. In the event of the requisition for use by any
government (it being acknowledged that the use of the Airframe or any Engine
pursuant to the CRAF Program does not constitute such a requisition) of the
Airframe and the Engines or engines installed on the Airframe that does not
constitute an Event of Loss, all of Company's rights and obligations under this
Indenture with respect to the Airframe and such Engines shall continue to the
same extent as if such requisition had not occurred; provided that,
notwithstanding the foregoing, Company's obligations other than payment
obligations shall only continue to the extent feasible. All payments received
by Company or Loan Trustee from such government for such use of the Airframe
and Engines or engines shall be paid over to, or retained by, Company.
(e) Requisition for Use by the Government of an Engine not
Installed on the Airframe. If any government requisitions the use, for a period
in excess of sixty (60) days, of any Engine not then installed on the Airframe,
Company will replace such Engine by complying with the terms of Section 7.05(b)
to the same extent as if an Event of Loss had occurred with respect to such
Engine. Upon such replacement, any payments received by Company or Loan Trustee
from such government with respect to such requisition shall be paid over to, or
retained by, Company.
(f) Application of Payments During Existence of Event of Default.
Any amount referred to in Section 7.05 that is payable to or retainable by
Company shall not be paid to or retained by Company if at the time of such
payment or retention an Event of Default or Payment Default has occurred and is
continuing, but shall be held by or paid over to Loan Trustee as security for
the obligations of Company under this Indenture, the Participation Agreement,
the Related Indentures and the Related Participation Agreements. When any such
Event of Default or Payment Default ceases, such amount shall be paid to
Company.
Section 7.06 Insurance. (a) Aircraft Liability Insurance. (i) Except
as provided in clause (ii) of this subsection (a), and subject to the rights of
Company to establish and maintain self-insurance in the manner and to the
extent specified in Section 7.06(c), Company will carry, or cause to be
carried, at no expense to Loan Trustee, aircraft liability insurance
(including, but not limited to, bodily injury, personal injury and property
damage liability, exclusive of manufacturer's product liability insurance) and
contractual liability insurance with respect to the Aircraft (A) in amounts
that are not less than the aircraft liability insurance applicable to similar
aircraft and engines in Company's fleet on which Company carries insurance;
provided that such liability insurance shall not be less than the amount
certified in the insurance report delivered to Loan Trustee on the Closing
Date, (B) of the type covering the same risks as from time to time applicable
to aircraft operated by Company (or, if a Lease is then in effect, by the
Permitted Lessee) of the same type as the Aircraft, and (C) that is maintained
in effect with insurers of recognized responsibility. Any policies of insurance
carried in accordance with this Section 7.06(a) and any policies taken out in
substitution or replacement for any of such
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policies shall: (A) name Loan Trustee, Subordination Agent, each Pass Through
Trustee, Policy Provider and each Liquidity Provider as their Interests (as
defined below in this Section 7.06) may appear, as additional insured (the
"Additional Insureds"), (B) subject to the condition of clause (C) below,
provide that, in respect of the interest of the Additional Insureds in such
policies, the insurance shall not be invalidated by any action or inaction of
Company and shall insure the Additional Insureds' Interests as they appear,
regardless of any breach or violation of any warranty, declaration or condition
contained in such policies by Company, (C) provide that, if such insurance is
canceled for any reason whatever, or if any change is made in the policy that
materially reduces the amount of insurance or the coverage certified in the
insurance report delivered on the Closing Date to Loan Trustee, Policy Provider
and Liquidity Providers, or if such insurance is allowed to lapse for
nonpayment of premium, such cancellation, change or lapse shall not be
effective as to any Additional Insured for 30 days (seven days, or such other
period as is then generally available in the industry, in the case of any war
risk or allied perils coverage) after receipt by such Additional Insured of
written notice from such insurers of such cancellation, change or lapse, (D)
provide that the Additional Insureds shall have no obligation or liability for
premiums, commissions, assessments or calls in connection with such insurance,
(E) provide that the insurers shall waive any rights of (1) set-off,
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Additional Insureds to the extent of any moneys
due to the Additional Insureds and (2) subrogation against the Additional
Insureds to the extent that Company has waived its rights by its agreements to
indemnify the Additional Insureds pursuant to the Operative Documents, (F) be
primary without right of contribution from any other insurance carried by any
Additional Insured with respect to its Interests as such in the Aircraft and
(G) expressly provide that all of the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate policy
covering each insured. "Interests" as used in this Section 7.06(a) and in
Section 7.06(b) with respect to any Person means the interests of such Person
in the transactions contemplated by the Operative Documents. In the case of a
lease or contract with any government in respect of the Aircraft or any Engine,
or in the case of any requisition for use of the Aircraft or any Engine by any
government, a valid agreement by such government to indemnify Company, or an
insurance policy issued by such government, against any of the risks that
Company is required to insure against hereunder shall be considered adequate
insurance for purposes of this Section 7.06(a) to the extent of the risks (and
in the amounts) that are the subject of such indemnification or insurance.
(ii) During any period that the Airframe or an Engine, as the case
may be, is on the ground and not being flown, Company may carry or cause to be
carried as to such non-flown Airframe or Engine, in lieu of the insurance
required by clause (i) above, and subject to self-insurance to the extent
permitted by Subsection 7.06(c), insurance otherwise conforming with the
provisions of said clause (i) except that: (A) the amounts of coverage shall
not be required to exceed the amounts of airline liability insurance from time
to time applicable to airframes or engines owned or leased by Company (or, if a
Lease is then in effect, by the Permitted Lessee) of the same type as such
non-flown Airframe or Engine and that are on the ground and not being flown and
(B) the scope of the risks covered and the type of insurance shall be the same
as from time to time are applicable to airframes or engines operated by Company
(or, if a Lease is then in effect, by the Permitted Lessee) of the same type as
such non-flown Airframe or Engine and that are on the ground and not being
flown.
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(b) Insurance Against Loss or Damage to Aircraft. (i) Except as
provided in clause (ii) of this subsection (b), and subject to the rights of
Company to establish and maintain self-insurance in the manner and to the
extent specified in Section 7.06(c), Company shall maintain, or cause to be
maintained, in effect with insurers of recognized responsibility, at no expense
to Loan Trustee, all-risk aircraft hull insurance covering the Aircraft and
all-risk coverage with respect to any Engines or Parts while removed from the
Aircraft (including, without limitation, war risk insurance if and to the
extent the same is maintained by Company (or, if a Lease is then in effect, by
the Permitted Lessee) with respect to other similar aircraft operated by
Company or such Permitted Lessee, as the case may be, on the same routes) that
is of the type as from time to time applicable to the aircraft operated by
Company (or, if a Lease is then in effect, by the Permitted Lessee) of the same
type as the Aircraft; provided that (A) such insurance (including the permitted
self-insurance) shall at all times while the Aircraft is subject to this
Indenture be for an amount not less than 110% of the aggregate principal amount
of the Equipment Notes outstanding from time to time, (B) such insurance need
not cover an Engine while attached to an airframe not owned, leased or operated
by Company, and (C) such insurance covering Engines and Parts removed from an
Airframe or an airframe or (in the case of Parts) an Engine need be obtained
only to the extent available at reasonable cost (as reasonably determined by
Company). Any policies carried in accordance with this Section 7.06(b) and any
policies taken out in substitution or replacement for any such policies shall:
(A) provide that any insurance proceeds up to an amount equal to the
outstanding principal amount of the Equipment Notes, together with accrued but
unpaid interest thereon, plus an amount equal to the interest that would accrue
on the outstanding principal amount of the Equipment Notes at the Debt Rate in
effect on the date of payment of such insurance proceeds to Loan Trustee (as
provided for in this sentence) during the period commencing on the day
following the date of such payment to Loan Trustee and ending on the Loss
Payment Date (the sum of such three amounts being the "Loan Amount"), payable
for any loss or damage constituting an Event of Loss with respect to the
Aircraft and any insurance proceeds in excess of the amount set forth on
Exhibit C up to the amount of the Loan Amount for any loss or damage to the
Aircraft (or Engines) not constituting an Event of Loss with respect to the
Aircraft (or Engines), shall be paid to Loan Trustee as long as the Indenture
has not been discharged, and that all other amounts shall be payable to
Company, unless the insurer has received notice that an Event of Default
exists, in which case all insurance proceeds for any loss or damage to the
Aircraft (or Engines) shall be payable to Loan Trustee, (B) subject to the
conditions of clause (C) below, provide that, in respect of the interests of
the Additional Insureds in such policies, the insurance shall not be
invalidated by any action or inaction of Company and shall insure the
Additional Insureds' Interests as they appear, regardless of any breach or
violation by Company of any warranty, declaration or condition contained in
such policies, (C) provide that if such insurance is canceled for any reason,
or if any change is made in the insurance that materially reduces the coverage
(not including the amount) certified in the insurance report delivered on the
Closing Date to Loan Trustee, Policy Provider and Liquidity Providers 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
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other deduction, whether by attachment or otherwise, in respect of any
liability of the Additional Insureds to the extent of any moneys due to the
Additional Insureds and (2) subrogation against the Additional Insureds to the
extent Company has waived its rights by its agreement to indemnify the
Additional Insureds pursuant to the Operative Documents and (F) be primary
without right of contribution from any other insurance carried by any
Additional Insured with respect to its Interests as such in the Aircraft. In
the case of a lease or contract with any government in respect of the Aircraft
or any Engine, or in the case of any requisition for use of the Aircraft or any
Engine by any government, a valid agreement by such government to indemnify
Company, or an insurance policy issued by such government, against any risks
which Company is required hereunder to insure against shall be considered
adequate insurance for purposes of this Section 7.06(b) to the extent of the
risks (and in the amounts) that are the subject of such indemnification or
insurance.
(ii) During any period that the Airframe or an Engine is on the
ground and not being flown, Company may carry or cause to be carried as to such
non-flown Airframe or Engine, in lieu of the insurance required by clause (i)
above, and subject to self-insurance to the extent permitted by Subsection
7.06(c), insurance otherwise conforming with the provisions of said clause (i)
except that the scope of the risks covered and the type of insurance shall be
the same as from time to time applicable to airframes and engines operated by
Company (or, if a Lease is then in effect, by the Permitted Lessee) of the same
type as such non-flown Airframe or Engine and that are on the ground and not
being flown; provided that, subject to self-insurance to the extent permitted
by Subsection 7.06(c), Company shall maintain or cause to be maintained
insurance against risk of loss or damage to such non-flown Airframe or Engine
in an amount at least equal to 110% of the aggregate outstanding principal
amount of the Equipment Notes during such period that such Airframe or Engine
is on the ground and not being flown.
(c) Self-Insurance. Company may from time-to-time self-insure, by
way of deductible, self-insured retention, premium adjustment or franchise or
otherwise (including, with respect to insurance maintained pursuant to
Subsections 7.06(a) or 7.06(b), insuring for a maximum amount that is less than
the amounts set forth in Sections 7.06(a) and 7.06(b)), the risks required to
be insured against pursuant to Sections 7.06(a) and 7.06(b), but in no case
shall the self-insurance with respect to all of the aircraft and engines in
Company's fleet (including, without limitation, the Aircraft) exceed for any
12-month policy year 1% of the average aggregate insurable value (for the
preceding policy year) of all aircraft (including, without limitation, the
Aircraft) on which Company carries insurance, unless an insurance broker of
national standing certifies that the standard among other major United States
airlines is a higher level of self-insurance, in which case Company may
self-insure the Aircraft to such higher level. In addition to the foregoing
right to self-insure, Company may self-insure to the extent of (1) any
deductible per occurrence that, in the case of the Aircraft, is not in excess
of the amount customarily allowed as a deductible in the industry or is
required to facilitate claims handling or (2) any applicable mandatory minimum
per aircraft (or if applicable per annum or other period) hull or liability
insurance deductibles imposed by the aircraft hull or liability insurers.
(d) Application of Insurance Payments. All losses will be
adjusted by Company with the insurers. As between Loan Trustee and Company it
is agreed that all insurance payments received under policies required to be
maintained by Company hereunder, exclusive of any payments received in excess
of the Loan Amount for the Aircraft from such
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policies, as the result of the occurrence of an Event of Loss with respect to
the Airframe or an Engine will be applied as follows:
(i) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe
that has been or is being replaced by Company pursuant to Section
7.05(a), such payments shall be paid over to, or retained by, Loan
Trustee and upon completion of such replacement shall be paid over to,
or retained by, Company;
(ii) if such payments are received with respect to the
Airframe or the Airframe and any Engines installed on the Airframe
that has not been and will not be replaced as contemplated by Section
7.05(a), so much of such payments remaining after reimbursement of
Loan Trustee for its costs and expenses as do not exceed the amounts
required to be paid by Company pursuant to Section 2.10 shall be
applied in reduction of Company's obligation to pay such amounts, if
not already paid by Company, or, if already paid by Company, shall be
applied to reimburse Company for its payment of such amounts and the
balance, if any, of such payment remaining thereafter will be paid
over to, or retained by, Company; and
(iii) if such payments are received with respect to an
Engine, so much of such payments remaining after reimbursement of Loan
Trustee for its costs and expenses shall be paid over to, or retained
by, Company; provided that Company has fully performed its obligations
under Section 7.05(b) with respect to the Event of Loss for which such
payments are made.
In all events, the insurance payment of any property damage loss
received under policies maintained by Company in excess of the Loan Amount for
the Aircraft shall be paid to Company.
The insurance payments for any loss or damage to the Airframe or an
Engine not constituting an Event of Loss with respect to the Airframe or such
Engine will be applied in payment (or to reimburse Company) for repairs or for
replacement property in accordance with the terms of Sections 7.02 and 7.04,
and any balance remaining after compliance with such Sections with respect to
such loss or damage shall be paid to Company. Any amount referred to in the
preceding sentence or in clause (i), (ii) or (iii) of the first paragraph of
this Section 7.06(d) that is payable to Company shall not be paid to Company
(or, if it has been previously paid directly to Company, shall not be retained
by Company) if at the time of such payment an Event of Default or Payment
Default has occurred and is continuing, but shall be paid to and held by Loan
Trustee as security for the obligations of Company under this Indenture, and
when any such Event of Default or Payment Default ceases, such amount shall, to
the extent not theretofore applied as provided herein, be paid to Company.
(e) Reports, Etc. On or before the Closing Date and annually following
renewal of Company's insurance coverage, Company will furnish to Loan Trustee,
Policy Provider and Liquidity Providers a report signed by a firm of
independent aircraft insurance brokers appointed by Company (which brokers may
be in the regular employ of Company), stating the opinion of such firm that the
insurance then carried and maintained on the Aircraft
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complies with the terms hereof and all premiums then due in connection with the
insurance have been paid. All information contained in such report shall be
Confidential Information and shall be treated by Loan Trustee, Policy Provider
and Liquidity Providers and each of their affiliates and officers, directors,
agents and employees in accordance with the provisions of Section 10.16.
Company will cause such firm to notify Loan Trustee, Policy Provider and
Liquidity Providers of any act or omission on the part of Company of which such
firm has knowledge that might invalidate or render unenforceable, in whole or
in part, any insurance on the Aircraft. Company will also cause such firm to
notify Loan Trustee, Policy Provider and Liquidity Provider as promptly as
practicable after such firm acquires knowledge that an interruption of any
insurance carried and maintained on the Aircraft pursuant to this Section 7.06
will occur. Such information may only be provided to other Persons in
accordance with Section 10.16.
(f) Salvage Rights; Other. All salvage rights to the Airframe
and each Engine shall remain with Company's insurers at all times, and any
insurance policies of Loan Trustee insuring the Airframe or any Engine shall
provide for a release to Company of any and all salvage rights in and to the
Airframe or any Engine. Neither Loan Trustee nor any Noteholder may, directly or
indirectly, obtain insurance for its own account with respect to the Airframe
or any Engine if such insurance would limit or otherwise adversely affect the
coverage or amounts payable under, or increase the premiums for, any insurance
required to be maintained pursuant to this Section 7.06 or any other insurance
maintained with respect to the Aircraft or any other aircraft in Company's
fleet.
(g) Right to Pay Premium. Notwithstanding the foregoing, Company
agrees that in the event of cancellation of any insurance due to the
nonpayment of premiums, Loan Trustee shall have the option, in its sole
discretion, to pay any such premium that is due in respect of the coverage
pursuant to this Indenture and to maintain such coverage until the scheduled
expiry date of such insurance and, in such event, Company shall, upon demand,
reimburse Loan Trustee for amounts so paid by it.
ARTICLE VIII
SUCCESSOR AND ADDITIONAL TRUSTEES
Section 8.01 Resignation or Removal; Appointment of Successor. (a) The
resignation or removal of Loan Trustee and the appointment of a successor Loan
Trustee shall become effective only upon the successor Loan Trustee's
acceptance of appointment as provided in this Section 8.01. Loan Trustee or any
successor thereto must resign if at any time it ceases to be eligible in
accordance with the provisions of Section 8.01(c) and may resign at any time
without cause by giving at least 60 days' prior written notice to Company and
each Noteholder. In addition, either Company (so long as no Event of Default or
Payment Default shall have occurred and be continuing) or a Majority in
Interest of Noteholders (but only with the consent of Company so long as no
Event of Default or Payment Default shall have occurred and be continuing), may
at any time remove Loan Trustee without cause by an instrument in writing
delivered to Loan Trustee and each Noteholder, and, in case of a removal by a
Majority in Interest of Noteholders, to Company. In the case of the resignation
or removal of Loan Trustee, Company shall promptly appoint a successor Loan
Trustee. If a successor Loan Trustee has not been appointed within 60 days
after such notice of resignation or removal, Loan Trustee,
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Company or any Noteholder may apply to any court of competent jurisdiction to
appoint a successor Loan Trustee to act until such time, if any, as a successor
is appointed as above provided. The successor Loan Trustee so appointed by such
court shall immediately and without further act be superseded by any successor
Loan Trustee appointed as above provided.
(b) Any successor Loan Trustee, however appointed, shall execute
and deliver to the predecessor Loan Trustee and Company an instrument accepting
such appointment and assuming the obligations of Loan Trustee arising from and
after the time of such appointment, and thereupon such successor Loan Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Loan Trustee in the trust
hereunder applicable to it with like effect as if originally named Loan Trustee
herein; but nevertheless upon the written request of such successor Loan
Trustee, such predecessor Loan Trustee shall execute and deliver an instrument
transferring to such successor Loan Trustee all the estates, properties, rights
and powers of such predecessor Loan Trustee, and such predecessor Loan Trustee
shall duly assign, transfer, deliver and pay over to such successor Loan
Trustee all monies or other property and all other books and records, or true,
correct and complete copies thereof, then held by such predecessor Loan
Trustee.
(c) This Indenture shall at all times have a Loan Trustee,
however appointed, that is a Citizen of the United States (without the use of a
voting trust) and a bank or trust company having a combined capital and surplus
of at least $100,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence or hereafter
incurred, are fully and unconditionally guaranteed by a corporation organized
and doing business under the laws of the United States or any state or
territory thereof or the District of Columbia and having a combined capital and
surplus of at least $100,000,000) or a corporation with a net worth of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of Loan Trustee upon reasonable or customary
terms. If such bank, trust company or corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of
federal, state, territorial or District of Columbia supervising or examining
authority, then for the purposes of this Section 8.01(c) the combined capital
and surplus of such bank, trust company or corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
conditions so published. In case at any time Loan Trustee ceases to be eligible
in accordance with the provisions of this Section 8.01(c), Loan Trustee shall
resign immediately in the manner and with the effect specified in Section
8.01(a).
(d) Any corporation into which Loan Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which Loan Trustee is a party,
or any corporation to which substantially all the corporate trust business of
Loan Trustee may be transferred, shall, subject to the terms of Section
8.01(c), be a successor Loan Trustee under this Indenture without further act.
Section 8.02 Appointment of Additional and Separate Trustees. (a)
Whenever (i) Loan Trustee deems it necessary or desirable in order to conform
to any law of any jurisdiction in which all or any part of the Collateral is
situated or to make any claim or bring any suit with respect to or in
connection with the Collateral, any Operative Document or any of the
transactions contemplated by the Operative Documents, (ii) Loan Trustee shall
be advised by
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counsel satisfactory to it that it is necessary or prudent in the interests of
Noteholders (and Loan Trustee shall so advise Company) or (iii) Loan Trustee
has been requested to do so by a Majority in Interest of Noteholders, then in
any such case, Loan Trustee and, upon the written request of Loan Trustee,
Company, shall execute and deliver an indenture supplemental hereto and such
other instruments as from time to time are necessary or advisable either (1) to
constitute one or more banks or trust companies or corporations meeting the
requirements of Section 8.01(c) and approved by Loan Trustee, either to act
jointly with Loan Trustee as additional trustee or trustees of all or any part
of the Collateral or to act as separate trustee or trustees of all or any part
of the Collateral, in each case with such rights, powers, duties and
obligations consistent with this Indenture as is provided in such supplemental
indenture or other instruments as Loan Trustee or a Majority in Interest of
Noteholders deems necessary or advisable, or (2) to clarify, add to or subtract
from the rights, powers, duties and obligations theretofore granted any such
additional or separate trustee, subject in each case to the remaining
provisions of this Section 8.02. If no Event of Default has occurred and is
continuing, no additional or supplemental trustee shall be appointed without
Company's consent. If an Event of Default shall have occurred and be
continuing, Loan Trustee may act under the foregoing provisions of this Section
8.02(a) without the concurrence of Company, and Company hereby irrevocably
appoints (which appointment is coupled with an interest) Loan Trustee as its
agent and attorney-in-fact to act for it under the foregoing provisions of this
Section 8.02(a). Loan Trustee may, in such capacity, execute, deliver and
perform any such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate trustee or for
the clarification of, addition to or subtraction from the rights, powers,
duties or obligations theretofore granted to any such additional or separate
trustee, subject in each case to the remaining provisions of this Section 8.02.
In case any additional or separate trustee appointed under this Section 8.02(a)
becomes incapable of acting, resigns or is removed, all the assets, property,
rights, powers, trusts, duties and obligations of such additional or separate
trustee shall revert to Loan Trustee until a successor additional or separate
trustee is appointed as provided in this Section 8.02(a).
(b) No additional or separate trustee shall be entitled to
exercise any of the rights, powers, duties and obligations conferred upon Loan
Trustee in respect of the custody, investment and payment of monies and all
monies received by any such additional or separate trustee from or constituting
part of the Collateral or otherwise payable under any Operative Documents to
Loan Trustee shall be promptly paid over by it to Loan Trustee. All other
rights, powers, duties and obligations conferred or imposed upon any additional
or separate trustee shall be exercised or performed by Loan Trustee and such
additional or separate trustee jointly except to the extent that applicable law
of any jurisdiction in which any particular act is to be performed renders Loan
Trustee incompetent or unqualified to perform such act, in which event such
rights, powers, duties and obligations (including the holding of title to all
or part of the Collateral in any such jurisdiction) shall be exercised and
performed by such additional or separate trustee. No additional or separate
trustee shall take any discretionary action except on the instructions of Loan
Trustee or a Majority in Interest of Noteholders. No trustee hereunder shall be
personally liable by reason of any act or omission of any other trustee
hereunder, except that Loan Trustee shall be liable for the consequences of its
lack of reasonable care in selecting, and Loan Trustee's own actions in acting
with, any additional or separate trustee. Each additional or separate trustee
appointed pursuant to this Section 8.02 shall be subject to, and shall have the
benefit of Articles IV, V, VI, VIII, IX and X hereof insofar as they apply to
Loan Trustee. The powers of any
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additional or separate trustee appointed pursuant to this Section 8.02 shall
not in any case exceed those of Loan Trustee.
(c) If at any time Loan Trustee deems it no longer necessary or
desirable or in the event that Loan Trustee has been requested to do so in
writing by a Majority in Interest of Noteholders, Loan Trustee and, upon the
written request of Loan Trustee, Company, shall execute and deliver an
indenture supplemental hereto and all other instruments and agreements
necessary or proper to remove any additional or separate trustee. Loan Trustee
may act on behalf of Company under this Section 8.02(c) when and to the extent
it could so act under Section 8.02(a) hereof. In any case, Company may remove
an additional or separate trustee in the manner set forth in Section 8.01.
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.01 Amendments to this Indenture without Consent of Holders.
At any time after the date hereof, Company and Loan Trustee may enter into one
or more agreements supplemental hereto without notice to or consent of any
Noteholder for any of the following purposes: (i) to evidence the succession of
another Person to Company and the assumption by any such successor of the
covenants of Company contained in any Operative Documents pursuant to Section
6.02(e) of the Participation Agreement; (ii) to cure any defect or
inconsistency herein or in the Equipment Notes (provided, that such change does
not adversely affect the interests of any Noteholder in its capacity solely as
Noteholder); (iii) to cure any ambiguity or correct any mistake; (iv) to
evidence the succession of a new trustee hereunder pursuant hereto or the
removal of the trustee hereunder or to provide for or facilitate the
appointment of an additional or separate trustee pursuant to Section 8.02
hereof; (v) to convey, transfer, assign, mortgage or pledge any property to or
with Loan Trustee; (vi) to make any other provisions or amendments with respect
to matters or questions arising hereunder or under the Equipment Notes, or to
amend, modify or supplement any provision hereof or thereof, so long as such
action shall not adversely affect the interests of Noteholders, Policy Provider
or either Liquidity Provider; (vii) to correct or amplify the description of
any property at any time subject to the Lien of this Indenture, or better to
assure, convey and confirm unto Loan Trustee any property subject or required
to be subject to the Lien of this Indenture or to subject to the Lien of this
Indenture the Airframe or Engines or any Replacement Airframe or Replacement
Engine; (viii) to add to the covenants of Company for the benefit of
Noteholders, or to surrender any rights or power herein conferred upon Company;
(ix) to add to the rights of Noteholders; (x) to include on the Equipment Notes
any legend required by law or as otherwise necessary or advisable and (xi) to
comply with any applicable requirements of the Trust Indenture Act of 1939, as
amended, or any other requirements of applicable law or of any regulatory body.
Section 9.02 Amendments to this Indenture with Consent of Holders. (a)
With the written consent of a Majority in Interest of Noteholders, Company may,
and Loan Trustee shall, subject to Section 9.06, at any time and from time to
time, enter into such supplemental agreements to add any provisions to or to
change or eliminate any provisions of this Indenture or of any such
supplemental agreements or to modify in any manner the rights and obligations
of Company, Loan Trustee and of Noteholders under this Indenture; provided,
however, that
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without the consent of each Noteholder affected thereby and Policy Provider, an
amendment under this Section 9.02 may not:
(1) reduce the principal amount of, Break Amount, if
any, Make-Whole Amount, if any, or interest on, any Equipment Note;
(2) change the date on which any principal amount of,
Break Amount, if any, 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.
Notwithstanding the foregoing, (i) neither Company nor Loan Trustee
shall enter into any amendment, waiver or modification of, or supplement or
consent to, this Indenture or any other Operative Document other than the
Participation Agreement (which is addressed in Section 9.03) which shall
reduce, modify or amend any indemnities in favor of Policy Provider, Primary
Liquidity Provider or Above Cap Liquidity Provider without the consent of
Policy Provider, Primary Liquidity Provider or Above Cap Liquidity Provider
that is subject to such reduction, modification or amendment and (ii) without
the consent of each holder of an affected Related Equipment Note then
outstanding, no amendment, waiver or modification of the terms hereof shall
modify Section 3.03, except as provided herein.
(b) It is not necessary under this Section 9.02 for Noteholders
to consent to the particular form of any proposed supplemental agreement, but
it is sufficient if they consent to the substance thereof.
(c) Promptly after the execution by Company and Loan Trustee of
any supplemental agreement pursuant to the provisions of this Section 9.02,
Loan Trustee shall transmit by first-class mail a notice, setting forth in
general terms the substance of such supplemental agreement, to all Noteholders,
as the names and addresses of such Noteholders appear on the Equipment Note
Register. Any failure of Loan Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental agreement.
Section 9.03 Amendments, Waivers, Etc. of the Participation Agreement.
Without the consent of a Majority in Interest of Noteholders, the respective
parties to the
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Participation Agreement may not modify, amend or supplement such agreement, or
give any consent, waiver, authorization or approval thereunder, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the respective
parties thereunder; provided, however, that, without the consent of Loan
Trustee or any Noteholder, the Participation Agreement may be modified, amended
or supplemented in order (i) to cure any defect or inconsistency therein or to
cure any ambiguity or correct any mistake, (ii) to amend, modify or supplement
any provision thereof or make any other provision with respect to matters or
questions arising thereunder or under this Indenture, provided that the making
of any such other provision shall not materially adversely affect the interests
of Noteholders or (iii) to make any other change, or reflect any other matter,
of the kind referred to in clauses (i) through (xi) of Section 9.01.
Notwithstanding the foregoing, without the consent of either Liquidity Provider
or Policy Provider, Company shall not enter into any amendment, waiver or
modification of or supplement or consent to the Participation Agreement which
shall reduce, modify or amend any indemnities in favor of such Liquidity
Provider or Policy Provider contained therein.
Section 9.04 Revocation and Effect of Consents. Until an amendment or
waiver becomes effective, a consent to it by a Noteholder is a continuing
consent by Noteholder and every subsequent Noteholder, even if notation of the
consent is not made on any Equipment Note.
Section 9.05 Notation on or Exchange of Equipment Notes. Loan Trustee
may place an appropriate notation about an amendment or waiver on any Equipment
Note thereafter executed. Loan Trustee in exchange for such Equipment Notes may
execute new Equipment Notes that reflect the amendment or waiver.
Section 9.06 Trustee Protected. If, in the reasonable opinion of the
institution acting as Loan Trustee, any document required to be executed by it
pursuant to the terms of Section 9.01 or 9.02 adversely affects any right,
duty, immunity or indemnity with respect to such institution under this
Indenture, such institution may in its discretion decline to execute such
document.
ARTICLE X
MISCELLANEOUS
Section 10.01 Termination of Indenture. (a) Upon (or at any time
after) payment in full of the principal amount, Make-Whole Amount, if any,
Break Amount, if any, and interest on and all other amounts due under all
Equipment Notes and Related Equipment Notes, and provided that there shall then
be no other Secured Obligations or Related Secured Obligations due to
Noteholders, Related Noteholders, Indenture Indemnitees, Loan Trustee and
Related Loan Trustees hereunder or under the Participation Agreement, the other
Operative Documents or the Related Indentures, Company and Loan Trustee shall
be deemed to have been released and discharged from their respective
obligations hereunder and under the Equipment Notes and the security interest,
mortgage lien and all other estate, right, title and interest granted by this
Indenture shall cease and become null and void and all of the property, rights,
interests and privileges granted as security for the Equipment Notes shall
revert to and revest in Company
-57-
without any other act or formality whatsoever, and Loan Trustee shall, upon the
written request of Company, execute and deliver to, or as directed in writing
by, Company an appropriate instrument (in due form for recording) releasing the
Aircraft and the balance of the Collateral from the Lien of this Indenture
together with such other instruments and documents as Company reasonably
requests to give effect to the release and termination, and, in such event,
this Indenture and the trusts created hereby shall terminate and this Indenture
shall be of no further force or effect; provided, however, that this Indenture
and the trusts created hereby shall earlier terminate and this Indenture shall
be of no further force or effect upon any sale or other final disposition by
Loan Trustee of all property constituting part of the Collateral and the final
distribution by Loan Trustee of all monies or other property or proceeds
constituting part of the Collateral in accordance with the terms hereof. Except
as otherwise provided above, this Indenture and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof ;
provided further, however, that no payment of any amount due under any Related
Equipment Note or any Related Indenture, any amount payable to any Related Loan
Trustee or payment of any other Related Secured Obligation shall be required in
connection with the termination of this Indenture arising from a mandatory
redemption of Equipment Notes pursuant to Section 2.10(a). Notwithstanding the
foregoing, if this Indenture has not terminated prior to the Final Payment
Date, this Indenture shall not terminate on the Final Payment Date unless no
Event of Default of the type referred to in Section 4.01(j) exists.
Section 10.02 No Legal Title to Collateral in Noteholders. No
Noteholder shall have legal title to any part of the Collateral. No transfer,
by operation of law or otherwise, of any Equipment Note or other right, title
and interest of any Noteholder in and to the Collateral or hereunder shall
operate to terminate this Indenture or entitle such Noteholder or any successor
or transferee of such holder to an accounting or to the transfer to it of any
legal title to any part of the Collateral.
Section 10.03 Sale of Aircraft by Loan Trustee is Binding. Any sale or
other conveyance of the Aircraft, the Airframe, any Engine or any interest
therein by Loan Trustee made pursuant to the terms of this Indenture shall bind
Noteholders and Company and shall be effective to transfer or convey all right,
title and interest of Loan Trustee, Company and such Noteholders in and to such
Aircraft, Airframe, Engine or interest therein. No purchaser or other grantee
shall be required to inquire as to the authorization, necessity, expediency or
regularity of such sale or conveyance or as to the application of any sale or
other proceeds with respect thereto by Noteholders.
Section 10.04 Indenture for Benefit of Company, Loan Trustee and
Noteholders. Except as provided in the following sentence, nothing in this
Indenture, whether express or implied, shall be construed to give any Person
other than Company, Loan Trustee, Noteholders or the other Indenture
Indemnitees any legal or equitable right, remedy or claim under or in respect
of this Indenture. Company agrees and acknowledges that Policy Provider, each
Related Noteholder and each Related Loan Trustee shall each be a third party
beneficiary of the covenants and agreements of Company set forth herein and may
rely on the covenants and agreements of Company set forth herein to the same
extent as if such covenants and agreements of Company were made to such Person
directly.
-58-
Section 10.05 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents required or permitted under the
terms and provisions of this Indenture shall be in English and in writing, and
given by United States registered or certified mail, courier service or
facsimile, and any such notice shall be effective when delivered (or, if
delivered by facsimile, upon completion of transmission and confirmation by the
sender (by a telephone call to a representative of the recipient or by machine
confirmation) that such transmission was received) addressed as follows:
(i) if to Company, addressed to:
Delta Air Lines, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer, Dept. 856
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the General Counsel at the same address,
but Dept. 971
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Loan Trustee, addressed to:
U.S. Bank Trust National Association
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Square
Hartford, Connecticut 06103
Attention: Corporate Trust Division
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or if to any Noteholder, addressed to such Noteholder at its address set forth
in the Equipment Note Register maintained pursuant to Section 2.07 hereof.
Any party, by notice to the other parties hereto, may designate
different addresses for subsequent notices or communications. Whenever the
words "notice" or "notify" or similar words are used herein, they mean the
provision of formal notice as set forth in this Section 10.05.
Section 10.06 Severability. Any provision of this Indenture that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
-59-
Section 10.07 No Oral Modification or Continuing Waivers. No terms or
provisions of this Indenture or of the Equipment Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
Company and Loan Trustee, in compliance with Article IX. Any waiver of the
terms hereof or of any Equipment Note shall be effective only in the specific
instance and for the specific purpose given.
Section 10.08 Successors and Assigns. All covenants and agreements
contained herein shall bind and inure to the benefit of, and be enforceable by,
each of the parties hereto and the successors and permitted assigns of each,
all as herein provided. Any request, notice, direction, consent, waiver or
other instrument or action by any Noteholder shall bind the successors and
permitted assigns of such Noteholder. Each Noteholder by its acceptance of an
Equipment Note agrees to be bound by this Indenture and all provisions of the
Participation Agreement applicable to a Noteholder.
Section 10.09 Headings. The headings of the various Articles and
Sections herein and in the Table of Contents hereto are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
Section 10.10 Normal Commercial Relations. Anything contained in this
Indenture to the contrary notwithstanding, Loan Trustee, any Noteholder or any
other party to any of the Operative Documents or the Pass Through Documents or
any of their affiliates may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with Company,
fully to the same extent as if this Indenture were not in effect, including
without limitation the making of loans or other extensions of credit to Company
for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.
Section 10.11 Voting by Noteholders. All votes of Noteholders shall be
governed by a vote of a Majority in Interest of Noteholders, except as
otherwise provided herein.
Section 10.12 Section 1110. It is the intention of the parties hereto
that the security interest created hereby, to the fullest extent available
under applicable law, entitles Loan Trustee, on behalf of Noteholders, to all
of the benefits of Section 1110 with respect to the Aircraft.
Section 10.13 Company's Performance and Rights. Any obligation imposed
on Company herein shall require only that Company perform or cause to be
performed such obligation, even if stated as a direct obligation, and the
performance of any such obligation by any permitted assignee, lessee or
transferee under an assignment, lease or transfer agreement then in effect and
in accordance with the provisions of the Operative Documents shall constitute
performance by Company and, to the extent of such performance, discharge such
obligation by Company. Except as otherwise expressly provided herein, any right
granted to Company in this Indenture shall grant Company the right to permit
such right to be exercised by any such assignee, lessee or transferee. The
inclusion of specific references to obligations or rights of any such assignee,
lessee or transferee in certain provisions of this Indenture shall not in any
way prevent or diminish the application of the provisions of the two sentences
immediately preceding
-60-
with respect to obligations or rights in respect of which specific reference to
any such assignee, lessee or transferee has not been made in this Indenture.
Section 10.14 Counterparts. This Indenture may be executed in any
number of counterparts (and each of the parties hereto shall not be required to
execute the same counterpart). Each counterpart of this Indenture including a
signature page or pages executed by each of the parties hereto shall be an
original counterpart of this Indenture, but all of such counterparts together
shall constitute one instrument.
SECTION 10.15 GOVERNING LAW. THIS INDENTURE HAS BEEN DELIVERED IN THE
STATE OF NEW YORK AND THIS INDENTURE, ANY INDENTURE SUPPLEMENT AND THE
EQUIPMENT NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.16 Confidential Information. The term "Confidential
Information" means: (a) the existence and terms of any lease of the Airframe or
Engines pursuant to Section 7.02(a) and the identity of the Permitted Lessee
thereunder; (b) all information obtained in connection with any inspection
conducted by Loan Trustee or its representative pursuant to Section 7.03(a);
(c) each certification furnished to Loan Trustee pursuant to Sections 7.06(a)
and 7.06(b); (d) all information contained in each report furnished to Loan
Trustee pursuant to Section 7.06(e); and (e) all information regarding the
Warranty Rights. All Confidential Information shall be held confidential by
Loan Trustee and each Noteholder and each affiliate, agent, officer, director,
or employee of any thereof and shall not be furnished or disclosed by any of
them to anyone other than (i) Loan Trustee or any Noteholder and (ii) their
respective bank examiners, auditors, accountants, agents and legal counsel, and
except as may be required by an order of any court or administrative agency or
by any statute, rule, regulation or order of any governmental authority.
Section 10.17 Submission to Jurisdiction. Each of the parties hereto,
and by acceptance of Equipment Notes, each Noteholder, to the extent it may do
so under applicable law, for purposes hereof and of all other Operative
Agreements hereby (a) irrevocably submits itself to the non-exclusive
jurisdiction of the courts of the State of New York sitting in the City of New
York and to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Indenture, the subject matter hereof or
any of the transactions contemplated hereby brought by any party or parties
hereto or thereto, or their successors or permitted assigns and (b) waives, and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Indenture or the Equipment Notes or the subject matter
hereof or any of the transactions contemplated hereby may not be enforced in or
by such courts.
-61-
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:
U.S. BANK TRUST NATIONAL
ASSOCIATION, not in its individual capacity,
except as expressly provided herein, but
solely as Loan Trustee
By:
-------------------------------------------
Name:
Title:
EXHIBIT A
to INDENTURE AND
SECURITY AGREEMENT
INDENTURE SUPPLEMENT NO. ___
INDENTURE SUPPLEMENT NO. __ , dated _____________, ____ ("Indenture
Supplement"), between DELTA AIR LINES, INC. ("Company") and U.S. BANK TRUST
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 (N3760C), dated as of
January 30, 2003 (the "Indenture"; capitalized terms used herein without
definition shall have the meanings specified therefor in Annex A to the
Indenture), between Company and U.S. Bank Trust National Association, not in
its individual capacity, except as expressly provided therein, but solely as
Loan Trustee ("Loan Trustee"), provides for the execution and delivery of
supplements thereto substantially in the form hereof which shall particularly
describe the Aircraft, and shall specifically grant a security interest in the
Aircraft to Loan Trustee; and
[WHEREAS, the Indenture relates to the Airframe and Engines described
in Annex A attached hereto and made a part hereof, and a counterpart of the
Indenture is attached to and made a part of this Indenture Supplement;]*
[WHEREAS, Company has, as provided in the Indenture, heretofore
executed and delivered to Loan Trustee Indenture Supplement(s) for the purpose
of specifically subjecting to the Lien of the Indenture certain airframes
and/or engines therein described, which Indenture Supplement(s) is/are dated
and has/have been duly recorded with the FAA as set forth below, to wit:
Date Recordation Date FAA Document Number]**
---- ---------------- --------------------
NOW, THEREFORE, to secure the prompt and complete payment (whether at
stated maturity, by acceleration or otherwise) of principal of, Make-Whole
Amount, if any, and interest on, the Equipment Notes and all other amounts
payable by Company under the Operative Documents and the performance and
observance by Company of all the agreements and covenants to be performed or
observed by Company for the benefit of Noteholders and Indenture Indemnitees
contained in the Operative Documents, and in consideration of the premises and
of
-----------------------------
* Use for Indenture Supplement No. 1 only.
** Use for all Indenture Supplements other than Indenture Supplement
No. 1.
A-1
the covenants contained in the Operative Documents, and for other good and
valuable consideration given by Loan Trustee, Noteholders and Indenture
Indemnitees to Company at or before the Closing Date, the receipt of which is
hereby acknowledged, Company does hereby grant, bargain, sell, convey,
transfer, mortgage, assign, pledge and confirm unto Loan Trustee and its
successors in trust and permitted assigns, for the security and benefit of Loan
Trustee, Noteholders and Indenture Indemnitees, a first priority security
interest in, and mortgage lien on, all estate, right, title and interest of
Company in, to and under the Aircraft, including the Airframe and Engines
described in Annex A attached hereto, whether or not any such Engine from time
to time is installed on the Airframe or any other airframe or any other
aircraft, and any and all Parts relating thereto, and, to the extent provided
in the Indenture, all substitutions and replacements of, and additions,
improvements, accessions and accumulations to, the Aircraft, including the
Airframe, the Engines and any and all Parts (in each case other than any
substitutions, replacements, additions, improvements, accessions and
accumulations that constitute items excluded from the definition of Parts by
clauses (b), (c), (d), (e) and (f) thereof) relating thereto;
To have and to hold all and singular the aforesaid property unto Loan
Trustee, and its successors and assigns, in trust for the ratable benefit and
security of Noteholders and Indenture Indemnitees, except as otherwise provided
in the Indenture, including Section 2.13 and Article III of the Indenture,
without any preference, distinction or priority of any one Equipment Note over
any other by reason of priority of time of issue, sale, negotiation, date of
maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and subject to the terms and provisions set forth in the Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and
confirmed.
THIS INDENTURE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the undersigned have caused this Indenture
Supplement No. __ to be duly executed by their respective duly authorized
officers, on the date first above written.
DELTA AIR LINES, INC.
By:
------------------------------------------
Name:
Title:
A-2
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Loan Trustee
By:
------------------------------------------
Name:
Title:
A-3
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.
Annex A-1
EXHIBIT B
to INDENTURE AND
SECURITY AGREEMENT
LIST OF PERMITTED COUNTRIES
Australia Germany Norway
Austria Greece Peoples' Republic of China
Bahamas Hungary Poland
Barbados Iceland Portugal
Belgium India Republic of China (Taiwan)
Bermuda Islands Ireland Singapore
Brazil Italy South Africa
British Virgin Islands Jamaica South Korea
Canada Japan Spain
Cayman Islands Liechtenstein Sweden
Chile Luxembourg Switzerland
Czech Republic Mexico Thailand
Denmark Monaco Trinidad and Tobago
Ecuador Netherlands Antilles United Kingdom
Finland Netherlands, the
France New Zealand
B-1
EXHIBIT C
to INDENTURE AND
SECURITY AGREEMENT
AIRCRAFT TYPE VALUE FOR SECTION 7.06(b)
Boeing 737-832 - $8,000,000
C-1
SCHEDULE I
to INDENTURE AND
SECURITY AGREEMENT
DESCRIPTION OF EQUIPMENT NOTES
The information set forth below this text in this Schedule has been
intentionally omitted from the FAA filing copy as the parties hereto deem it to
contain confidential information.
Original Principal Amount Maturity Date
------------------------- ----------------
Series G
Equipment Notes: $21,917,485.13 January 25, 2008
Series C
Equipment Notes: $8,325,376.09 January 25, 2008
Series D
Equipment Notes: $2,883,344.43 January 25, 2008
SCHEDULE I-1
CERTAIN DEFINED TERMS
DEFINED TERM DEFINITION
------------ ----------
Debt Rate for Series G Equipment Notes: With respect to (i) the first Interest Period 2.09% per annum and (ii) any
subsequent Interest Period, LIBOR for such Interest Period as determined
pursuant to the Reference Agency Agreement plus the Applicable Margin for
Series G Equipment Notes.
Debt Rate for Series C Equipment Notes: With respect to (i) the first Interest Period 3.34% per annum and (ii) any
subsequent Interest Period, LIBOR for such Interest Period as determined
pursuant to the Reference Agency Agreement plus the Applicable Margin for
Series C Equipment Notes.
Debt Rate for Series D Equipment Notes: With respect to (i) the first Interest Period 3.84% per annum and (ii) any
subsequent Interest Period, LIBOR for such Interest Period as determined
pursuant to the Reference Agency Agreement plus the Applicable Margin for
Series D Equipment Notes.
Applicable Margin: In the case of Series G Equipment Notes, 0.75% per annum, as such margin may
be adjusted as necessary for the period and in the circumstances specified in
Section 2(d) of the Registration Rights Agreement; in the case of Series C
Equipment Notes, 2.00% per annum; and in the case of Series D Equipment Notes,
2.50% per annum.
Make-Whole Amount: In the case of the prepayment of the unpaid principal amount of Series G
Equipment Notes, an amount equal to the following percentage of the principal
amount of Series G Equipment Notes prepaid:
SCHEDULE I-2
IF REDEEMED DURING
THE YEAR PRIOR TO
THE ANNIVERSARY OF
THE ISSUANCE DATE MAKE-WHOLE
INDICATED BELOW AMOUNT
------------------- ----------
1st 1.50%
2nd 1.00%
3rd 0.50%
SCHEDULE I-3
EQUIPMENT NOTES AMORTIZATION
SERIES G EQUIPMENT NOTES
Percentage of
Original Principal Amount
Payment Date to be Paid
The portion of this Schedule appearing below this text is intentionally deleted
from the FAA filing counterpart because the parties hereto deem it to contain
confidential information.
[INTENTIONALLY OMITTED]
SCHEDULE I-1
EQUIPMENT NOTES AMORTIZATION
SERIES D EQUIPMENT NOTES
Percentage of
Original Principal Amount
Payment Date to be Paid
The portion of this Schedule appearing below this text is intentionally deleted
from the FAA filing counterpart because the parties hereto deem it to contain
confidential information.
[INTENTIONALLY OMITTED]
SCHEDULE I-2
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 U.S. Bank Trust National Association (as successor to State
Street Bank and Trust Company of Connecticut, National Association), as
trustee, as supplemented by Trust Supplement No. 2003-1G, dated as of January
30, 2003, Trust Supplement No. 2003-1C, dated as of January 30, 2003 and Trust
Supplement No. 2003-1D, dated as of January 30, 2003.
SCHEDULE II-1